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Hydropower is the long-forgotten and under-appreciated sibling of the renewable energy family. It does not garner a fraction of the media attention of solar, and many people do not even realize it is a renewable energy source. Moreover, it was a challenge to have it incorporated into clean energy stimulus programs. According to 2008 U.S. Department of Energy (DOE) statistics, renewable energy was responsible for only 7 percent of America's power supply, and 34 percent of that amount was derived from hydropower and while only 1 percent was from solar.
However, as important as hydropower has been in the past, it has many more limitations in terms of land development due to environmental and sustainability issues
than solar, as the country shifts towards a higher degree of clean
energy. Furthermore, hydropower is a low priority renewable energy
source in desert regions of the country such as the Valley of the Sun,
where water is a premium and in limited supply.
Beyond the use of conventional hydropower technology, there is
increasing government interest in developing new power generation
derived from the ocean and in-stream kinetic energy potential; also
known as wave power. Since pumped-storage hydropower is the only
large-scale storage option available at this time, the National
Hydropower Association (NHA) argues that a large-scale increase in wind
and other variable renewable generation technologies requires building
additional pumped storage, as a stable back-up energy source, in
addition to a smart grid infrastructure. According to the Energy Information Administration,
there is 20,000 MW of operating pumped-storage capacity in the U.S.;
developers have proposed constructing another 23,000 MW. Moreover,
current U.S. hydropower generation avoids approximately 225 million
metric tons of carbon emissions from entering the atmosphere each year.
Growing interest in non-hydro renewables such as solar, wind, biomass
and geothermal is also increasing funding emphasis on the hydropower
industry. DOE has stated that to integrate the wind resources needed to
generate 20 percent of U.S. electricity by 2030, which is an unofficial
national goal, the U.S. will need an additional 50,000 MW of peaking or
storage capacity. This point enabled the NHA to successfully lobby for
including additional tax incentives for hydropower in national economic
stimulus programs. The Recovery Act extends the placed-in-service date
through December 31, 2013, for small irrigation hydro, incremental
hydropower from additions to existing hydro plants, hydropower
development at existing non-powered dams, ocean energy and in-stream
hydrokinetic technologies projects. This funding requires that
developers of these projects complete the work in five years, as is the
case for many clean energy stimulus projects.
The Recovery Act clean energy stimulus also allows hydropower projects to claim a 30 percent investment tax credit
(ITC) in lieu of a production tax credit (PTC), both of which have been
extended through 2013. The ITC is aimed at opening up more financing
for renewables projects in lieu of the tightened credit markets in the
past year. Another incentive available to a hydropower facility, if the
facility refuses the PTC and the ITC, is a grant issued from the
Secretary of the Treasury worth 30 percent of the cost of the project.
This same legislation also authorizes $1.6 billion of new clean
renewable energy bonds (CREBs), which is an option for public power
providers to the PTC. It allows them to finance development of
facilities that generate electricity from renewables such as
hydropower. Furthermore, this stimulus program also created an advanced
energy investment tax credit for companies that invest in clean energy
technology manufacturing facilities. Hydropower equipment manufacturers
are eligible to participate in the 30 percent credit
if they upgrade, expand, or re-establish a facility to manufacture
“property” for producing energy from the sun, wind, geothermal or hydro
sources. The original provision provided the tax credits only for wind,
solar and geothermal; however, the NHA staff successfully lobbied to
ensure that the definition was expanded to include “other renewable
resources;” thus, encompassing traditional hydropower and advanced
hydrokinetics associated with ocean and river currents.
Even U.S. legislation has treated hydropower as an afterthought and
oversight while developing policy for the clean energy stimulus, not
including it in the initial mix for renewable energy funding. Part of
that issue has been due to significantly less media attention and
support from the top of the Obama Administration for hydropower in
rebuilding the U.S. economy. Hydropower has a more limited supply chain than other renewables such as solar; therefore, it is less stimulative economically while it also has less exportation potential when compared to wind and solar components.
The DOE budget for hydropower
underwent severe reductions under the Bush Administration, which was
hardly supportive of any renewable sources, in general. However,
hydropower will ride the wave of increased support for clean energy in
President Obama’s recently announced budget proposal, which includes $6
billion for related technologies, along with an increase of fees and
elimination of tax breaks for oil and gas companies. However, solar and
biomass will be higher priority energy sources for desert states such
as Arizona with renewable energy portfolio standards.
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