With the House passing a hydropower bill earlier this year and the Senate working on its own bill, will hydropower legislation lead the way to a broader discussion on energy policy? During today's OnPoint, Kevin Frank, U.S. CEO of Voith Hydro, discusses the impact this policy could have on his company and the hydropower industry. He also talks about some of the licensing bottlenecks that exist in the United States for hydropower projects.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi, joining me today is Kevin Frank, U.S. CEO of Voith Hydro. Kevin, thanks for coming on the show.
Kevin Frank: Thank you, Monica, for having me.
Monica Trauzzi: Kevin, hydropower is back on the map in Congress in a big way with attention in both the House and Senate as well as from DOE Secretary nominee Moniz. The House passed a bill earlier this year. The Senate Energy Committee is now working on its own bill. What do the two bills do? What could they do for your industry?
Kevin Frank: The biggest thing they do, Monica, is help us get some focus on the licensing side. Licensing takes way too long and is very complicated, and this bill lets us focus on a two-year licensing process for hydro. It also allows us to look at the things that are not connected to rivers and get them out of the focus on the environment. It allows us to get a two-year licensing process.
Monica Trauzzi: And so this focuses on smaller projects, is that correct?
Kevin Frank: Smaller projects, and unconnected projects, unconnected to rivers.
Monica Trauzzi: So how likely is it that this actually crosses the finish line?
Kevin Frank: Oh, it's very likely. I think there's support all the way through the House and the Senate and I think right into the White House.
Monica Trauzzi: How does policy uncertainty affect your company and your industry more broadly?
Kevin Frank: Well, it's a business problem. Uncertainty makes it tough to make the right investments. So it costs a lot up front to do a hydro project, although it's very affordable energy, it does take a lot to get it started. And if you have an uncertain licensing process and it takes too long, it makes it hard to make the business model work.
Monica Trauzzi: How has Voith been faring, though? Are you profitable at this point?
Kevin Frank: Oh yes, yes, we've been in business for 145 years. We've been doing hydro for well over 100 years, and we're still very profitable. We have over 500 people up in New York building hydro equipment right now.
Monica Trauzzi: So why the need then for federal help?
Kevin Frank: Well, we don't need the finance piece; what we need is a more certain process. Because of this complication, it just takes too long to get new projects started. And like I said, when you're trying to work a business model and there's uncertainty in there, we're having a tough time getting a new hydro license.
Monica Trauzzi: Let's talk about the financial piece of this. Right now hydro does not enjoy the same level of federal incentives as other renewables do. What is the case for giving hydro a boost in terms of federal tax incentives to bring it more on par with wind and solar?
Kevin Frank: Hydro is a renewable energy, and it's clean. It's a backbone of our energy right now. We do 60 percent of the renewable energy in this country is hydro. We would like to build more of it. We would like to make it more affordable. We don't think it's fair to give wind and solar help if you're not going to give the rest of the renewables help.
Monica Trauzzi: So how important is moving this type of legislation that passed the House and is making its way through the Senate, to the future of hydro? I mean, if it doesn't pass, if it doesn't cross the finish line, what does that then mean?
Kevin Frank: It means less projects, less work, less people working in places like York, Pennsylvania, building turbines and generators.
Monica Trauzzi: So like I said at the top, DOE Secretary nominee Moniz has specified that hydropower is one of those technologies that he'd like to put more of a focus on. What should DOE be doing then?
Kevin Frank: Well, we're really excited to hear them talking about hydro and putting a focus on it. Just the fact that he's putting a focus on it, we know that it will make a difference. We need the agencies to work together in a more coordinated fashion, get rid of the duplication of effort, get rid of the delays, let's get some hydro being built, let's put some people to work.
Monica Trauzzi: How established is hydropower technology and how much innovation still is there to be completed?
Kevin Frank: Hydro is an incredibly efficient use of a water resource, so it's highly efficient. The technology today is going into helping the environment. So hydro wants to be part of the solution with these 80,000 dams that are out there untapped, not making power, we want to tap into them, and when we do that it will help the environment. So hydro's technology today is very focused on fish-friendly technology.
Monica Trauzzi: Do you think the discussion has shifted away from the environmental discussion that we were seeing several years ago about the environmental impacts of hydro, or does that continue to be a factor for you guys?
Kevin Frank: Monica, the discussion today is how hydro is part of the solution. So when we have these 80,000 dams out there, any kind of environmental issue is there. Hydro is part of the solution. We can fix a lot of the environmental issues that are out there.
Monica Trauzzi: And do you think that you've sufficiently addressed those issues?
Kevin Frank: We are, yes. We have the technology today. We can put it to work. So let's get the licensing process more efficient. Let's not shortcut the environment; let's improve the environment. Hydro is part of the solution.
Monica Trauzzi: So if this hydro bill passes and gets all the way to the president, what do you think that could mean for the broader energy policy discussion and prospects for a larger bill?
Kevin Frank: We think that it means we're going to put more people to work. Look, there's 60,000 megawatts of power out there, hydropower, just waiting to be developed. So, what's the next step? Let's get this up to the larger projects, let's get a two-year licensing certainty. The first bill looks at a two-year licensing. We think the next bill needs to say there needs to be two-year licensing. Let's put this power to work.
Monica Trauzzi: All right, we're going to end it right there. Thank you for coming on the show, and nice to see you.
Kevin Frank: Thank you, Monica.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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