Green hydro pioneers: ten years on

The Low Impact Hydropower Institute (LIHI) was established in the US as an independent non-profit corporation dedicated to providing a voluntary certification programme for identifying low impact hydro power. The concept for the institute developed from the efforts of American Rivers (a national river conservation organization) and Green Mountain Energy (a marketer of green electricity) to develop appropriate mechanisms for identifying environmentally preferable hydro power for use by consumers in the emerging competitive electricity markets.

The institute’s governing board met for the first time in November 1999 and officially launched the certification programme in January 2000. The institute received its first application for certification in May 2000. As of 1 January 2009, the institute has certified 37 projects (103 dams) in 22 states from Maine to Alaska with a combined installed capacity of 2135.58MW (see certification list).

Through its certification programme, the institute serves a broad constituency with a variety of stakeholders including environmentalists, consumers, renewables and green energy labeling groups, power marketers, and the hydro power industry.

The institute serves these various interests by providing a national independent and objective mechanism for identifying hydro power facilities that are low impact relative to other hydro facilities. By providing a voluntary certification programme centered on environmental criteria, consumers are able to choose low impact hydro power over other hydro when purchasing electricity.

There are also non-commercial groups that are identifying or labeling energy products as green or environmentally preferable. These groups generally set standards for the amount and type of renewable energy that can achieve their label, and these energy products are then available for customers in competitive markets. The groups typically look at a range of renewable energy products such as solar, wind, and biomass. However hydro power, due to its environmental effects, can prove difficult to include in the renewables mix. In addition, due to the complex statutory and regulatory scheme surrounding hydro power generation, addressing hydro effects requires some specialised knowledge and focus.

The institute provides this expertise through its rigorous programme focused solely on hydro power and provides these groups with the ability to utilise the certification programme, backed by the strength and credibility of a governing board well-versed in hydro power issues.

Hydro power project owners who want to gain a competitive edge in the new energy markets now have a way of obtaining recognition for their well-operated and well-sited facilities by getting them certified as low impact by the institute. Moreover, the industry can obtain this certification regardless of the size of its facility – as long as it meets the criteria, the facility will be identified as low impact.

Back in March 2002, I wrote an article on the institute for IWP&DC when it was the ‘new kid on the block’. I didn’t know much about them, but after interviewing their then executive director, Lydia Grimm, I walked away from the interview very impressed with what they had done to create a unique organisation.

At the time I wondered if it could survive without a robust green market and the support and interest of the hydro power industry. Well, it did survive and one of the reasons I believe it has been so successful is the efforts of its volunteer governing board. I caught up with three veteran board members who have been with the organisation since 1999. I wanted to ask them a few questions and get their sense on how successful the institute has been since its creation and their hopes for the future.

Ayer: As one of the founders of LIHI, you were very involved in creating the organization. Has it turned out the way you had originally envisioned? If not, do you have any sense why?

Roos-Collins: Foolish plans of mice and men, right? LIHI has largely met my original expectations. Let me explain what they were. The founders intended our programme to enhance environmental quality at existing hydro power projects by encouraging licensees to exceed the regulatory minimums which the Federal Energy Regulatory Commission (FERC) would otherwise impose in licences. Specifically, our criteria ask whether a given project follows the recommendations for flow releases, fish passage, and other environmental enhancements as proposed by resource agencies under Federal Power Act section 10(j).

In 1999, FERC frequently rejected such recommendations on its own initiative, and licensees rarely reached settlements with other stakeholders. Our programme was intended to help change that reality. We believed that FERC was more likely to incorporate enhancement measures into a project licence if the licensee affirmatively said that it accepted them as a business decision. Why would a licensee do that? We expected that our certification would increase project revenue – indeed, more than the cost of accepting such measures – since many electricity customers would pay a premium for such green power.

So, how has the world turned? Today, just nine years later, most licences are based on settlements between licensees, resource agencies, and other stakeholders. Such settlements typically incorporate agency recommendations under Federal Power Act section 10(j). That positive trend mostly reflects a widespread recognition in this regulatory community of the comparative benefits of settlement versus litigation in relicensing proceeding. For some licensees, our certification programme provided the extra benefit necessary for them to accept that new approach.

Malloch: When we started this effort more than ten years ago it looked like we would have robust retail competition for electricity. Deregulation and breaking the utilities up was a foregone conclusion. We saw an opportunity to differentiate power in a way that furthered our goals of improving river health. We wanted to make certified hydro power like organic food – good for you and good for the environment.

In addition, we wanted to provide an incentive for accepting positive public benefit and environmental health terms in the FERC relicensing process and support settlement.

We got up and running, with our first few certifications underway, when the electricity system went crazy, undercutting our strategy. Deregulation and retail competition went out. But it turned out that hydro power owners still wanted recognition for the good things they were doing, especially as a result of relicensing. That got us through a few lean years.

Now there is increasing institutional and corporate demand for green power as part of a drive for corporate responsibility and sustainability. That is driving many hydro power owners to seek certification – some are getting real premiums by selling certified power to institutional buyers. There is also a growing interest in including certified hydro power as part of renewable portfolio standards (RPS).

LIHI’s story is similar to many startups. The initial market target turned out to be wrong, for reasons we could not foresee. But by staying alive and continuing to work at developing a niche, we finally found a real opening. From here, we think we can grow the business, and continue to seek improvements to the way hydro power projects are operated.

Swanson: I envisioned that the creation of LIHI would quickly identify the hydro power facilities that meet minimum standards for their environmental quality and the impacts they have on key ecosystem attributes. I envisioned that this certification programme would help the public understand that some hydro power has relatively few adverse impacts and that some pose very significant problems. I think LIHI is fulfilling this vision but it is taking longer to accomplish this than I anticipated at the start. With LIHI we wanted to make sure that hydro power marketed as green power or clean power really was power generated by hydro power facilities that did not cause serious environmental problems.

When we started there was a disturbing trend by policy makers toward distinguishing low impact hydro power on the basis of the size of the unit, not the specific impacts on local fisheries or water quality or other attributes that relate to local conditions. LIHI has helped people understand that not all small hydro power facilities are benign and that not all large hydro power facilities produce severe impacts. Nevertheless I find many people continue to assume that small hydro facilities pose few risks and that large ones are problematic.

Ayer: How much has the climate change debate altered the way environmental organisations think about hydro power’s role in the future?

Roos-Collins: A sea change is underway. For many decades, a debate has occurred about whether hydro power is renewable. Licensees argued that their projects use a renewable source, water, to generate power, while environmental groups focused on the significant impairments of renewable resources, the fish and wildlife species which depend on natural flows. In my view, that debate is stale. It focuses on existing projects. That ignores the imperative that we develop new renewable power to replace existing coal and other thermal generation, in order to lessen the rate of climate change and increase energy independence. LIHI now certifies retrofits of non-hydro power dams to add such renewable capacity. That reflects the principle that new renewable power must be designed, built, and operated to protect the local aquatic ecosystem, not just the global commons.

Malloch: There has always been a tension between the notions that ‘dams are bad’ and that ‘hydro power is good’ in both environmental organizations and the broader population. Climate change heightens that tension, but I have not seen a major shift in thinking about hydro power.

In most organisations the thinking is that we need new non-hydro power renewables. Hydro power is seen as a mature resource, with little new generation potential from new traditional projects because the best sites are used or off limits. However, there is interest in retrofitting existing non-power dams with generators and unconventional hydro power. Other resources, especially wind, solar and non-food based biofuels are seen as having the most promise.

When we get a carbon-constrained economy, and have to run an electricity grid with more intermittent generation sources, we might see renewed appreciation of hydro power.

Swanson: The climate change crisis has had the effect of elevating the concern about power sources that contribute to climate change, and consequently reducing the priority to other ecosystem impacts. I endorse this focus because the inattention given to the climate crisis for the last two decades has reduced the time available and increased the difficulty of addressing this.

Nevertheless, I believe the ecosystem impacts that LIHI focuses on in its certification programme remain important and are crucial to long term efforts to find sustainable paths to meet our local and global energy needs. The LIHI plays an important role in offering science-based criteria for identifying and mitigating the important impacts caused by hydro power construction and operation. All energy production sources pose varying environmental risks. LIHI plays an important role in encouraging facility owners to take steps to reduce impacts that are not addressed in the hydro power licensing process.

Ayer: Some have suggested that the LIHI certification programme should be used as the eligibility metric of any national renewable portfolio standard (RPS) that Congress passes. What do you think?

Roos-Collins: Yes, as a permissive eligibility metric for hydro power. Let me start with the negative. It might be inappropriate for RPS to use our certification as the sole and mandatory metric, since that would delegate public policy to the control of a non-profit corporation. By contrast, using our certification as a permissive metric would make common sense. As the only certification programme for hydro power in the US, we have a ten-year track record of fairly applying our criteria. We actively solicit, consider, and respond to public comments on each application. Our decisions are public records. Our certifications have resulted in new revenues and other substantial business benefits for project owners, who uniformly seek renewal at the expiration of original certifications.

In sum, our programme provides a public service – distinguishing superior performance in environmental enhancement – that may be incorporated into RPS or other public policies designed to encourage renewable power development. Similarly, certification programmes for other goods are administered by private corporations, such as Green-E (other sources of renewable power), Forestry Stewardship Council (lumber products), or Underwriters’ Laboratories (electrical and other residential goods).

Swanson: I believe that the underlying criteria that support LIHI certification should be used in any RPS. Whether certification administered by a non-government organization can or should be used for qualifying resources for a federal or state regulated policy is a question that has to be addressed if LIHI certification is to be considered. More important is the current focus of LIHI certification on existing hydro power facilities. RPS policy focuses on additions to the supply of qualifying renewable energy generated electricity. This diminishes the role LIHI certification could play in the RPS programme.

Ayer: If you could go back to 1999 during the days of creating LIHI, what would you do differently?

Roos-Collins: Water under the bridge. Let’s talk about the future!

Malloch: Hindsight being what it is, I would have put more attention towards developing demand for certified power from the ultimate customers rather than just on the hydro power owners. We might have seen that retail competition was difficult and focused instead on large commercial and institutional power users. I would have also worked harder at our revenue model. Initially we relied on foundation grants and certifications. Now modest annual fees allow us to do more marketing and to get the word out about LIHI, which benefits certification holders.

Swanson: I would have liked to see LIHI commit resources to educating the public about river systems and the way hydro power facilities pose threats to river systems. Resource limitations, including the time of the LIHI executive director and board of directors, were barriers to addressing that while also focusing on administering the new certification process. I hope the LIHI will succeed in connecting with the communities around hydro facilities, pointing out what is working and what continues to threaten the health of America’s rivers and streams.

Ayer: LIHI does not accept certification applications for projects outside the US. Can you see a day when the LIHI certification programme might be extended to Canada or South America?

Roos-Collins: Unlikely in the next few years. Our programme reflects the regulatory and other legal requirements for hydro power in the US. Essentially, we ask: does a project exceed the minimum requirements of the Federal Power Act? We would have to start from scratch in Canada or South America, which of course have very different legal requirements. Plus, the LIHI staff and board will have our hands full keeping up with certification requests from domestic projects if federal RPS legislation recognises our programme.

One possibility is redesigning the program to state objective criteria, such as the degree of control and alteration of natural flows. In that form, it would apply anywhere. The founders considered and rejected that approach in 1999. Even if objective on paper, such criteria would require the LIHI board to use substantial judgment and discretion in considering the facts of a given application. Since seeking our certification is still voluntary, why would a project owner trust us to apply criteria where a rational answer could be yes or no?

Malloch: International certification is a direction we want to go. It will take some work, because the licensing systems are different, but we think that we can develop approaches that work independent of the regulatory system.

Swanson: I hope that this happens. It is particularly important to have a LIHI certification process applied in Canada where there are so many large existing and yet untapped hydro power resources. I live in Vermont where we currently depend on hydro power from Quebec, Canada for a large proportion of our electricity supply. It is difficult to sort out the conflicting claims about the environmental impacts of the hydro power imported from Canada. It would be very helpful if there were an independent organisation in Canada, like the LIHI providing certification of the hydro power imported to the US.

Ayer: What is LIHI’s future? Where will it be in five years?

Roos-Collins: Our future will be influenced by RPS and other renewable power policy, which will change more in the next five years than the past 20. Having said that, I hope that LIHI will make two changes on our own initiative. We should offer different levels of certification, such as basic to exceptional. This would encourage owners to go the extra mile in protecting the local ecosystem.

Second, we should expand our programme to include new projects, both inland and marine. Our programme today reaches existing projects, including retrofits. As I said above, new generation – unlike fine-tuning existing generation – will be necessary to mitigate climate change and contribute to energy independence. LIHI should be part of that solution.

Malloch: We see LIHI continuing to grow rapidly as the demand for green power grows among consumers. There are better hydro power projects that should be rewarded for their efforts. There are also projects that need to improve their environmental performance. We serve a real role in helping to distinguish between the two. There is also a role for LIHI in RPS programmes for the same reason. Most RPS systems use a size limit for hydro power, but small hydro is not necessarily better hydro. We want RPS systems to include only better hydro.

Swanson: My hope is that our nascent efforts to market LIHI certification will gain a strong foothold among environmental education organisations, their members, and the millions of other Americans who treasure our environment and are committed to wrestling with the difficult trade-offs involved in meeting our energy needs in a way that is sustainable in the long term. We are making progress but I think we still have a long way to go.

Ayer: My personal goals for the institute have not changed much, and I don’t have much to add to what Richard, Steve, and Sam have said. However, I do have some updated goals for the next five years:

• Continue to be recognised as the gold standard for certifying low impact hydro power.

• Certify between 60 and 70 hydro projects as low impact and have those projects be recognised and compensated for that status.

• Continue to be a credible and knowledgeable voice. To help the green market evolve to the point that state and federal governments go beyond arbitrary, and relatively meaningless size and date of construction criteria, for determining eligibility of existing hydro projects in procurement programmes and RPS eligibility standards.

If you’d like further information please contact Fred Ayer at: fayer@lowimpacthydro.org or visit the LIHI website at www.lowimpacthydro.org

LIHI: who’s who?

Richard Roos-Collins (LIHI Chair) has served as the Director of Legal Services at the Natural Heritage Institute in San Francisco since 1991. He is a director of the Natural Heritage Institute, a public interest law firm in San Francisco, where he represents both public and private clients in matters to improve the management of water, other natural resources and energy, and emphasises settlements to restore environmental quality consistent with economic growth.

Steve Malloch, (LIHI Treasurer) works on Western water resources issues for the National Wildlife Federation from Seattle. He has been involved with hydro power since the mid-1990’s as a consultant and lobbyist for conservation organisations on federal legislation. As a consultant to American Rivers, he helped shape the strategy and organisation for the Low Impact Hydropower Institute (LIHI) and continues to serve on its board of directors.

Sam Swanson (LIHI Secretary) is Director of Renewable Energy Technology and Market Analysis at the Pace Law School Energy and Climate Center. His work aims to reduce the barriers to the deployment of sustainable renewable energy technology and to encourage the growth of voluntary clean energy markets.

Fred Ayer is the Executive Director of the Low Impact Hydropower Institute and can be reached at fayer@lowimpacthydro.org