Streamlining the Hydropower Licensing Process: What's Up with the Dam Licensing?

• Author: Lawson, Andrew G.

"A river is more than an amenity, it is a treasure. It offers a necessity of life that must be rationed among those who have power over it." (1)

1. INTRODUCTION

   On April 14, 2017, Energy Secretary Rick Perry requested that the Department of Energy (DOE) conduct a study to examine electricity markets and reliability. (2) Four months later, the DOE released a 181-page report evaluating the present trajectory of the U.S. electricity system and providing policy recommendations to promote grid resiliency. (3) Among other things, the report recommended encouraging the Federal Energy Regulatory Commission (FERC) to revisit the hydropower licensing process in order to minimize regulatory burden. (4)

   The paramount reason that the United States is not further developing hydropower is the burdensome licensing process. (5) To remedy the inefficient licensing process the Obama Administration enacted the Hydropower Regulatory Efficiency Act of 2013 (HREA). (6) Why then, in 2017, did the DOE recommend that FERC revisit the licensing process with the purpose of streamlining it? (7)

   Hydroelectric power is a proven, reliable resource that creates electricity without burning fossil fuels and thus does not contribute to global climate change. (8) If hydropower is so efficient, why not utilize it to a greater degree? (9) One possible explanation is that increased awareness of the negative externalities of dams has caused a dam removal movement. (10) However, at the same time, a growing number of activists have been pushing for the use of non-powered dams (NPD), which are small dams that do not currently produce electricity. (11) The answer seems to be that NPDs are subject to the same complex licensing process as large-scale dams. (12)

   This Note begins by detailing the rise of large and small hydropower facilities in the United States. (13) The Note then explains the different statutes that influence the hydropower licensing process and summarizes the licensing process itself. (14) This Note then tracks the history of the government's efforts to streamline hydropower licensing, culminating with a discussion of the HREA. (15) After explaining the HREA, this Note analyzes its end result. (16) Finally, this Note offers three routes Congress can take to begin expediting the small hydropower licensing process. (17)

2. HISTORY

   1. Rise of Hydropower in the United States

      1. Hydropower Generally

         Hydropower is the oldest, most abundant, and most efficient renewable energy source in the United States. (18) Throughout its short history, the United States has built over 80,000 dams. (19) In the late 1800s, a group of business leaders realized that falling or flowing water could turn the turbines of a generator. (20) Following this discovery, the New Deal era emphasized construction and production within the United States and induced a boom in dam construction. (21) Accordingly, the United States constructed a majority of its large hydropower facilities during the New Deal era. (22)

         Hydropower relies on the energy that water creates as it moves through narrow channels and into turbines. (23) The potential energy capacity of moving water varies depending on the volume of water stored or the change in elevation from one point to another. (24) The momentum of the moving water spins a turbine that in turn transfers kinetic energy to a generator. (25) Hydropower generates electricity with an extremely efficient conversion rate of 90%, whereas other renewables average only 50%. (26)

         Although most dams use this method to create electricity, dams come in a vast array of sizes and harness moving water in many ways. (27) The three types of hydropower facilities are impoundments, diversions, and pumped storage facilities. (28) An impoundment facility uses a dam to store water in a reservoir and generates electricity by periodically releasing water from the reservoir to spin a turbine that activates a generator. (29) A diversion directs only a portion of a river through a narrow channel and does not always require a dam. (30) A pumped storage facility moves water from one reservoir to another reservoir at a higher elevation to store energy when energy costs are low, and releases that water downhill through turbines to produce cost efficient electricity when energy costs are high. (31)

         Despite the existence of more than 80,000 dams, hydroelectric power only accounts for between 6% and 8% of overall energy production in the United States. (32) This is partly because, of the tens of thousands of dams installed over 600,000 miles of rivers, the United States only uses around 2,500, or 3%, to produce electricity. (33) The 2,500 hydroelectric dams account for 48% of overall renewable energy generation. (34)

         The average U.S. hydropower plant is sixty-four years old. (35) Over 500 hydroelectric licenses will expire within the next twenty years. (36) If the licenses expire, and the plants no longer function, the United States could lose 6,000 megawatts of non-federal hydropower within the next five years. (37) The United States is now in a position where its dams are in need, or approaching the need, of significant investment. (38)

         The 1970s' environmental movement produced laws that began to constrain the operation and use of dams. (39) This was due in part to the policies of the early twentieth century, which shaped hydropower, focusing on economic development and national defense as opposed to environmental impacts. (40) While dam opponents existed during the dam construction boom, it was not until later when public opinion about the utility and environmental impact of dams shifted that dam opponents began to see changes in policy. (41) In general, current public perception of large hydropower dams is negative. (42) General public perception is negative because the potential negative externalities resulting from damming a waterway include the altering of flow regimes, the degradation of water quality, and increased fish mortality. (43) Regardless of public condemnation, large dams are not necessary to create a significant amount of clean, renewable hydro power. (44)

      2. Small Hydropower Generally

         Although the United States is unlikely to significantly develop large conventional hydropower, small hydropower facilities can satisfy a substantial portion of U.S. energy needs without the negative externalities associated with large dams. (45) All fifty states have small dams without hydropower facilities. (46) Small hydropower can be placed on just about any running water source, but the vast majority of the most plausible and efficient sites are those that involve installing a hydropower facility on an existing NPD. (47)

         Intuitively, it makes sense that installing a hydropower facility at an existing NPD would add little additional ecological impact. (48) The installation of a hydropower facility on an existing dam minimally affects the ecosystem because the original dam construction is what causes major environmental degradation. (49) Moreover, compared with large conventional hydropower, small hydropower facilities require less water flow, take up less space, and do not require reservoirs. (50)

         On a per-dam basis, powering NPDs has the greatest potential for increasing hydropower capacity. (51) An NPD's power potential is equivalent to twelve nuclear power plants. (52) Developers originally constructed the NPDs that would be targeted for hydropower generation facilities for other purposes such as navigation, flood control, water supply, and recreation. (53) Developers can add power generation capabilities to the NPD's existing infrastructure without interfering with the NPD's original purpose. (54) Therefore, the negative environmental impact resulting from construction would be minimal because the dam would not require significant alteration. (55)

         The DOE deems grid reliability and resiliency paramount factors in protecting the U.S. power grid. (56) The United States designed its grid management principles when generation could be scheduled relatively precisely to meet the appropriate energy production demand. (57) Unfortunately, increasing renewable energy sources that produce varying amounts of energy throughout the day, such as wind and solar, interfere with proper grid management, threatening grid reliability and resiliency. (58) Wind and solar energy are unpredictable because minimal energy is produced on cloudy days or days with no wind. (59) Dependable baseload generation, or the ability to produce energy at sustained levels, alleviates this issue by protecting grid reliability and resiliency. (60)

         Hydropower provides inexpensive baseload generation. (61) Some hydropower facilities can also attain maximum output relatively quickly, providing essential back-up generation during electrical outages. (62) Attaining maximum output quickly allows hydropower facilities to meet fluctuating energy demands throughout the day. (63) Furthermore, in addition to providing baseload generation, and therefore supporting a resilient and reliable grid, hydropower development will also create a large number of hydropower-related jobs. (64) If powering small NPDs avoids the extensive ecological problems associated with large dams, is relatively cheap, and will positively impact the energy grid, why is there virtually no effort to develop NPDs? (65)

   2. Small Hydropower Regulatory Process

      1. Effect of Licensing Inefficiencies

         An outdated licensing scheme makes small hydropower projects cost-prohibitive and unattractive to investors. (66) The current licensing process requires a small hydropower facility to go through the same complex, time-consuming licensing process as a major project the size of the Hoover Dam. (67) The small hydropower licensing process also takes longer and costs more money than the licensing process of other renewables. (68) Furthermore, regulatory costs can account for as much as 30% of the total project cost. (69) These factors all hinder the...