North American Market Brief

Regional Spotlight

In this annual feature, learn about the state of hydropower generation in North America, including key trends and important activity.

What’s happening in the hydropower market in North America? North America is a bit unique in that its two countries – Canada and the U.S. – are close together geographically but far apart in terms of their attitude toward hydropower and the major activity that is taking place in each. Hydropower provides a much larger percentage of total electricity generation in Canada than it does in the U.S., but the U.S. has a much stronger history in hydropower, with the first facility beginning operations in the 1880s.

Regardless, some key trends are occurring, and there is some unique activity in North America compared with other regions of the world. This article provides a brief analysis of hydropower activity in North America in a variety of sectors.

But first, it is important to better set the stage with regard to what hydroelectric power “looks like” in the U.S. and Canada. Several reputable organizations have gathered just this sort of data.

For starters, the International Energy Agency lists both Canada and the U.S. among the top producers of hydroelectricity (which includes pumped storage) in the world (see Figure 1). In its Key World Energy Statistics 2017 document (based on 2015 data), IEA said Canada (second place) produced 381 TWh of electricity, or about 9.6% of the world total and the U.S. (fourth place) produced 271 TWh or 6.8%. In terms of net installed capacity, the U.S. had 102 GW (second place) and Canada had 79 GW (fourth place). Finally, in terms of the top producers (percent of hydro in total domestic energy generation), Canada was fourth at 56.8% and the U.S. was 10th at 6.3%.

Comparatively, the International Hydropower Association reported in its World Hydropower Statistics map, taken from the 2017 Hydropower Status Report (based on 2016 data) that the U.S. had 102.5 GW of installed hydropower capacity (including pumped storage) and Canada has 79.3 GW.

According to data from the International Renewable Energy Agency (IRENA) (based on 2015 data), hydropower accounts for 44.6% of all electricity generation from renewable energy technologies in the U.S. and 90.1% in Canada. In terms of installed capacity, hydropower accounts for 42.9% of all installed renewable energy generation capacity in the U.S. and 83.4% in Canada.

Key trends

As mentioned above, rehabilitation of existing and aging facilities in the U.S. is a key trend. In terms of dollars spent, this is no doubt a stronger segment of the business than is new development. For example, in a March 2017 article we featured 17 U.S. facilities undergoing renovation with a price tag of $1.38 billion, and this is just a fraction of the total work ongoing. With most of the larger sites already developed in the country, as well as regulatory hurdles that make it difficult to build new large dams, the other primary focus is adding hydropower generation to some of the more than 80,000 existing non-powered dams. In fact, as the U.S. Department of Energy said in its Hydropower Vision report, the country has a growth potential of 4.8 GW from new development on non-powered dams.

In Canada, the main trends we are seeing are new development of large hydropower facilities and a focus on marine and hydrokinetic energy. Natural Resources Canada reports the country has an estimated undeveloped hydro potential of 15,000 MW. Installed capacity in 2015 was 79,245 MW, and the International Hydropower Association reports that ongoing project in the construction phase will add more than 3,000 MW. In addition, NRC says “With extensive coastal and inland waters, Canada has the ideal environment for tapping the potential of marine renewable energy.” The country even has a Marine Renewable Energy Technology Roadmap to advance the commercialization of marine energy technologies in Canada and is committing money and resources to this effort.

In addition, there are some cross-border issues between the two countries. Thanks to Canada’s stronger base of hydropower generation and continued development work, the country is positioned to provide low-cost hydroelectricity to the U.S. In fact, electricity is already coming to the U.S. from Manitoba Hydro. In the Northeast, three different groups are working to install a transmission line that would bring electricity supplied by Hydro-Quebec into New England. And in the north-central portion of the U.S., a transmission line is being proposed from Manitoba to Minnesota to bring more electricity across the border in that area.

Finance/business situation

Money is obviously available in Canada to support hydropower. The recent agreement under which Innergex Renewable Energy Inc. will acquire all shares of Alterra Power Corp. is one example of this. The deal has an “aggregate consideration” of $1.1 billion and is being backed by Caisse de depot et Placement du Quebec, along with commitments from “two leading Canadian banks” to backstop and upsize Innergex’s existing credit facility. This transaction will boost Innergex’s overall new power generation capacity by more than 40% and add four hydro plants with a total capacity of 307 MW (one is under construction).

Another example is BluEarth Renewables LP’s recent purchase of three hydro facilities in British Columbia and one wind facility in Ontario. These plants, owned by Veresen Inc., have a total capacity of 85 MW, and BluEarth said its “growth strategy includes pursuing targeted acquisitions where we can take full advantage of our existing footprint and operational bench strength.” BluEarth owns 15 hydropower facilities with a total capacity of 253 MW in British Columbia and Ontario, Canada, as well as in Pennsylvania, U.S. Unfortunately, the financial terms of the acquisition are confidential.

Companies are buying and selling hydropower facilities in the U.S. as well. Recently, Eversource Energy sold nine small hydro plants to HSE Hydro NH AC, LLC for $82.5 million. The plants had a total generating capacity of 68.2 MW. Eversource Energy said it was selling the plants to “mark the completion of electric deregulation in New Hampshire and a shift in how [Eversource Energy] procures energy for customers in the future.”

IRENA provides data on global renewable energy investment trends through its Global Trends in Renewable Energy Investment 2017 report. However, keep in mind that these results cannot be subdivided to focus on just the U.S. and Canada. IRENA says that in 2016, total investment in small hydropower was about U$3.5 billion globally in 2016, unchanged from 2015. For marine energy, the dollar amount was $200 million in 2016, also unchanged from 2015.

Regulatory update

Regulatory issues in the U.S. are a bit of a moving target at the moment.

Significant regulatory activity is under way, most recently the Hydropower Policy Modernization Act of 2017 passing the U.S. House. The primary purpose of this legislation is to allow the Federal Energy Regulatory Commission to extend its preliminary permitting for an additional four years with the potential for an additional four years, while also establishing FERC as the lead agency in coordinating pertinent federal authorizations and reviews. Additionally, this bill ensures both conventional hydroelectric and marine generation are recognized by Congress as “renewable” forms of energy.

In addition, a tax reform bill was introduced to the U.S. House Republicans in early November, entitled Tax Cuts & Jobs Act. This bill is intended to rewrite U.S. tax code for the first time in more than three decades. Unfortunately, the bill seeks to repeal the inflation increases for clean energy production tax credits, effectively raising taxes on hydropower and other clean energy projects.

Canada is in a different position, as a lot of its government policies are in place and long-standing. Activity at the provincial level in Ontario involves the release of the 2017 Long-Term Energy Plan, which sets out a vision for the future of Ontario’s energy sector. This plan updates the 2013 LTEP. With regard to hydro, it says these facilities provided 23% of the province’s total generation in 2015, with about 8,800 MW of installed capacity. It also identifies significant remaining waterpower potential in the province and substantial opportunities to get more from existing waterpower assets, such as increasing their operational flexibility through the use of new, more efficient turbines.

The 1,100-MW Site C project is just one example of large new hydro development in Canada. (photo courtesy BC Hydro)

The 1,100-MW Site C project is just one example of large new hydro development in Canada. (photo courtesy BC Hydro)


Updates on specific activity

New development

Canada, with its greater untapped potential and generally more supportive governmental stance, is much more active in new hydro development than the U.S. A couple of projects worth mentioning are 1,100-MW Site C and 81.4-MW Upper Lillooet River.

The development of Site C has been rather constroversial, but in mid-December British Columbia Premier John Horgan announced it would indeed be built. This project, on the Peace River in British Columbia, has been closely examined, with the B.C. Utilities Commission releasing a report Nov. 1 to address the financial impact of continuing, suspending or terminating the project. A key finding was that the project would not likely meet its planned November 2024 in-service date and costs could rise more than 50% over the initial budget of C$8.335 billion (US$6.5 billion). Horgan said, “Site C is not the project we would have favored. But, we have to finish.”

The Upper Lillooet River Hydro Project, also in British Columbia, is a good example of the development work being completed in the country by non-governmental utilities. Innergex Renewable Energy completed this project in May 2017 with commercial operation of its 25.3-MW Boulder Creek facility. Boulder Creek and the 81.4-MW Upper Lillooet River plant make up the Upper Lillooet River Hydro Project. Electricity generated by both facilities is delivered to BC Hydro under a 40-year fixed-price power purchase agreement.

As mentioned earlier, new development activity in the U.S. primarily focuses around adding hydro generation to existing dams. One example of this is the 36.4-MW Red Rock hydroelectric plant being built at a U.S. Army Corps of Engineers dam on the Des Moines River in Iowa. This project is expected to be complete in late 2018, with a powerhouse downstream from Red Rock Dam containing two Kaplan turbine-generator units.

Small hydro

In the U.S., hydro development activity is primarily occurring on the small side of the scale (less than 30 MW). The Federal Energy Regulatory Commission recently issued original operating licenses for two such projects: 6-MW Opekiska Lock and Dam and 5-MW Morgantown Lock and Dam. Both are to be located at existing dams operated by the U.S. Army Corps of Engineers. Additionally, small hydro development is occurring at irrigation canals in the U.S., such as the work being done by the North Unit Irrigation District in Oregon to install a 4.5-MW in-conduit system manufactured by Natel Energy.

Canada is seeing small hydro development work as well, although maybe not as extensively as the U.S. given the earlier illustration of its larger potential for development. One example of small hydro in Canada is the 1-MW Elora facility, which began operating in 2017 on the Grand River in Ontario. It was built at an existing weir that had previously impounded water for hydroelectric generation. A second example is the Saskatoon Weir Hydropower Station to be built on the South Saskatchewan River. This facility will have a capacity up to 6.1 MW and be built at an existing weir. It is expected to cost C$65 million (US$51 million) to develop, with construction scheduled to begin in 2020.

Pumped storage

Canada actually does not have any pumped storage facilities currently operating, so this portion will focus on the U.S.

Admittedly, the U.S. hasn’t commissioned any new pumped-storage plants for more than a decade, but there is continued interest in this type of development. Very recently, the Kauai Island Utility Cooperative in Hawaii issued a request for qualifications for the Puu Opae Energy Project, which would include a pumped-storage plant with a capacity up to 25 MW. This shows promise to reach fruition and is part of a larger project that will incorporate the use of solar photovoltaic technology to pump the water uphill during the day.

Additionally, Dominion Energy is studying the construction of a pumped storage project in the Commonwealth of Virginia. The potential generating capacity of the facility has not been disclosed, but Dominion Energy says it could cost $2 billion but also provide millions in tax revenue while creating hundreds of jobs during construction and up to 50 permanent jobs when complete.

Marine and hydrokinetic energy

In North America, the main area of focus for this segment of the hydroelectric power market is in Canada.

Recently, the Offshore Energy Research Association announced it was helping support five collaborative research projects to address knowledge gaps and challenges associated with tidal energy development in Canada. A total of $1.25 million went to winners from Nova Scotia: Acadia University (two projects), the Fundy Ocean Research Center for Energy, Dynamic Systems Analysis, and Nova Scotia Community College.

In addition, in October, the government of Nova Scotia amended its Marine Renewable-energy Act to “make it easier to assess innovative, lower-cost tidal energy technologies and help developers bring them to market faster.” Changes included allowing demonstration permits of up to 5 MW and allowing companies to sell the electricity they generate at a lower price than existing tidal feed-in tariffs. In addition, the energy minister will be able to issue permits for up to five years and will have the authority to negotiate and issue power purchase agreements for up to 15 years.

In the U.S., the U.S. Army Corps of Engineers issued its final approval for the Bourne Tidal Test Site in September, paving the way for the Marine Renewable Energy Collaborative to proceed with installation of a test platform in the Cape Cod Canal in Massachusetts. The site will include a structure onto which turbines up to 100 kW in capacity and 3 m in diameter can be tested. The collaborative is accepting proposals from entities interested in performing testing at the site.

Rehabilitation and upgrade work

This is a significant focus at U.S. hydro plants, given their overall more advanced age. In fact, there are probably well over a couple hundred hydro facilities in this country undergoing some sort of rehabilitation and/or upgrade work right now.

The U.S. Army Corps of Engineers is one example of a hydro project owner doing this work. Its Cumberland River System Hydropower Rehabilitation Program has been ongoing since 2004 and is anticipated to cost US$1.2 billion. The nine hydro plants in this river system, which began operating between 1948 and 1977, have passed their expected design life and have begun to suffer declines in efficiency and reliability. The goal is to repair, rehabilitate, replace and modernize hydroelectric generation equipment in the nine plants, resulting in increased reliability, availability and efficiency.

However, several plants in Canada are also currently undergoing rehabilitation. For example, the 289-MW E.B. Campbell station, owned by SaskPower, is being rehabilitated through the replacement of six Francis turbine-generator units, including auxiliary equipment and mechanical and electrical balance of plant.

In addition, Ontario Power Generation recently announced a rehabilitation program that will more than double the capacity of its 10-MW Ranney Falls project. A new 10-MW turbine-generator unit will replace an existing 800-kW turbine at the site, located in a separate powerhouse, that was installed in 1926. OPG says this work furthers its commitment to maximizing its hydroelectric resources across Ontario and will breathe new life into the aging facility. The work also is expected to create 70 jobs.

Civil/dam safety work

The single biggest ongoing news story in North America with regard to the safety and reliability of civil structures is the February 2017 incident at Oroville Dam in California, U.S. The California Department of Water Resources reported it had met its Nov. 1 deadline to repair and reconstruct the main spillway to handle flows of up to 100,000 cubic feet per second, which was required to prepare the spillway for the rainy season. However, significant work is ongoing to both repair the damaged emergency spillway and accomplish more permanent repairs to the main spillway. In addition, the independent forensic team investigating the incident released its final report in early January, citing a “long-term systemic failure of the [dam owner], regulatory and general industry practices.”

Natural events continue to pose a hazard to dams and water supply structures, as a recent event in Tennessee in the U.S. illustrates. In early November, a rock slide damaged a section of a wooden water flume used to supply water to the 23-MW Ocoee No. 2 hydropower plant. This facility is owned by the Tennessee Valley Authority and is located on the Ocoee River. Work is under way to assess and repair the damage caused by the large boulder.

Although issues with the safety of dams in Canada have not come up a lot, there are some facilities facing structural challenges. One example is the 660-MW Mactaquac Generating Station in New Brunswick. Since the 1980s, concrete portions of the hydro station have been affected by a chemical process called alkali-aggregate reaction, which causes the concrete to swell and crack. This situation has required substantial maintenance and repairs and plant owner NB Power is working to address the situation in order to ensure the hydro station can operate to its intended 100-year lifespan.

Elizabeth Ingram is managing editor of Hydro Review.

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