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December 2012 Policy Study, Number 12-12

   

Water, Water Everywhere, but Not a Drop for Power

   

Examples of Hydroelectric Energy Generation in Iowa

   

 

Gary C. Young, a Ph.D.-licensed professional engineer based in Cedar Rapids, recently wrote a book entitled Municipal Solid Waste to Energy Conversion Processes – Economic, Technical, and Renewable Comparisons, which has a chapter on renewable energy sources and an extensive discussion of hydroelectric energy generation. He provides detailed analysis of the potential electricity generation, electricity costs, and income generation for three low-head dams in Iowa.

 

The dams are located in Nashua, Delhi, and Fort Dodge and appropriate for small-scale “run-of-the-river” operations. A run-of-the-river hydroelectric facility uses only the daily water flow to generate electricity. There is no major reservoir of water to be drawn down and used on a regular basis.

 

By definition a small-scale hydroelectric power plant generally has a capacity of less than 15 megawatts and/or a dam height of less than 65 feet.[32] Some projects with generation capacity of up to 30 megawatts are still considered small-scale.

 

The Lake Delhi dam data Young uses is outdated because of the 2008 and 2010 flood damage, but is nevertheless interesting as power generation potential is an issue now being discussed. Rebuilding the Lake Delhi dam with hydroelectric power is an important part of that flood recovery effort. Currently there are licensing applications under consideration by FERC for several other dams in Iowa, including at the Coralville Reservoir and other low-head dams – though no new licenses have been issued since 2010.

 

Young’s analysis for all three sites goes through several possible scenarios. These scenarios factor in various project costs and potential financial returns based on taking advantage of 1) federal renewable energy tax credits of 1.8 cents per kilowatt hour, 2) clean renewable energy bonds (CREBS), which have a zero percent interest rate, as well as 3) the American Recovery and Reinvestment Act of 2009, which provided a grant of 30 percent of the project cost to the developer.[33]

 

The Nashua Mill Dam and Powerhouse, which became operational in May of 2012, is an excellent example of both the problems and success of retrofitting a smaller dam to generate electricity. The original dam and powerhouse were constructed in 1917 and closed in 1965. The dam was rebuilt in 1989 by the city of Nashua, but generated no electricity.[34]

 

The city filed the official application for a license in April 2009, after several years of preparatory work. The final license and approval to begin power generation was issued three years later.

 

This project was built and managed by a private company – Modern Hydro of Waupaca, Wisconsin – and cost approximately $2.675 million. The total regulatory process took over six years to complete. Currently it consists of a single turbine with a capacity of 600 megawatts, with at least two more turbines and two more generators to be added in the future.

 

On an annual basis, this facility can generate just under four million kilowatt hours of electricity per year.[35] The turbines will run in a fully automated run-of-the-river mode. Based on annual use of about 11,000 kilowatt hours (kWh) of electricity per house, this would power about 360 homes for a year.

 

The energy from the Nashua Powerhouse is primarily used to power city facilities, such as city hall, the library, streetlights, and the water treatment facility. Extra power is sold back to the grid (Alliant Energy) at 4.5 cents/kWh. In addition, the federal government pays a renewable energy incentive of 1.8 cents/kWh, as stated before, and provides a 1 cent per kWh “green tag.”[36] The renewable energy incentive is the same one used by the wind power industry, which is the focus of much recent discussion.

 

Modern Hydro sells the excess electricity to Alliant Energy and Nashua receives 15 percent of that amount, which is to be used for future dam maintenance and other needs.[37] In this scenario, the city is basically buying the electricity from themselves, managed by their private-sector operating partner.

 

The FERC analysis of the project costs and electricity generation costs showed that in the first year alone there would be a savings of over $78,000 to the city, compared to purchasing power from an outside source.[38] The estimated positive cash flow for the Nashua Powerhouse by Dr. Young shows a minimum of $47,000 in year one, increasing to $81,000 at year 10, and continuing to increase to over $241,000 after 20 years, once the bonds are paid off. The facility has an expected life of another 30 years after that. As a result, the city will have both significant positive cash flow and control their own power needs for the next 50-60 years.

 

The actual construction took approximately a year and a half – the rest of the six-year development process was bureaucratically driven regulatory approvals and documentation. According to Nashua Mayor John Phyfe, who was an early supporter and organizer for the project, it took “monstrous amounts of paperwork.”[39] The process begins with a request for a preliminary permit to do a study to determine project feasibility, and proceeds through various studies and authorizations. This preliminary study permit is good for three years in most cases.

 

As an example of regulatory overreach, though the Iowa Department of Natural Resources (DNR) did not respond in a timely manner to the water quality certification request for the Nashua project, resulting in an official waiver of the water quality requirements of the DNR, the FERC license still requires the facility to meet these standards.[40]

 

Additional paperwork had to be generated, adding costs to the project, because the drawings of the proposed project boundary showed an elevation of 960.1 feet above mean sea level. The statement of the potential boundary said “960.1feet plus or minus 0.25 feet.” The “plus or minus 0.25 feet” (4 inches) statement of the boundary required a complete redrawing of the reservoir plans.[41]

 

The FERC by law must consider, on an equal consideration basis, issues such as benefit of interstate or foreign commerce, improvement of waterpower development, protection, mitigation, and enhancement of fish and wildlife, irrigation and flood control, water supply, and protection of recreation. There is no provision for commerce or waterpower development to take priority over any other issue.[42]

 

This is even though, as the FERC analysis showed, the benefits of the Nashua project include the “ability to help maintain the stability of a power system…by quickly adjusting power output to respond to rapid changes in system load; to respond rapidly to a major utility system or regional blackout by providing a source of power.”[43]

 

Some of the environmental concerns about hydroelectric power include the effect on the water temperature and oxygen levels for fish, as well as endangered animals and plants adjacent to the river. At the Nashua facility, the environmental assessment showed that there was no change in water temperature either above or below the dam and that fish would not be impacted, yet the FERC process requires extensive testing and mitigation actions, just in case.[44]

 

Power lines must be constructed to not harm migratory birds. The plants of concern in Iowa are the Western prairie fringed orchid and prairie bush clover. The environmental assessment specifically dealt with how these plants must be protected, though they were not found on this site.

 

The tiny Indiana bat – indistinguishable by most people from the common Brown bat – is another species which requires special consideration by hydroelectric facilities in Iowa. Though they live primarily in trees and caves, especially near cropland, they were referenced by at least one FERC Iowa environmental analysis as an animal of concern to hydroelectric generation.[45]

 

The Nashua Dam and Powerhouse is just one example of how hydroelectricity can be used to both provide reliable, inexpensive power and energy independence for communities in Iowa, and across the U.S – and how the regulatory process both delays use of this important renewable resource and drives up the cost of production.

 

At Lock and Dam #18, one of the large dams on the Mississippi, located at Burlington, Iowa, the proposed installation of 24 “very low head” turbines has basically come to a stop. This is considered a very low-head dam because the drop is only four to seven feet. The preliminary permit was to expire as of August 30, 2012. According to City Manager Jim Ferneau the town does not have the financial ability to build the power plant.

 

A Canadian firm, Coastal Hydropower, is trying to get approval from the FERC to be the licensee for the city of Burlington to construct and operate the $86 million plant. The cities located at dam sites have preferred status in the FERC regulatory and licensing process. As a result, the contracts between the city and the private-sector builder and operator are closely scrutinized by FERC. A similar arrangement for a power plant at Lock and Dam #21, located at Quincy, Illinois, was turned down by the FERC last year because of “misuse of municipal preference.”[46] Ferneau was anticipating that the preliminary permit would be renewed, but progress is slow.

 

 

   

 

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