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Researched by Industrial Info Resources (Sugar Land, Texas)--Leading international data center developer Digital Realty (Dallas, Texas) is taking steps to reduce the impact of emissions from its nearly 100 operational data center buildings in the U.S. The company this week signed a power purchase agreement (PPA) with Current Hydro LLC (Houston, Texas) for the output from three hydropower plants to be built along the Ohio River in Ohio and West Virginia.
Digital Realty touts itself as "the world's largest data platform," boasting more than 300 data centers across six continents. In addition to the several operational facilities being tracked in the U.S., Industrial Info is tracking $40.7 billion worth of U.S. projects from the company that are either under construction or being considered for development, as well as another $11.4 billion from Digital Realty in other countries throughout the world.
Keeping this large, power-hungry footprint of data centers in mind, Digital Realty's not-quite 70-megawatt (MW) PPA for the output from the three planned hydropower plants appears somewhat of a token effort toward emissions solutions, but with hydropower's tax credits coming through the One Big, Beautiful Act (OBBBA) unscathed, the U.S. may see more development and similar agreements in this area than it has in some time.
Current Hydro's business model is to construct smaller run-of-river plants at existing locks and dams in the Ohio, Alleghany and Illinois river basins. Using existing infrastructure helps keep project costs in check and limits the environmental disruption that would be caused by entirely new developments.
The three Current Hydro projects covered by the PPA are all along the Ohio River separating Ohio and West Virginia and include:
While the less than 70 MW covered by the PPA represents only a fraction of the power consumed by Data Realty's U.S. facilities, this rare hydropower PPA may be a precursor to similar developments and agreements. Unlike wind and solar power, which saw the expiration of federal tax credits substantially hastened under the OBBBA, hydropower, along with battery energy storage and geothermal power, emerged relatively unscathed. The OBBBA actually brought a more extended credit phase-out time for hydropower through 2033, with credits incrementally stepping down to 0% by 2036. In addition to the production tax credits, which provide credit per kilowatt-hour of power produced for 10 years, run-of-river hydro projects as a form of baseload power also receive an investment tax credit for construction that varies by the size of the project and other specifics.
With this in mind, developers may begin showing increased interest in hydropower development, and more business models resembling Current Hydro's that use existing facilities may be in the cards. As the U.S. contains more than 90,000 dams, large-scale studies on hydropower's potential in the country are few and far between due to the substantial amount of facilities to be analyzed. A 2016 report from the U.S. Department of Energy (DOE) found that 12.8 gigawatts (GW) of new hydropower capacity could be deployed in the U.S. by 2050. However, the most substantial contributions to this amount, 6.3 GW, would come from upgrades to existing facilities, which the OBBBA also supports. The DOE found 4.8 GW could be added to the U.S. grid through retrofitting existing non-powered dams (such as Current Hydro's projects), with another 1.7 GW potentially available from entirely new facilities.
A quick look through Industrial Info's GMI Project Database for hydropower projects suggests that refurbishment and modernization of existing facilities greatly outweighs the amount of projects for developing new power at non-powered dams. Of the more than $187 billion in active capital U.S. hydro projects being tracked by IIR (not all of which are expected to move forward), the data suggest less than $5 billion of this is to bring power to existing non-powered dams. In addition to Current Hydro, key players in this area include Kram Hydo (Houston), which is developing similar projects in at least five states, and Rye Development LLC, which is focused on Pennsylvania dams.
Modernization and refurbishments of existing hydro facilities far outweigh new run-of-river development in large part because of continued generous federal credits that, although implemented under the Biden-era Inflation Recovery Act, were preserved under the Trump administration's OBBBA. This is the 80/20 rule, which stipulates that if a hydro plant owner replaces 80% of the fair market value of the plant's equipment with newer machinery and controls, the facility will be considered "new" and become available for production and investment tax credits. With the U.S. hydropower fleet sporting an average machine age of 64 years according to the DOE, many existing run-of-river facilities already are in need of upgrades to both help meet increasing power demand and to simply replace worn out equipment. In such cases, the 80/20 rule can be a significant influence on moving forward projects at existing hydropower facilities.
As these older facilities are modernized, companies such as Current Hydro, Rye and Kram are seizing newer opportunities at facilities that already have a tremendous amount of infrastructure, helping keep overall project costs down while taking advantage of future tax credits. With the Trump administration's severe curtailment of solar and wind power's federal benefits, hydropower appears to be moving up the value chain of renewable energy, and hydropower development could see a somewhat of a renaissance in the U.S. in the coming years.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).
Digital Realty touts itself as "the world's largest data platform," boasting more than 300 data centers across six continents. In addition to the several operational facilities being tracked in the U.S., Industrial Info is tracking $40.7 billion worth of U.S. projects from the company that are either under construction or being considered for development, as well as another $11.4 billion from Digital Realty in other countries throughout the world.
Keeping this large, power-hungry footprint of data centers in mind, Digital Realty's not-quite 70-megawatt (MW) PPA for the output from the three planned hydropower plants appears somewhat of a token effort toward emissions solutions, but with hydropower's tax credits coming through the One Big, Beautiful Act (OBBBA) unscathed, the U.S. may see more development and similar agreements in this area than it has in some time.
Current Hydro's business model is to construct smaller run-of-river plants at existing locks and dams in the Ohio, Alleghany and Illinois river basins. Using existing infrastructure helps keep project costs in check and limits the environmental disruption that would be caused by entirely new developments.
The three Current Hydro projects covered by the PPA are all along the Ohio River separating Ohio and West Virginia and include:
- the 20-megawatt (MW) Pike Island plant in Belmont County, Ohio
- the 20-MW New Cumberland project in Hancock County, West Virginia
- The 28.5-MW Robert C. Byrd project in Mason County, West Virginia.
While the less than 70 MW covered by the PPA represents only a fraction of the power consumed by Data Realty's U.S. facilities, this rare hydropower PPA may be a precursor to similar developments and agreements. Unlike wind and solar power, which saw the expiration of federal tax credits substantially hastened under the OBBBA, hydropower, along with battery energy storage and geothermal power, emerged relatively unscathed. The OBBBA actually brought a more extended credit phase-out time for hydropower through 2033, with credits incrementally stepping down to 0% by 2036. In addition to the production tax credits, which provide credit per kilowatt-hour of power produced for 10 years, run-of-river hydro projects as a form of baseload power also receive an investment tax credit for construction that varies by the size of the project and other specifics.
With this in mind, developers may begin showing increased interest in hydropower development, and more business models resembling Current Hydro's that use existing facilities may be in the cards. As the U.S. contains more than 90,000 dams, large-scale studies on hydropower's potential in the country are few and far between due to the substantial amount of facilities to be analyzed. A 2016 report from the U.S. Department of Energy (DOE) found that 12.8 gigawatts (GW) of new hydropower capacity could be deployed in the U.S. by 2050. However, the most substantial contributions to this amount, 6.3 GW, would come from upgrades to existing facilities, which the OBBBA also supports. The DOE found 4.8 GW could be added to the U.S. grid through retrofitting existing non-powered dams (such as Current Hydro's projects), with another 1.7 GW potentially available from entirely new facilities.
A quick look through Industrial Info's GMI Project Database for hydropower projects suggests that refurbishment and modernization of existing facilities greatly outweighs the amount of projects for developing new power at non-powered dams. Of the more than $187 billion in active capital U.S. hydro projects being tracked by IIR (not all of which are expected to move forward), the data suggest less than $5 billion of this is to bring power to existing non-powered dams. In addition to Current Hydro, key players in this area include Kram Hydo (Houston), which is developing similar projects in at least five states, and Rye Development LLC, which is focused on Pennsylvania dams.
Modernization and refurbishments of existing hydro facilities far outweigh new run-of-river development in large part because of continued generous federal credits that, although implemented under the Biden-era Inflation Recovery Act, were preserved under the Trump administration's OBBBA. This is the 80/20 rule, which stipulates that if a hydro plant owner replaces 80% of the fair market value of the plant's equipment with newer machinery and controls, the facility will be considered "new" and become available for production and investment tax credits. With the U.S. hydropower fleet sporting an average machine age of 64 years according to the DOE, many existing run-of-river facilities already are in need of upgrades to both help meet increasing power demand and to simply replace worn out equipment. In such cases, the 80/20 rule can be a significant influence on moving forward projects at existing hydropower facilities.
As these older facilities are modernized, companies such as Current Hydro, Rye and Kram are seizing newer opportunities at facilities that already have a tremendous amount of infrastructure, helping keep overall project costs down while taking advantage of future tax credits. With the Trump administration's severe curtailment of solar and wind power's federal benefits, hydropower appears to be moving up the value chain of renewable energy, and hydropower development could see a somewhat of a renaissance in the U.S. in the coming years.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).
