Solar energy has been the fastest growing source of renewable electricity in the United States since 2013[1]. Before that, wind energy held that distinction for at least a decade[2]. However, both suffer from well recognized issues of intermittency. The rate of development of hydropower pales in comparison, notwithstanding studies suggesting that the levelized cost of hydropower is the cheapest of any renewable or fossil fuel resource, at $.02 kWh, and that it both has quick-start capability and provides the largest source of energy storage today [3]

The development in the U.S. of very large hydro power projects like the 1930’s era Hoover Dam, with its 2,080 MW of installed capacity, is undoubtedly behind us, but recent studies by the U.S. Department of Energy (DOE) suggest that the opportunity exists to add significantly to the nearly 100,000 MW of hydro capacity that supplies seven percent of U.S. power today[4]. One study looked solely at existing, non-powered dams (NPDs). Of the existing 80,000 such dams, DOE concluded that more than 54,000 deserved a further look at their power generating potential. It concluded that such dams could add 12,000 MW of capacity, including in many regions of the country that have not generally been seen as good candidates for other renewable resources[5]. It further concluded that, with minimal new construction, the top 100 such NPDs could contribute 8,000 MW of additional power[6]. A second DOE study, published in 2014, concluded that currently undammed rivers could add as much as 84,700 MW of capacity to the U.S. grid[7].

The U.S. may be particularly well-positioned to add to hydropower production, particularly from NPDs, but studies suggest that the rest of the industrialized world could increase hydropower production by about 30 percent and that hydropower could provide the developing world with five to ten percent of its power needs[8]. The International Energy Agency indicates that Africa has developed only five percent of its hydropower potential and Asia only 18 percent[9].

Environmental concerns associated with the flooding of land and impacts on fish are among the most common objections raised in connection with new hydropower dams, but those objections have little application where the dams have long been in place for flood control and agricultural reasons. High capital costs can also be a concern, but those likewise have substantially reduced relevance when a dam is already built and operating for other purposes. Nevertheless, hydropower development has had difficulty gaining a foothold among the new renewable resources being added to the grid. In the U.S., regulatory burdens are often cited as a key explanation. 

The U.S. Congress and the Federal Energy Regulatory Commission (FERC), which is responsible for licensing most hydropower facilities, have recently taken some small steps that could mitigate some of the regulatory burdens long associated with hydropower development. The Hydropower Regulatory Efficiency Act of 2013 is designed to reduce the regulatory burden on small and NPD hydropower projects in particular[10]. Among other things, the Act:

  • Increases the limit for the small hydropower licensing exemption from 5 MW to 10 MW
  • Creates a licensing exemption for qualifying small conduit hydropower facilities 
  • Authorizes FERC to create exemptions for private conduit facilities up to 40 MW
  •  Allows exemptions for small conduit projects on federal lands; and
  • Allows FERC to extend the duration of hydropower preliminary permits, which in turn permits an applicant to preserve its exclusive right to construct a hydropower project, thereby affording additional time to complete project development[11]

FERC has implemented these authorities in newly adopted regulations[12]. The Act also required FERC to study the feasibility of a two-year licensing process for hydropower development at NPDs, and in August 2014, FERC approved a pilot project to test the proposed two-year process[13].  

Although these steps are small, they show that U.S. policy is moving in the right direction to enable growth in the hydropower industry commensurate with its value as a low-cost, low-carbon source of energy. This may be an opportune time for renewable energy developers to give hydropower projects another look.