In 2009, the Corps initiated a Hydropower Modernization Initiative (HMI), which is using risk assessment and net present benefit methods to identify the most pressing investment needs for hydropower rehabilitation efforts, and the potential for energy generation increases at particular facilities (Sale, 2010). From the evaluation of the first six Corps facilities, an average energy increase potential of 8 percent was identified and investments to achieve the increases were deemed cost-effective. Funding the investments will generally be difficult for facilities outside the Bonneville system, however, as discussed below.

Although there is much interest in increasing domestic hydropower production, there are challenges confronting hydropower production beyond just finding the resources to replace, rehabilitate, and upgrade equipment. The fate of hydropower is entwined with the opposition to large dams based on economic, social, and environmental factors. Dams change river flows and the fish runs that depend on them, alter water chemistry, change riverine landscapes, and inundate large areas that can include scenic canyons and valleys (Moore et al., 2010). There is growing interest in dam removal in the United States, which could affect some Corps hydropower projects in the future, although likely not the largest projects. In addition, climate change adds concerns about reliability and predictability of hydropower development. Hydropower production also faces increasing competition for use of the water and for reservoir storage space. Many Corps dams and reservoirs are part of multiple-purpose projects, so that hydropower must compete with other uses such as flood protection, irrigation, water supply, efforts to protect fish, and efforts to restore aquatic ecosystems. There is growing interest in sustainable reservoir operation (Jager and Smith, 2008). Some or all of these varied factors enter into discussions about the future of hydropower at particular project locations.

Funding Issues and Options

Hydropower is provided only modest funding in Corps budgets. In the Fiscal Year 2013 proposed Corps budget, for example, hydropower is allotted $180 million, with $178 million for operation and maintenance, and only $2 million for construction (USACE, 2012d). By contrast, the FY2013 budget includes $1.41 billion for flood risk management, $1.75 billion for navigation, $512 million for aquatic ecosystem restoration, and $252 million for recreation (USACE,

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