Even well-intended regulations can hurt progress on renewable energy.


Earlier this month, President Obama issued a memo to the heads of executive departments and agencies, laying out his administration's new goals for renewable energy. The White House directive calls for agencies to double their use of renewable electricity, which includes sources like "hydrokinetic renewable energy" derived from lakes, rivers, and man-made channels. Yet, to accomplish this noble goal, onerous government regulations may end up being the administration's own worst enemy.

Consider what recently happened when a solid local plan to generate clean energy in Logan City, Utah encountered one-size-fits-all federal regulations. "Green" regulations stifled a small green energy project, leading to four years of delays and doubling the cost.

In 2009, Logan City began installation of a micro-hydropower system — essentially a small electric generator — in an existing water pipeline. At first, the project seemed like a winner for both the environment and the taxpayer. It would alleviate the excess water pressure that threatened to damage city infrastructure, and in the process generate enough clean, low-cost energy to power 185 local homes.

Micro-hydropower is an efficient new source of green energy that works much like conventional hydropower, but on a smaller scale. In theory, anyone with access to flowing water can benefit from it simply by placing a turbine in the water and hooking it up to a generator. Unlike conventional hydropower, micro-hydropower does not require a dam. It has little environmental impact, but if fully developed, it could double America's hydroelectric capacity.

In the case of Logan City, this clean energy solution entailed nothing more than placing a turbine within the Dewitt Springs pipeline and hooking it up to a generator. Everything would take place within an existing building, with no disruption to any stream, animal or plant life, or historic structures — but laws meant to protect the environment soon backfired.

Project managers thought the regulatory requirements would be simple. The Federal Energy Regulation Commission, which oversees the permitting of hydropower projects across the country, did grant the city an exemption designed for small projects, but it made little difference. The city had to meet a laundry list of other regulations to comply with the Endangered Species Act, the National Historic Preservation Act and the National Environmental Policy Act, among others.

Those regulations were cumbersome enough, but it was the Stimulus Act of 2009 which really turned the project into a taxpayer's nightmare. While the stimulus provided part of the funding, it came with strings. The law required that every part used be manufactured in the United States. Since only one domestic company fit the bill, prices went through the roof.

Logan City expected to spend a maximum of $1.4 million, but instead the project cost almost $3 million — which doesn't include the four years of effort the city poured into it. The city's assistant engineer said that the city will never undertake anything similar after "the permitting headache and the nightmare and the frustration of the process."

Federal funding made the Logan City project possible, and federal regulations strangled it. This is a case of "Green versus Green," when policies that are intended to protect the environment end up obstructing environmental progress.

The story of Logan City is just one example among many. A micro-hydro project in Afton, Wyo. also saw costs skyrocket in order to comply with federal regulations. The final cost of the city's Swift Creek micro-hydro project was $7.5 million, but project managers estimate that $5.6 million was spent just to meet regulatory requirements.

Beyond the ballooning fiscal toll that these regulations exact on localities, there are also the temporal aspects to consider. It took Barre City, Vt., more than seven years to comply with regulations on a hydro-power project that would only power 12 homes.

In places like Logan City, Afton, and Barre City, redundant and unnecessary federal requirements are holding back small, commonsense projects and the local innovators who put them into practice. Rather than protecting the environment like they were meant to, they prevent environmentally friendly alternative energy projects from ever being born.

Micro-hydropower is a promising source of clean, low-cost electricity for localities all across the country. If policymakers at the national level truly want communities to develop local renewable energy, they will need to realize that our complex web of regulations has unintended consequences that get in the way. Until then, for many cities, micro-hydropower will remain something that works only in theory.

Ryan M. Yonk is an assistant professor of political science at Southern Utah University. Megan E. Hansen is a policy analyst at Strata Policy. They are coauthors of the Mercatus Center working paper, "Logan City's Adventures in Micro-Hydropower: How Federal Regulations Discourage Renewable Energy Development," with Randy Simmons and Kenneth Sim.


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