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Overcoming Boundaries (Real and Imagined) to Hydrokinetic Power Development

Issue 6 and Volume 87.

by Larry Eisenstat and Bethany Dukes, Dickstein Shapiro LLP

Hydrokinetic power harnesses the motion of waves or the flow of tides, ocean currents or inland waterways to generate electricity without the impoundments or diversions used in traditional hydropower. Its proponents are quick to extol its many apparent virtues.

Like other renewable power sources, hydrokinetic projects are renewable, emission-free and virtually silent. They create green jobs for local communities and decrease reliance on oil and natural gas.

Unlike most intermittent resources, waves and tides are predictable. Many projects could be sited near load centers and integrated into the existing electrical system without major expansions. Some East Coast projects might even unload certain transmission facilities, reduce congestion and alleviate part of the need for future transmission lines.

And, if offshore, they would be virtually invisible from the mainland. While many of the more impressive tidal ranges are located abroad, some speculate that the United States alone has enough wave and tidal resource potential to meet about 10 percent of its energy demand.

Finally, the technical risk is becoming increasingly acceptable. The United Kingdom has been promoting hydrokinetic power for some time and in May 2008 connected the first tidal turbine to its grid. The results to date are encouraging.

There also is considerable skepticism whether hydrokinetic power could be cost-competitive and developed on a scale necessary to significantly contribute to the U.S. energy portfolio. Developers first must be willing to sign on to a technology that, while showing significant promise, has yet to be tested over multiple years. Scarce operational data exists concerning its performance, environmental impacts and costs. On its face, it would appear to entail potentially complex installation and maintenance issues. It is reasonable to assume that permitting would be just as lengthy and uncertain, and the difficulties in raising capital would be at least as large, as those faced by more conventional power technologies. Perhaps this is why only two projects have been successfully licensed in the United States.

Things might be changing, however. While the first federally licensed hydrokinetic project in the United States commenced commercial operation on Aug. 20, other projects successfully have completed the demonstration phase and are nearing full-scale implementation, and new projects continue to be developed. More than 140 preliminary permits have been issued for projects that potentially could produce thousands of megawatts. The Federal Energy Regulatory Commission (FERC) has further contributed by developing expedited procedures to lessen the burden on pilot projects seeking these preliminary permits. Together with the Department of the Interior’s Mineral Management Service (MMS), it recently streamlined the process of obtaining FERC licenses and leases from MMS for projects on the outer continental shelf. Likewise, states are beginning to coordinate their permitting and leasing processes with the federal licensing process.

Future prospects also appear bright. Arizona Sen. Jeff Bingaman’s energy bill provides funding for hydrokinetic energy research and development. In August, the Department of Energy selected several national laboratory-led advanced water power projects to receive up to $11 million in funding, and in September it announced an additional $14.6 million for 22 projects to promote advanced hydropower technologies. In June, President Barack Obama established an interagency Ocean Policy Task Force to develop a cohesive national policy and coordinate state and federal efforts for the nation’s oceans.

One must look only to the 1980’s wind power development to see why hydrokinetic power is far from dead in the water and what this nascent technology requires to attain the commercial viability and public support that wind power enjoys today.

In light of its technical promise and today’s environmental and national security imperatives—and until further development would not make sense—the federal and state governments must continue providing to hydrokinetic power development the same degree of seed money and other economic stimuli used to advance wind, nuclear, oil and gas in the form of direct grants, tax incentives, geologic and meteorologic research or set asides.

Authors

Larry Eisenstat is the head of Dickstein Shapiro LLP’s energy practice. Reach him at [email protected] or 202-420-2224.

Bethany Dukes is an associate in Dickstein Shapiro LLP’s energy practice. Reach her at [email protected] or 202-420-4865.