The National Hydropower Association (NHA) and Chelan County Public Utility District (Chelan PUD) released a new report looking at public policy areas that can unleash capabilities of hydropower for the next 30 years. Entitled “Reinvigorating Hydropower: A cornerstone of our clean, affordable, reliable electric future” the report describes the value hydropower provides the grid and the recommended governmental and industry policies necessary to fully realize hydropower’s value.
“Hydropower has and will continue to play a critical role in states meeting clean energy goals. From providing reliably and resiliency to enabling other renewables onto the grid, hydropower is the backbone of the nation’s electricity system,” said Linda Church Ciocci, Executive Director of the National Hydropower Association. “However, for it to flourish, policymakers must breathe new life into the polices that are holding it back, and it starts with recognizing the true value of hydropower. This report is a call to action to begin that important discussion.”
“With the adoption of equitable and smart policies, hydropower provides the best generation pathway to an affordable, reliable and clean electric power system necessary to accomplish deep, economy-wide decarbonization,” said Steve Wright, General Manager, Chelan PUD.
The paper makes a call to action, identifying six recommendations, covering a range of issues including market design, public policy and regulatory processes.
Design Markets that Value Hydropower Services
Hydropower is such a multi-purpose performer that it would be highly successful in a resource-neutral market. To be sustainable over the long term, an equitable market must send appropriate price signals to hydropower owners and operators. Markets fail when they only value some attributes (such as energy) while transferring the benefit of others (such as associated grid services). Regulators should re-examine all existing market design rules, practices and resource procurement programs to incentivize the generating attributes needed to achieve carbon reduction and reliability at low cost.
Choose Technology Neutral Policies for Carbon Reduction Goals
Public policy should focus on the best societal outcomes that allow alternative solutions to compete. Renewable energy portfolios (RPSs) and tax incentives began as a means to kick-start nascent technologies, such as wind and solar. As these technologies have matured, policies have not treated hydropower equitably. Going forward, public policy should provide a more equitable, technology-neutral market signal for any generating resources that meet emission goals.
Allow Reinvestment in Existing Hydropower to Meet “Additionality” Criteria
To achieve low levels of carbon emissions on the grid, renewable energy purchasers and those setting portfolio policies should view reinvestment in hydropower as meeting additionality requirements. Limiting the markets in which hydropower can compete reduces the value of all types of hydropower investment.
Improve the Hydropower Licensing Process
Hydropower has the longest, most complex development timeline of any renewable energy technology. The licensing process can cost millions of dollars and take 10 years or longer – even for projects being relicensed. Recent changes to license term policy may unleash investments at existing projects if properly implemented. However, more action will be needed to streamline and improve overall licensing outcomes.
Improve Project Performance
Given its aging infrastructure and contributions to grid resiliency and reliability, hydropower deserves more focus in the nation’s research portfolio. There are opportunities to increase hydropower system output through new sensor technologies, combined with mega-data analysis. Federal and state governments should support such efforts by finding room in their budgets to support R&D in the hydropower industry.
Improve Contracting and Quality Control Practices
Hydropower owners and vendors should work together so that equipment is resilient, easy to maintain and achieves its life expectancy. Collaborative arrangements between owners and vendors that lead to longer term warranties and increased operational data sharing can enhance quality in a manner that ensures actual life matches planned investment life.