22,500 MW Three Gorges Dam in China

Vintage Approaches for Planning & Regulating Sustainable Hydropower

22,500 MW Three Gorges Dam in China

Recently, a colleague doing work for the United Nations Development Programme in Russia requested me to send her the best guidance available on planning international hydropower projects. She was attempting to minimize impacts on biodiversity and ecosystem services. While I have been away from Hydropower for a while, I was really hard pressed to find current documents that would help her. Most reports were too general and few, if any, talked about planning and regulating hydropower projects, which can last 50 years or longer. I found this difficult to understand despite the wealth of experience in the U.S. and Canada in siting and regulating hydropower. 

I quickly realized that in the hydro arena, we were still grappling with environmental, regulatory and social issues. The same is true for siting natural gas and renewable energy. However, the stakes are higher today since the World Bank Group and the Asian Infrastructure Bank are investing in hydropower in to spur economic development, address Climate Change and move countries away from fossil fuels. So I dusted off three publications below that should help both developing and developed countries to better plan and manage their hydropower and other energy projects. Here's a short explanation of each:

  1. Lesson Learned in 78 years (Hydropower)- this is really the U.S. historical experience to about 1998, but it's still very applicable today and can be used by all countries. It was prepared for the World Commission of Dams.

    U.S. government agencies, like the Army Corps of Engineers, Bureau of Reclamation and power authorities such as TVA and BPA have developed about 50% of the U.S. hydropower. The private sector was allowed to develop the remaining 50% of hydropower projects under a licensing system which allowed the companies to operate the projects between 30 to 50 years. Conservationist  actually were largely responsible for this, because they were apprehensive about the government monopolizing all of the hydropower development in the U.S. The license was like a contract between the developer and the government and dictated the construction, operation and maintenance of the project. Hydro projects require a great deal of capital, so the 30-50 year license was designed to allow the project developer to accrue revenue and pay off debt in a relatively stable fiscal environment. The Federal Power Commission now called Federal Energy Regulatory Commission or FERC regulated the construction, operation and maintenance of the project, including dam safety.

    The most important aspect of this regulatory arrangement is that hydropower projects don't operate forever. Instead, 2 years prior to expiration of the original license, the hydropower developer has to file for a new license. Relicensing is not easy and as you might expect, and much can change in 30 to 50 years with respect to power needs, and environmental requirements. FERC reviews the project in the context of today's environment laws and needs and considers recommendations from environmental agencies, NGOs and the public. For example, the original licenses might have been 5 pages long, but a new license might be 100 pages long with all kinds of environmental mitigation and measures to promote non-power benefits such as flood control, irrigation, water supply, fishery protection, recreation, water quality, etc. Public participation in relicensing is extraordinarily high. Most projects are relicensed, but in a few cases smaller projects have been removed since they are not economically viable when environmental requirements are imposed on them.

  2. Considering Cumulative Effects under the National Environmental Policy Act- this document is especially relevant to multiple hydropower projects planned or operating on a single river or within a river basin. The cumulative effects from multiple hydropower projects could have additive adverse effects and sometimes much more than the individual effects of single projects. The document is also applicable to linear energy projects such as natural gas and oil pipelines and electric transmission lines.

  3. Energy Chapter of the Handbook of Environmental Assessment that I authored. The important parts of this chapter pertain to the regulation of projects. Energy project are generally long-lived assets. There is an explicit bias for the preparation of environmental reviews that emphasize mitigation and its implementation, rather than preparing voluminous documents on impacts that will collect dust. Regulatory institutional strengthening is also discussed to manage the construction, operation and implementation of the mitigation measures. There is also a preference for adaptive environmental management- i.e. implement the mitigation, determine how well is works and make adjustments to obtain better results. The concept of a review after a 30-50 year period is also explored, since debt on the project is usually completely paid down. Project developers often are better able to afford environmental mitigation also.

  4. Hydropower Training in Seattle, Washington on August 22-23, 2016