Locke Lord QuickStudy: DOE Pledges Over Half a Billion ‎Dollars to Support ‎Hydroelectric Power and Jump-Start ‎Marine Energy

Last week, the U.S. Department of Energy (DOE) announced two separate programs that together will award nearly $600 million to fund hydroelectric power and advance marine energy. The DOE will award $554 million through Maintaining and Enhancing Hydroelectricity Incentives under Section 247 of the Energy Policy Act of 2005. These funds, among other things, will help existing hydroelectric facilities integrate new renewable-energy resources into their operations and reduce the facilities’ environmental impacts. DOE will award the remaining $45 million of funding to support a pilot demonstration site and a tidal energy and/or current energy project.

These investments show DOE’s commitment to clean energy and innovation. The programs recognize the importance of hydroelectric power as well as the potential role of tidal energy and current energy to achieve the Biden Administration’s goal of 100% clean electricity by 2035 and a net-zero-emissions economy by 2050.

Maintaining And Enhancing Hydroelectricity Incentives

The DOE’s Grid Deployment Office administers the Maintaining and Enhancing Hydroelectricity Incentives. The program provides financial support to existing hydropower and pumped storage facilities for capital improvements related to three categories: (1) improving grid resiliency (e.g., integration of wind or solar resources at the facility); (2) improving dam safety to ensure acceptable performance (e.g., spillway upgrades and erosion repair); and (3) environmental improvements (e.g., fish passage and water quality).^[1]

To apply for the incentive, the facility must be a qualified hydroelectric facility, which means it:

(a) Is licensed by FERC or is a hydroelectric project constructed, operated, or maintained pursuant to a permit or valid existing right-of-way granted prior to June 10, 1920, or a license granted pursuant to the Federal Power Act (16 U.S.C. 791a et seq.), or has a FERC-issued exemption;

(b) Was placed into service before November 15, 2021; and

(c) Is in compliance with all applicable Federal, State, and Tribal requirements, or would be brought into compliance with all applicable Federal, State, and Tribal requirements as a result of the capital improvements carried out using an incentive payment.

To be eligible for incentive payments, the facility must have procured the materials or incurred the other costs for the capital improvement after November 15, 2021. Additionally, the available incentive payments cannot exceed 30% of the costs of the capital improvement and the amount of the incentive payment is capped at $5,000,000. A qualified hydroelectric facility cannot receive more than one incentive payment in per fiscal year and all developments within an individual FERC-licensed hydroelectric project are treated as a single hydroelectric facility. Therefore, each FERC-licensed hydroelectric project may receive only one incentive payment per fiscal year.

DOE intends to allocate up to 25% of the upcoming funding to small projects, which are hydropower projects that have a nameplate capacity of less than 10 MW and are owned by small businesses, municipal entities (including electric cooperatives), nonprofit organizations, or Indian Tribes.^[2]

Required letters of intent to submit full applications are due June 22, 2023. The full applications are due October 6, 2023.

Advancing Tidal Energy And Current Energy

Marine energy technologies, including tidal and current technologies, are an important and developing energy resource. These technologies transform the energy from the flow of oceans and rivers into clean electricity. Because tides and currents are highly predictable, these resources could provide a comparatively predictable and significant flow of energy that plays an important role in our clean energy future. DOE’s $45 million funding opportunity is the agency’s first large-scale investment in tidal energy or current energy, and this investment seeks to help establish the United States as a leader in this area.

This funding covers two topic areas. The first area will provide up to $35 million to support the development in state waters of a tidal energy and/or current energy technology demonstration site. This project will provide research and analysis to show a path to commercial viability for the demonstration site and the potential for further development of the site into a 5 MW or larger grid-connected project. Concept papers for this topic area are due on June 5, 2023.

The second area will provide up to $10 million to support a community-led tidal energy and/or current energy planning and development project. Community members will work with the project developer to advise on technology design and the development process to help ensure local energy goals align with the proposed deployment of the technologies. This will include a focus on siting and how these technologies can be deployed in an environmentally responsible way. Concept papers for this topic area are due on July 13, 2023.

Outlook And Implications

These funding opportunities highlight the importance of supporting existing clean energy generation (e.g., hydroelectric facilities) and investment in new technologies (e.g., tidal energy and current energy) to meet our clean energy goals. While solar and wind generation receive much of the public attention, hydropower, the nation’s oldest source of renewable energy, will have a key role to play. Hydroelectric generation currently provides 6% of all electricity in the United States and accounts for over 30% of renewable-electricity generation. These assets, however, are aging and require financial investment to help ensure they continue to provide important clean energy, particularly at a time when thousands of megawatts of planned new solar and other renewable projects are experiencing significant delays and have been or ultimately may be abandoned due to the current economic and energy market climate. Moreover, existing dams that currently are not used to produce power could add up to 12 gigawatts of new hydropower capacity. Tidal energy and current energy also have the potential to be a significant new avenue for clean energy. While marine energy technologies are at an early stage of development, the total available resources could provide over 50% of all current power generation in the United States. Hydroelectric generation and marine energy technologies will be a key part of our clean energy future.

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