Despite efforts to offer a streamlined regulatory path for some demonstration hydropower projects, earlier this year the holder of a hydrokinetic pilot project license for a project proposed for the Tanana River in Alaska surrendered its license due to an inability to find financing. The case of the Whitestone Poncelet River-In-Stream-Energy-Conversion (RISEC) Pilot Project No. 13305 illustrates the Federal Energy Regulatory Commission’s hydrokinetic pilot project licensing process, the difficulties of testing and developing new hydropower technologies, and how the Commission handles pilot license surrender.
Whitestone Power and Communications, an assumed name of the Whitestone Community Association, had proposed the project as a 100-kilowatt demonstration of its proprietary hydrokinetic prototype technology. It was to be located on the Tanana River at its confluence with the Delta River, about 90 miles southeast of Fairbanks. A Poncelet undershot waterwheel and generator unit mounted on a floating platform, seasonally installed and moored to a cliff. Power produced would be supplied to the Golden Valley Electric Association grid.
The Federal Energy Regulatory Commission granted WPC a five-year pilot project license on October 19, 2012. In processing WPC’s application, the Commission used a hydrokinetic pilot project licensing process derived from from its Integrated Licensing Process. According to the Commission, the hydrokinetic pilot project licensing process was designed “to meet the needs of entities, such as Whitestone, who are interested in testing new hydropower technologies while minimizing the risk of adverse environmental impacts.” The Commission describes the goal of the pilot licensing process as “to allow developers to test new hydrokinetic technologies, to determine appropriate sites for these technologies, and to confirm the technology’s environmental and other effects without compromising the Commission’s oversight of the projects and limiting agency and stakeholder input.”
As outlined in a white paper prepared by Commission staff, a hydrokinetic pilot project should be: (1) small; (2) short term; (3) located in environmentally nonsensitive areas; (4) removable and able to be shut down on short notice; (5) removed, with the site restored, before the end of the license term (unless a new license is granted); and (6) initiated by a draft application in a form sufficient to support environmental analysis. After finding the WPC project met these standards, the Commission issued it a license in 2012. Article 301 of the license required the licensee to commence construction of the project works within two years from license issuance, i.e., by October 19, 2014.
Despite winning a license, the project was never built. In 2014, WPC asked for and received a two-year extension of the start-of-construction deadline, “due to unforeseen setbacks in obtaining the necessary financing to begin construction.” But in that order, the Commission reminded the licensee that, pursuant to section 13 of the Federal Power Act, the deadline for starting construction may only be extended once, for a period not exceeding two additional years. Therefore, the Commission noted its inability to grant any further extensions of time for the commencement of project construction.
But in September 2015 WPC applied to the Commission for surrender of its license. In its surrender application, WPC stated that it was unable to obtain the funding necessary to construct the project and had not constructed any project facilities.
In April 2016, the Commission granted WPC's surrender application without condition, citing the facts that the licensee had not commenced construction and that the project site remained unaltered.
The Whitestone project was among the first to use the Commission’s hydrokinetic pilot project licensing process. But despite receiving expedited regulatory treatment in licensing, financing challenges led the licensee to surrender its license before the project could be constructed. Some other proposed hydrokinetic projects have been canceled or put on hold, following licensure; earlier this year, the Commission accepted license surrender for a Washington tidal power project licensed as a 10-year pilot project, after the public utility district proposing it found it economically infeasible. Another project -- an ocean wave energy farm off the Oregon coast -- surrendered its pilot license