Hydroelectric Incentives Guide

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. Three distinct hydroelectric incentive programs are 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

PROGRAM	SUMMARY	ELIGIBLE ENTITIES	ELIGIBLE PROJECTS
Hydroelectric Production Incentives (Section 242 of EPAct 2005)	Incentive 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.
Hydroelectric Efficiency Improvement Incentives (Section 243 of EPAct 2005)	Incentive 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 dam	Owners 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%.
Maintaining & Enhancing Hydroelectricity Incentives (Section 247 of EPAct 2005)	Incentive 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.

PROGRAM

SUMMARY

ELIGIBLE ENTITIES

ELIGIBLE PROJECTS

Hydroelectric Production Incentives

(Section 242 of EPAct 2005)

Incentive 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.

Hydroelectric Efficiency Improvement Incentives

(Section 243 of EPAct 2005)

Incentive 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 dam

Owners 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%.

Maintaining & Enhancing Hydroelectricity Incentives

(Section 247 of EPAct 2005)

Incentive 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.

Frequently Asked Questions

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.

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.

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%.

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.