Icon representing Grid Deployment Office's hydroelectric incentives program

The Hydroelectric Incentives program oversees an investment of more than $750 million to support the continued operation of the U.S. hydropower fleet to meet the nation’s clean energy goals and ensure a more reliable and resilient electric grid system. The Bipartisan Infrastructure Law (BIL) funded three distinct hydroelectric incentive programs aimed to add hydroelectric capacity to non-powered dams and construct small hydroelectric projects in areas of inadequate electric service, as well as incentivize hydropower investment in capital improvements related to efficiency, grid resilience, dam safety, and environmental conditions.

Programs Overview

PROGRAMBIL PROVISION SUMMARYELIGIBLE ENTITIESELIGIBLE PROJECTSFUNDING

Hydroelectric Production Incentives

(Section 242 of EPAct 2005) 

40331Incentive supports hydropower development by providing payments for electricity generated and sold from dams and other water infrastructure that add or expand hydroelectric power generating capabilities, or are constructed in an area with inadequate electric service.Owners or authorized operators of a hydroelectric generation facility 

A qualified hydroelectric facility is a hydroelectric generation facility that:

(a) is located in a State or in U.S. jurisdictional waters;

(b) has a water-powered turbine or other generating device (including conventional or new and innovative technologies capable of continuous operation);

(c) is owned or solely operated by a non-Federal entity;

(d) began producing hydroelectric energy (either through added generation capability, excluding maintenance, or through the incorporation of new equipment, refurbished equipment, or both) for sale on or after October 1, 2005; and

(e) that either:

(1) is at an existing dam or conduit that was completed before November 15, 2021; or,

(2)

(i) has a generating capacity of not more than 20 megawatts;

(ii) for which the non-Federal entity has received a construction authorization from the Federal Energy Regulatory Commission, if applicable; and

(iii) that is constructed in an area in which there is inadequate electric service.

BIL funded incentive at $125 million.

No facility may receive more than $1 million in 1 calendar year.

Incentive payment based on net electric energy generated by and sold from its operation during the eligibility window.

Refer to the guidance for additional information.

Hydroelectric Efficiency Improvement Incentives

(Section 243 of EPAct 2005)

40332Incentive payments to the owner or authorized operator of a hydroelectric facility at an existing dam for capital improvements directly related to improving facility efficiency by at least 3%.Owner or authorized operator of a hydroelectric facility at an existing damOwners or authorized operators of a hydroelectric facility at an existing dam for eligible capital improvements directly related to improving facility efficiency by at least 3%.

BIL funding incentive at $75 million.

Limitations include:

(1) incentive payments shall not exceed 30% of the costs of the applicable capital improvement(s);

(2) not more than 1 incentive payment may be made to a single eligible hydroelectric facility per fiscal year; and

(3) the amount of the incentive payment shall not exceed $5 million.

Maintaining & Enhancing Hydroelectricity Incentives

(Section 247 of EPAct 2005)  

40333Incentive payments to the owner or authorized operator of a qualified hydroelectric facility for capital improvements directly related to improving grid resilience (including the addition of energy storage such as reservoir capacity, pumped storage hydropower, and batteries), improving dam safety, and related to environmental improvements.

A qualified hydroelectric facility is a hydroelectric project that 

(1)(A) is licensed by the Federal Energy Regulatory Commission; or

(B) is a hydroelectric project constructed, operated, or maintained pursuant to a permit or valid existing right-of-way granted prior to June 10, 1920, or a license granted pursuant to the Federal Power Act (16 U.S.C. 791a et seq.);

(2) is placed into service before the date of enactment of this section (November 15, 2021); and

(3)(A) is in compliance with all applicable Federal, Tribal, and State requirements; or

(B) would be brought into compliance with the requirements described in subparagraph (A) as a result of the capital improvements carried out using an incentive payment under this section. 

Owners or operators of qualified hydroelectric facilities for capital improvements directly related to:

(1) improving grid resiliency,

(2) improving dam safety,

(3) environmental improvements

Additional eligibility information is provided in the final guidance.

BIL funded incentive at $553.6 million.

Limitations for the incentive payments include:

(1) Incentive payments shall not exceed 30% of the costs of the applicable capital improvement(s)

(2) Not more than 1 incentive payment may be made to a single qualified hydroelectric facility in any fiscal year, the amount of which shall not exceed $5 million.

 

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Resources and FAQs

Hydroelectric Production Incentives (Section 242 OF EPAct 2005)

  • Supports qualified hydropower development by providing payments for electricity generated and sold from dams and other water infrastructure that add or expand hydroelectric power generating capabilities, or are constructed in an area with inadequate electric service

Q: How, where, and when can I apply for this funding?
On October 11, 2023, the U.S. Department of Energy (DOE) announced 66 hydro facilities throughout the country will receive more than $36.7 million in incentive payments for electricity generated and sold in calendar years 2021 and 2022. See the full list of selected entities.

The latest guidance can be accessed on the Hydroelectric Production Incentives webpage or through the Clean Energy Infrastructure Funding Opportunity eXCHANGE.

Q: How much funding is available in Year 1?

Through the Infrastructure Investment and Jobs Act (commonly known as BIL), DOE received $125 million for the Hydroelectric Production Incentives. Payments for this incentive are calculated based on electric energy generated and sold by a qualified hydroelectric facility during the incentive period. Please refer to the guidance for application requirements and payment calculation procedures.

Q: What are the next steps for the Hydroelectric Production Incentives?

DOE plans to open the application window for electricity generated and sold in calendar year 2023 in the spring of 2024.

 

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Hydroelectric Efficiency Improvement Incentives (Section 243 OF EPAct 2005)

  • Focuses on increasing efficiency by funding qualified capital improvements that improve an existing hydroelectric facility’s efficiency by at least 3%

Q: How, where, and when can I apply for this funding?

The application window for the Hydroelectric Efficiency Improvement Incentives closed on June 20, 2023.

The latest guidance can be accessed on the Hydroelectric Efficiency Improvement Incentives webpage or through the Clean Energy Infrastructure Funding Opportunity eXCHANGE.

Q: How much funding is available in Year 1?
Through the Infrastructure Investment and Jobs Act (commonly known as BIL), the Department of Energy (DOE) received $75 million for the Hydroelectric Efficiency Improvement Incentives. Please refer to the guidance for application requirements. 

Q: What are the next steps for the Hydroelectric Efficiency Improvement Incentives?

DOE is now in the process of reviewing applications and anticipates announcing those selected for negotiations in early 2024.

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Maintaining & Enhancing Hydroelectricity Incentives (Section 247 of EPAct 2005)

  • Invests $554 million to enhance existing hydropower facilities for capital improvements directly related to grid resiliency, dam safety, and environmental improvements

Q: How, where, and when can I apply for this funding?

The application window for the Maintaining & Enhancing Hydroelectricity Incentives closed on October 6, 2023.

The latest guidance can be accessed on the Maintaining and Enhancing Hydroelectricity Incentives webpage or through the Clean Energy Infrastructure Funding Opportunity eXCHANGE

Q: How much funding is available in Year 1?

Through the Infrastructure Investment and Jobs Act (commonly known as BIL), DOE received $553.6 million for the Maintaining and Enhancing Hydroelectricity Incentives. Please refer to the guidance for application requirements. 

Q: What are the next steps for the Maintaining and Enhancing Hydroelectricity Incentives?

DOE is now in the process of reviewing applications and anticipates announcing those selected for negotiations in the spring of 2024.

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If you have additional questions, please reach out to us at hydroelectricincentives@hq.doe.gov and we will get back to you as quickly as possible.