Energy & Technology

An Illustrative Framework for a Clean Energy Standard for the Power Sector



November 2011

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This paper describes an illustrative framework for a federal clean energy standard (CES) for the electricity sector. A CES is a type of electricity portfolio standard. Electricity portfolio standards are flexible, market-based policies that typically set requirements for the percentage of electricity that must be supplied from qualified energy resources—requiring, for example, that by 2025, 25 percent of electricity sales must be met with electricity generated from renewable sources (e.g., wind, solar, geothermal). Thirty-one states and the District of Columbia have already enacted some type of electricity portfolio standard, and members of Congress have several times proposed federal electricity portfolio standards.[1] For background information on the concept of a CES, see "Clean Energy Standards: State and Federal Policy Options and Implications."[2]

A CES Framework

The CES framework described in this paper is intended to illustrate how policymakers could balance the various objectives and interests associated with a federal CES, whether in the way described in this paper or in any number of other ways.

An Illustrative CES Framework

Table 1 below presents the key CES policy design questions and considerations that policymakers face in choosing relevant CES policy parameters, as well as an illustrative framework that addresses these design choices, and the rationales that explain the approach illustrated. The various policy design choices in the illustrative CES framework should be considered together as a whole, as they are interrelated.

In addition to the CES policy outlined in Table 1 below, Discussion of Select Issues Related to the CES Framework describes some key CES design issues as well as policies that can complement a federal CES to more effectively drive clean energy technology innovation and deployment.

Note that certain numeric values are bracketed. These bracketed values are suggestions and can be refined based on additional analysis or deliberation. In addition, for the "Eligible Clean Energy Resources" policy design parameter, the proposal includes two alternatives.

Table 1 : Illustrative Federal CES Framework

Policy Design


Illustrative CES Framework


CES Point of Regulation

Administrative complexity and burden

Cost-effective incentives for clean energy deployment, energy efficiency, and GHG emission reduction

Ease of crediting both supply-and demand-side compliance

CES is an electricity portfolio standard with a point of regulation at (compliance obligation on) electric utilities[3]

The electricity portfolio standard approach is already demonstrated in a majority of states and well known among federal policymakers in light of multiple federal renewable and clean energy standard bills.

Putting the point of regulation on electricity generators, rather than on utilities, would ultimately leave certain generators with no compliance options but to buy credits or shut down.[4]

CES Coverage

Administrative complexity and burden

Dilution of the effective CES target by exempting certain utilities

Fairness with respect to impacts on different electricity consumers

Compliance options available to smaller utilities

All electric utilities regardless of size or ownership

The inherent compliance flexibility and cost-effectiveness of a market-based CES program and the inclusion of non-renewable energy sources and efficiency as compliance options mean that electric utilities of any size in any location have readily available compliance options.

Exempting certain electric utilities based on size or ownership unfairly shifts the cost of achieving a national clean energy goal onto a subset of electricity consumers.

Covering all electric utilities does increase the administrative complexity of a federal CES as a much larger number of entities must comply, but experience with similar programs indicates that this is manageable (see Appendix A.3 in "Clean Energy Standards: State and Federal Policy Options and Implications").[5]

Eligible Clean Energy Resources (Option A – Technology-focused definition of "clean energy")

Direct and lifecycle air emissions from different technologies

Trade-off between promoting near-term deployment of more cost-effective clean energy technologies and accelerating the deployment of less mature technologies

Improving the environmental and public health profile of electricity generation based on multiple criteria

Distribution of costs and benefits —e.g., the potential for wealth transfers and windfall profits

Full credits for renewables, as defined in Sec. 132 of the American Clean Energy Leadership Act of 2009 (S.1462) from the 111th Congress—e.g., with respect to crediting both existing and new renewables for the most part but only incremental hydropower, and with respect to the definition of biomass[6]

New and incremental nuclear power

Partial credits for fossil fuel use coupled with carbon capture and storage (CCS) as a function of net CO2 emissions rate

Partial credits for new and incremental natural gas generation that is below an emissions threshold of [800 lbs CO2/MWh] with the total credits available for such natural gas generation in any given year limited in order to spur coal-to-gas fuel switching without disadvantaging other clean energy technologies.

Where [800] lbs CO2/MWh is roughly the emission rate of a new natural gas combined cycle (NGCC) plant.

CES provides at least some financial incentive for all new generation that can lower power-sector GHG emissions below the "business-as-usual" trajectory.

Concerns about biomass and hydropower addressed by adopting definitions from 2009 Senate renewable electricity standard.

Incentive for NGCC generation limited to supporting the displacement of older, less efficient coal generation that would not otherwise have occurred.

No credits directly issued to non-incremental hydropower and nuclear generation to avoid rewarding activities that do not provide any additional clean energy generation.

Eligible Clean Energy Resources (Option B – Emissions-focused definition of "clean energy")

Credits available for all generation save for non-incremental generation from nuclear, hydropower, and fossil fueled units.

Credits awarded based on the following formula for a generator with an emissions rate of X lbs CO2/MWh:

(Credits / MWh) = 1 – (X lbs CO2/MWh)/([1,700] lbs CO2/MWh)

Where [1,700] lbs CO2/MWh is roughly the emission rate of a new supercritical coal-fired power plant.

CES provides financial incentive for any new generator that can lower power-sector GHG emissions below the "business-as-usual" trajectory, and for some existing generators, and the financial incentive is proportional to the degree of CO2-intensity reduction.

A CO2-intensity metric for eligibility and partial crediting puts all lower-carbon resources on a level playing field.

Credits for Electricity Savings from Energy Efficiency

Energy efficiency is often the lowest-cost option for clean energy (counting avoided use, or "negawatts")

Challenges in measuring and verifying electricity savings

Trade-off between promoting cost-effective GHG emission reductions and accelerating the deployment of less mature technologies

Credits issued for demonstrated electricity savings from utility energy efficiency programs (i.e., customer end-use electricity savings), and industrial efficiency, including new combined heat and power systems. 1 MWh of electricity savings earns (1- (CES % requirement)) credits.

Credits for electricity savings are neither tradable outside the state where the electricity savings occurred nor bankable.

Credits for electricity savings can be used to meet up to [25%] of an electric utility's compliance obligation.

Energy efficiency is included in a CES in recognition of its status as a low-cost clean energy option.

The ability to directly comply via electricity savings is limited owing to concerns over measurement and verification and the policy goal of spurring new clean energy technology deployment.

Demonstrated electricity savings earn less than 1 credit per MWh in order to correctly account for the differential impact of electricity savings versus non-emitting generation.

Base Quantity of Electricity Sales

Minimization of regional disparities

The base quantity of electricity sales to which the CES percentage requirement applies is equal to total annual electricity sales to end-use customers excluding non-incremental nuclear and hydropower generation.

Excluding existing nuclear and hydropower from the base quantity provides credit indirectly for these clean energy sources without risking windfall profits.

Targets and Timetable

Increase in clean energy compared to "business as usual"

Achievability and cost

Minimization of regional disparities


Total Clean Energy Goal

CES Requirement as % of base quantity



















The CES program administrator shall periodically (every [5] years) adjust future CES percentage requirements in light of any unanticipated reductions in generation from existing clean energy facilities to ensure that the total clean energy goals are met.

Clean energy targets are generally consistent with expected power-sector generation mix under recent proposals for comprehensive climate and energy legislation.

Actual CES percentage requirement is a function of the total clean energy goal, the definition of the base quantity of electricity sales, and the treatment of existing clean energy facilities.

Linear ramp up of CES targets is achievable in light of historical clean energy deployment rates and compliance flexibility from trading, banking/borrowing, and alternative compliance payment (ACP).

Banking and Borrowing

Compliance flexibility and cost containment

Achievement of clean energy deployment beyond "business as usual"

Risks associated with excessive credit borrowing

Unlimited banking

Limited borrowing ([3] years into the future) with "interest" against future clean energy credit streams from facilities that are under construction.

Banking provides temporal compliance flexibility and lower compliance costs without sacrificing policy goals.

Borrowing similarly provides compliance flexibility and improves cost-effectiveness but should be limited to avoid excessive borrowing that puts pressure on policymakers to forgive debts.

Alternative Compliance Payment (ACP)

Trade-offs between cost containment and clean energy deployment and emission reductions

In lieu of clean energy credits, electric utilities can comply by making alternative compliance payments in an amount equal to [$35/MWh] in 2012 and rising at the rate of inflation plus [5%].

ACP revenues shall be made available to the states whose ratepayers provided them for use in furtherance of the goals of the CES—e.g., clean energy research, development, demonstration, and deployment – as well as offsetting electricity costs for ratepayers – e.g., energy intensive, trade exposed (EITE) industries and low-income households.

ACP that increases in real terms provides protection against excessive costs but allows credit prices to increase over time as the CES target becomes more ambitious.

ACP revenues are used for the benefit of the states whose ratepayers paid them.

Treatment of Existing State Programs

States' ability to set state clean energy requirements

States' ability to affect national clean energy requirements (i.e., additionality of state clean energy requirements)

States' ability to define qualified clean energy under federal program

Avoidance of "double-counting" of clean MWhs

Administrative complexity and burden

Federal CES is a separate and distinct program from state electricity portfolio standards.

Qualified clean energy facilities can earn both federal and state credits for meeting separate compliance obligations.

Appropriate compliance credit granted to electric utilities for payments made to state programs (i.e., state RPS ACP payments and central procurement state RPSs (e.g., NY)).[7]

Federal CES does not preempt any state programs.

Federal CES sets the goal and requirement for aggregate national clean energy generation, and Congress defines what counts as clean energy for the purposes of this goal.

States retain authority to operate and implement their own programs that can change the share of national clean energy generation and associated benefits achieved within their own borders.

Double-counting of MWhs toward compliance with the federal requirement is avoided.

Discussion of Select Issues Related to the CES Framework

Certain CES policy design issues related to the CES framework above warrant particular mention, and these are explored in more detail in this section. Note that the issues below highlight the need for more sophisticated modeling analyses of potential CES policies to inform policymakers and other stakeholders about the implications of and trade-offs among various CES design options as they develop the details of a CES policy.[8]

Quantifying Base Quantity

The assumption underpinning the framework described in this paper is that, if a CES sets uniform percentage requirements for all electric utilities, policymakers should provide CECs only to qualified clean energy generation while excluding non-incremental nuclear and hydropower generation from the base quantity of electricity sales. This approach can minimize the risk of windfall profits, though for some technologies, it may risk encouraging the reduction of generation from existing clean energy facilities.

Natural Gas

Highly efficient natural gas combined cycle (NGCC) power plants emit much lower levels of air pollutants (including CO2, the primary GHG) compared both to the average existing coal-fired power plant and even compared to new coal-fired power plants with modern pollution controls.[9] Moreover, developments over the past few years related to shale gas have led to the realization that the United States has a much larger supply of affordable domestic natural gas than previously thought.[10] As a result of these and other factors, natural gas is, absent new policies, projected by the U.S. Energy Information Administration (EIA) to dominate new electricity generating capacity additions in coming decades.[11]

While natural gas is a highly competitive choice for new electricity generating capacity required to meet electricity demand growth, there remains a significant opportunity to displace existing older, less efficient, and more highly polluting coal-fired generation with incremental natural gas-fired generation—a displacement unlikely to be fully realized under "business as usual" but one that a CES can facilitate by providing at least some credit to incremental natural gas-fired electricity generation. Incremental natural gas-fired generation could come from both new capacity additions and greater utilization of existing NGCC power plants.

In providing an incentive under a CES for displacing existing coal-fired generation with incremental natural gas-fired generation, policymakers may want to avoid an outcome in which a CES provides an incentive for natural gas at the expense of other lower-emitting energy technologies—e.g., renewables, nuclear power, and fossil fuel use coupled with CCS. Whether providing partial credit under a CES for incremental natural gas-fired generation leads to this outcome likely depends on the CES program's targets and the value of any alternative compliance payment (ACP). For example, providing credit for incremental natural gas-fired generation under a CES that has very modest targets and a low ACP value is more likely to create an incentive for natural gas-fired electricity generation at the expense of lower-emitting technologies.

Both "Eligible Clean Energy Resources" policy design parameter options in the CES framework would tie incentives for natural gas under a CES to the displacement of existing traditional coal-fired electricity generation. This approach, however, could benefit from additional analysis and deliberation – particularly regarding how best to implement it.

Other issues related to crediting natural gas under a CES are how the treatment of natural gas may affect CES cost impacts differently across utilities, states, and regions and how policymakers can provide incentives for new NGCC plants without creating competition between new and existing NGCC units.[12]

Equitable Impacts

Since electricity prices already vary dramatically across utilities, states, and regions, electricity price impacts under a CES can vary across utilities, states, and regions. This variation results from factors such as the different levels of existing clean power generation, differences in renewable resource endowments, differences in wholesale power markets, and different retail electricity market structures (i.e., competitive vs. traditionally regulated). These factors and CES policy design choices can interact in complex and nuanced ways, so the best way to gauge the likely electricity price impacts of particular CES policy formulations is through sophisticated power sector modeling.

The CES framework in Table 1 is intended to provide for equitable electricity price impacts across utilities, states, and regions. Stakeholders, however, may reasonably have different points of view regarding what constitutes "equitable price impacts." For example, some might argue that roughly equal percentage changes in electricity rates across utilities, states, and regions are fair while others might support price changes of similar absolute magnitude (e.g., in cents per kilowatt-hour). Additionally, some might argue that it is only fair for utilities, states, and regions that currently have higher than average electricity prices because of a greater current reliance on cleaner energy sources to see smaller price increases under a national CES than utilities, states, and regions that enjoy lower than average electricity prices in part due to less investment in clean power generation.

Cost Containment

In designing a CES, policymakers will likely seek to balance the benefits associated with increasing clean power generation against the costs (e.g., electricity rate impacts) associated with transitioning to an electricity generation mix that relies more heavily on clean energy sources. In recent congressional electricity portfolio standards, one of the key provisions for cost containment has been the alternative compliance payment (ACP).[13]

A few points regarding the inclusion of and value chosen for an ACP warrant mention. First, congressional electricity portfolio standard proposals in the 111th Congress have included relatively low ACP values that remained constant in real terms (i.e., they increased only to keep pace with inflation).[14] However, putting the power sector on a clean energy trajectory that diverges more and more over time from "business as usual" is likely to require an ACP that may start off at a relatively low level but that increases in real terms over time.
Second, while an ACP acts as a price ceiling for the price of tradable clean energy credits, the relationship between credit prices and electricity rate impacts under a CES is not as straightforward as one might imagine. As such, policymakers should think carefully about what ACP value is truly appropriate for balancing benefits and costs under a CES.

Third, if policymakers want to use a CES to focus specifically on spurring the deployment of less commercially mature, very low-emitting technologies, policymakers might consider a CES formulation that has a high ACP value but a lower percentage target coupled with a narrower definition of clean energy. This formulation might satisfy the desire for cost containment while still providing a substantial financial incentive for less commercially mature clean energy technologies.


Complementary Policies

A policy—like a CES—that lowers the cost of clean electricity technologies relative to competing technologies can be the federal government's central, overarching policy for spurring widespread deployment of clean electricity technologies. However, combining a CES with technology-specific complementary policies like those summarized in Table 2 can help deploy clean energy technology more cost-effectively and advance a broader portfolio of clean energy technologies by addressing market failures, and market and institutional barriers that a CES alone cannot address.[15]

Table 2 includes examples of existing policies and programs that could complement a CES. Policymakers could continue these policies and programs, expand them, or create new similar ones to complement a federal CES.

Table 2 : Clean Power Complementary Policies

Type of Complementary Policy


Policy Examples

Clean Energy R&D

On their own, private firms tend to under-invest in clean energy R&D in light of the spillover benefits from such investments.

The Federal government can directly fund clean energy R&D and provide incentives for private sector investment as well.

Advanced Research Projects Agency-Energy (ARPA-E)

DOE Energy Innovation Hubs

R&D tax credits

Demonstration and "First-Mover" Clean Energy Projects

First-of-a-kind demonstration projects and "first mover" clean energy projects provide real world cost and performance data, thus mitigating uncertainty and market risk for clean energy technologies. Such projects also move clean energy technologies along their "learning curve," thus making them more cost-competitive.

FutureGen 2.0

Loan Guarantee Program

Targeted tax credits

Policies to Address Institutional and Regulatory Barriers

These issues vary among clean technologies and include, for example: transmission siting for wind and solar power, interconnection standards for distributed generation, uncertainty over long-term handling of spent nuclear fuel, and electric utility regulation that discourages electricity savings from energy efficiency programs.

Policies specific to institutional and regulatory barriers

Given the limited options with a CES policy for addressing costs borne by particular households and businesses of concern to policymakers (e.g., low-income households and energy-intensive, trade-exposed [EITE] industries), policymakers might seek to ameliorate any negative cost impacts felt by such households and businesses via complementary policies outside of the CES. Tax credits to defray the cost of energy efficiency investments by EITE industries and additional funding for the Low Income Home Energy Assistance Program (LIHEAP), are examples of such complementary policies.



[1] "Renewable & Alternative Energy Portfolio Standards," Center for Climate and Energy Solutions, last modified August 25, 2011.

[2] Regulatory Assistance Project and the Center for Climate and Energy Solutions. Clean Energy Standards: State and Federal Policy Options and Implications, September 2011, Appendix A.3.

[3] Here, as in congressional electricity portfolio standard proposals, the definition of "electricity utility" refers to any person, state agency, or federal agency, which sells electric energy (Public Utility Regulatory Policies Act of 1978, 16 U.S.C § 2602(4)).

[4] Clean Energy Standards: State and Federal Policy Options and Implications, Section 8.5. This section discusses the point of regulation.

[5] Ibid, Appendix A.3.

[6] American Clean Energy Leadership Act of 2009, S. 1462, 111th Congress, Sec. 132 (2009). Renewable energy is defined to mean electric energy generated at a facility (including distributed generation facility) from: solar, wind,  geothermal and incremental geothermal, qualified incremental hydropower, marine and hydrokinetic renewable energy, ocean (including tidal, wave, current, and thermal), biomass (as defined by the Energy Policy Act of 2005, 42 U.S.C. § 15852(b)), landfill gas; and coal-mined methane, or qualified waste-to-energy sources or other innovative sources as determined through rulemaking.

[7] In most states with RPS programs, utilities are required to provide their customers a certain percentage of electricity from renewable sources. New York's RPS program uses a central procurement model, with New York State Energy Research and Development Authority (NYSERDA) as central procurement administrator. Under this model, utilities do not procure renewable electricity directly, but rather NYSERDA pays a production incentive to renewable electricity generators. In exchange for receiving the production incentive, the renewable generator transfers to NYSERDA all rights and/or claims to the RPS attributes associated with each MWh of renewable electricity generated, and guarantees delivery of the associated electricity to the customer.

[8] "Clean Energy Standards," Center for Climate and Energy Solutions, last accessed September 19, 2011. Existing CES modeling results from such groups as the Bipartisan Policy Center and Resources for the Future are accessible on this webpage.

[9] Clean Energy Standards: State and Federal Policy Options and Implications, Appendix A.3.

[10] "What is shale gas and why is it important?," United States Energy Information Administration's (EIA), Energy in Brief, last modified August 4, 2011.

[11] "Annual Energy Outlook 2011," United States Energy Information Administration (EIA), last modified April 26, 2011. In its AEO2011 Reference Case, EIA projects that natural gas will account for 60 percent of capacity additions for 2009-2035.

[12] Meghan McGuinness, The Administration's Clean Energy Standard Proposal: An Initial Analysis, Bipartisan Policy Center Staff Paper (Washington, DC: Bipartisan Policy Center, 2011). Such competition between new and existing NGCC units has little to no benefit in terms of increasing clean energy generation, but as the Bipartisan Policy Center's recent CES modeling suggests, it is a possible outcome if a CES policy is not carefully crafted to avoid it.

[13] Electric utilities demonstrate compliance with CES requirements by submitting clean energy credits equivalent to the required level of clean energy generation. An ACP provision under a CES allows an electric utility to make payments to the CES program administrator of a specified value in lieu of submitting tradable credits. An ACP acts as a cap on the cost of compliance with a CES. Electric utilities will increase the amount of clean energy that they deliver in keeping with the CES requirement until the incremental cost of such energy exceeds the ACP value. Policymakers may set a fixed ACP, one that increases at the rate of inflation, or one that increase in real terms over time as the CES targets become more ambitious.

[14] Clean Energy Standards: State and Federal Policy Options and Implications, Table 3 in Appendix A.3

[15] Ibid, Appendix A.2. This appendix section provides a broad overview of many of these challenges.



The Business Behind Low-Carbon Solutions

Business leaders from across the country convened in Atlanta last month to share critical lessons from developing and deploying low-carbon solutions.  At our Business of Innovating conference, dozens of company leaders—from Coca-Cola and Mars to Dow and Bayer—discussed new products and solutions that are beginning to drive business growth in clean energy while limiting greenhouse gas emissions.  Their efforts reflect a deepening understanding of changes in market preferences and demand for low-carbon solutions. 

NPR Not Plugged In to All the Facts on Electric Vehicles

A recent story on NPR’s Morning Edition about plug-in electric vehicles (PEVs) misses the mark. At C2ES, we don’t believe PEVs are the single answer to our transportation energy security and environmental problems, but we think they could make a contribution if they’re given a fair shot. That’s why we started an initiative on PEVs almost a year ago to take a practical look at the challenges and opportunities of PEV technology.

First, the story mentions plug-in hybrid electric vehicles (PHEVs) like the Chevrolet Volt at the outset, but then ignores how that vehicle type overcomes the problem at the heart of the story – range anxiety. The fear of being stranded due to inadequate driving range and deficient charging infrastructure is a legitimate critique of battery electric vehicles (BEVs). BEvs are battery-only vehicles, i.e. they cannot run on gasoline. But, the Volt and soon-to-be-released Toyota Prius Plug-in Hybrid can run on gasoline or electricity and have the same range as a conventional car. You can travel 25 to 50 miles in a Volt or up to 15 miles in a plug-in Prius without using gasoline and then rely on gasoline to fuel the rest of your trip. It’s difficult to estimate how many trips these electric-only ranges will accommodate, but a plug-in hybrid overcomes the need for a consumer to make that determination. In case you’re wondering, the average car trip length is 9.34 miles according to the National Household Transportation Survey.

Eileen Claussen Highlights C2ES's Goals, Energy Policy on E&E TV

Watch the Interview

November 16, 2011

On E&E TV's OnPoint, Eileen Claussen discusses goals of the newly-launched Center for Climate and Energy Solutions (C2ES) and assesses the current state of energy policy talks in Washington. Claussen also gives her views on the Obama administration's handling of energy policy. Click here to watch the interview.

Click here for additional details on C2ES.

Yes, You’ve Come to the Right Place

For those of you who came to our website today expecting to find information and resources from the Pew Center on Global Climate Change, please don’t click away. Today we announced an exciting transition. We are now C2ES — the Center for Climate and Energy Solutions. In addition to changing our name, we’ve refreshed our mission and strategic approach, updated our website, and made other changes to ensure that we can continue to craft real solutions to the energy and climate challenges we face today.

Yes, a great deal has changed in the last 24 hours. But what hasn’t changed is the need for straight talk, common sense and common ground. Today’s climate and energy issues present us with real challenges — and real opportunities as well. This is about protecting the environment, our communities and our economy. And it is about building the foundation for a prosperous and sustainable future.

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Q&A with Eileen Claussen for Singapore International Energy Week

This Q&A orginally appeared on Singapore International Energy Week's website.

September 2011

Q1. The Kyoto Protocol expires in 2012. Do you see an agreement on its successor during negotiations at Durban later this year? Or is an extension of the Kyoto Protocol or a move to a transitional framework a more likely outcome?

Eileen Claussen: The Kyoto Protocol has played an important role in advancing climate change efforts in some parts of the world. Most notably, the European Union established its successful Emissions Trading System and other policies in order to fulfil its obligations under the Kyoto Protocol. However, because developing countries are exempt from Kyoto's emission targets and because the United States has chosen not to join, the Protocol covers just one-third of global greenhouse gas emissions. Japan, Canada and Russia have made clear that they will not take on new binding targets post-2012 without commensurate obligations by the United States and the major developing countries, which are not prepared for binding commitments. Hence, there appears very little prospect of new Kyoto commitments being adopted in Durban.

While our ultimate aim should be a comprehensive and binding international climate framework, we must accept that getting to binding commitments will take time. The Cancún Agreements made important progress in strengthening the existing frameworks in the areas of finance, transparency, adaptation and technology. Further incremental progress in these areas will promote near-term action and will strengthen parties' confidence in one another and in the regime, thereby building a stronger foundation for a later binding agreement. At the same time, countries must continue strengthening political will and policies domestically. In Durban, parties should make concrete progress in implementing the Cancún Agreements--for instance, by establishing the Green Climate Fund and agreeing on stronger transparency measures--while affirming their intent to work toward binding outcomes.

Q2. Global GHG emissions increased by a record amount last year. Is the goal of preventing a temperature rise of more than 2 degree Celsius just a "nice Utopia" as IEA's Dr Fatih Birol put it?

EC: Long-term goals are tricky. On the one hand, they provide a rallying point to help focus attention and orient action, and a yardstick for measuring progress. On the other hand, they are meaningful only if they can be operationalized, and if interim efforts don't appear to be on track, people may be discouraged as a result and the will to act may actually weaken. In the case of climate, a temperature goal is appealing because it is easily related in the public mind to the core issue--global warming. But as a metric, it is several steps removed from the action that is needed: Reducing emissions. From a practical standpoint, a global emissions goal might be more helpful.

Countries' pledges to date clearly do not put us on the path to meeting the 2 degree goal. While achieving the goal is not yet out of the question, it would require a dramatic acceleration of efforts around the globe. The bottom line is that we know what direction we must go. Whatever our long-term goal--indeed, whether or not we have a long-term goal--the immediate challenge is the same: Ramping up our efforts as quickly as possible.

Q3. How much of an impact will the recent nuclear power crisis in Japan have on GHG emissions reduction?

EC: It is still too early to know what impact the Fukushima disaster will have on energy choices and greenhouse gas emissions around the world. The most dramatic example is the recent decision by Germany to completely phase out nuclear power. While many in Germany believe that the gap can be filled by renewable energy and improved energy efficiency, others are deeply concerned that the country will deepen its reliance on coal, making it impossible to achieve its ambitious greenhouse gas reduction goals.

Other countries must assess for themselves the implications of Fukushima for their energy futures. For those countries choosing to continue or deepen their reliance on nuclear power, the tragedy clearly offers lessons for improving safety. Given the continued growth in energy demand projected in the future, particularly in developing countries, it is difficult to imagine that we will be able to meet the world's energies needs and simultaneously meet the climate challenge without continued reliance on nuclear power. It is therefore imperative that we continue striving to enhance safety and solve the issue of long-term waste disposal.

Q4. Technology is seen as a key enabler to achieve low emissions growth. In your opinion, what are the top three technologies available today that can make the biggest impact?

EC: There are thousands of technologies available today that could make a huge impact with the right policy support, such as a price on carbon. But the problem, at least in the US today, is that it is unclear when such policy support will be forthcoming. So I will pick my top three based on the ones that need the least additional policy support to make a contribution, either because they yield multiple economic benefits beyond climate, or because they benefit from existing policy drivers. 

a. Batteries in cars. Batteries can be used in vehicles in a variety of ways. While a battery-only vehicle may only be able to fill a niche market, hybrid vehicles that run on either gasoline or electricity will likely have broader appeal, and start-stop batteries, which turn off the gasoline engine while a vehicle idles, can be applied to just about any vehicle, achieving modest per-vehicle reductions that add up to significant reductions fleet wide. The combination of new US standards for fuel economy and GHG emissions and electric utility interest in selling electricity can drive battery costs down. The potential emission reductions are enormous, but they depend on cleaning up the electricity grid.

b. Information technology. IT can enable dramatic GHG reductions, for example through energy efficiency (e.g. smart buildings that turn on lights and HVAC when they're needed and turn them off when they're not), substituting videoconferencing for travel, and using wireless communication to optimize transportation routing for people and goods. Convenience and time savings are such powerful drivers of IT that it needs little incremental policy support.

c. Carbon capture and storage (CCS) for enhanced oil recovery (EOR) using CO2. CCS is technically available, and potentially a game changer, enabling us to continue to use fossil fuels but with very low CO2 emissions. CO2-EOR is already economic using naturally occurring CO2, and is close to economic using captured CO2.  With very little policy support, EOR using captured CO2 could yield some near-term emission reductions while driving CCS costs down, thereby enabling enormous emission reductions in the future.

Q5. Energy efficiency has long been touted as the lowest hanging fruit to address the energy and climate change challenges. Many Asian countries have announced ambitious targets to cut their energy and carbon intensities. For example, as part of its 12th Five-Year Plan, China has indicated that it aims to cut energy intensity by 16 percent and carbon intensity by 17 percent in the next five years. Do you think Asian countries are doing enough? What more can they undertake to help combat climate change?

EC: Efficiency improvements that generate more economic output with less energy input are important for a variety of reasons, including energy supply security, pollution and greenhouse gas (GHG) emission reduction, and improvement of livelihoods. Countries such as Korea, China and India have taken significant measures to improve efficiency, with the result that the energy intensity of their economies has been lowering over the past decade.

Many energy efficiency measures are classified as "low hanging fruit," meaning the energy savings and other benefits they produce far outweigh the cost of investing in them. Asian countries are currently focusing on exploiting these low hanging fruit, notably in the industrial and power sectors, as well as in appliances and equipment, and large commercial and public buildings. Eventually, achieving additional energy savings will require more expensive investments, and targeting more difficult sectors, such as small and medium enterprises and households.

Asian governments will need to adjust policy tools to meet these new challenges. Policy certainty and appropriate price signals are important to ensure the efficiency improvement potentials of current investments are maximised. One way of providing these is through cap-and-trade type systems, such as those being considered or developed in China, India and Korea. This will also require the phase-out of subsidies that artificially decrease energy prices and encourage consumption rather than conservation. Though progress is slow, several Asian countries have taken or are taking steps in this direction as well.

Limiting the growth of or reducing energy consumption is, of course, essential. However, shifting to less carbon-intensive sources of energy is equally important in the medium to long term. As such, many Asian countries should also be commended for investing in developing less GHG-intensive energy sources.

Published by Singapore International Energy Week
Eileen Claussen

September 2011 Newsletter

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The Pew Center's September 2011 newsletter highlights a new intiative focused on expanding carbon dioxide enhanced oil recovery, a new brief on international climate assistance, the lessons we can learn from Hurrican Irene, and more.


Quick Facts

  • Hydropower is a renewable, efficient, and reliable source of energy that does not directly emit greenhouse gases or other air pollutants, and that can be scheduled to produce power as needed, depending on water availability.
  • There are about 78,000 megawatts of hydropower generation capacity in the United States.[1]
  • Over the last decade, depending on water availability, hydroelectricity provided 5.8 to 7.2 percent of the electricity generated in the United States and averaged more than 70 percent of the electricity generated annually from all renewable sources, although this share is falling as the renewable capacity from other sources grows.[2]
  • More than half of the total U.S. hydroelectric capacity for electricity generation is concentrated in three western states--Washington, California and Oregon--with approximately 26 percent in Washington alone. Canada is a major electricity supplier to New York, New England, the Upper Midwest, the Pacific Northwest, and California.[3]
  • Hydropower could offer at least 80,000 megawatts of additional generation capacity.[4] Small, micro, and low hydropower are developing hydro technologies, while the efficiency and capacity of existing hydroelectric generators can be improved. Only about 3 percent of the roughly 80,000 dams in the United States have hydropower plants and can generate electricity.[5]
  • Existing hydropower is very inexpensive to operate (generation costs 2 to 4 cents per kilowatt-hour).[6] The levelized cost of electricity of new hydropower projects, of less than 50 megawatts, (6 to 14 cents per kilowatt-hour) and incremental hydropower projects (adding generating capacity to existing dams; 1 to 10 cents per kilowatt-hour) puts them among the least expensive forms of low-carbon electricity.[7]
  • The effects of climate change on water availability are expected to affect hydropower generation.


Hydropower, or hydroelectricity, is electricity generated by the force of moving water in the penstock[8] of a hydropower unit. Turbines are used to capture the kinetic energy of water by converting it to electricity as the falling water spins the turbine. Hydropower plants may be located below reservoirs or built in rivers (called “run-of-the-river” units) with no water storage capacity. Hydropower is considered a renewable source of energy, as it relies on water which is continuously renewed through the natural water cycle.

Hydroelectricity’s low cost, near-zero emissions, and ability to be dispatched quickly to meet peak electricity demand have made it one of the most valuable renewable energy sources worldwide. Hydropower accounts for about 17 percent of the world’s total electricity generation.[9]

Depending on water availability and annual precipitation, hydroelectricity has provided 5.8 to 7.8 percent of the electricity used in the United States in the last dozen years and is the largest renewable source of electricity in the United States.[10],[11]U.S. hydropower accounted for 8.5 percent of global hydropower capacity and 7.6 percent of global hydropower generation in 2010 (1.29 percent of global electricity generation from all sources).[12]


The amount of electricity generated by a hydropower facility depends on three factors: 1) the turbine generating capacity; 2) the turbine discharge flow (the volume of water passing through the turbine in a given amount of time), and 3) the site head (the height of the water source or vertical distance between the highest point of water source and the turbine). The higher the head, the more gravitational energy the water has as it passes through the turbine. Most existing hydropower facilities in the United States can convert about 90 percent of the energy of falling water into electricity, which makes hydropower a technically efficient source of energy.

U.S. hydropower plants are very diverse. They might be located at dams with various storage capacities or be run-of-the-river facilities with no water storage capacity. Their elevation also varies. Only 3 percent of the dams in the United States have hydropower plants and can generate electricity.

Generally, based on the head and storage capacity availability, hydropower plants are categorized as follows:

  • Low-Head High-Storage Hydropower Plants

These facilities are usually located behind multi-purpose (water supply, flood control, etc.) dams which have hydropower generation as an ancillary benefit. The reservoirs associated with these units are large (high storage capacity) while the head is relatively low at these facilities.

  • High-Head Low-Storage Hydropower Plants

These facilities are often located behind reservoirs which have hydropower generation as their single objective. The reservoirs associated with these units are small (low storage capacity) while the head is relatively high. These units are usually located at higher elevations.

  • Run-of-the-River Hydropower Plants

These facilities are usually built on rivers with steady natural flows or regulated flows discharged from upstream reservoirs. These units have little or no storage capacity, and hydropower is generated using the river flow and water head. Run-of-the-river hydropower plants are less appropriate for rivers with large seasonal fluctuations.

  • Pumped-Storage Hydropower Plants

At these facilities water is stored in a lower reservoir after it is released from an upper reservoir to drive the turbine and generate power. Later, water is pumped back to the upper reservoir for reuse. Pumping water back to the upper pool requires energy (electricity). Pumped-storage systems are considered as flexible sources of electricity generation. These units generate electricity when demand and price are higher (during peak hours) and pump water back to the upper pools when electricity demand and price are lower. Pumped-storage plants are not net energy producers; rather, they provide energy storage and electricity at its peak demand times (see Climate Techbook: Energy Storage).

Hydropower plants can also be categorized based on their capacities:

  • Large Conventional Hydropower plants

These facilities have a generation capacity of more than 30 megawatts. The installed large hydropower capacity in the U.S. is approximately 66,500 megawatts.[13]

  • Small Conventional Hydropower plants

These facilities have a generation capacity of 1 to 30 megawatts. The installed small hydropower capacity in the U.S. is approximately 8,000 megawatts.[14]

  • Low Power Hydropower Plants

These facilities have a generation capacity of 100 kilowatts to 1 megawatt. The installed low power hydropower capacity in the U.S. is approximately 350 megawatts.[15]

  • Micro Hydropower Plants

These facilities have a generation capacity of less than 100 kilowatts.[16]

Electricity demand fluctuates during the day and between months depending on different factors, most importantly the hour of the day and temperature. One of the advantages of hydropower over other sources of electricity (e.g., variable wind and solar power or baseload coal and nuclear plants) is its generation flexibility. Such flexibility enables hydropower to meet sudden fluctuations in demand or help to compensate for the loss of power from other sources. Hydropower can be used for both baseload and peak generation.

Environmental Benefit/Emission Reduction Potential

Hydropower is a clean source of energy, as it burns no fuel and does not produce greenhouse gas (GHG) emissions, other pollutants, or wastes associated with fossil fuels or nuclear power. However, hydropower does cause indirect GHG emissions, mainly during the construction and flooding of the reservoirs. This may be due to decomposition of a fraction of the flooded biomass (forests, peatlands, and other soil types) and an increase in the aquatic wildlife and vegetation in the reservoir.[17] Hydropower’s GHG emissions factor (4 to 18 grams CO2 equivalent per kilowatt-hour[18], [19], [20], [21]) is 36 to 167 times lower than the emissions produced by electricity generation from fossil fuels.[22],[23] Compared to other renewables, on a lifecycle basis hydropower releases fewer GHG emissions than electricity generation from biomass and solar and about the same as emissions from wind, nuclear, and geothermal plants.[24]

Hydropower is mainly criticized for its negative environmental impacts on local ecosystems and habitats. Damming a river alters its natural flow regime and temperature, which in turn changes the aquatic habitat. Such a change disturbs the river’s natural flora and fauna. Fish are very sensitive to hydropower operations, and fish species (especially migratory species) have been significantly affected by hydropower dams across the United States. Small, low and micro hydropower facilities have much smaller negative environmental impacts than large hydropower facilities, but even they can engender public concern.[25],[26]

Studies have estimated significant potential for increased deployment of hydropower in the United States, with additional generation capacity of at least 80,000 megawatts, mostly provided through the development of new small and micro hydroelectric plants (accounting for nearly 59,000 megawatts), development of new hydroelectric capacity at existing dams without hydropower facilities (17,000 megawatts), and generation efficiency improvements at existing facilities (4,000 megawatts).[27] Fully realizing the aforementioned low or high estimates of new hydropower potential might reduce or avoid CO2 emissions from electricity generation equal to roughly 8.5 percent of total 2003 U.S. CO2 emissions from electricity generation.[28]In its reference case scenario, the Energy Information Administration (EIA) predicts that between 2009 and 2035, conventional hydropower capacity will average 0.1 percent growth and hydropower generation will average 0.5 percent growth. Its overall share of renewable electricity capacity will fall as other renewable energy sources are deployed.[29]

A 2010 report from the International Energy Agency (IEA) projected that global hydropower production might grow by nearly 75 percent from 2007 to 2050 under business-as-usual but that it could grow by roughly 85 percent over the same period in a scenario with aggressive action to reduce GHG emissions. However, even under this latter scenario, increased hydropower generation is projected to provide only about 2 percent of the total GHG emission reductions from the global electric power sector compared to business-as-usual by 2050 (with all renewable technologies nonetheless providing nearly 33.5 percent of GHG abatement from the power sector).[30] According to IEA, a realistic potential for global hydropower is 2 to 3 times higher than the current production, with most remaining development potential in Africa, Asia, and Latin America.[31] IEA also notes that, while small hydropower plants could provide as much as 150 to 200 GW of new generating capacity worldwide, only 5 percent of the world’s small-scale (i.e. small, low, and hydro) hydropower potential has yet been exploited.[32]


Existing hydropower is one of the least expensive sources of power since the cost of hydropower is dominated by the initial capital cost of building the facility while the ongoing operating and maintenance (variable) costs are low. Moreover, since hydropower generation does not require burning fuels, operations costs are not vulnerable to fuel price fluctuations. Existing hydropower facilities are very cheap to operate and they can operate for 50 years or more without major replacement.[33] The cost of hydropower is highly site-specific and depends on different factors, including hydrologic characteristics, site accessibility, and distance from transmission. A 2008 study of the cost of new renewable electricity generation in the western United States (where much of the potential for new U.S. hydropower is located) estimated the levelized cost of incremental hydropower at existing dams to be $0.01 to $0.10 per kilowatt-hour (kWh) and the levelized cost of new small and micro hydropower to be between $0.06 and $0.14 per kWh, making incremental hydropower the least expensive option for new renewable generation and new hydropower roughly on par with new wind and biopower.[34]

Current Status of Hydropower

At present, there are about 78,000 megawatts of hydropower generating capacity in the United States,[35] enough to supply 28 million households with electricity, or replace 500 million barrels of oil.[36] Pumped-storage facilities offer an additional to 22,000 megawatts of capacity to that amount.[37] More than half of the total U.S. hydroelectric capacity for electricity generation is concentrated in three western states-- Washington, California and Oregon--with approximately 27 percent in Washington alone.[38] There are nearly 2,400 hydropower facilities in the United States, although the United States has roughly 80,000 dams.[39],[40] In the past 10 years, hydropower has provided between 5.8 and 7.2 percent of total U.S. electricity, and, in 2010, hydropower accounted for nearly 60 percent of all renewable electricity generated in the United States.[41] The United States has constructed very few new large dams since the early 1980s owing to concerns over their negative impacts on rivers, and the construction of new large hydropower dams is not considered a practical option for increasing hydropower generation due to the environmental impacts and unavailability of proper sites to develop for large-scale hydropower generation.[42]

The U.S. Army Corps of Engineers is the largest hydropower operator in the country, running 75 plants with a total installed capacity of 20,474 megawatts (26 percent of nationwide capacity). These federal plants produce about 100 billion kilowatt-hours a year, nearly a third of the nation’s total hydropower output, or enough to serve about ten million households.[43] The privately owned dams in the United States which generate hydroelectric power are under the regulatory authority of the Federal Energy Regulatory Commission (FERC). FERC issues licenses for legal operation of hydropower dams to permit the dam owner to use public waters for hydropower generation. FERC licenses are renewed every 30 to 50 years. License renewal is an opportunity to balance the hydropower benefits against the negative effects of hydropower generation on the health of aquatic and riparian ecosystems.[44]

Currently, 1,010 gigawatts of hydropower generation capacity are in operation globally, and in 2010, 30 gigawatts of new capacity was added.[45] Hydropower accounts for about 16 percent of global total electricity generation[46] and nearly 85 percent of renewable electricity generation (in 2008).[47]As regions, Central and South America generate nearly 64 percent of their electricity from hydropower,[48] and many countries, including several large countries such as Canada and Brazil, rely on hydropower for more than half of their electricity.[49],[50] China currently obtains about 16 percent of its electricity from hydropower;[51] from 2005 to 2010, China added almost 100 gigawatts of hydropower capacity,[52] increasing generation by almost 40 percent between 2005 and 2009  (global hydroelectric generation averaged slightly negative annual growth between 2005 and 2008).[53]

Obstacles to Further Development or Deployment of Hydropower

  • Unavailability of Proper Sites for New Large Hydro Facilities

The best sites for large hydropower generation in the United States have already been developed, and developing new sites for hydropower generation without negative ecological and recreational impacts is challenging. Storage and generation capacity expansions at existing hydropower sites or adding hydropower generation to reservoirs with existing dams that currently lack hydroelectricity generation is more likely.

  • Regulatory Hurdles

Hydropower is the most heavily regulated electricity generating technology after nuclear power, with regulatory requirements that may be time-consuming, expensive, and redundant as well as tailored to past experience with large hydropower projects, despite the likelihood that small-scale and incremental hydropower will be most important for future U.S. hydropower growth.[54]

  • Environmental Tradeoffs

There is a tradeoff between the GHG avoidance or reduction benefits of hydropower and other environmental impacts. Increasing hydropower generation can have negative ecological and recreational impacts. For example, FERC, in an effort to protect riverine ecosystems, has often mandated reduced hydropower production levels under hydropower licenses.[55]

  • Climate Change

Climate change and the alteration of rainfall and temperature regimes can affect hydropower generation. Hydropower systems with less storage capacities are more vulnerable to climate change, as storage capacity provides more flexibility in operations. Although hydropower systems may benefit from more storage and generation capacity, expansion of such capacities may not be economically and environmentally justified.[56]

Policy Options to Help Promote Hydropower

  • Price on Carbon

A price on carbon would raise the cost of electricity produced from fossil fuels relative to the cost of electricity from renewable sources, such as hydropower, and other low carbon technologies.

  • Renewable Electricity Standards

Renewable electricity standards (renewable portfolio standards) require electricity providers to gradually increase the amount of renewable energy resources—such as wind, solar, bioenergy, and geothermal—in their electricity supplies, until they reach a specified target by a specified date.[57] The hydropower production growth under these standards is mostly provided through development of small-scale hydropower and this growth is considerably slower than increase in electricity generation from other renewable sources.

  • Economic Incentives

Different financial incentives (e.g. tax credit bonds, production tax credit, incentive payments[58]) are provided to encourage the growth of hydropower generation, improving efficiency at existing projects, and more reliance on renewable electricity sources in the United States.

  • R&D Efforts

R&D efforts are required to improve efficiencies, reduce costs and negative environmental impacts, and improve reliability and durability of hydropower technologies. Integration of hydropower systems with other renewable sources (developing hybrid systems) of electricity generation are recommended. There is a need for further R&D to improve equipment designs, investigate different materials, improve control systems, and optimize generation as part of integrated water-management systems.[59]

Hydropower generation is an ancillary benefit of most dams that currently have it. Absence of reliable hydrological forecasts may result in needlessly foregone hydropower. For instance, a reservoir may be emptied to minimize the flood risks and ensure that flooding does not occur. In that case minimizing flood risks results in loss of hydropower benefits. R&D efforts are required for improving the meteorological and hydrological forecasting abilities for better performance of hydropower systems.

  • Adaptive FERC Licenses

FERC licenses are issued for periods of 30 to 50 years. Hydrological and ecological changes of hydropower systems during this period may require changes in the license requirements to increase the hydropower and environmental benefits. Adaptive FERC licenses may help to avoid the need to change license requirements and improve the performance of hydropower systems.[60]

Related Business Environmental Leadership Council (BELC) Company Activities

Related C2ES Resources

Climate Change 101: Technological Solutions, 2011.

Race to the Top: The Expanding Role of U.S. State Renewable Portfolio Standards, 2006

Electricity Sector Overview, 2011

Further Reading / Additional Resources

Aspen Environmental Group and M. Cubed (2005); “Potential changes in hydropower production from global climate change in California and the western United States”; California Climate Change Center, CEC-700-2005-010, June 2005 (

Casola, J. H., Kay J. E., Snover A. K., Norheim R.A., Whitely Binder L. C., the Climate Impacts Group (2005), “Climate Impacts on Washington’s Hydropower, Water Supply, Forests, Fish, and Agriculture”, Center for Science in the Earth System, Joint Institute for the Study of the Atmosphere and Ocean, University of Washington, Seattle (

Electric Power Research Institute (EPRI) (2007), Assessment of Waterpower Potential and Development Needs (

Energy Information Administration, International Energy Statistics (Official Energy Statistics from the U.S. Government) (

Hall D. G. and K. Reeves (2006) A Study of United States Hydroelectric Plant Ownership, Report prepared for the National Renewable Energy Laboratory, Idaho National Laboratory, INL/EXT-06-11519.

Idaho National Laboratory, Hydropower Program (

IEA (2010) Energy Technology Perspectives, Scenarios and Strategies to 2050, In support of the G8 Plan of Action,

International Hydropower Association

Kosnik L. (2008), “The Potential of Water Power in the Fight against Global Warming in the US”, Energy Policy (36): 3252-3265.

Low Impact Hydropower Institute

Madani K., Lund J. R. “High-Elevation Hydropower and Climate Warming In California.”

National Energy Education and Development Project (2008) Hydropower, Secondary Info Book, pp. 24-27 (

National Hydropower Association

U.S. Army Corps of Engineers (2009) Hydropower; Value to the Nation (

U.S. Department of Energy, Wind and Hydropower Technologies Program Website, Hydropower (

Wilbanks T. J., T. Bhatt, D. E. Bilello, S. R. Bull, J. Ekmann, W. C. Horak, Y. J. Huang, M. D. Levine, M. J. Sale, D. K. Schmalzer, and M. J. Scott (2008) Effects of Climate Change on Energy Production and Use in the United States, Synthesis and Assessment Product 4.5, Report by the U.S. Climate Change Science Program and the Subcommittee on Global Change Research, February 2008.

World Bank Group (2009), Directions in Hydropower

[1] U.S. Energy Information Administration (EIA) (2009) “Existing Capacity by Energy Source,” 2010.

[2] U.S. Energy Information Administration (EIA) (2011) “Net Generation by Energy Source: Total All Sectors.” 2011.

[3] U.S. Energy Information Administration (EIA) (2010) “Net Generation from Hydroelectric (Conventional) Power by State by Sector, Year-to-Date through December 2010 and 2009.” 2011.

[4] Kosnik, L-R (2008a), “The Potential of Water Power in the Fight against Global Warming in the U.S.,” Energy Policy (36): 3252-3265. Accessed 1 August 2011.

[5] National Hydropower Association. “Hydro Works for America.” Accessed 25 July 2011.

[6] Idaho National Laboratory. “Hydropower Plant Costs and Production Expenses.” Accessed 25 July 2011.

[7] California Institute for Energy and the Environment (CIEE), Renewable Energy Transmission Initiative (RETI): Phase IA. Final Report prepared by Black & Veatch. April 2008.

[8] A penstock is an intake structure or enclosed pipe that that delivers water to turbines.

[9] U.S. Energy Information Administration (EIA) (2008) “International Energy Statistics – Electricity Generation” Accessed 29 July 2009.,&syid=2005&eyid=2009&unit=BKWH

[10] U.S. Energy Information Administration (EIA) (2011) “Net Generation by Energy Source: Total All Sectors.”

[11] Ibid. 

[12] EIA (2014)  “International Energy Statistics.” Accessed 18 February 2014.

[13] Electric Power Research Institute (EPRI) (2007), Assessment of Waterpower Potential and Development Needs (

[14] EPRI, 2007.

[15] EPRI, 2007.

[16] EPRI, 2007.

[17] Hydro Quebec (2009) Greenhouse Gas Emissions and Hydroelectric Reservoirs (

[18] Tremblay A., Varfalvy L., Roehm C. and Garneau M., The Issue of Greenhouse Gases from Hydroelectric Reservoirs: From Boreal to Tropical Regions, Table 1, p. 3 (

[19] Meier P. J. (2002) Life-Cycle Assessment of Electricity Generation Systems and Applications for Climate Change Policy Analysis, Ph.D. Dissertation, University of Wisconsin, Madison (

[20] Van de Vate, J. F. (2002) Full-energy-chain greenhouse-gas emissions: a comparison between nuclear power, hydropower, solar power and wind power, International Journal of Risk Assessment and Management, Vol. 3, No.1 pp. 59-74.

[21] Gapnon L. and Van de Vate, J. F. (1997) Greenhouse gas emissions from hydropower: The state of research in 1996, Energy Policy, Vol. 25, No.1, pp. 7-18.

[22] Tremblay et al. GHG emissions from reservoir flooding are higher in tropical areas, and in other regions reservoirs older than 10 years produce GHG emissions similar to natural lakes.

[23] Van de Vate, 2002. Run-of-the-river systems produce less GHG emissions (5 to 10 g CO2 equivalent per kilowatt-hour) due to absence of reservoirs.

[24] Meier P. J. (2002) Life-Cycle Assessment of Electricity Generation Systems and Applications for Climate Change Policy Analysis, Ph.D. Dissertation, University of Wisconsin, Madison (

[25] Kosnik, L-R (2008a), “The Potential of Water Power in the Fight against Global Warming in the U.S.,” Energy Policy (36): 3252-3265. Accessed 1 August 2011.

[26] Carlton, Jim, “Deep in the Wilderness, Power Companies Wade In,” Wall Street Journal, 21 August 2009.

[27] Kosnik L-R (2008a).

[28] Ibid.

[29] EIA, Annual Energy Outlook 2011. 2011.

[30] IEA (2010) Energy Technology Perspectives, Scenarios and Strategies to 2050, In support of the G8 Plan of Action.

[31] IEA (2008) Energy Technology Perspectives, Scenarios and Strategies to 2050, In support of the G8 Plan of Action.

[32] IEA, 2008.

[33] IEA, 2008.

[34] Black & Veatch, 2008.

[35] EIA, 2011.

[36] Environmental Protection Agency. “Hydroelectricity.” Accessed 8 September 2011.

[37] U.S. Energy Information Administration (EIA) (2009) “Existing Capacity by Energy Source,” 2010.

[38] EIA 2010.

[39] Hall D. G. and K. Reeves (2006) A Study of United States Hydroelectric Plant Ownership, Report prepared for the National Renewable Energy Laboratory, Idaho National Laboratory, INL/EXT-06-11519.

[40] National Hydropower Association, 2011.

[41] EIA, 2011.

[42] Kosnik L-R (2008a).

[43] U.S. Army Corps of Engineers (2009) Hydropower; Value to the Nation (

[44] Madani K (2009) Climate Change Effects on High-Elevation Hydropower System in California, Ph.D. Dissertation, University of California - Davis.

[45] REN21. Renewables 21 Global Status Report. 2011.

[46] REN21, 2011.

[47] EIA, 2008. “International Energy Statistics.” Accessed 29 July 2009.

[48] Ibid.

[49] EIA, “Canada.” Accessed 29 July 2011.

EIA, “Brazil.” Accessed 29 July 2011.

[52] REN21, 2011.

[53] EIA, 2009. “International Energy Statistics.” Accessed 29 July 2009.

[54] Kosnik L-R, (2008b), “Consolidation & ownership trends of nonfederal hydropower generating assets”, 1980–2003. Energy Economics 30 (3), 715–731.

[55] Kosnik L-R, (2008b).

[56] Madani K., Lund J. R. (in review) "Estimated Impacts of Climate Warming on California’s High-Elevation Hydropower", Climatic Change.

[57] Union of Concerned Scientists. “What are renewable electricity standards.”

[58] For details on financial incentives see

[59] IEA, 2008.

[60] Madani K (2009) “Climate Change Effects on High-Elevation Hydropower System in California”, Ph.D. Dissertation, University of California - Davis.


Overview of hydroelectric generation and storage technologies

Overview of hydroelectric generation and storage technologies

Hydrokinetic Electric Power Generation

Quick Facts

  • Hydrokinetic technologies use the power of moving water – ocean waves or currents in canals, rivers, and tidal channels - to produce electricity.
  • New hydrokinetic generation technologies are primarily in the development, demonstration, and pilot phases of deployment and have not yet been commercialized.
  • In 2011, the United States had less than 1 megawatt (MW) of installed hydrokinetic, as compared to more than 77,000 MW of conventional hydroelectric generation capacity.[1],[2]
  • Many hydrokinetic development projects are underway in the United States - as of 2011, the Federal Energy Regulatory Commission (FERC) has issued 70 preliminary permits for hydrokinetic projects.[3]
  • Some experts predict that hydrokinetic energy could provide 13,000 MW of new generation capacity to the United States by 2025.[4]
  • Like some other renewable energy sources, ocean wave power is variable, with actual generation changing with fluctuations in wave height and/or period. Unlike wind and solar power, however, this variability is highly predictable (for days ahead) facilitating the integration of ocean wave power into electricial grid operations. Tidal current flows can be nearly constant throughout the year, so these hydrokinetic power sources can supply baseload generating capacity. River currents typically fluctuate seasonally and with precipitation events.


The power of tidal, river, and ocean currents and ocean waves is tremendous, and the basic concept behind hydrokinetic power is not new. For centuries people have harnessed the power of river currents by installing water wheels of various sorts to turn shafts or belts.[5]

Modern ocean wave energy conversion machines use new technology that is designed to operate in high amplitude waves, and modern tidal/river/ocean current hydrokinetic machines use new technology that is designed to operate in fast currents. Both of these emerging technologies have the potential to provide significant amounts of affordable electricity with low environmental impact given proper care in siting, deployment, and operation.


Tidal/river/ocean current energy and wave energy converters are sometimes categorized separately,[6] but this factsheet covers both types of technology under the general term “hydrokinetic power.” Another marine energy technology, ocean thermal energy conversion, is not covered in this factsheet because it is not applicable to the continental United States but rather to tropical areas.[7]

Wave energy converters take many forms. The simplest are tethered floating buoys that convert the energy in the rise and fall of the passing waves into electricity (often via hydraulics). Other machines have chambers that, when filled and emptied by rising and falling wave water, compress and decompress air to drive an electric generator. Yet another type of machine looks like a giant sea snake with floating pontoons that heave and sway on the ocean surface, driving hydraulic pumps to power an electric generator (see Figure 1 and Figure 2). All of these machines are anchored to the seabed and must withstand marine environments. Waves powerful enough to drive these generators are often found off coasts with large oceans to their west (providing long wind fetch) and strong prevailing winds such as the west coasts of the United States, Chile, and Australia and in the North Sea, amongst many other places.[8]

Figure 1: The 750 kilowatt (kW) Pelamis sea “snake” converting wave energy to electricity during sea trials in Aguçadoura, Portugal.

Source: Pelamis Wave Power, August 2009.

Figure 2: Illustration of the sea snake’s operation.

Source: Pelamis Wave Power, August 2009

Rotating devices take a variety of forms but in general capture energy from water flowing through or across a rotor. Some of these devices are shaped like propellers and can swing, or yaw, to face changing tidal currents. Other rotating devices are shaped like a jet engine, having many vanes turning within a fixed outer ring (seeFigure 3). Fast currents, like those in the Missouri and Mississippi Rivers, in tidal channels such as the Puget Sound, or in ocean currents such as the Gulf Stream off Florida, have enough power to turn large rotating devices. The power from a hydrokinetic machine is proportional to the cube of the current velocity. Faster currents are better, and sites with current velocities reaching 3 meters per second (m/s) are desirable. Tidal barrage technology takes advantage of predictable ocean tides.  A barrage, or dam across an estuary or tidal channel, traps tidal flows and then releases them through turbines as tides fall.

Figure 3: An ocean view of OpenHydro’s tidal current turbine installed near the Orkney Islands at the European Marine Energy Consortium (EMEC) test site.

Source: European Marine Energy Consortium (Image: Mike Brookes-Roper)

Environmental Benefit/Emission Reduction Potential

Deploying hydrokinetic power generation instead of relying on fossil fuels for electricity generation avoids greenhouse gas (GHG) emissions and other air pollution associated with fossil fuel use. It has been estimated that 13,000 megawatts of hydrokinetic capacity could be developed by 2025.[9] At full potential, hydrokinetic sources could generate 400 terawatt-hours (TWh) per year, or around 10 percent of U.S. demand in 2007.[10] Assuming hydrokinetic generation displaces generation from the current mix of U.S. fossil fuel power plants, this level of hydrokinetic power generation would avoid over 250 million metric tons of carbon dioxide (CO2) emissions per year, equal to 4 percent of total U.S. CO2 emissions in 2007.[11],[12]

Unlike conventional hydroelectric generation, hydrokinetic power does not require a dam or diversion, thus avoiding the negative environmental impacts associated with dams.


Because no commercial hydrokinetic power projects are currently licensed and operating in the United States, it is difficult to estimate the cost of hydrokinetic power production. A 2005 report by the Electric Power Research Institute (EPRI) estimated that some U.S. utility-scale wave power projects could produce electricity for about 10 cents per kilowatt-hour (kWh) once the technology has matured.[13] The present state of technology makes hydrokinetics a long-term investment opportunity with potentially significant but highly uncertain returns. In the meantime, the early stage of the technology and high regulatory costs associated with lengthy permitting requirements and licensing uncertainties are likely to continue presenting major economic hurdles to commercialization of the technology.

Current Status of Hydrokinetic Electric Power

A number of hydrokinetic generation technologies are moving beyond pilot or demonstration stages in the United States and globally, and several U.S. commercial wave and tidal energy projects are likely to apply for federal operating licenses in the near future. Areas in the United States with good wave energy potential include most of the continental U.S. west coast, Hawaii, and Alaska. For tidal energy, good sites exist in the Puget Sound, San Francisco, a variety of east coast tidal channels, and in Alaska. For river hydrokinetic energy, large inland rivers such as the Mississippi, Missouri, and Yukon have promising potential power.

As of June 2011, the Federal Energy Regulatory Commission (FERC) had issued 70 preliminary permits for hydrokinetic projects (27 tidal, 8 wave, and 35 inland) with 9,306 megawatts (MW) of generation capacity (see Figure 4). Preliminary permits are pending for an additional 147 projects with 17,353 MW of capacity.[14] These preliminary permits allow feasibility studies but no permanent or large-scale installations. In 2010, a utility-scale wave power project in Reedsport, Oregon, capable of supplying electricity to 1,000 homes, received the first-ever Settlement Agreement with FERC and is expected to apply for a commercial license in the next couple of years.[15] In addition, the Department of Energy awarded $34 million to hydrokinetic research and development (R&D) projects in the FY2010 budget.[16]

On a global scale, at least 25 countries have initiated hydrokinetic R&D activities.[17] Only tidal barrage technology has achieved commercial scale, and it accounts for 262 MW of the nearly 270 MW of hydrokinetic installed capacity.[18] Approximately 2 MW of wave power and 4 MW of tidal power have been installed, but mostly as short-run tests or prototypes.[19] As in the United States, the development of hydrokinetic projects is also reaching the early commercial stage in other countries, including the under-development 254 MW Sihwa tidal barrage power[20] project in South Korea and the proposed 50 MW tidal current power project off the coast of Gujarat, India.[21]

Figure 4: Map of FERC preliminary permits issued for hydrokinetic projects, June 2011.

Source: Federal Energy Regulatory Commission, June 2011.[22]

Facilities for testing and demonstrating new hydrokinetic technologies are also being established. Prominent R&D centers for each technology include:[23]

  • Wave Energy - the European Marine Energy Consortium (EMEC) in Scotland, Wave Hub in Cornwall England, The Danish Wave Energy Center in Hanstholm, the New England Marine Renewable Energy Center (MREC) at the University of Massachusetts Dartmouth, the Northwest National Marine Renewable Energy Center (NNMREC) at Oregon State University, Hawaii’s National Marine Renewable Energy Center (HNMREC), and the Southeast National Marine Renewable Energy Center at Florida Altantic University. Other notable facilities are found in Galway Bay in Ireland and the Azores in Portugal.
  • Tidal Energy - the European Marine Energy Consortium (EMEC) in Scotland, the New England Marine Renewable Energy Center (MREC) at the University of Massachusetts  Dartmouth, the Northwest National Marine Renewable Energy Center (NNMREC) at the University of Washington, and the Southeast National Marine Renewable Energy Center at Florida Altantic University. Another notable facilities are found in the Minas Passge in the Bay of Fundy in Canada.

There are a number of hydrokinetic devices that have had successful trials and remained in operation after many years of service. For tidal current power, notable examples include: the Irish Open Hydro 1-MW turbine, the first commercial-scale turbine deployed in North America; the 250 kW TREK turbine; Verdant Power’s horizontal axis turbines in the St. Lawrence River, developed following Verdant’s 2006-2008 RITE project in New York City’s East River; the 1.2 MW SeaGen turbine operating in Northern Ireland since 2008; and the 1.5 MW Morild II floating horizontal-axis prototype in Norway.[24] For wave power, notable examples include next generation .75 GW Pelamis Wave Power devices; Aquamarine’s Oyster 1 device operating at EMEC since 2009; and Ocean Power Technologies’ 150 kilowatt PB150 PowerBuoy in Oregon.[25]     

Obstacles to Further Development or Deployment

  • Cost

Although equipment costs are likely to fall as technology matures, installation costs could remain high due to extreme marine environments and the specialized engineering required for large marine infrastructure projects. Operation and maintenance (O&M) costs could remain high due to difficult access and working conditions unless machines are developed that can be unattended for long periods of time.

  • Technology

The technology required for hydrokinetic generation - turbines, generators, structural components, and transmission lines – must withstand extreme marine and river environments. Although the technical issues are challenging, they are not insurmountable. A wide variety of propeller designs and wave energy devices are being tested, and much remains to be learned. Wave energy converters must be designed to withstand very harsh marine conditions for long periods of time. Some of the pilot projects have suffered very rapid failures for this reason.

  • Permitting Requirements

Developers of hydrokinetic generation projects in the United States face considerable hurdles as regulatory agencies, such as FERC and the Minerals Management Service (MMS), adapt permitting policies to new technologies. Resource agencies, such as the Fish and Wildlife Service, will also require time to learn about the environmental effects of the new technologies. The permitting process for conventional hydroelectric projects is lengthy, taking as much as seven years to obtain an initial FERC operating license, due to a comprehensive review process and environmental study requirements. Hydrokinetic projects must go through a similar review process, and the environmental study requirements are, at this point, even lengthier because so much is unknown about environmental impacts of the new technologies. In 2007, the FERC adopted the Hydrokinetic Pilot Project Licensing Process, which streamlines the issuance of construction and operation licenses for pilot demonstration projects with rated capacities of less than 5 MW, with periods of operation of less than 5 years, and whose purpose is experimental in nature.[26]

  • Environmental Impacts

Becausehydrokinetic power does not require the construction of a dam, it should have less impact on the environment than a conventional hydroelectric project. However, there is still considerable uncertainty about environmental impacts and recognition that impacts will vary with technology and site characteristics. The pilot demonstration projects currently in operation are providing valuable data that regulators and resource agencies need to understand environmental impacts. Attention is focused on the questions of harm to fish and other marine life, detrimental changes to currents and sediment transfer, site impacts from installation and decommissioning, conflicts with other uses of the water body, and intrusive visual appearance. In 2009, the U.S. Department of Energy (DOE) delivered a comprehensive report on environmental impacts of hydrokinetic power generation to Congress. The report stated there is no conclusive evidence that hydrokinetic technologies will cause significant environmental impacts on acquatic environments, fish and fish habitats, ecological relationships, and other marine and freshwater resources.[27]

Policy Options to Help Promote Hydrokinetic Power Generation

  • Price on Carbon

A price on carbon, such as that which would exist under a GHG cap-and-trade program, would raise the cost of electricity produced from fossil fuels relative to the cost of electricity from renewable sources, such as hydrokinetic power, and other lower-carbon technologies. A price on carbon would increase both deployment of mature low-carbon technologies and R&D investments in less mature technologies.

  • Research, Development, and Demonstration (RD&D)

Increased government funding for technology development and testing can help accelerate the commercialization of hydrokinetic technologies.Establishing test sites with existing permits and licenses for testing of wave energy conversion devices and hydrokinetic turbines and generators under standardized conditions could also speed technology development.

  • Addressing Environmental Impacts

Government-funded test programs with resource agency participation could determine environmental impacts of hydrokinetic power generation with more certainty and inform guidelines and regulations for mitigating such impacts.

  • Streamlining Licensing and Permitting

Continued efforts to simplify and accelerate project licensing and permitting would enable pilot and commercial-scale projects to be deployed more rapidly and inexpensively.

  • Renewable Portfolio Standards

A renewable portfolio standard (RPS, sometimes also called a renewable or alternative energy standard, RES/AES) requires that a certain amount or percentage of a utility’s power plant capacity or electricity sales come from renewable sources by a given date. Power generators or utilities receive credits for qualified renewable generation and must have sufficient credits to meet the states’ targets. At present, 31 U.S. states and the District of Columbia have adopted RPSs (8 U.S. states have renewable energy goals).[28] In addition, Congress has several times considered a federal RPS. State RPSs or a federal RPS could promote hydrokinetic power technologies by making them qualifying renewable technologies whose generation counts towards compliance with the RPS. In addition, RPS policies or proposals often have carve-outs for specific renewable technologies or provide extra credits for generation from certain technologies, generally in order to promote less commercially mature technologies.

Related Business Environmental Leadership Council (BELC) Company Activities

Related C2ES Resources

Climate Change 101: Technology, 2011

Race to the Top: The Expanding Role of U.S. State Renewable Portfolio Standards, 2006

Further Reading/Additional Resources

Cada, Glenn et al., “Potential Impacts of Hydrokinetic and Wave Energy Conversion Technologies on Aquatic Environments,” Fisheries, April 2007.

The Carbon Trust, Future Marine Energy: Results of the Marine Energy Challenge - Cost Competitiveness and Growth of Wave and Tidal Stream Energy, 2006.

U.S. Department of Energy (DOE)

Electric Power Research Institute (EPRI)

  • Assessment of Waterpower Potential and Development Needs, EPRI Report 1014762, Palo Alto, CA March, 2007.
  • Ocean Energy Program
  • Ocean Tidal and Wave Energy: Renewable Energy Technical Assessment Guide—TAG-RE: 2005, EPRI Report # 1010489, Palo Alto, CA, December 2005.
  • Primer: Power from Ocean Waves and Tides, Palo Alto, CA, June 2007.

Federal Energy Regulatory Commission (FERC)

Hagerman, George, Energy from Tidal, River, and Ocean Currents and from Ocean Waves, Presentation, 8 June 2007, Washington, DC.

Idaho National Laboratory, Hydrokinetic & Wave Technologies

International Energy Agency Implementing Agreement on Ocean Energy Systems (IEA-OES)

Union of Concerned Scientists, Hydrokinetic Overview

[1] U.S. Department of Energy (DOE), Energy Efficiency and Renewable Energy (EERE), “Marine and Hydrokinetic Technology Database.” Accessed 17 August 2011.

[2]U.S. Energy Information Administration (EIA), Electric Power Annual Report with data for 2009, Table 1.2, April 2011.

[3]Federal Energy Regulatory Commission (FERC), “Hydrokinetic Projects.” 9 June 2011.

[4] Electric Power Research Institute (EPRI), Assessment of Waterpower Potential and Development Needs, EPRI Report 1014762, Palo Alto, CA, March 2007.

[5] For example, in the American colonies, undershot waterwheels, built so that only the bottom of the wheel was in the river, drove flour and lumber mills. Dams and diversions, which are required for conventional hydroelectric (which uses the hydro potential energy) but not for hydrokinetic power, were built across rivers in the United States to power mills and factories throughout the 19th and 20th centuries. And over a century ago, ocean waves were used to pump seawater up to a tank on the cliffs in Santa Cruz, California, for spraying on dirt roads and dust control.

[6] Schwartz, SS, editor, Proceedings of the Hydrokinetic and Wave Energy Technologies Technical and Environmental Issues Workshop, Washington, DC, October 2005, prepared by RESOLVE, Inc., March 2006.

[7] For more information on ocean thermal energy conversion, see the U.S. DOE’s website.

[8] Wind fetch refers to the unobstructed distance over which wind can travel across a body of water in a constant direction. Wind fetch is important because longer fetch can result in larger wind-generated waves.

[9] EPRI. “The Future of Waterpower: 23,000 MW+ by 2025” EESI Briefing, June 8, 2007. Accessed 4 August 2011.

[10] Bedard, et al. North American Ocean Energy Status – March 2007. Accessed 4 August 2011.

[13] EPRI, Ocean Tidal and Wave Energy: Renewable Energy Technical Assessment Guide—TAG-RE: 2005, EPRI Report # 1010489, Palo Alto, CA, December 2005.

[14] Federal Energy Regulatory Commission (FERC), “Hydrokinetic Projects.” 9 June 2011.

[15] IEA Energy Technology Network. Annual Report Implementing Agreement on Ocean Energy Systems. 2010.

[16] Ocean Renewable Energy Coalition. “MHK Talking Points.” 2011. Accessed 5 August 2011.

[17] REN21. Global Status Report (GSR) 2011. 2011.

[18] IEA 2010.

[19] Ibid.

[20] Ibid.

[21] REN21 GSR 2011.

[22] Federal Energy Regulatory Commission (FERC). “Issued Hydrokinetic Preliminary Permits.” August 2011.

[23] IEA 2010.

[24] Ibid.

[25] Ibid.

[26] Federal Energy Regulatory Commission (FERC). “Licensing Hydrokinetic Pilot Projects.” April 14, 2008.

[27] U.S. Department of Energy (DOE), Energy Efficiency and Renewable Energy (EERE), Report to Congress on the Potential Environmental Effects of Marine and Hydrokinetic Energy Technologies. December 2009.

[28]For more information on state RPSs, see C2ES's state RPS page.


Production of electricity using the power of ocean waves or currents in canals, rivers, and tidal channels

Production of electricity using the power of ocean waves or currents in canals, rivers, and tidal channels

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