NCPA - National Center for Policy Analysis

The Demise of Traditional Hydro-Power

June 1, 2015

Traditional hydroelectric power, generated by the storage and release of water in reservoirs, has faced regulatory and environmental restraints on growth for decades. The current generation capacity of hydroelectric power, in the form of conventional and pumped storage, in the United States is around 101,000 megawatts. According to the Electric Power Supply Association, this is enough energy to power 75 to 100 million homes.

While the federal government owns only 8 percent of the total number of hydroelectric facilities, it accounts for 52 percent of total hydro generation due to the large size of its facilities. The private sector, public utilities and state or local governments own the other 92 percent of the facilities, 89 percent of which have a generation capacity of less than 30 megawatts. The non-federal market for hydroelectric power is therefore significant, operating over 1,600 hydropower facilities in states across the country.

Lack of growth in hydroelectric development stem from considerations outside of average cost, including:

  • Locations for new reservoirs are lacking as most were constructed on in the twentieth century.
  • Many key rivers in the United States are drying up as a result of changing weather patterns and outdated water sharing laws.
  • Regulations implemented in 1992 drastically increased the waiting time for project development, discouraging future investors who already faced large initial investment costs. Licensing, through Federal Energy Regulatory Commission, for traditional hydro projects can take anywhere from 16 months to 10 years, depending on the environmental concerns on the project.
  • Intentional removal of nearly 900 dams in the last 25 years to restore wildlife habitats.

While one of the easiest methods for boosting generation capacity is installing hydroelectric generators on existing dams, the destruction of current dams is hindering this prospect.

Source: Lauren Aragon, "The Demise of Traditional Hydro-Power," National Center for Policy Analysis, May 27, 2015. 

 

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