Hydro Investment

One of the more interesting findings of DOE’s U.S. Hydropower Market Report was the significant decline in spending on refurbishments and upgrades in 2020-2022 compared to the previous decade. The report speculated that this decline in spending could be at least partly due to confusion over U.S. Government incentives available. Labor and supply chain issues have likely also played a role in the lowered spending levels in recent years. In the 2022 Ear to the River survey, over 60% of respondents noted that labor and supply chain issues had impacted their operations or planned projects over the last three years (2022 Ear to the River). We asked the following question of North American Asset Owners:

Q: Over the next five (5) years (2024 – 2029) what is your organization's forecasted investment in refurbishments and upgrades of your existing hydro assets?

*The hydro owners in the NHA Asset Owners Forum represented approximately 32,000 MW of hydro generating capacity.

NHA Asset Owners Forum*

< $1M - 0%

>$1M-<$10M

>$10M-<$50M

>$50M

Ontario Waterpower Association Member Calls

< $1M - 0%

>$1M-<$10M

>$10M-<$50M

>$50M

“Each year, the annual Ear to River survey provides the OWA with valuable information and insights regarding the key opportunities and challenges facing the waterpower industry. The report will continue to both guide and support our advocacy efforts in the future.”

- OWA

DOE’s market report (U.S. Hydropower Market Report 2023 Edition (energy.gov) notes that refurbishment and upgrade investments averaged $883 million per year throughout the 2010-2019 period but had been less than half of that during the 2020-2022 period. The results above indicate that spending may rise to pre-2020 levels over the next few years.

The DOE Market Report also noted that tax incentives under the Bipartisan Infrastructure Law were expected to support increased investments in refurbishments and upgrades in upcoming years. 2023 also saw a large flurry of activity around DOE grant programs that will be awarding over $750 Million in incentive payments and investments to the industry starting in 2024. We asked U.S. Asset owners:

Q: For asset owners making capital investments, what government programs are most important to have?

NHA Asset Owners Forum

(10 responses)

Grants

Tax Incentives

Low Interest Loans

Other

Grants are clearly expected to be of importance to the U.S. hydropower industry going forward and are expected to stimulate investment, particularly in refurbishments and upgrades at existing hydro facilities. The 2023 Ear to the River survey ended at the end of 2023 when most of the DOE grant programs had been applied to but not yet awarded. The 2024 Ear to the River survey will seek to understand the impact these grants are having on the U.S. industry as they are awarded.