Monday, October 22, 2012

Economics of Hydropower

Hydropower is the cheapest way to generate electricity today. No other energy source, renewable or nonrenewable, can match it. Today, it costs less than one cent per kilowatt-hour (kWh) to produce electricity at a typical hydro plant. In comparison, it costs coal plants about four cents per kWh and nuclear plants about two cents per kWh to generate electricity.

Producing electricity from hydropower is cheap because, once a dam has been built and the equipment installed, the energy source—flowing water—is free.

Hydropower plants also produce power cheaply due to their sturdy structures and simple equipment. Hydro plants are dependable and long-lived, and their maintenance costs are low compared to coal or nuclear plants.

One requirement may increase hydropower’s costs in the future. The procedure for licensing and relicensing dams has become a lengthy and expensive process. Many environmental impact studies must be undertaken and as many as 13 state and federal agencies must be consulted. It takes up to seven years to get a license to build a hydroelectric dam or a relicense to continue operations.

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