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Odd Man Out: Why Hydroelectric Power Isn’t Considered Renewable

Eric Sharpe's picture
Editor, Researcher Energy Ink Magazine

I am the Editor and Chief conrtibutor of Energy Ink Magazine which covers the energy industry in the American Plains and Rocky Mountain region.  Our deeply researched coverage has truly impacted...

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A renewable, clean energy source should be simple to identify.  If the source can not be depleted and produces virtually zero greenhouse gases, it meets the two standards of definition of “clean and renewable.” Regardless of seemingly meeting this standard, the world’s largest electricity producing “renewable” energy resource is not considered renewable in  many political circles.

A trend has formed in the creation of state governments’ “Renewable Portfolio Standards” (RPS) for electricity generation.  Since 1994, some 30 states (and hundreds of cities) have adopted binding RPSs with a majority passing such legislation since in 2004. Seven other states have adopted non-binding RPS “goals.”  These standards call for power providers in some states to increase their use of renewable energy by as much as 33% by 2025.

The common theme among these standards: hydroelectric power does not count as a renewable energy resource.  The Montana RPS called for 15% of its energy to come from renewable resources such as wind, biomass, and solar, by the year 2015.  Nearly 40% of Montana’s energy production already came from hydroelectric power.  Washington state’s goal is 15% by 2020, yet hydropower already accounts for 76.6% of its power production.

State after state that is already reliant on hydroelectric power to help fuel its commercial and industrial needs categorize hydroelectric power as a non-renewable energy resource.  It begs the question:  Why is hydroelectric power not considered renewable in most state’s RPS or by more strictly complicit environmental organizations?

Sustainability

It is an added third benchmark of the definition of “renewable” which seems to disqualify it:  the issue of sustainability.  This term does not refer to hydroelectric’s ability to continue to produce energy.  In environmental terms, sustainability refers to the environment itself.  In ecology, “sustainability” is defined by eco-friendly organizations such as Cool Earth Solar as “how biological systems endure and remain diverse and productive.

The Government’s Energy Information Administration (EIA) is more specific in defining ecological sustainability as that which “creates and maintains the conditions under which humans and nature can exist in productive harmony, that permit fulfilling the social, economic and other requirements of present and future generations.”

Though both definitions are roughly the same, interpretations of the concept of sustainability in relation to hydroelectric power stand on opposite sides.  To many environmentalists and nearly all state RPSs, hydropower is not a “sustainable” renewable energy resource.

To the EIA, Hydropower is indeed sustainable, and thus, a renewable energy resource.  What this means is that the Federal Government’s lead agency on energy statistics counts hydro as a renewable.  Then again, NREL (the National Renewable Energy Laboratory) which is “the only federal laboratory dedicated to the research, development, commercialization and deployment of renewable energy and energy efficiency”… “doesn’t perform any research in hydroelectric power technologies” according to their website.  They are the leading authority on renewable energy development.

Some environmental groups including the Sierra Club do support hydropower, but only in the realm of the “small-scale.”  For any medium to large scale dam project, many environmentalists see trouble for the ecology. When a dam is constructed to facilitate a hydroelectric project, the biological system which had existed in the formerly free-flowing river prior to a dams construction is disrupted, or in some cases, destroyed.  It does not matter if a new, sustainable, and even beneficial biological hierarchy is created as a result.  The point of argument is that a dam disrupts existing environmental conditions.

Further, many environmentalists contend that some hydro-powered facilities, which include the reservoir powering it, indeed do not meet the “zero greenhouse gas” benchmark either.  When a lake or reservoir is created for a conventional hydroelectric project, it results in what is called “reservoir emissions.” As the water sits still in the reservoir, plant material that was present before flooding begins to decay and release methane into the atmosphere.

The arguments against adding this third benchmark (sustainability) in defining a renewable energy resource are important.  Despite altering flowing rivers and potentially disrupting an ecological system, most certainly the damming of a river can create new and important ecological opportunities for wildlife and the environment.  Socially, dams also perform a valuable duty in preventing flooding which proves deadly and economically devastating to countless communities around the globe. The real question then as to whether hydropower should be considered renewable would seem to hinge on the issue of “trade-offs” with the environment and society; benefits versus losses.  Both political parties seem to ignore this question.

Politics

The argument is far more complex than the issue of sustainability.  Frankly, the environment seems to have nothing to do with it when considering the political motivators driving hydroelectric dams into the “non-renewable” category.

The advent of the Renewable Portfolio Standard took hold during the past Bush Administration.  Twenty states adopted some form of RPS between 2001 and 2007, and seven were adopted prior (as early as 1983 (Iowa)  and another six in the late 90’s).

The rush to set standards is, on the surface, plainly stated in Montana’s RPS which reflects many state RPSs goals: to promote economic growth, energy self-sufficiency and environmental benefits.

69-3-2001. Short title... “Montana Renewable Power Production and Rural Economic Development Act”.

69-3-2002. Findings. The legislature finds that:

     (1) Montana is blessed with an abundance of diverse renewable energy resources;

     (2) renewable energy production promotes sustainable rural economic development by creating new jobs and stimulating business and economic activity in local communities across Montana;

     (3) increased use of renewable energy will enhance Montana’s energy self-sufficiency and independence; and

    (4) fuel diversity, economic, and environmental benefits from renewable energy production accrue to the public at large,...

 

Included in the body of the bill are restrictions on the inclusion of substantial hydroelectric power production.  Basically, hydropower dams generating above 10 MWh don’t count.  That means that about 98.7% of all current hydroelectric power generation in the state can not be counted as a renewable energy source.

The rush to establish RPSs seems to be born of social pressures and sincere environmental concerns at the state level.  Yet a 2008 Harvard study found that:

the policy appears to address global issues of sustainability and climate change more than localized pollution concerns, and hence is not an obvious state issue.

Underlying those motivators are politics and money.  A comprehensive research paper published in 2010 in The Energy Journal, (Vol. 31, No. 3.) entitled “Why Do States Adopt Renewable Portfolio Standards?” provides great insight to the real motives behind the now popular RPS. They conclude:

RPS adoption seems to be driven more by political ideology and private interests than by local environmental and employment benefits, raising questions as to when environmental federalism serves the public interest.

In other words, the RPS carries with it as much political baggage as any other “policy tool.” 

Money

These findings speak to the social pressures and environmental concerns for the globe.  But financial components which may be driving the RPS phenomenon is less obvious.

Often driving the adoption of an RPS are efforts to “wring economic development benefits” from it.  That much is clearly stated in the goals of several state’s RPS.

Certainly, compliance penalties must be in place for such standards to be effective, and so, failure of a utility company to comply with the standards will cost them.  The potential income to state coffers is difficult to estimate, but could be immense.  The penalty for compliance failure in Montana is:

“… $10 for each megawatt hour of renewable energy credits that the public utility or competitive electricity supplier failed to procure.”

In Texas, it’s “$50 per MWh that is deficient.

In a report created for the Montana State Energy and Communication Committee, it seems Montana’s largest utilities are in danger of such fines:

While renewable generation increased since the passage of Montana’s RPS, the portfolio’s of Montana’s two largest regulated utilities do not demonstrate a decrease in commitment to fossil-fuel generation.

Regardless, Northwestern Energy was meeting the benchmark goals of the standards as of 2012 in that they met the “10% (by 2010) RPS requirement with a mixture of wind, banked renewable energy credits, and small hydroelectric projects.”

Of that generation, less than half (46%) came from Montana based generators.  All other had to be purchased from other states, which doesn’t exactly “enhance Montana’s energy self-sufficiency and independence” as stated in the Montana RPS goals.

With the $900 billion purchase of PPL Montana’s 11 hydroelectric facilities last February (still under review by the Public Service Commission), Northwestern Energy seems to defy the Montana State Energy and Communication Committee conclusion that they “do not demonstrate a decrease in commitment to fossil-fuel generation.”  Their efforts actually seem “real world” rather than political considering those dams electrical output will not count toward their renewable credits. Many question the purchase from a business perspective because of this but it must be said that the company is investing in Montana’s true renewable future.  Clearly, money is being spent to purchase renewable energy for use on the grid, even though it doesn’t qualify as renewable in the MT RPS.

Money is also being spent to purchase renewable energy credits.  Once the electricity provider has fed the electricity into the grid, Renewable Energy Certificates (REC) are received by those providers (1 credit for 1MWh produced. ) These credits can then be sold on the open market as a commodity.  It works much like the failed Federal proposal for Cap and Trade in which carbon credits could be traded by fossil fuel energy producers to stay in compliance.

Finally, if a utility misses its final 15% goal, the potential fines will result in money spent.  Potentially millions. 

Failed Fight

Conservatives in several states pressed for reform of their RPSs by attempting to pass bills which would add hydroelectric as a qualifying renewable.  None have succeeded, even in traditionally conservative states.  But what may be surprising to many is that the RPS is not a “blue state” phenomenon.  In other words, the Renewable Portfolio Standard is supported by both Democrats and Republicans.

According to the Governor’s Wind Coalition, “Of the 37 states with standards or goals, 22 had “mixed governments” at the time of enactment… [of] the remaining 15, eight were all Democrat and seven were all Republican.”

According to Forbes Magazine, Republican Kansas Governor Sam Brownback, “is a vocal clean energy supporter and one of nine Republican governors in the Governor’s Wind Energy Coalition.”  Last year, Brownback clearly stated his support:  “Investment in the renewable energy economy is creating jobs across all employment sectors.

But is it?

Following the money is difficult.  Numbers are easily skewed and often based on exaggerated claims.  The Judith Gap Wind project in Montana made claims that nearly two hundred full time jobs would be created with its construction and completion in 2005.  Evidence suggests that most of these jobs were short-lived and filled by out-of state contractors.  Regardless, it is estimated that Wheatland County, home of the turbine project, takes in $1.2 million annually from wind-assessment taxes.

Despite State RPSs affecting about two out of every three American utility bill payers, little is known about the actual benefits being seen by renewable standards, both economic and environmental.  Each state government’s reports on their RPS progress make claims of measurable success in both jobs gained and carbon output reduced.  But several research efforts by independent think tanks contradict these claims.  The Manhattan Institute for Policy Research, a well respected, though typically conservative organization on policy, reported in 2012 that:

There is growing evidence that the costs may be too high—that the price tag for purchasing renewable energy, and for building new transmission lines to deliver it, may not only outweigh any environmental benefits but may also be detrimental to the economy, costing jobs rather than adding them.

The 2010 research paper in The Energy Journal found a similar result: “economic analysis suggests they (RPSs) are not first-best policies.”

The Manhattan Institute continued their assessment in stating that the RPS is essentially a “de facto carbon-reduction tax” that is straining state economies by leading to higher utility bills for consumers.  They report that coal “dependant states” with an active RPS has lead to increases in such costs by “54.2 percent between 2001 and 2010, more than twice the average increase experienced by seven other coal-dependent states without mandates.”

If true, the question of the real motives behind establishing an RPS comes into question.  The Wichita Eagle makes their assumption as to motives clear:  “...wind tax credits have helped fuel billions of dollars of investment in wind projects in Kansas in the past few years.”  The implication then is that the RPS has indeed had a positive economic impact on states, but not necessarily for consumers.  Kansas is also home to large wind turbine and tower manufacturing companies including Siemans.  Actually, most of the heavy concentration of turbine and wind component companies reside in states with an RPS. It is evident that lobbyists for wind energy have become a force in American politics. 

The Consequences for the Rest of Us

Where does hydroelectric power fit in all of this?  No where.  Including hydropower in an RPS would lessen the impact of any benchmark on wind energy development.  Speaking in relative terms, hydropower is not being allowed to compete with wind energy for financial reasons, not environmental concerns. Even with massive tax credits to the wind generating industry, hydropower is still the less expensive energy source of the two in the near term.

Without question, the cleanest energy source on the planet, including solar and wind, are “Run of River” Hydroelectric power facilities.  It meets the strictest definition of “renewable.”  Typical Impoundment Dams can have a tremendous long term negative impact on an ecology, but when constructed with local environmental sensitivity, they are the largest and cleanest energy source on the planet.  This article is not an argument for damming every river in the region to meet our energy needs.  It is about explaining why hydroelectric power is not being developed, let alone counted, as a true natural resource in order to benefit the region - despite the goals of Renewable Portfolio Standards of reducing carbon emissions. Hydroelectric potential in our region and the United States is significant.  Most of America’s dams are “unpowered” but could be “retrofitted”.  Simply, hydroelectric power is neither being viewed nor pursued with any sense of reason.  Whether accepted as a renewable or not, it is being ignored, and thus, as neither a renewable, nor a fossil fuel, it is simply “odd man out” in the nation’s quest for energy independence. 

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