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Thirty seven states have adopted renewable portfolio standards (RPS) or non-binding renewable energy goals, and the once-distant deadlines for deriving a minimum percentage of electricity set by these standards are fast approaching or have already passed, sometimes without being met. As states scramble to generate more electricity with renewable sources, some are turning to less mature technologies, such as hydrokinetic turbines, to fill the gap. Hydrokinetic turbines draw energy from the natural movements of water in rivers and tidal systems. Though there are many sites, particularly on the Mississippi and along the Northwest and Northeast shorelines, that are in the initial planning phase, and even a few that have obtained licenses to proceed with development, as a whole, the technology is essentially untested in the US.
Part I of the Federal Power Act gave the Federal Energy Regulatory Commission (FERC) permitting and licensing authority over non-federal hydroelectric power projects. The Commission has entered into Memoranda of Understanding with several states to cooperate in encouraging the growth of this nascent industry. In an effort to ensure that permittees and licensees diligently pursue their intended projects and therefore contribute to growth of the industry, FERC adopted a “strict scrutiny” standard for granting preliminary permits, which was intended to promote competition and prevent “site banking,” a practice by which one entity collects preliminary permits without any intent to develop them so as to maintain priority development rights over other potential developers. This policy also requires a permit holder to demonstrate his or her progress on a regular basis and, if the Commission determines that not enough progress has been made, the permit may be cancelled to open the site up to a more diligent developer.
It is unclear whether this “strict scrutiny” is effectively encouraging hydrokinetic development. Though very few permits and licenses have been issued, many have been cancelled for insufficiently demonstrating progress or surrendered because development was not feasible. In a market where developers are fighting for the right to develop a certain site, FERC’s strict scrutiny policy may be an effective mechanism for allocating development rights to the most able developers. However, developers are apparently reluctant or unable to undertake projects reliant on this less mature technology that has less understood environmental impacts. In this kind of market, a strict scrutiny policy may be doing more harm than good. Well-intentioned developers are held to this higher standard of review in the face of uncertainty in the project’s economic and technological success and regulators and community members who have not yet gained an understanding of hydrokinetic projects.
Hydrokinetic electricity is contributing to the mix of electric production in Europe, China, and Australia, but so far, the US has not capitalized on this low-impact renewable energy resource. FERC should consider if “strict scrutiny” is the standard of review that best encourages this industry that is still struggling to take off in the US.
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