What Impact Does the Infrastructure Bill Have on My Project?

The Infrastructure Investment and Jobs Act (IIJA), also known as the Bipartisan Infrastructure Law (BIL), was signed into law on Nov 15, 2021. We have been following its progress and potential impacts over the last few months.

I recently attended a webinar presentation hosted by the United States Society on Dams (USSD) that answered some common questions surrounding this legislation, including what the IIJA is, who is responsible for enacting it, and what the possible next steps are for hydroelectric facilities. Here are some key takeaways from that presentation that helped my own understanding.

What is the IIJA? Why does it exist?

The IIJA will provide safe drinking water, reliable transportation, and specifically, secure and efficient energy. This historic, once-in-a-generation investment will help to deliver more clean energy for American families by guiding the country towards 100% carbon-free electricity.

How big of an investment does the IIJA represent exactly? $2.4 billion is allocated for energy related incentives in total, including $753 million allotted for hydropower incentives, and $1.6 billion for dam safety & removal.

What does this mean for my project?

Any hydroelectric facility in the United States may be eligible.

The $753 million for hydropower incentives stems in part from the amendment of two existing hydropower incentives in the 2005 Energy Policy Act (EPAct):

1. Section 242 hydro production incentive: increased to $125 million
2. Section 243 hydro efficiency improvement incentive: increased to $75 million

The remaining $553 million of the $753 million comes from the addition of a new incentive program, Section 247 of EPAct, which served is designated for maintaining and enhancing hydroelectricity. It is important to note that these incentive programs are grants, not loans.

For a deeper dive into each of these sections:

Section 242

Qualifying projects include:

• Adding generation to an existing dam built before November 15, 2021
• Adding generation to an existing conduit built before November 15, 2021
• New greenfield projects that are 20 megawatts (MW) or less, have received a construction authorization from Federal Energy Regulatory Commission (FERC), and are constructed in an area of inadequate electric service

Payments to a qualified facility are capped at $1 million per year and can be claimed for 10 years. These payments are 1.8 cents per kilowatt hour, and come as an actual written check, rather than a tax credit.

Section 243

This section provides payment to hydropower owners/operators at existing dams for capital improvements of facilities that are directly related to improving the efficiency of facilities by at least 3%. For example, FERC must certify that the project will become more efficient—through swapping out turbines, trash rake removals, different operation computer software, etc.—by 3% or more.

Incentive payments will not exceed 30% of the cost of the capital improvement, and they are capped at $5 million to a single facility in any one year.

Section 247 (New Section)

This section provides payment to owners/operators of qualified hydro facilities for capital improvements directly related to improving grid resiliency; improving dam safety; or environmental improvements.

Grid resiliency could include providing ancillary services or integrating other variable sources of electricity generation. Dam safety could include maintenance or upgrade of spillways, dam stability improvements, and upgrades or repairs to floodgates. Environmental improvements could include items such as improving safe fish passage, improving water quality, and improving recreational access.

Incentive payments will not exceed 30% of the cost of the capital improvement and are capped at $5 million. There will not be more than one payment made at a single qualified hydropower facility in any one year. If capital improvements were completed prior to Nov 15, 2021, those projects most likely would not be eligible for a grant.

Note that no funding is provided for relicensing hydropower projects.

Who is responsible for administering these incentive programs?

All incentive programs are administered by the Department of Energy (DOE), which previously has been administered through the Water Power Technologies office, which is in the Energy Efficiency and Renewable Energy office. However, that may change going forward due to amount of funding the DOE received. DOE will issue guidance, or rules, and regulations to implement these programs. The rulemaking portion is expected to be completed around mid to late April 2022. It is anticipated that funds will then be issued to states in June 2022. More information can be found at hydro.org, or congress.gov.

Now what should I do?

The specifics of how to apply for the grants have not yet been released by the DOE; however, there are a few things you can do to streamline your application once that information is released.

First, take an inventory of your planned or ongoing projects to see which ones would qualify for the grants. Look for projects that:

1. Are focused on increased hydro production such as adding generation to existing dams or conduits or new green hydro (less than 20MW), or
2. Can increase the efficiency of a component of your project by 3%, or
3. Is considered a large capital improvement for your grid, dam or the environment, or
4. Improves overall dam safety, such as improvements to your spillway, or
5. Include the removal of a non-federal dam.

Second, review your potential grant-receiving projects considering which would make the greatest impacts to your system while also providing the best carbon-free electricity to the American public and/or provide for improvements to our waterways and fish habitats.

Third, connect with a grant writing consultant to let them know that you are interested in pursuing this path and may need assistance in getting the grant written.