Federal reconciliation bill could impact area’s hydropower

  • Cabot Station turbine hall. COURTESY FIRSTLIGHT POWER

  • Northfield Mountain turbine hall. COURTESY FIRSTLIGHT POWER

  • The Turners Falls dam. COURTESY FIRSTLIGHT POWER

Staff Writer
Published: 11/7/2021 11:02:31 AM

The hydropower industry has been working closely with congressional lawmakers to get a 30% tax incentive included in the reconciliation bill going through the wringer.

As it stands, the bill has a tax incentive for the nuclear industry, but renewable hydropower has been left out. Industry professionals say the tax incentive is crucial to freeing up capital to support grid resilience, dam safety upgrades such as new turbines and fish passage systems, and environmental enhancements at existing hydropower facilities, at least six of which are in Franklin County.

Leonard Greene, director of government affairs and communications at FirstLight Power, explained investment tax credits are tools the federal government uses to incentivize investment in particular technologies, reducing the overall cost of large-scale development and capital projects.

“In some cases, the tax credit can mean the difference between a project being developed or not being developed based on projected financials,” he said. “Tax credits such as the proposed ITC (investment tax credits) for dam safety and environmental improvements can have a tangible impact on how a dam owner addresses an identified issue, such as fish passage. In this case, the tax credit could render certain improvements that are not economically viable to become viable because of the tax incentive.”

Greene said FirstLight is supportive of each of Congress’ proposals, especially the ITCs for energy storage and a separate proposal that would provide a tax credit for dam safety and environmental improvements at existing sites. He said the energy storage investment tax credits would substantially improve the financial viability of new energy storage projects, expediting their development. The company is considering pairing new battery energy storage systems with some of its hydropower facilities, improving their overall capability to provide renewable energy when it is most needed.

Greene mentioned the investment tax credits for dam safety and environmental improvement would help existing dam owners maintain their facilities and install environmental improvements, such as fish passages.

FirstLight currently owns and operates 11 run-of-river and conventional hydropower plants, two pumped hydro storage facilities (which he explained are a form of energy storage), a large solar plant, and two battery storage facilities. All of its generation and energy storage facilities are in Massachusetts and Connecticut.

John Ragonese, Federal Energy Regulatory Commission license manager for Great River Hydro, said the tax credits could lessen hydropower plants’ environmental footprint by enabling necessary improvements.

“In general, what ... we believe is that while it all makes sense to have an ITC for wind and solar to incentivize more resource investment in those areas, the fact that (the reconciliation bill) doesn’t include hydro is somewhat ironic,” he said. “Many of our hydropower projects provide a lot of grid support. And that grid support is very critical and is recognized as so by, say, ISO New England (an independent, nonprofit regional transmission organization, headquartered in Holyoke).”

Great River Hydro operates seven hydroelectric stations on the Deerfield River and six on the Connecticut River, constituting the largest conventional hydropower fleet in the region.

Margaret L. Boyle, who works for U.S. Rep. Richard Neal, chair of the House Ways and Means Committee, said the reconciliation bill is still being negotiated.

Andrew Fisk, executive director of the Connecticut River Conservancy, which advocates for the health of the river and tributaries, said the 501(c)(3) nonprofit organization supports the investment tax credits, so long as hydropower facilities are transparent about the money they make and spend. He said it is in everyone’s best interest to ensure hydropower projects operate with the smallest ecological footprint possible.

“Right now, they don’t,” he said. “They damage the rivers and ... don’t do as much for the public as they should.”

Fisk said the hydropower companies that run these projects need to make significant investments, and tax credits, if properly constructed, can help support those investments.

LeRoy Coleman, director of communications for the National Hydropower Association, in Washington, D.C., explained the bipartisan legislation can facilitate the rehabilitation, retrofit, or removal — the “3 Rs” of the industry — of the nation’s 90,000 dams.

“For the hydropower industry, retrofitting our existing fleet is critical. While hydropower provides clean, renewable energy to over 30 million U.S. homes, the flexibility it provides to the grid is where it shines. It’s quickly dispatchable, while also integrating growing amounts of wind and solar generation,” Coleman said in a statement. “New hydropower facilities built on existing, non-power dams, as well as new closed-loop pumped projects is without a doubt on the horizon for the industry, but Congress cannot take for grant what the existing fleet means for our clean energy future.

“Let’s say you wanted to make dam safety upgrades to improve the performance of a spillway,” he went on to say. “That alone could cost you in excess of $100 million. A 30% ITC can make the decision for a hydropower owner that much easier. It would also enable them to make fleet-wide changes to improve environmental upgrades like fish passage systems or improve generation resiliency and performance with a new turbine.”

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