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The Future of Hydropower in the Pacific Northwest: Challenges and Opportunities

October 12, 2016

The U.S. Department of Energy (DOE) recently released a report detailing a vision for increasing the nation’s hydropower capacity by 50% by 2050. Despite a variety of technical, environmental, and market challenges to be overcome, the report concludes that there remain significant opportunities for future hydropower development in the United States. Those opportunities come particularly through upgrades to existing hydropower facilities, adding power generation capacity to existing dams and canals, and development of new pumped storage capacity. In the Pacific Northwest, the nation’s hydropower leader, the potential for new hydro development in undammed stream reaches is limited largely due to environmental constraints associated with fish habitat protections. However, there are still significant regional opportunities to optimize the use of existing infrastructure to increase hydropower capacity. In particular, through development of in-conduit hydropower and pumped storage hydropower facilities, the region could reap benefits ranging from increased grid reliability, improved ability to incorporate intermittent renewable power sources like wind energy, and reduced carbon emissions.

The Department of Energy’s Hydropower Vision

In July 2016, theDOE’s Office of Wind and Water Power Technologies released its Hydropower Vision: A New Chapter for America’s 1st Renewable Electricity Source. This report represents the culmination of the agency’s first comprehensive analysis to evaluate the future of hydropower in the United States, focusing on continued technical evolution, increased energy market value, and environmental sustainability. Undertaken through a broad-based collaboration with a wide variety of stakeholders, the Hydropower Vision initiative had four principal objectives:

  • Characterize the current state of hydropower in the United States, including trends, opportunities, and challenges;
  • Identify ways for hydropower to maintain and expand its contributions to the electricity and water management needs of the nation from the present through 2030 and 2050;
  • Examine critical environmental and social factors to assess how existing hydropower operations and potential new projects can minimize adverse effects, reduce carbon emissions from electricity generation, and contribute to stewardship of waterways and watersheds; and
  • Develop a roadmap identifying stakeholder actions that could support responsible ongoing operations and potential expansion of hydropower facilities.

The Hydropower Vision analysis concludes that U.S. hydropower could grow from 101 gigawatts (GW) of capacity to nearly 150 GW by 2050, as modeled based on certain assumptions regarding technological improvements, environmental constraints, and market factors.[1] Under this scenario, growth would result from a combination of 13 GW of new hydropower generation capacity (upgrades to existing plants, adding power at existing dams and canals, and limited development of new stream-reaches), and 36 GW of new pumped storage capacity. While ambitious in scope, such growth is anticipated to have considerable benefits, such as a savings of $209 billion from avoided greenhouse gas (GHG) emissions, increased grid reliability, and air quality improvements.

The Current State of U.S. Hydropower

While other renewable energy sources, particularly wind and solar, have expanded dramatically in recent years, hydropower production has largely leveled off since 1990 with very little new capacity installed. Instead, the majority of hydropower generation was installed between 1950 and 1990, with average total energy produced by hydropower plants remaining relatively consistent for several decades, at around 275 TWh per year. As power demand has risen, coal, natural gas, nuclear and other sources have been added to meet the new demand, and hydropower’s share of the amount of net total United States electricity generation has decreased dramatically, from 30% in 1950 to 6% in 2015.[2] Despite this relative decline, however, hydropower still provides approximately half of all U.S. renewable power.

In the Pacific Northwest, hydropower has a long and particularly important history, and it remains an important regional power source. In 1889, Portland streetlights were electrified via the first long-distance transmission of electricity from hydropower from the Sullivan Plant at Willamette Falls, 14 miles away. Today, Oregon, Washington, and California have the most installed hydropower capacity (~40 GW in 565 plants) in the country. According to the Hydropower Vision report, the Columbia River basin alone produces more than 40% of all U.S. hydropower generation, including the highest capacity generating facility in the United States, the 6.9 GW Grand Coulee Dam.

Opportunities for Optimization

The Hydropower Vision laid out several key insights regarding the role of existing and future hydropower in the U.S. power sector. First, the report identified the high value of existing hydropower facilities, providing low-cost, low-carbon, renewable energy as well as flexible grid support services. In addition, hydropower has significant near-term potential to increase its contribution to the nation’s clean generation portfolio through optimized use of existing infrastructure. Significant potential also exists for new pumped storage hydropower to help meet grid flexibility needs and support increased integration of variable generation resources, such as wind and solar. Finally, the DOE report concludes that the economic and societal benefits of both existing and potential new hydropower are substantial and include job creation, cost savings in avoided mortality and economic damages from air pollutants, and avoided GHG emissions.

Importantly, increasing the nation (and region’s) hydropower capacity does not significantly rely on building new dams in free-flowing river reaches. Instead, most of the projected gains come from upgrading existing hydropower facilities with more efficient, modern technological innovations. The vast majority (~97%) of the more than 87,000 existing dams in the United States do not have hydropower generation plants installed. The Hydropower Vision finds significant potential to add hydropower generating capacity to existing non-powered dams.

In-Conduit Hydropower

There are also significant opportunities to develop low-impact, in-conduit hydropower development in existing water supply pipes and canals. These mostly small, in-conduit hydropower opportunities are underutilized resources that can, in many circumstances, be developed with minimal changes to existing infrastructure and water delivery operations. With thousands of miles of pipes and canals, particularly throughout the Western U.S., significant opportunities still exist to develop relatively simple, environmentally-sensitive in-conduit hydropower.

Changes to federal law enacted several years ago have also helped to streamline the federal regulatory process for small conduit hydroelectric projects. The Hydropower Regulatory Efficiency Act of 2013, PL 113-23, authorized streamlined Federal Energy Regulatory Commission (FERC) regulatory actions on small non-federal conduit hydroelectric projects. The Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act, PL 113-24, eased the regulatory burden on the development of in-conduit hydropower facilities on Reclamation canals, critically important in the West. Advocates for the legislation argued that streamlining the permitting process would make it easier for Western agricultural water users to pursue practical small-scale hydropower generation projects. Increased revenues from hydropower sales can also provide a new source of funding for operating, maintaining, and rehabilitating aging water delivery infrastructure.

Two Oregon examples include the Juniper Ridge and Ponderosa hydropower projects. The Juniper Ridge Project, constructed by the Central Oregon Irrigation District in conjunction with a 2.5-mile-long canal lining project, has an installed capacity of 5 MW.[3] The Swalley Irrigation District’s Ponderosa Project has an installed capacity of 0.75 MW.[4] Both projects tap into a previously un-utilized resource, generating power during the irrigation season when irrigation water is already being conveyed in the canals.

Further, the benefits of in-conduit projects are not limited to agricultural water delivery systems. For example, in early 2015 the Portland Water Bureau and the City of Portland, Oregon began operating an in-conduit hydropower system on the City’s large 42? gravity-fed main water line. This project was the first in the U.S. to secure a 20-year power purchase agreement for electricity produced by in-pipe hydropower in a municipal water pipeline. The system is expected to produce 1.1 million kWh of electricity per year. Significant opportunities for new in-conduit hydropower development remain in other municipal water systems.

Pumped Storage Hydropower

Another type of non-traditional hydropower with the potential for substantial growth in the coming decades is pumped storage hydropower (PSH). Pumped storage is a hundred year old technology based on a very basic concept: When power is plentiful and cheap, use it to pump water uphill; when power is limited and expensive, release the water downhill, turning turbines to generate electricity on-peak. A normal setup uses excess electricity — such as power generated from wind turbines during a blustery night — to pump water from a lower reservoir to a reservoir at a higher elevation. Then, when the wind stops blowing or electricity demand spikes, the water from is released from the upper reservoir to spin hydroelectric turbines.

From the 1950s into the 1980s, pumped storage systems, such as the Ludington Pumped Storage project in Michigan, were often built as companions to large baseload power plants, helping utilities capture the full value of a high, steady stream of output despite the ebb and flow of demand from day to night and on weekends. According to the U.S. Energy Information Administration, some forty pumped storage plants now provide about 22 GW of storage capacity in the U.S. – but a large new system hasn’t gone into service in 20 years.[5]

Pumped storage has, however, had some recent international success. For example, in 2013, Spanish utility Iberdrola expanded its $1.3 billion Cortes-La Muela hydroelectric scheme, which uses surplus electricity to pump water from the Júcar River to a large reservoir 1,700 feet above the river. When demand rises, the water is released to generate electricity. The 1,762-megawatt pumped storage generating capacity, Europe’s largest, is part of a hydroelectric complex capable of powering about 500,000 homes a year. While much of the recent conversation around energy storage centers on the development of new battery technologies, more than 98 percent of global installed energy storage remains pumped storage.[6]

As the DOE has emphasized, PSH facilities are not traditional baseload generation facilities, but instead generally serve two main functions: (1) providing energy storage and shifting system demand from peak to off-peak periods; and (2) providing backup capacity in case of outages of large thermal or nuclear generating units. PSH can also help reduce curtailment of excess generation by providing load and energy storage, thus enabling greater integration of variable generation resources into the system, such as wind or solar. According to the DOE, PSH facilities also typically have fewer operational and environmental constraints than hydropower facilities. PSH plants can start up quickly and have high ramp rates, providing high generating capacity in a short time period and contributing to greater flexibility and reliability of power system operation. Thus, there are great opportunities for developing PSH to assist in integrating large amounts of intermittent renewable power sources, such as wind and solar.

Challenges Facing Hydropower Development

Environmental considerations and the lack of viable sites for new large dams limit the likelihood of significant increases in hydropower generation from the development of new facilities on undeveloped stream reaches. Assessments of new stream reach development (NSD) potential at the national scale account for factors that preclude development, such as designation as a National Park, Wild and Scenic River, or Wilderness Area (which often are related to water resources). However, sites that appear promising when evaluated at the national scale still require comprehensive feasibility assessments at watershed or basin scales. A detailed site assessment must consider, for example, the potential presence of threatened and endangered species, cultural sites, and other sensitive or protected resources, which can render otherwise-promising sites non-viable upon closer look. Because of this, DOE recognizes that the consideration of critical habitat in the Pacific Northwest provides a limiting factor that may preclude cost-effective NSD development in the region. On the other hand, consideration of NSD potential in conjunction with removing non-hydro, obsolete dams and barriers has the potential to result in increased energy yield and more rivers restored to natural conditions.

Technological innovation has the potential to provide opportunities to optimize hydropower generation while minimizing environmental impacts. But to do so, continued commitment and investment in the development of new technologies and strategies to increase economic competitiveness will be needed. It is difficult to predict whether much-needed public or private investment in new hydropower technologies will actually occur over the coming decades.

Finally, climate change creates additional uncertainty for hydropower generation, with potential impacts including: increasing temperatures and evaporative losses resulting in reduced available water resources; changes in precipitation patterns and decreased snowpack altering seasonal availability of resources; and increased intensity and frequency of flooding resulting in greater risk of physical damage and changes in operations. However, the development of new off-stream storage facilities, perhaps in conjunction with PSH facilities, also has the potential to help mitigate the effects of reduced snowpack resulting from climate change impacts.

Regional Focus on the Pacific Northwest

In recent years, dam removal in the Pacific Northwest has been a much bigger story than new hydropower development. Since 2011, two major dams on the Elwha River in Washington’s Olympic National Park have been removed, including the largest dam removal project in the nation’s history.[7] And after decades of contention, an agreement signed in April 2016 has paved much of the way for removal of four large hydropower dams on the Klamath River.[8] Despite the region’s focus on dam removal - largely for the benefit of the region’s iconic migratory salmon runs - there remain opportunities to optimize existing hydropower resources and integrate new hydropower facilities into the region’s electrical grid.

Minimizing the environmental impacts of new hydropower development in the Pacific Northwest is critical to the region’s ability to maximize the benefits of its abundant hydropower resources. In the Columbia River Basin in particular, increasing wind and solar generation requires new balancing resources, such as hydropower. But those resource decisions cannot be separated from concerns over resident and migrating fish species. This is because releases from the Columbia River storage reservoirs provide salmon in the lower Snake and Columbia rivers with flows that may enhance downstream migration. But the timing and volume of these releases may also result in headwater reservoir water surface elevation variations that are harmful to resident fish. Second, the optimal schedule of reservoir flow releases to enhance either salmon migration or resident species habitat is generally not identical to the optimal schedule for hydropower generation. Third, increasing capacity for wind and solar generation in the region is making the flexibility of hydropower generation more valuable, but such flexibility is limited by the need to time flows for salmon outmigration and to avoid excessive spill at Columbia River dams.

Despite challenges, opportunities for integrating new hydropower into the regional power grid remain. With nearly 6,000 MW of wind power coming online between 2000 and 2011, the Bonneville Power Administration sometimes struggles to limit its hydroelectric generation to make room for wind power.[9] Development of substantial PSH capacity could potentially assist the region in absorbing the excess power generation that occurs when high river flow conditions coincide with strong winds. Instead of spilling water (with potential negative consequences for fish associated with high dissolved gas levels in the downstream river) or curtailing wind power (with negative economic consequences for renewable power developers), PSH could allow the excess water to be pumped and stored for later use when river flows or wind conditions are reduced. Multiple study and research efforts are aimed at understanding the tradeoffs between aquatic environmental objectives and power system reliability and stability in systems with coordinated wind, solar, and hydropower assets.

A decade-long investigation of a large pumped storage project off-stream from the Columbia River at the John Day Dam, 110 miles upriver from Portland, Oregon, is on hold. But the investigation illustrates both the promise and challenges of large scale PSH development. The Klickitat (Washington) Public Utility District’s JD Pool Pumped Storage Project envisioned a large-scale energy storage facility near Columbia River’s John Day Dam to help get the most value out of the increasing supply of renewable, but variable, wind and solar power. In evaluating the proposed site, an engineering report noted a slew of virtues of the proposal: “It is in the middle of BPA’s robust high voltage transmission corridor, it can be developed in an environmentally benign manner, and the associated topography supports a high energy density design.” The lower reservoir, with a surface area around 100 acres and holding around 12,000 acre-feet of water, would sit alongside the Columbia River on the grounds of a closed aluminum smelter. As a closed loop system, impacts to the Columbia River would be minimized, and established water rights provide more water than would be needed to periodically recharge the system. Grid interconnection could be easily accomplished, and the site is near large amounts of variable wind turbines, which pose a load balancing challenge for BPA. Finally, the topography between the two upper reservoir sites – more than 2,000 feet vertical in just a bit over one mile horizontal - gives JD Pool “high energy density,” allowing the project to produce some 1,200 MW of power and to store up to 17,000 megawatt-hours of energy.[10]

Despite the huge upside of the project, other factors have (at least temporarily) put the project on hold. In an initial federal filing regarding the project, the U.S. Fish and Wildlife Service warned of possible issues with migratory birds. The Confederated Tribes and Bands of the Yakama Nation raised concerns regarding potential impacts to significant cultural resources. And additional investigation of the smelter site revealed more extensive contamination requiring unexpectedly costly remediation.

In December 2015, FERC rejected the utility’s request for a second extension for its preliminary permit (first received in 2009) and a request for a new permit the utility had also filed. The PUD’s existing permit, which gave it the exclusive right to study and develop the project with the goal of applying for a license, has now expired. It first received the 3-year permit in 2009 and its first extension was granted in 2012. In rejecting the new request, FERC said that the utility had ample time to prepare its application and that another extension would “constitute site banking.”

Thus, the JD Pool project is currently on hold pending environmental cleanup at the smelter site and investigation of other potential environmental issues. Once this has been completed, however, the long-term structural advantages of the site (topography, grid connectivity, and intermittent, large-scale renewable power) will remain. While such a project would be costly and undoubtedly face environmental opposition, the potential benefits to the stability of the Pacific Northwest power grid and integration of intermittent renewables would be significant.[11]

Whether or not the JD Pool project is ultimately developed, there remain additional opportunities for development of smaller, off-stream PSH facilities throughout the Pacific Northwest. When properly designed to limit impacts on water supplies and fish habitats, PSH facilities could prove vital to the region’s ability to continue integrating the large amounts of wind and solar power needed to meet the region’s ambitious climate targets.[12]

Conclusion

In a comprehensive study, the U.S. DOE has concluded that there are significant opportunities to integrate additional hydropower into the nation’s energy portfolio, largely through optimization of existing infrastructure and the development of new pumped storage hydropower facilities. While there are substantial environmental, economic, and technical challenges to overcome, hydropower can continue to play a major role in the nation’s electricity market. In the Pacific Northwest, there may be few potential undeveloped large dam sites, but there are many other opportunities to better utilize hydropower to help integrate increasing intermittent renewable resources, such as wind and solar. Continued investment is critical to optimizing power production from existing facilities, developing new in-conduit and other low-impact hydropower production, and increasing pumped storage hydropower capacity. Such investment should help facilitate further integration of intermittent renewable power sources and reduce carbon emissions, while better protecting the environmental values threatened by traditional dam-building activities.

For more information, please contact any of the attorneys in the Firm’s Alternative Energy, Energy, or Water Resources practice groups.

[1] U.S. Dep’t of Energy, Hydropower Vision: A New Chapter for America’s 1st Renewable Electricity Source, 1-4 (2016).

[2] Id. at 73-74.

[3] Central Oregon Irrigation District, Questions and Answers about the Juniper Ridge Water Conservation Project.

[4] Swalley Irrigation District, Swalley Irrigation District Main Canal Pipeline and Ponderosa Hydroelectric Project.

[5] http://www.eia.gov/todayinenergy/detail.cfm?id=11991

[6] http://e360.yale.edu/feature/for_storing_electricity_utilities_are_turning_to_pumped_hydro/2934/

[7] https://www.nps.gov/olym/learn/nature/elwha-ecosystem-restoration.htm

[8] http://www.pacificorp.com/about/newsroom/2016nrl/klamath-agreement-removal.html

[9] See e.g., Iberdrola Renewables, et al v BPA, 143 FERC 61,274 (2013) (regarding BPA policy on curtailment of wind generation); BPA Final Record of Decision in Docket OS-14 – Oversupply Rate Proceeding at P-1 (indicating more than 7,000 MW of wind power installed in Northwest since 1999).

[10] http://breakingenergy.com/2014/12/26/pumped-storage-dream-tiny-washington-state-utility-makes-big-pitch/

[11] http://breakingenergy.com/2014/12/26/pumped-storage-dream-tiny-washington-state-utility-makes-big-pitch/

[12] See Ch. 28, Or Laws 2016 (requiring phase-out of coal-fired electricity in Oregon and increasing renewable portfolio standard to 50% by 2040); Energy Independence Act, RCW 19.285 (establishing conservation and renewable energy targets for State of Washington).

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