NextEra Energy announced this week that it officially sold off the last of its hydro assets. Once lauded as the clear and clean future of electricity generation, it has had its future recently called into question by economists and environmentalists alike. Let’s take a look at where hydro stands, who’s behind it, and whether hydro-heavy utilities know something NextEra doesn’t.

All dried up
After announcing its intention to sell last December, NextEra emptied its electricity generation bucket of its remaining hydro assets this week. The utility handed off 19 facilities and eight storage reservoirs to Brookfield Renewable Energy Partners, a Canada-based pure-play renewable power platform.

NextEra CEO President and CEO Armando Pimentel called the assets an “attractive portfolio in many respects” but cited generation optimization and concentration of resources as primary reasons for his company’s decision.

NextEra has an eye toward “greater growth potential,” and hydro’s heyday seems to be behind it. The majority of all facilities were built in the 1970s, and generation has remained fairly steady over the past 40 years. In contrast, other renewables, primarily wind and solar, have nearly quadrupled capacity since 1990.

Source: eia.gov.

But there’s no discounting the continued importance of hydropower. It currently comprises 8.2% of total U.S. generation, and a whopping 63% of renewable power.

Source: eia.gov. 

The future of renewables

Looking ahead, hydro is the slow and steady tortoise of renewable energy. From now through 2040, increases in non-hydro renewables are expected to account for 32% of total growth, while hydropower output should continue at current levels.

Source: eia.gov. 

Despite hydropower’s lackluster growth potential, there’s good reason that capacity hasn’t decreased. Most of the “best” sites in the U.S. have been filled, and hydropower offers a “clean” and “steady” source of electricity, with its major capital expenditure days behind it.

The quotation marks are necessary caveats, since some recent analyses of hydropower question the environmentalism of larger dams. A recent Sierra Club position paper supports existing run-of-river dams producing less than 10 MW, but large dams don’t make the cut. If the EPA were to adopt similar views that hydroelectric plants cause ecological damage and significant greenhouse gas emissions from reservoirs, the helping hand of green energy policy might pull back from hydro.

Who’s hanging on to hydro?
Many utilities have small but significant hydro assets that help to keep costs low and steady when water levels are high and other fuel prices take a turn for the worse.

Atlantic Power‘s stock recently plummeted on news of a slashed dividend and dismal quarter, and the company’s counting on renewables to put it back in business. The utility currently generates 5% of its energy from four hydroelectric facilities and expects to keep assets steady as it focuses on solar and wind. Compared with hydro’s limited expansion and capital intensiveness, wind’s production tax credit and solar’s investment tax …read more
Source: FULL ARTICLE at DailyFinance