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US hydropower industry at a crossroads with drought, aging dams, new opportunities

03 August 2021 Kevin Adler

Drought in the US West this year is exposing the vulnerability of hydropower to climate conditions, even as the Biden administration and Congress indicate support for the power source's contribution to the country's drive towards decarbonization.

Hydropower in 2020 supplied 7.3% of the US' electricity, or 291 billion kWh. This was, by far, the largest source of renewable power in the nation, according to the US Energy Information Administration (EIA), as it represented 52% of the total.

A $1-trillion-plus infrastructure plan, which could move through the Senate as early as this week, does not carve out funding for hydropower. But the $3.5-trillion budget that's coming right behind surely will. Several bills have been introduced in Congress, with bipartisan backing, to invest in maintenance of existing dams to support energy production, manage water flow, and mitigate environmental concerns.

While political support is strong, the US hydro sector faces long-term challenges that include managing capacity during drought conditions. Most of the top locations for dams have been developed, and more existing dams than ever are up for license renewal in the coming decade. And environmental researchers have pointed out that dams are not 100% carbon-free, as the reservoirs they create remove forests and grasslands that captured carbon and, in some cases, the decaying plant life in the dams is a substantial source of methane as well.

These factors suggest that a major increase in US hydropower capacity will be hard to achieve.

Benefits

The National Hydropower Association (NHA) contends hydropower brings critical reliability to a US economy looking to reduce carbon emissions through renewable energy.

"It's clear that hydropower and pumped storage will play a key role in achieving carbon emission reduction targets. Hydropower is the renewable resource that integrates other renewables like wind and solar onto the electrical grid," said NHA Director of Communications LeRoy Coleman in an email to Net-Zero Business Daily on 22 July.

Hydropower offers quick, reliable startup capabilities that can balance the irregular cycles of wind and solar.

"Hydropower units can perform startups quicker and less expensively than most other generation technologies, except combustion turbines. This ability makes them an attractive option to act as peaking units to fill short gaps in the supply-demand balance," said the US Department of Energy's (DOE) Office of Renewable Energy and Energy Efficiency.

A DOE study published in January 2021 found that pumped-storage units typically started once per day, on average, during the years 2017-2019, indicating their ability to balance grid operations. Regular hydro units, which tend to provide baseload power, started anywhere from 12 to 100 times per year, with mid-sized units (10-100 MW) typically starting more often, DOE found.

DOE also said that hydropower represents 40% of the nation's "black start" resources; that is, power units that can start without relying on outside support from the grid, which makes them valuable for reliability purposes.

Particularly in high-demand periods such as summer, the ability of hydropower to balance loads also saves consumers money. A study by IHS Markit found that a shortfall of 3-5% of hydropower in the summer could cause wholesale power prices within a region to rise by 20%. And if that hydro shortfall coincides with temperatures 2.3 degrees Celsius above historic norms, prices could rise by as much as 50%.

Maintenance mode

Yet, to a large extent, the story of US hydro over the next few decades will be one of preservation and maintenance, rather than growth.

"In our outlooks, we essentially assume a build that is consistent with recent history—some small expansion of the fleet that is largely coming from upgrades at existing sites or some relatively small new projects," said Douglas Giuffre, IHS Markit director, research and analysis, power. "It seems to me that the appetite for taking on megaprojects like new nuclear in the US or new, large-scale hydro is waning…. With other clean energy options so much cheaper, it's hard to envision another wave of large-scale hydro projects in the US."

Hydropower capacity has grown steadily, though modestly, in the US in the last decade. DOE reported in January 2021 that capacity increased by a net 431 MW between 2017 and 2019 and a net 1,688 MW between 2010 and 2019, through capacity increases at existing facilities, new hydropower in conduits and canals, and by powering up non-powered dams.

That latter increase represents a gain of barely more than 2% in relation to the nearly 80 GW of hydropower capacity in the country.

As of the end of 2019, DOE said that an additional 1,490 MW, from 217 projects, was in the US development pipeline.

Source: US Department of Energy

IHS Markit sees stable US hydropower production for the next two decades. In IHS Markit's "Fast Transition" scenario, which was updated in June, it forecasts a slight decline in US hydropower output for the next two decades: from 288,242 GWh in 2020; to 267,368 GWh in 2030; to 263,372 GWh in 2040.

More federal investment needed

Even keeping hydro at current levels will require major investment.

In April, NHA joined the Hydropower Reform Coalition, the Association of State Dam Safety Officials (ASDSO), the Union of Concerned Scientists, and others in writing to the Biden administration to outline the investments needed to keep hydropower prominent in the US energy mix.

The organizations asked the administration to invest $63.17 billion over 10 years to preserve most of the nation's existing hydropower dams and restore 20,000 miles of rivers that have been affected by dams (not all of which are hydro dams). Along with hydro upgrades and new construction, this plan would maintain US hydropower capacity at today's level of about 80 GW of power and 23 GW of pumped hydro storage.

Their plan responds to the reality that the hydro industry has an unprecedented number of dams that are facing relicensing because of their age. According to a study by ASDSO in 2019, the average age of the 90,000 dams in the US (hydro and non-hydro) is nearly 60 years.

From now through 2030, the US Federal Energy Regulatory Commission (FERC) will need to conduct relicensing for 281 hydro dams and pumped storage units, which is more than three times as many as it reviewed in the 2010s, according to testimony during a July FERC oversight hearing held by the US House of Representatives' Energy and Commerce Committee. The relicensing will affect 4.7 GW of dam power and 9.1 GW of pumped storage, or more than one-third of total US pumped storage capacity.

One of the coalition's requests of the Biden administration is that it increase funding for FERC and other agencies that oversee dams to ensure timely relicensing and safety checks. "Dam infrastructure is aging, and increased investment is required to support dam safety upgrades, facility removal, and environmental and other improvements," the coalition said.

Potentially, some aging dams can be retrofitted to supply power as part of their relicensing. The Red Rock Dam on the Des Moines River in Iowa was one such success story, as it began to deliver power in October 2020, more than 50 years after the dam was built for flood control. But it took a decade from proposal to completion, and the dam's capacity is a mere 36.4 MW, with a peak of 55 MW.

But adding hydropower capacity to an existing dam must be done thoughtfully as well, said Colleen McNally-Murphy, executive director of the Hydropower Reform Coalition, which represents more than 160 conservation and recreation organizations that seek to protect and restore rivers affected by hydropower dams. The groups educate and lobby for a "more nuanced look at hydro," she said.

"Not all hydropower is created equal. Some projects really do allow for the rapid onset and drawdown of solar and wind—they can do that balancing. But a lot of projects do not have that technology built into them," McNally-Murphy said.

"There are some projects that we think have a place in our grid, in our overall energy reliability picture. But let's make sure that the dams [where] we … are performing maintenance and retrofitting make sense," she said.

Reality

The ambitions of maintaining hydro capacity, increasing pumped hydro, and improving river flow are running into the difficult reality of an inadequate water supply in the Western US. With tensions rising between farmers, environmentalists, and residents in the West, the hydropower industry is working harder than ever to show how its activities are compatible with healthy rivers and ecosystems, while also delivering clean power that the nation needs.

California is perhaps ground zero for this clash. During the 2010s, the state generated 7-19% of its electric power annually from hydropower. This wide variation indicates the impact that drought conditions can have in the state—and they're happening with a vengeance in 2021.

This year, 100% of California has been declared as reaching drought conditions, and the EIA reported that California's hydropower production for 2021 is expected to be down by 19% year on year at 13.6 million MWh from 16.8 million MWh last year. Compared with 2019, the picture is even worse, as production in the first four months of 2021 was down 71% from two years ago.

Source: US Energy Information Administration

To cite one anecdote, California's Edward Hyatt Power Plant, which relies on water from the Lake Oroville dam, is likely to shut down in August due to low water levels, according to the California Department of Water Resources. This would be the power unit's first shutdown since it began operation in 1967.

It's an interstate problem as well. In July, the US Bureau of Reclamation used its authority under the 2019 drought contingency plan to release water from reservoirs upstream from Lake Powell, which straddles the border of Arizona and Utah, in order to keep water depths high enough to drive the turbines in the Glen Canyon Dam. The drought plan was worked out with officials from Colorado, New Mexico, Utah, and Wyoming, which indicates the complexity of any water-related decision.

The bureau said that releases of water in other reservoirs could continue for the rest of 2021.

Biodiversity and free-flowing rivers

As if drought conditions aren't enough of a concern, there is a growing movement to demolish dams (hydro and non-hydro) to restore rivers to their natural flows and protect biodiversity.

In a precedent-setting move, FERC on 17 June approved a dam license transfer that will allow for the removal of four dams on the lower Klamath River in Oregon and Califor­nia, the largest-ever dam removal project in the US. Advocates for the removal project cited the harm to salmon runs and concerned Native American tribes.

On 27 July, the formal transfer of the dams from PacifiCorp to the Klamath River Renewal Corporation was approved by Oregon, the last of the four states that needed to sign the pact.

The four dams—called Iron Gate, Copco No. 1, Copco No. 2 and J.C. Boyle—have a combined capacity of about 163 MW. Permitting for the demolition work is underway, and removal could begin in 2023. Early cost projections are $434 million-450 million.

As McNally-Murphy explained, because many dams are originally licensed for 50 years, those coming up for renewal now predate crucial environmental laws such as the 1972 Clean Water Act and 1973 Endangered Species Act. "The licensing process is the opportunity for us to bring these projects up to where they need to be," she said. "In some cases, the cost of making those necessary changes is not worth it economically. So many projects were marginal already, and companies do not have the money [for] safety and maintenance upgrades, and don't have money to do the environmental mitigation they have to do."

Stakeholders in the Northwest are now discussing breaching four dams in Washington State to protect salmon on the Snake River. Some experts say salmon on the Snake River are near extinction because so few can make it past eight dams to spawn.

Washington Governor Jay Inslee and a spokesperson for US Senator Patty Murray of Washington, both Democrats, told a summit of Northwest tribal leaders in June that they want to ask the what-if-we-close-the-dams question. At a public forum, Inslee called for "a regional discussion for how to replace these services" to take place "in the months ahead."

Also onboard is Idaho Republican US House member Mike Simpson, who has proposed the Columbia Basin Initiative, which would allow for the removal of the four dams, in exchange for relicensing the other hydro dams on the river, replacing the lost power with other renewable sources, and solutions for farmers facing losing irrigation water.

But closure won't happen without a fight. US Representative Cathy McMorris Rodgers, Republican-Washington, said at a congressional hearing in June that she believes the Snake River hydro dams are critical to power reliability, noting that they "picked up the slack" in winter 2020-21 when a hydro dam on the Columbia River in the state of Washington was not operating.

That type of message resonates in California as well, where rolling blackouts in August 2020 showed that the state's power grid is sorely stretched. Reducing hydro power would stretch the system further.

"It's important to note that while hydropower's overall generation in California may decrease as a result of the drought, hydro is still providing clean energy when it's needed. The peak demands, the huge ramps during the evening, hydropower is providing critical delivery and flexibility to the grid when it matters the most, and that shouldn't be taken for granted," NHA's Coleman said.

But siting a new dam or pumped hydro storage project anywhere in the West will be a challenge. Just this month, Pumped Hydro Storage LLC withdrew applications at FERC to construct two dams inside the Grand Canyon National Park, known as the Little Colorado River and Salt Trail Canyon dams. Both dams had had received preliminary permits in June 2020.

"Pumped Hydro Storage cited strong opposition from the Navajo Nation, environmentalists, and others, as well as investment risks," said the Grand Canyon Trust, in applauding the withdrawal.

Congress

Congress is trying to provide some solutions to the competing power, water, and biodiversity needs. In June, Senators Lisa Murkowski, Republican-Alaska, and Maria Cantwell, Democrat-Washington, introduced the Maintaining and Enhancing Hydro­electric and River Restoration Act of 2021 to provide federal financial backing for both removing envi­ronmentally damaging dams and improving dams that are ecologically sound and providing power to the grid.

The bill would create a new 30% federal tax incentive to sup­port efforts by private, state, local, and non-profit groups to demolish and remove obsolete river barriers, with the owner's consent. Also, dam owners could use a 30% tax credit on projects to improve safety, reduce environmental impacts, and harden their links to the power grid.

In the US House, Representative Annie Kuster, Democrat-New Hampshire, introduced on 9 July the Twenty-First Century Dams Act (HR 4375), which would invest $25.8 billion over five years on "enhancing the safety, grid resilience benefits, and power generating capacity of America's existing dams while also providing historic funding to remove dams that are no longer necessary."

At the oversight hearing for FERC held on 28 July by the House Energy and Commerce Committee's Energy Subcommittee, McMorris Rodgers brought up the issue of dam relicensing. FERC Chairman Richard Glick agreed with her that "the process is too long," and he said that Congress can reform rules about how government agencies can collaborate on permitting.

Even with reforms to the permitting process, McNally-Murphy pointed out that it's unlikely that hydro dams can be approved as quickly as battery storage, which is rapidly on the rise.

In June 2018, Vistra Energy announced what was at the time going to be the world's largest battery storage facility, 300 MW of capacity at the Moss Landing power plant in California. The storage facility opened a little over two years later in November 2020, and Vistra has announced plans for another 100 MW at the site. "You can't move like that with pumped-hydro storage," McNally-Murphy said.

Getting smarter

Yet the bottom line, according to NHA's Coleman, is that hydropower is necessary for the country's clean energy future. "From year to year, hydropower generation will always vary depending on factors such as precipitation and timing of snowmelt," said Coleman. "Yet despite regional fluctuations from year to year, total US hydro generation has remained stable."

It's all about getting smarter and adjusting to climate change, Coleman said, as operators are "incorporating climate resilience strategies to mitigate vulnerabilities to generation."

Posted 03 August 2021 by Kevin Adler, Editor, Climate & Sustainability Group, IHS Markit

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