By Miranda Willson | 04/15/2022 06:55 AM EDT

A massive clean energy project that doesn’t rely on wind or solar could help solve some of California’s electricity challenges — if it can get built.

Nine years after first proposing the San Vicente Energy Storage Facility, the city of San Diego and the San Diego County Water Authority announced in January that they were in talks with a private developer to advance the hydroelectric pumped storage project, which would be constructed northeast of the city.

The development is an example of what the hydropower industry hopes will be a tipping point for one of the oldest sources of renewable energy, even as some analysts and environmentalists remain skeptical of whether the challenges for water power can be overcome.

“The hydro industry is really trying to showcase the fact that we’re part of the solution for climate change,” said Leonard Greene, head of government affairs and communications at FirstLight Power Resources Inc., which operates traditional hydroelectric and pumped storage projects in New England.

Although the days of sprawling new hydroelectric dams on American rivers may be over, observers see a growing interest in new pumped storage facilities and other hydropower projects that may pose less significant environmental threats while providing benefits to the power grid. Consisting of two reservoirs at different elevations, pumped storage projects use water and gravity to generate power as well as store electricity, which can be released as needed to help balance the power grid.

The trend comes as industry leaders and environmental groups alike are pushing for reforms to the hydropower permitting process that could make it easier to advance certain potentially lower-impact hydropower projects (Greenwire, April 4).

Representing a growing share of the hydropower projects proposed or under development, pumped storage facilities act similarly to a giant battery, but they can store energy for longer than the batteries that exist today. Many of the major projects under consideration, including the one proposed in San Diego, are closed-loop.

That means they aren’t connected to an existing free-flowing waterway, “potentially minimizing aquatic and terrestrial impacts,” according to a Department of Energy report from 2020.

All told, 63 gigawatts’ worth of new pumped storage projects have been proposed to the Federal Energy Regulatory Commission over the last three years, an amount that’s roughly three times the existing pumped hydropower capacity under FERC’s jurisdiction, according to ClearView Energy Partners LLC in a research note last month. FERC is charged with approving and regulating new, nonfederal hydroelectric dams.  

The heightened interest in pumped storage is likely due to state and federal policies promoting a transition to carbon-free energy, said Timothy Fox, vice president at ClearView.

“Even though battery storage is the dominant new energy storage being deployed, there’s this growing interest for pumped storage because it’s a proven approach for long-duration energy storage,” Fox said. “It will be important for states like California and the [New England] states as they look to decarbonize their grids.”

Currently, the standard timeline for permitting new hydroelectric project is about five years, according to Aaron Levine, a senior legal and regulatory analyst at the National Renewable Energy Laboratory.

But under proposed reforms to the Federal Power Act backed by the hydropower industry and environmental organizations, the licensing process for closed-loop pumped storage projects could be shortened to three years.

Sent to members of Congress last week, the reforms intend to improve the economic value and environmental benefits of hydropower projects, while promoting healthy rivers and recognizing the rights of Native American tribes.

The proposal is the product of three years of negotiations among tribes, conservation groups and industry leaders. It represents a possible turning point for a sector that has long been at odds with the environmental community and tribes, who say they’ve lacked a say in the development of dams on their land.

So far, some members of Congress have expressed interest in the proposed Federal Power Act reforms.

“Like coal and natural gas, the permitting process for hydroelectric infrastructure is a wasteful disaster,” Sen. John Barrasso (R-Wyo.), ranking member of the Senate Energy and Natural Resources Committee, said in a statement. “I look forward to seeing the agreement various stakeholders have reached. I will take time to review their ideas to ensure our American energy producers and families are truly getting the relief they need.”

‘A new area’ for the hydropower industry

The three-year licensing processes outlined in the package would only apply to certain closed-loop pumped storage projects.

In addition, new hydroelectric projects at dams that are already in place but are not currently producing energy would be able to obtain a license within two years.

Aside from pumped storage, hydropower projects at existing, “non-powered” dams represent a significant segment of the new projects being proposed to FERC — and one that also has potential for fewer environmental issues, analysts say.

Overall, the reforms would clarify and improve the current process for permitting closed-loop pumped storage facilities, said Tom Kiernan, president of American Rivers. While closed-loop projects may bring their own challenges, the environmental group is not opposed to expedited licensing for smaller, “non-controversial” facilities, said Kiernan, who helped craft the package of reforms.

“It’s a new area that the industry is enthusiastic about and that we’re looking at closely,” he said. “It’s a different set of challenges we’re all trying to understand.”

Still, observers say the package and low-impact hydropower projects in general are far from a catch-all solution. In practice, new hydropower projects often face opposition on environmental and other grounds, which can make it difficult to site them, said John Parsons, a senior lecturer at the Massachusetts Institute of Technology.

“I’m confident that reforms like this can be good. I just don’t think they’re enough,” Parsons said. “I think the divisions in our society really disrupt the sound functioning of normal Democratic processes.”

For example, PacifiCorp’s proposed Crooked Creek pumped storage project in Oregon is already facing skepticism from local conservation groups over the project’s land use and water impacts, according to comments submitted earlier this year to FERC. The Klamath tribes, based in southern Oregon, also said in a January letter to FERC that the project as proposed could potentially destroy sacred areas and burial sites.

PacifiCorp will engage with the Klamath tribes on tribal cultural resources in the region as well as assess any challenges related to water use before moving forward with the proposal, said David Eskelsen, a company spokesperson. PacifiCorp is part of Berkshire Hathaway Energy.

“PacifiCorp is aware of challenges related to water scarcity, and believes there can be creative solutions to address these issues,” Eskelsen said in an email.

It’s also not clear whether pumped storage projects like PacifiCorp’s and other hydroelectric facilities being proposed will translate into actual projects, said Colleen McNally-Murphy, associate national director of the Hydropower Reform Coalition. The environmental group was involved in drafting the proposed Federal Power Act changes.

“We are seeing a lot of pumped storage projects being proposed. That doesn’t mean we’re seeing a lot of pumped storage projects being built,” McNally-Murphy said.

While the San Vicente project near San Diego showcases the potential of pumped storage as a new hydropower solution, it also exemplifies some of its limitations.

If constructed, the facility would be capable of storing enough energy to power 135,000 households for eight hours a day every day of the year, according to the San Diego County Water Authority. That’s critical in California, which experts say will need a significant amount of new energy storage capabilities to decarbonize its power system while avoiding blackouts.

In addition, the project could help solve a recurring problem in California that is also beginning to emerge in other regions, officials said: excess renewable energy that cannot be used immediately and ends up going to waste.

“Currently, San Diego is generating excess solar energy and sending it out of state since there is not sufficient storage to hold that excess energy for later use,” Neena Kuzmich, deputy director of engineering at the water authority, said in a statement. “That requires us to buy out of state power when our demand exceeds supply, particularly for evening use.”

At the same time, the project has been under exploration by San Diego officials since at least 2013, according to public filings from the water authority. While the city and water authority began negotiations with private developer BHE Kiewit in January, they are currently focused on “environmental surveys and feasibility studies,” said Ed Joyce, senior public affairs representative at the water authority.

Often, new hydropower projects will need to undergo environmental reviews under the Endangered Species Act through the U.S. Fish and Wildlife Service, said Levine of NREL. They must also obtain a clean water certification through their relevant state agency, Levine said.

That’s in addition to the FERC process, which begins with the obtainment of a preliminary permit.

After obtaining a preliminary permit from FERC, which authorizes studies at the site but no construction activities, developers must then apply for a license. At that point, FERC will conduct an environmental review under the National Environmental Policy Act, Levine said.

“There’s a lot of complexities involving what studies need to be completed to understand the impacts the project is going to have,” Levine said.

The process is designed to ensure that facilities can operate safely and that environmental concerns are mitigated, Levine said. Still, Greene of FirstLight Power described it as “incredibly complicated” and costly.

“It is absolutely, ridiculously too long. … To build a solar field or wind farm or battery storage projects tends to be a lot quicker,” Greene said. “We’re at a significant disadvantage.”

‘Hugely helpful’

Under the reforms proposed last week, it’s not clear exactly how the licensing process would be expedited for closed-loop pumped storage projects and hydroelectric facilities at existing dams.

The faster process for closed-loop pumped storage would only apply to select projects that would not harm endangered or threatened species and that would not be sited on tribal lands without the consent of tribes, McNally-Murphy said.

Still, FERC would need to determine what analyses or reviews could be streamlined or eliminated in those cases, said Charles Sensiba, a partner at Troutman Pepper and a lead negotiator for the hydropower industry on the package of reforms.

“It will be a challenge to get them through in just two or three years’ time,” Sensiba said. “There are some ideas that the legislation puts forward, such as reduced studies, a streamlined NEPA [process] … but most of the progress on getting those projects through in two or three years’ time would be something resolved by a new [FERC] rule.”

Based on his most recent research, Levine said that delays in obtaining state water quality permits and authorizations pertaining to potential endangered species impacts are more likely to hold up projects than the FERC process. But those issues would not be resolved through the proposed reforms, since they extend beyond the realm of the Federal Power Act, he said.

“I’ve spoken to a number of the members who were on that working group who developed this, and I think they felt that those were going to be really hard to reform,” Levine said.

Despite that, Greene of FirstLight Power said the expedited licensing process would be “absolutely critical” for new, low-impact projects in particular.

“This is something that would be hugely helpful not just to the hydropower industry, but to helping achieve our climate goals,” he said.

FirstLight is currently in the process of relicensing its Northfield Mountain Pumped Hydro Storage Station in Massachusetts. Typically, FERC licenses for hydropower projects last for 30 to 50 years, after which point they must be renewed. Today, about 30 percent of the installed capacity of nonfederal hydropower projects is currently up for relicensing, Sensiba said.

Part of the aim of the proposed reforms is to modernize the permitting process for those existing projects, too, as developers and regulators consider whether to keep them in place. For environmental groups, that represents a key part of the conversation around hydropower today.

Although hydropower constitutes the largest source of low-carbon power in some parts of the country, aging dams may face environmental challenges and financial obstacles, McNally-Murphy said.

In addition to addressing the licensing process for new projects, the reforms would direct FERC to improve the process for surrendering licenses, adding new requirements for public participation early on in that process.

“This doesn’t cover the entire universe of the world of hydro, but we think we’ve identified some areas that will improve the process in terms of making it more participatory and providing some clarity, as well as supporting our tribal partners,” McNally-Murphy said.

Correction: A previous version of this article described hydropower as carbon-free. While hydroelectric turbines do not directly emit air pollutants, methane and carbon dioxide can be released when organic matter decomposes in a reservoir.