AMC's Zealand Falls Hydroelectric Project

Miles from the nearest road in the woods of the White Mountain National Forest in New Hampshire sits a backcountry hydropower project.  Owned by the Appalachian Mountain Club, the Zealand Falls Hydroelectric Project No. 14657 is licensed to generate 2.5 kilowatts of power, using Whitewall Brook on federal land within the White Mountain National Forest.  The project provides power to licensee Appalachian Mountain Club's Zealand Falls Hut, a year-round backcountry facility constructed in 1932 which provides overnight lodging for about 6,000 hikers and skiers.  Visitors can learn about the hut's power systems first-hand, with additional information coming from public records.
 
While the Zealand Falls Hut is not connected to the utility grid, it uses on-site distributed generation (including solar, wind, and the licensed micro-hydro system) to charge batteries and to power a well water pump, refrigerator, freezer, lights, radio, fire system, and other electrical equipment.

According to the AMC's December 29, 2014 application to the Federal Energy Regulatory Commission for a hydropower license, the Zealand Falls hydro unit was originally installed in 1981 with funds from a U.S. Department of Energy demonstration grant.  The application describes its original project objective as "to provide an alternative energy source for the AMC's Zealand Falls Hut that would a) enhance public awareness of renewable energy sources; b) conserve fossil fuel by decreasing propane consumption; and c) reduce the reliance on helicopters that are used to airlift propane tanks in and out of this backcountry hut used by the public."  In 2011, the AMC replaced the hydroelectric generator and some other systems, with the effect of reducing water diversion.

Under section 23(b)(1) of the Federal Power Act, a non-federal hydroelectric project must be licensed (unless it has a still-valid pre-1920 federal permit) if it:

(a) is located on a navigable water of the United States;
(b) occupies lands or reservations of the United States;
(c) utilizes surplus water or waterpower from a government dam; or
(d) is located on a stream over which Congress has Commerce clause jurisdiction, is constructed or modified on or after August 26, 1935, and affects the interests of interstate or foreign commerce.

The White Mountain National Forest is a federal "reservation" managed by the U.S. Forest Service. On December 29, 2014, AMC filed its application to operate and maintain its existing off-grid micro-hydro project.  The Commission granted AMC's application by order dated August 12, 2015.
 
According to the order issuing license, the Zealand Falls Project features a natural bedrock pool from which a 3-inch-diameter intake pipe diverts water through a settling tank and penstock feeding a single turbine-generator unit with an installed capacity of 2.5 kW.  Water is returned to Whitewall Brook below the turbine, about 1300 feet below the diversion.  The project is licensed to operate in a run-of-river mode during the ice-free period (typically May to October).

According to the order, the levelized annual cost of operating the Zealand Falls Project as licensed is "about $585.78, or $579.98/MWh."  Based on an estimated annual generation of 1,010 kilowatt-hours, the Commission found "the project would produce power valued at $117.00."  This is several times higher than the cost of power delivered by the utility grid, and almost 3 times higher than the cost of producing alternative energy from a propane-fueled generator with a current average cost of propane fuel of $2.65 per gallon."  At the same time, the order notes that the project may achieve public interest values beyond project economics.