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Feb 15 -- The U.S. Department of Energy (DOE) gives notice of availability of a Draft Guidance and requests comment on the Draft Guidance to inform its implementation of hydroelectric incentives in the Infrastructure Investment and Jobs Act of 2021 (IIJA). The Draft Guidance describes the application process and the information necessary for the Secretary of Energy to make incentive payments to owners and authorized operators of qualified hydroelectric facilities pursuant to the Energy Policy Act of 2005 (EPAct 2005), Maintaining and Enhancing Hydroelectricity Incentives. DOE will accept comments, data, and information regarding this Draft Guidance no later than 5:00 p.m. ET on February 28, 2023.

Through section 40333 of the IIJA, Public Law 117-58, Congress amended EPAct 2005, Public Law 109-58, to establish Section 247, Maintaining and Enhancing Hydroelectricity Incentives. See 42 U.S.C. 15883. The provision requires the Secretary to make incentive payments to the owner or authorized operator of a qualified hydroelectric facility, subject to the availability of appropriations, for capital improvements directly related to improving grid resilience, improving dam safety, and environmental improvements. Incentive payments may be made upon receipt by the Secretary of an incentive payment application that demonstrates that the applicant is eligible to receive such payment and satisfies the other requirements as deemed necessary.

Under the statute, the incentive payments include the following limitations: an incentive payment shall not exceed 30 percent of the costs of the applicable capital improvement(s); and no more than one incentive payment may be made to a single qualified hydroelectric facility in any fiscal year that shall not exceed $5,000,000.

On June 30, 2022, DOE released a Request for Information (RFI) to provide interested parties the opportunity to provide preliminary feedback on the design of the section 247 of EPAct 2005 incentive program. Based on the RFI responses, the DOE Grid Deployment Office's (GDO) Hydroelectric Incentives Program has developed the Draft Guidance and now seeks public comment on this draft.

The Draft Guidance describes the application process and the information necessary for the Secretary of Energy to make incentive payments to owners and authorized operators of qualified hydroelectric facilities pursuant to section 247 of EPAct 2005, Maintaining and Enhancing Hydroelectricity Incentives.
 
While reviewers are welcome to provide comments on all aspects of this Draft Guidance, DOE is particularly interested in receiving comments with respect to the following five questions.

(1) The DOE proposes to use a scoring criteria rubric to prioritize which capital improvement applications are awarded funding in the event the program is oversubscribed (i.e., more eligible applications than available funding). DOE seeks feedback on this approach. (See Section IX of the Draft Guidance).

(2) The DOE proposes to distribute funds in an equitable manner in the event the program is oversubscribed. To do so, the DOE plans to fund applications in all three of the categories of capital improvements (i.e., improving grid resiliency, improving dam safety, and environmental improvements) by selecting the top scoring application in each category for small projects and remaining eligible projects. DOE seeks feedback on this approach. (See Section XI of the Draft Guidance).

(3) Recognizing that small hydropower facilities make up 75 percent of the nation's hydropower fleet, the DOE intends to allocate up to 25 percent of the program funding to support capital improvements made at small hydropower projects (nameplate capacity of 10 MW or less that is owned or operated by a small business, Indian tribe, municipality, or electric cooperative.) DOE seeks feedback on this approach. (See Section IV of the Draft Guidance).

(4) To balance risk while incentivizing hydropower owners and operators to make qualified capital improvements, DOE is proposing to provide a portion of the funding (up to 10 percent) up front and the remainder upon completion of the capital improvement(s). DOE seeks feedback on this approach. (See Section X of the Draft Guidance).

(5) DOE estimates eight (8) hours of preparation time for the EPAct 2005 Section 247 application. DOE seeks comment on this estimate.
 
DOE Draft Guidance: https://www.energy.gov/​gdo/​hydroelectric-247-draft-guidance
FRN: https://www.federalregister.gov/d/2023-03201

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