What could the 2020 election results mean for Hydro?
I recently attended a virtual event from National Hydropower Association (NHA), which explored three main areas of potential impact: legislative, regulatory, and wholesale energy markets.
Here are some predictions from panel members:
Clean Energy Bill: Based on the platform of the Biden administration, clean energy standards are going to be a priority. While a comprehensive climate bill likely will not pass without a democratic-controlled senate, smaller changes toward cleaner energy are likely. Progress will still be made, and while it remains important as ever to protect our resources, we expect that several proposed bills will contain hydropower provisions. Some public utilities and investor-owned utilities are taking steps toward decarbonization on their own, though it is costly.
License modernization and reform: From a bipartisan perspective, climate change and the need for clean generation of energy is dominating the conversation. We’re all trying to reach the same goal but using different tools to get the job done. There’s a high likelihood we’ll see progress in license reform, but a comprehensive modernization of the process will be difficult to achieve.
Tax policy: Control of the senate will determine what will be done with investment/production tax credits, but a Republican majority will mean big changes are unlikely. We could see some smaller changes.
Infrastructure bill: The Biden administration’s proposed $2 trillion infrastructure package may not be considered due to lack of support. However, an “infrastructure” bill can refer to almost anything. As the economy recovers, we really don’t know what form a potential infrastructure bill could take.
As hydro is America’s #1 renewable resource, federal regulation is a hot topic. A Biden administration is going to have different goals and priorities than the Trump administration—a net zero energy policy, environmental justice, and climate change are going to be high on the list. Water and water infrastructure are going to be priorities as well. However, new legislation is going to be difficult given the current political divide. Some things we might expect moving forward:
- The US could rejoin the Paris Climate Accord. This would place a focus on reducing greenhouse gas emissions.
- We may revisit some rules that the Trump administration previously rolled back. Three significant rules were changed—the National Environmental Policy Act (NEPA) updates; changes to the Clean Water Act Section 401; and changes to the Endangered Species Act. We expect all three of these to be revisited, at least in part. This could impact hydro projects.
- We could see a shift from fossil fuels to more focus on renewable sources of energy.
- The potential is there for a zero carbon emissions policy. Hydro would play a key role in meeting this goal.
- We could see a greater focus on infrastructure resiliency as a response to climate change.
- There will likely be a greater focus on environmental justice, protecting vulnerable populations, and transparency to the public.
- As FERC dam safety is a bipartisan issue, significant changes in this area are unlikely.
Energy market impacts
Federal Energy Regulatory Commission (FERC): As the Biden administration is tasked with staffing federal agencies, a democratic-led FERC is likely. FERC will probably continue moving in the same direction as it has been; there’s still plenty of work to be done on the path we’re already on, and there are questions on how much change can realistically occur due to the likelihood of a conservative Supreme Court and potential of a Republican-led senate.
Transmission planning: Transmission planning is shifting to FERC jurisdiction. There is a general consensus that there is large gap between where we are and where we need to be in terms of transmission oversight. A Democrat-led FERC will likely see its role as consumer-advocates and consumer-protectors, and could focus on more and better benefit cost analysis.
Minimum Offer Price Rule (MOPR): Clean energy sources were previously offered into the capacity market at lower rates than other energy sources. MOPR raises the minimum price of clean energy, making it difficult for it to compete. This rule was created quickly and was meant to be a quick fix. It is highly unlikely to continue to exist as-is, but we don’t know in what capacity it will change. There is a question of whether FERC should be running these energy auctions at all, or whether that power should reside with individual states.
The focus on climate change will likely continue as we work toward reducing carbon emissions. Clean energy continues to be important, and hydro will play a key role. Small shifts and changes are likely; however, overarching legislative and regulatory changes may be difficult to pass given the current division. There has been no blue wave; there has been no red wave. Instead, we are swimming through turbulent purple waters. We will have to wait and see how everything plays out in the two remaining Senate races before the crystal ball will clarify 2021 and beyond. As hydro professionals, we are ready to help our clients and communities through whatever changes we’ll face.
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