Will Pumped-Storage Projects Benefit from White House Infrastructure Plan?

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The Trump administration's pledge to rebuild the nation's infrastructure, which may include streamlining federal reviews of Power and other proposed infrastructure projects, is due to be unveiled any day. But some aspects of the plan started leaking to the media in advance of the president's State of the Union address last month. Depending on the plan's details, including whether federal laws like the National Environmental Policy Act (NEPA) or the Endangered Species Act (ESA) are modified, the infrastructure proposal could give a badly needed boost to pumped-storage projects, some of which have been trying to obtain permits for 10 years or more.

Industrial Info is tracking 39 active pumped-storage projects valued at about $43.7 billion that developers want to build across the U.S. Eleven of those projects, collectively worth about $12 billion, are scheduled to begin construction over the next three years, between February 2018 and February 2021, according to Industrial Info's Global Market Intelligence (GMI™) Platform.

Five of those proposed pumped-storage projects are worth a billion dollars or more, including the 500-megawatt (MW) grassroot San Vicente project being developed by the San Diego County Water Authority. This $1.5 billion project, under development for more than a decade, still is not permitted. But last month, the owners selected Black & Veatch (B&V) (Overland Park, Kansas) to be their representative. B&V will help evaluate proposals, select the full-service team and negotiate the project delivery agreement.

"Growing demand centers, particularly in drought-prone areas like Southern California, require holistic water-planning solutions," Kevin Davis, Black & Veatch associate vice president and project manager, said in a recent statement. The San Vicente pumped-storage project "would marry investments in water system resilience with renewable energy deployment, helping to reduce greenhouse gases."

Though long in the tooth, the San Vicente project does not have the distinction of being the pumped-storage project waiting the longest for a permit. That honor appears to go to Southern California's Eagle Mountain Pumped-Storage Plant, a $2.6 billion project that has been under development since late 1992 - over 25 years - yet still lacks a permit.

Far longer than the list of active pumped-storage projects under development is the list of projects that have been cancelled or placed on hold. Across the U.S., about 35 proposed pumped-storage projects have been cancelled, including 10 projects valued at about $15.9 billion that were scheduled to kick off construction between February 2014 and February 2018. Another 27 projects worth an estimated $37 billion are "on hold."

By contrast, in the last four years, only 12 pumped-storage projects collectively valued at slightly under $1 billion have been completed, according to Industrial Info's GMI Platform.

The U.S. has 42 pumped-storage plants with total generating capacity of 22,000 MW, according to the National Hydropower Association (NHA) (Washington, D.C.). The nation could add about 35,500 MW of new pumped-storage generation by 2050 with the right set of policies and regulatory reforms, according to a U.S. Department of Energy (DoE) (Washington, D.C.) report, "Hydropower Vision: A New Chapter for America's 1st Renewable Electricity Source," which was released in mid-2016. For more on this, see July 12, 2017, article - Two Ways Hydro Can Win: Call it 'Renewable,' Position it as Backup to Solar and Wind.

Pumped-storage projects have fallen out of favor in recent years due to their large size, big price tag and long licensing process. Utilities increasingly prefer adding smaller-sized generation projects, coupled with energy-efficiency programs and distributed generation to meet customer electric demand.

The San Vicente project is scheduled to begin construction in late 2020 and be operating by late 2024. But the construction kickoff date has slipped by 120 months - 10 years - since the project was first announced.

Late last year, the U.S. House of Representatives passed H.R. 3043, the Hydropower Policy Modernization Act, sponsored by Representative Cathy McMorris Rodgers (Republican-Washington). Among other things, that bill would classify hydropower as a "renewable" resource, alongside solar and wind, which would allow pumped-storage projects to qualify as renewable resources for the purpose of complying with state renewable portfolio mandates.

H.R. 3043 also would designate the Federal Energy Regulatory Commission (FERC) (Washington, D.C.) as the lead agency for coordinating all federal authorizations and reviews related to hydropower license applications, including compliance with NEPA. The House approved the bill by a vote of 233-182 last November and sent it to the Senate for that body's consideration.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com