Municipal hydrokinetic energy

Interest is increasing in municipal hydrokinetic energy projects, as cities and towns consider whether they should generate renewable electricity from their water resources.  Hydrokinetics entails generating electricity from moving water such as tides, waves, and free-flowing rivers.  Towns, states, and national governments may not only have an interest in generating power for their citizens, but may also have advantages in project development such as lower financing costs.

For example, the town of Wiscasset, Maine is considering whether to pursue a project togenerate electricity from tidal power in the Sheepscot River. The town thinks that tidal currents and flowing water in the Sheepscot could be used to generate electricity using hydrokinetic technology.  In 2008, the town applied to the Federal Energy Regulatory Commission for a preliminary permit to study the feasibility of the project. Wiscasset proposed to deploy a series of hydrokinetic turbine generating units in the tidal Sheepscot, along with associated transmission facilities. Currently, Wiscasset appears to be considering using the RivGen units under design by ORPC.

In May 2009, the FERC granted Wiscasset its preliminary permit. Preliminary permits confer the right to investigate the feasibility of a hydropower project, typically for a three-year term. Preliminary permits do not authorize actual construction; to actually build and operate a hydrokinetic or hydroelectric project generally requires a FERC license or exemption. The holder of a preliminary permit does have first priority to file for a full license as long as the preliminary permit remains in effect, and FERC expects permittees to make progress toward ultimate licensure. (For example, in September 2011 a company affiliated with ORPC used its preliminary permit priority to file a pilot license application for the Cobscook Bay Tidal Energy Project.)

Next spring, the town faces a key deadline if it chooses to seek a hydrokinetic pilot project license for the project. Wiscasset’s preliminary permit is set to expire on April 30, 2012. Filings in the project’s FERC docket suggest that the town may seek to extend that deadline. For example, in a May 2011 filing, the town said, “we anticipate the Wiscasset Project will apply for a successive Preliminary Permit in May 2012”.

Generally, preliminary permits expire after three years, after which the original permittee has no special rights to the site. In certain circumstances, federal regulators can grant successive preliminary permits. For example, FERC has given several municipal hydroelectric projects successive preliminary permits when the towns need more time. Even this requires a showing of diligent efforts to investigate the project’s feasibility and partial progress toward readiness for a license application.

In Wiscasset’s case, other deadlines within the preliminary permit process have already been extended. For example, the 2009 preliminary permit required the town to submit a Notice of Intent and draft license application in May 2011. Instead of filing these pre-application documents, the town chose to ask FERC for an extension to allow more site studies and stakeholder consultation. FERC allowed the town more time, but only until the preliminary permit expires on April 30, 2012. FERC may give the town similar leniency if it applies for a successive preliminary permit this spring. On the other hand, FERC promotes competition and discourages “site-banking”; if someone else showed interest in developing the Wiscasset site, FERC might be less inclined to issue the town a successive preliminary permit.

Wiscasset has until the end of April 2012 to either file a license or seek its successive preliminary permit.  If Wiscasset moves forward, the Sheepscot hydrokinetic project could be an example of how towns can benefit from their renewable energy resources.