Licensing Process
"Since we installed the units downstream from the city of Hastings’ hydroelectric plant, the Federal Energy Regulatory Commission’s (FERC) noncapacity license amendment process was utilized," Krouse said. "The city’s existing license (P-4306) was amended since new power generation was being installed within the existing project boundary without increasing the hydraulic capacity of the facility (we did not raise the level of the water behind the dam to generate more power)."
However, instead of a two-stage pre-filing consultation, the company chose the three-stage consultation because the Hastings hydrokinetic power station was the first project of its type in the U.S., Krouse explained. Company management felt that using the three-stage pre-filing consultative process would give stakeholders more time to better understand the technology and provide additional early feedback. Numerous state and federal agencies participated in the process. Most stakeholders understood the significance of the project and participated in the licensing process by looking at the big picture, thinking creatively, and working efficiently toward compromise. Many were comfortable with performing studies once the project was installed.
"Unfortunately, some stakeholders, specifically certain staff at the U.S. Department of Interior’s [DOI’s] National Park Service, tried to stop this project from being licensed, or considerably slow its progress. And, despite the comprehensive fish and water quality studies that we proposed on day one, DOI attempted to burden the city and Hydro Green Energy with additional expensive and unnecessary studies, some that they wanted well before project installation," he said. "There was a disconcerting disconnect between the DOI’s stated renewable energy policies at the federal level and the actions of its field staff. Despite these activities, the license amendment was filed in April of 2008, and FERC issued its order approving the project in December 2008."
Financing the Project
"Our company is a privately funded renewable energy company," Krouse said. "We funded the Hastings project entirely on our own. In the future, this type of project would serve as an equipment sale to the hydropower plant owner, and Hydro Green Energy would enter into a maintenance contract and also receive a yearly royalty payment for the use of its broadly patented technology."
In terms of cost per kW installed, the capital costs for the Hastings project were lower than those of a similarly sized solar power project and generally comparable to costs of biomass or geothermal, Krouse explained. The cost for the second turbine unit at the Hastings hydrokinetic power station will be at or below $3,500/kW installed. The company’s goal is to be directly competitive with some thermal technologies, such as nuclear power, in five years; through economies of scale in manufacturing and larger projects, Krouse thinks this goal is "very much achievable."
"Our company does not disclose contractual power pricing data," he said. "For a variety of reasons, pricing at future projects is likely to be site specific, but nonetheless competitive with other incremental hydropower upgrades such as a generator rewind or a turbine blade redesign. All of those upgrades require outages at the facility. Our system was installed without ever taking the existing facility offline. This is a major opportunity cost savings and will translate into demand for our products from the hydropower industry."
The city of Hastings has a power purchase agreement (PPA) with Xcel Energy for its conventional hydropower facility, he stated. All power generated by the hydrokinetic units will be sold as part of that PPA. Hydro Green Energy and the city will split all power sales attributable to the hydrokinetic units.
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