Small Hydropower Systems: Permitting and Selling Excess Power

Obtaining a Permit and Water Rights 

If your hydropower system will have minimal impact on the environment, and you aren't planning to sell to a utility, there's a good chance that the process you must go through to obtain a permit won't be too complex. Locally, your first point of contact should be the county engineer. Your state energy office may be able to provide you with advice and assistance as well. In addition, you'll need to contact the Federal Energy Regulatory Commission and the U.S. Army Corps of Engineers. 

You'll also need to determine how much water you can divert from your stream channel. Each state controls water rights and you may need a separate water right to produce power, even if you already have a water right for another use. 

Selling the Power You Produce 

The great thing about producing your own power is that you can usually sell any excess power to your local utility. If you decide to sell, you'll need to contact the utility to find out application procedures, metering and rates, and the the utility requires to connect your system to the electricity grid (it is generally best to do this before you purchase your hydro system). If your utility does not have an individual assigned to deal with grid-connection requests, try contacting your public utilities commission, state utility consumer advocate group, state consumer representation office, or state energy office. In general, utilities require a grid-interactive inverter listed by a safety-testing and certification organization such as , and the ability to disconnect your system from the utility's grid in the event of a power outage. The latter is necessary to prevent utility personnel working on the outage from accidentally being electrocuted. 

Utilities in many states now offer a special incentive to small power providers called net metering. Net metering is a billing method that allows you, as a small power provider, to be billed only for the net amount of electricity you consume over a billing cycle. You effectively get the same value for the output of your system as you pay for electricity from the utility, up to the point where excess power is produced. Any excess power from your system is then bought by the utility, generally at the wholesale rate. For detailed information on net metering, contact your state's utility regulatory agency, typically the public utility commission or public service commission. 

Aside from the advantages associated with selling power back to your utility, grid-connected systems also render additional electricity storage capacity, such as a , unnecessary. The grid will supply power when your hydropower system can't meet all your power requirements. However, if you live in an area where you can obtain higher rates for production during peak demand periods or for so-called “green power,” it might be economical to include energy storage capacity to dispatch power to your utility on demand. 

A Clean Energy Future 

By investing in a small hydropower system, you can reduce your exposure to future fuel shortages and , and help reduce air pollution. There are many factors to consider when buying a system, but with the right site and equipment, careful planning, and attention to regulatory and permit requirements, small hydropower systems can provide you a clean, reliable source of power for years to come.