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definitions of eligible renewable energy technologies. Like the PTC and ITC, these state- level incentives have been significant drivers of new renewable energy capacity.26 Most hydropower projects in the United States are licensed and regulated by the FERC. The licensing process is a long and difficult one, which reduces the supply of new projects. Owners may choose from three different FERC licensing processes, but in all cases, the process averages 6–10 years from beginning to end, and is widely blamed for raising project development costs. Projects rated at capacities of 5 MW or less may be exempt from FERC licenses, although exempted projects are still regulated by state authorities. 27 All hydropower projects, both licensed and exempted, require environmental reviews, public participation, and agency consultation before development can proceed.28 The FERC licensing process for small hydropower projects may face changes in the near future (box 5.1). The complexity of the process has created an entire category of legal and regulatory consulting service providers specialized in assisting project developers with the FERC licensing process.29 BOX 5.1 Changes to the FERC licensing process Two bills changing the conditions for development of small hydropower were signed into law by President Obama in August 2013: H.R. 267, the Hydropower Regulatory Efficiency Act of 2013 (P.L. 113-23), and H.R. 678, the Bureau of Reclamation Small Conduit Hydropower and Rural Jobs Act (P.L. 113-24). Under the previous law, all hydropower projects were required to be licensed or exempted by FERC, but the new law changes that. P.L. 113-23 allows FERC to exempt hydropower projects of up to 10MW that use existing canals, pipelines, or other conduits from its usual permitting process (under previous law, only projects up to 5 MW were exempt). It also waives license requirements for certain projects of 5 MW or less. According to hydropower industry representatives, the cost of the FERC licensing process is a high hurdle for small projects, sometimes surpassing actual project development costs. The measure also orders FERC to explore a two-year licensing process for hydropower development at existing non-powered dams and closed-loop pumped storage projects (significantly faster than the current process). In addition, it directs the Department of Energy to study pumped storage to support intermittent renewable energy sources like wind and solar. P.L. 113-24 authorizes the development of small hydropower facilities at existing canals and other manmade waterways that are owned by the Bureau of Reclamation. The bill also streamlines the licensing process for some projects by removing them from coverage under the National Environmental Policy Act of 1969 (NEPA). Sources: HydroWorld.com, “Hydroelectric Power Industry Leaders,” August 12, 2013; HydroWorld.com, “Obama Signs Hydroelectric Power Bills,” August 9, 2013; CRS, Bill Summary & Status, H.R. 267, CRS Summary; industry representative, telephone interviews with USITC staff, March 13 and April 4, 2013. Sales of hydropower equipment for hydropower O&M services, particularly turbines, are an important demand factor because the equipment needs to be maintained and repaired. Most manufacturers of turbines initially provide maintenance and repair services under the warranty on their equipment.30 Once the warranty period has passed, many hydroelectricity producers continue to receive these services from the same 26 BNEF, Sustainable Energy in America 2013 Factbook, January 2013, 22, 38; IER, “The Status of Renewable Electricity Mandates,” n.d. (accessed March 29, 2013) ; Center for Climate and Energy Solutions, “Renewable and Alternative Energy Portfolio Standards,” March 21, 2013. 27 Exempted projects do not require renewed applications to FERC to continue operating, as opposed to licenses, which have terms of 30–50 years and must then undergo a relicensing process. 28 Industry representatives, interviews with USITC staff, March 4 and 12, 2013; BNEF, Sustainable Energy in America 2013 Factbook, January 2013, 39. 29 Industry representatives, interviews with USITC staff, March 4 and 12, 2013. 30 The length of the warranty period varies according to the manufacturer. 5-8PDF Image | Renewable Energy and Related Services: Recent Developments
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