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Why Renewable Energy Is Not Cheap and Not Green
Hydroelectricity: The Politically Incorrect Renewable
Of the 375 billion kwh produced from renewable sources in 1995, 294 billion kwh -- or 78 percent -- was generated from falling water. On a capacity basis, hydro accounts for 97 gigawatts (GW) of total U.S. renewable capacity out of 113 GW, an 85 percent market share. Hydro has a 9 percent and 10 percent share of the national electric generation and capacity market, respectively.
Hydroelectricity has been downplayed by eco-energy planners as an alternative to fossil fuels for new capacity investments despite its dominant market share among renewable energies. Reported The Energy Daily in 1992:
As far back as 1985, Russell Shay of the Sierra Club testified before a House subcommittee that "fisheries in California and the Pacific Northwest face disastrous effects from the unprecedented numbers of small hydro projects which have been proposed for our Western waterways."148 New hydroelectric construction was condemned as particularly invasive.149 In 1987, the Electric Consumers Protection Act declared a moratorium against new hydro designations as "qualifying facilities" under PURPA.150 Criticism from mainstream environmentalists led the Bush administration to drop incentives to promote hydro in what became the Energy Policy Act of 1992. In 1993, the Sierra Club and Trout Unlimited criticized the Clinton administration for promoting hydro development as a global warming strategy.151
In the Worldwatch Institute's manifesto on the "coming energy revolution," there is excited speculation about new wind and solar farms around the world totalling 1,500 MW. Yet hydro is treated as a virtual dead end with only vague talk about possible growth.152 A joint study by The Alliance to Save Energy, American Gas Association and Solar Energy Industries Association, with peer review from the NRDC and Worldwatch Institute, forecasts low growth in hydropower "due to recent concerns regarding the loss of large land and recreational areas to accommodate hydroelectric facilities, the possibly catastrophic effects of potential dam failures and various health and ecological considerations."153 Another sign of hydro as the "politically incorrect" renewable was apparent when the 1995 edition of the Electric Power Annual removed the statistics for hydroelectric power from the renewable category for the first time.154
The eco-energy planners' lack of interest in hydro is reflected in the Yergin Task Force's goal "to triple the United States nonhydropower renewable energy capacity by the year 2000."155 Hydro is left out of the picture despite having no air emissions and as much as 74 gigawatts of potential capacity, a figure far higher than other more favored renewable energy sources.156 Another DOE study concludes that the department "projects minimal growth for conventional hydropower; however, recent rulings, especially to protect fish, could result in capacity declines."157 A study by the California Energy Commission released in November 1995 lists 14 electricity supply options for the state with pumped storage (at a costly $1,300 per kilowatt) the only water resource.158 Indeed, hydro's environmental problems mean that not only are new projects not being built, but some existing capacity is being retired and ratepayers are underwriting expensive fish-preservation programs.159
Environmental concerns with hydropower -- even when it might substitute for coal burning -- surfaced with (successful) environmental lobbying of the U.S. Export-Import Bank to deny funding for China's 18,000-MW Three Gorges Project. Concerns about global warming were put aside by groups such as Friends of the Earth, which were concerned about water quality, endangered species and population resettlement.160
The economics of hydropower will not rescue the king of renewable energy from its no-growth posture in the United States. The domestic hydro industry is mature, with the best sites already exploited (due, in large part, to government subsidies since the 1930s). In regard to the remaining undeveloped sites, up-front capital costs range from $2,000 to $3,700 per kilowatt in today's dollars, figures from three to six times greater than the capital cost of new gas-fired combined cycle plants.161
Hydroelectricity from developed projects is typically the cheapest source of power in a generation portfolio. Little existing hydro capacity, therefore, should face retirement even given the competitive challenges of a restructured industry. The threat to existing capacity is political, not economic. The political conflict surrounds federal licensing of hydro projects, which at the time of renewal gives environmentalist opponents the opportunity to force new waterway investments that create new incremental costs. Such controversies, and the construction of new hydro facilities, might (and indeed should) be addressed through waterway privatization, which would create true markets to direct water resources to their highest competing uses.
A strange thing happened to hydropower on its way to the sustainable energy ball: the party's environmentalist hosts withdrew their invitation. Long a favorite of sustainable energy groups opposed to more traditional fuels . . . in the last 10 years environmentalists have turned on hydropower. . . . Suddenly hydro is being mentioned in the same breath with coal, oil and nuclear -- precisely the fuels hydro, touted early on as an environmentally benign energy source, was to replace. Today environmentalists talk of 'non-hydro renewables' like wind, solar and biomass.147