Pay to play

The key to unlocking hydropower’s future is a clearer understanding of what drives value in today’s energy mix.

Through federal and state tax incentives, regulatory policies, and increased interest from the general public in clean energy, the power grid today benefits from an array of clean, and relatively low-cost, energy options. In fact, Abhishek Somani, an economist at PNNL, says “the rise of solar and wind energy has changed the economics of the power market.”

“The changes in today’s energy mix are changing the value, requirements, and definition of grid services,” said Somani. “In turn, these changes affect the contracts and compensation for resources.”

Geographic factors are also a consideration as renewable portfolio standards, and which technologies qualify, vary across states. As many as 30 states across the country have clean energy standards related to the percentage of power generated for utilities that comes from renewable energy sources. For example, Colorado plans to go 100 percent renewable by 2030, but doesn’t consider hydropower a renewable resource. Meanwhile, Washington State’s clean energy standard immediately led to new long-term contracts for hydropower to support the state’s technology industry. And in California, only energy storage smaller than 50 megawatts is allowed, which leaves out any new large pumped hydro from being considered.

“The acceptance and treatment of hydropower gets flipped on its head when we go from one way of defining ‘standard’ to another,” said Somani.