S&P: U.S. hydro asset transactions experiencing renaissance
A report from S&P Global Ratings says hydro assets in the U.S. seem to be experiencing a renaissance, with recent transactions commanding substantial EBITDA (earnings before interest, taxes, depreciation and amortization) multiples.
“Hydropower Projects 101: How S&P Global Ratings Views the Risk of Hydro” says that although America’s hydro fleet of about 80 GW has remained largely flat since the 1970s, there is a resurgence in financing hydro assets. Factors cited are:
- These assets continue to provide one major advantage to ratepayers: insulation against commodity price
- Increasing decarbonization of North America makes hydro assets very valuable
- The low power pricing environment that has weakened merchant generators’ fortunes during the past two years makes the case for maintaining hydro assets.
- Incumbent plants retain significant value and are a scarce resource
- With variable generation sources coming online, the ability of hydro facilities to adjust their production relatively quickly and offer load following services is becoming more valuable
The report says more than $6 billion of capital has been spent on hydro assets between 2005 and 2013 in the U.S. Key takeaways from this report, per S&P, are:
- Despite hydrological and financial complexities, hydro fleets can be rated according to their resource risk, the risk of non-performance and liquidity features
- A deluge of hydro closures is unlikely. Instead, these assets’ relative resilience and ability to renew via capital investments mean they are likely to play a significant role in the U.S.’ energy plans
- Despite substantial proliferation of hydropower in the Pacific Northwest, it is possible that hydro imports from Canada could increase, given the favorable economic benefits of hydropower
A section on the Clean Power Plan says, “… we still believe that even if the new composition of the Supreme Court does not uphold the rule, there is likely to be some form of carbon regulation in the U.S. longer term, and, if so, the maintenance of hydro assets is likely to play a significant role in reducing carbon emissions.”
Pumped storage, conventional technologies get DOE funding
The U.S. Department of Energy has awarded $9.8 million in funding toward pumped-storage and hydroelectric power conversion technologies as part of its HydroNEXT program.The initiative is being administered by DOE’s Office of Energy Efficiency and Renewable Energy and seeks to make hydro development easier by advancing modular, cost-efficient innovations.
Selected for the pumped-storage sector were:
- National Renewable Energy Laboratory will couple a ternary pumped-storage unit with “sophisticated” transmission monitoring and control equipment in a proof-of-concept for improving pumped-storage components’ integration into other renewable projects;
- Obermeyer Hydro is developing reversible pump-turbines with submersible permanent magnet motor-generators. DOE said the scalability and versatility of this design makes it applicable for a number of storage projects; and
- Shell Energy North America is investigating the feasibility of building a 5-MW closed-loop project that will include an artificial upper reservoir, a floating barge housing generating equipment, and a submerged, bag-like lower reservoir.
Selected to advance technologies for adding generation to non-powered dams were:
- Canyon Hydro will further optimize the design of Archimedes screws for use in low-head, high-flow sites, while also looking to reduce manufacturing and transportation costs through modular designs;
- Natel Energy will test a lab-scale version of its “hydroEngine” turbine, which it describes as a “linear Pelton”; and
- Rickly Hydrological will design and lab test powertrain, modular infrastructure components and software designed to simplify small hydro development at non-powered dams.
Canada offers online aquatic species at risk maps
The Department of Fisheries and Oceans in Canada offers aquatic species at risk maps on its website, intended to help hydro developers determine if an aquatic species at risk or its critical habitat may occur in or near the zone of impact of a particular proposed hydroelectric project.
Users can find an area of interest by zooming in and clicking on a map grid. They can then use the resulting map page and species table to gain the desired information.
For example, clicking on the Pacific Ocean Map 1 grid reveals 32 aquatic species at risk in that region, from the basking shark to the yelloweye rockfish. Clicking on the leatherback sea turtle, an endangered species, reveals more detailed information, including action plans, order and recovery strategy implementation progress.
EPA releases fact sheet on aquatic life and hydrologic alteration
The U.S. Environmental Protection Agency and U.S. Geological Survey have released a fact sheet – Final EPA-USGS Technical Report: Protecting Aquatic Life from Effects of Hydrologic Alteration.
Hydrologic alteration is a change to an aquatic system and can include an increase or decrease in water volume, seasonal pulse flow disruption, dramatic variation in water temperature, and other factors. Sources of flow alteration cited in the report are:
- Dams and impoundments (including for hydropower)
- Diversions (including for hydropower)
- Groundwater withdrawals
- Effluents and other artificial inputs
- Land-cover alteration
Stresses on aquatic life associated with hydrologic alteration may be further intensified through climate change, which may change the frequency and duration of extreme weather events, EPA says.
The report presents a literature review of the natural flow system and a description of the potential effects of flow alteration on aquatic life; examples of narrative water quality criteria some states have developed to support natural flow and maintain healthy aquatic biota; and a flexible framework that can be used by states, tribes and territories to quantify targets for flow regime components that are protective of aquatic life.
The report is at http://www.epa.gov/wqc/aquatic-life-ambient-water-quality-criteria.
The third edition of Hydro Wheels: A Guide to Maintaining and Improving Hydro Units, by 30-year hydropower veteran Thomas Spicher, provides information to help operators diagnose and remedy common problems. The expanded version adds a chapter, “New and Upgraded Hydro Turbines,” which provides guidance in establishing long-term, highly-reliable service from turbines through procurement and specification improvements. Buy the book for US$41.30 at www.PennWellBooks.com.