New Bill introduced to incentivize hydropower upgrades

29 June 2021

New bipartisan legislation has been introduced in the US that will offer federal tax incentives to encourage safety, environmental, and grid resiliency upgrades for hydropower dams.

US Senators Maria Cantwell (D-WA) and Lisa Murkowski (R-AK) introduced Senate Bill 2306, the Maintaining and Enhancing Hydroelectric and River Restoration Act of 2021, last week , with the bill set to establish a new 30% tax incentive for dam improvements and 30% tax incentive to support removal of obsolete dam obstructions that harm the health of river ecosystems, pose safety hazards, block fish passage, and inhibit economic development. 

“Maintaining and upgrading our hydroelectric facilities will ensure Washingtonians and our economy continue to benefit from some of the nation’s lowest electricity rates and cleanest air,” said Senator Cantwell. “This measure will also help restore river ecosystems, creating more salmon habitat and new outdoor recreation opportunities. These two new incentives, combined with other new complementary programs, will help preserve emissions-free power sources while opening up miles of free-flowing river and creating thousands of well-paying rural construction jobs.”

“Hydropower is Alaska’s largest source of clean, renewable energy and supplies 25 percent of the state’s electricity. Alaska has incredible opportunities for hydropower and this legislation helps tap into that potential, especially in many of our smaller communities. This bill integrates renewable energy development with the values Alaska places on our fisheries, delivering cleaner power while reducing many communities’ reliance on costly fuels like diesel. I’m proud this legislation includes important provisions for Alaska, which will ultimately help bring small hydro projects in Alaska to construction,” added Senator Murkowski.

With hydroelectricity accounting for over seven percent of all US electricity generation in 2020, including around two-thirds of Washington’s total, maintaining existing hydropower capacity will be critical to meeting any national net-zero goal. Hydropower also has the unique ability to provide black start capabilities to help recover from a crisis, voltage support for the grid, and integration of increasing amounts of variable renewable energy sources as we decarbonize. However, many of these dams are decades old and need significant investment to keep them operating safely.

The Maintaining and Enhancing Hydroelectric and River Restoration Act of 2021 leverages the federal tax code by providing the 30% federal investment tax credit, with a direct pay option, that would spur investments in dam safety, environmental improvements, and grid flexibility. Investments could include adding more efficient and fish-friendly turbines, managing river sediments, upgrading or replacing floodgates and spillways, and improving fish passage infrastructure at existing dams.

The Cantwell-Murkowski bill would also create the separate new 30% federal tax incentive, with a direct pay option, to support efforts by private, state, local, and non-profit groups to demolish and remove, with the owner’s consent, obsolete river barriers. Removing unnecessary dams that no longer meet their intended purpose or benefit society could provide a huge number of new outdoor recreation activities, spur economic development, and increase the resilience of rivers to the effects of climate change. A recent joint proposal from the hydropower and river conservation community estimated that increased support for existing dam removal efforts could double the removal rate over the next ten years. That would result in the removal of 2000 obsolete river obstructions and restore ecosystem functions essential for salmon recovery by opening up 20,000 miles of free-flowing river habitat.

Malcolm Woolf the President and CEO of the National Hydropower Association spoke in support of the bill: “America’s 90,000 dams are infrastructure that Congress must address, and we thank Senators Cantwell and Murkowski for their leadership in pushing innovative tax credits to support existing, carbon-free hydropower and promote healthy rivers. To accelerate our transition to a reliable, clean energy grid, incentives to promote grid resiliency, environmental and safety enhancements, and removal of dams determined by their owners to have reached the end of their useful life, are critical. These tax incentives, with a direct pay option for publicly owned hydropower, are an important component of a larger package to preserve and improve existing hydropower, enhance dam safety, and support healthy rivers, and we urge Congress pass the full measure.”

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