What are your key priorities going forward for the company?
Our primary focus moving forward in 2024 revolves around executing on the exciting groundwork we’ve laid through substantial growth and planning in recent years, particularly within our development portfolio. A key aspect of our strategy involves continuing our expansion into solar and storage assets, specifically co-locating these assets with our existing hydro projects.
Benefiting from the deregulation that separated transmission and distribution from power-producing assets in the United States, we now possess substantial land holdings around our assets. While some land is essential for federal licensing requirements and maintaining buffers for hydro projects, a significant portion is available for potential diversification by adding new clean energy development projects.
To facilitate this expansion, we’ve established both in-house capabilities and strategic partnerships. Notably, we’ve previously announced partnerships with two companies—Davis Hill Development and New Leaf (formerly Borrego). We are actively exploring opportunities to begin construction on the first of these projects, likely early this year; we see 2024 as a pivotal year for ground breaking at FirstLight.
Specifically, two initial projects are planned at the Shepaug Hydroelectric Facility, referred to internally as Little Shepaug and Big Shepaug. Notably, these projects encompass both behind-the-meter and front-of-the-meter ground-mounted solar arrays, addressing diverse use cases and aligning with our commitment to sustainable energy solutions.
You mentioned the establishment of solar and storage initiatives. Does this encompass technologies such as floating solar?
Yes, we do have a project in development for a floating solar array at our Western Massachusetts pumped storage facility. The advantage here lies in the fact that the upper reservoir of our existing pumped storage project is not designated as a public use waterway. This distinction addresses a common challenge associated with floating solar on conventional hydro reservoirs, where recreation considerations come into play. Although there are complexities related to the active nature of our pumped storage project, including significant daily water fluctuations of up to 20 to 40 feet, we are actively exploring and engineering solutions for the implementation of floating solar.
How do you perceive the evolution of the hydropower and dams industry within the broader clean energy landscape, and what role does First Light envision playing in this transformation?
In the context of the broader clean energy landscape, the messaging around hydro has experienced shifts over the past couple of years; I’ve seen this first-hand not only working in the hydro industry but also as a board member at the National Hydropower Association. Existing hydro stands out as a crucial integrator of various renewable assets, essentially forming the backbone of the renewable energy system, particularly in the case of ponding hydro.
However, there has been a notable trend toward favouring run-of-river approaches. While acknowledging the environmental considerations, it’s essential to recognize the value of pondage in hydro, akin to a natural battery. Similar to pumped storage, ponding hydro enables the storage and release of water to meet peak demand, especially during high-carbon generation periods, followed by off-peak recharging of reservoirs.
Looking ahead to the future landscape, preserving our existing hydro infrastructure is imperative. Recent federal legislation has introduced favourable tax credits and grants to enhance resiliency in existing hydro projects, offering incentives for a 3% incremental generation increase.
Anticipating a wave of refurbishments and upgrades, another key program gaining momentum is focused on non-powered dams. Federal legislation has provided a boost to this initiative, and we anticipate further traction in the coming years.
Will FirstLight seek to enhance the representation of women engineers, especially in technical roles? While there’s notable presence in administrative roles, the appeal of STEM positions seems to be a challenge. Are there initiatives in progress to address this?
Diversity in our workforce is a key priority for us, and while we’ve made progress as a company and as an industry, we have a long way to go. We’ve made a number of changes over the past few years that have broadened our talent pool and been effective in attracting diverse talent. First, we added a recruiter to our team, which has enabled us to be more intentional with hiring and talent acquisition. Post-pandemic, we also made the decision to permanently allow hybrid and remote work for all roles that don’t require boots on the ground every day, widening our talent pool to the entire U.S. and beyond.
We’re also proud to showcase our women in STEM roles. An illustrative example is one of our engineers, Becky Stebbins, who was recently featured in a children’s book ‘Energy Superheroes: Women in Energy Careers.’ She specializes in dam safety and civil engineering and is actually one of two women on our team of three individuals who specialize in dam safety – a fairly rare case in the hydro industry, having two of three specialists be women.
A last example of a change we made that has been fruitful in our hiring efforts is implementing a generous paid parental leave policy, a recent addition that has proven to be a decisive factor for some of our newly hired team members. It’s important for us to create an environment that supports diverse needs. Furthermore, we strive to highlight success stories internally, fostering an atmosphere that encourages and celebrates achievements across the board.
How does FirstLight approach the recruitment of veterans and military personnel to the industry?
Our industry is well-suited for individuals with military experience, and we actively welcome veterans into various roles within our company. The skill sets acquired in the military often align seamlessly with the demands of power generation and engineering, making it a natural fit and an attractive talent pool for employers, given how many new roles we’ll need to fill to successfully reach our decarbonization targets in the U.S. and beyond.
You mentioned your active involvement with the NHA. How do you believe this engagement contributes to your leadership role at First Light?
Our collaboration with the NHA provides a crucial connection to federal policy and actions. At FirstLight, much of our focus is on regional considerations—examining the impact of state and local policies on our facilities and actively participating in outreach efforts within those spheres.
Our association with the NHA has been tremendously valuable in its ability to complement our regional efforts by providing insights into the broader federal landscape. This allows us to contribute our perspective and support to initiatives such as the infrastructure bill (IRA), where we were strong advocates. We actively endorsed the bill, engaged in extensive outreach on Capitol Hill, and co-signed numerous letters advocating for needed policies and reforms to eliminate roadblocks and accelerate our progress toward a clean energy future.
Recently the company announced the integration of H2O Power and acquisition of Hydromega. Can you share more about how these integrations will unfold, and are there plans for additional acquisitions or integrations?
I’ve emphasized that our primary focus for 2024 is implementation, and a significant aspect of this is the seamless integration of the H2O and Hydromega teams.
With H2O, we have successfully integrated the administrative aspects over the past seven months, fostering mutual support and collaboration on operational fronts, which has been incredibly gratifying to watch and enriching for the entire team. As a team, we are engaged in recontracting efforts in Canada, specifically in Ontario, for both small and large hydro projects. While we have a robust track record in managing our contracts in the U.S., our combined expertise now allows us to bring additional strength to these discussions, enhancing our capabilities.
With Hydromega, we anticipate closing the transaction by the end of 2023, with the subsequent months dedicated to thoughtfully combining the FirstLight organization to allow us to effectively collaborate and collectively achieve our full potential. A key point of excitement lies in Hydromega’s development pipeline, which adds another two gigawatts to our existing portfolio of two gigawatts, encompassing offshore wind, solar, and storage projects.
Hydromega’s development pipeline includes land-based wind projects in Quebec, storage initiatives in Ontario, and new hydro builds. This expansion presents an exciting opportunity for us to delve into these projects and bring them to market and adds a team of seasoned developers to our already stellar development team. Currently, we are actively involved in solicitations in Quebec and Ontario, collaborating closely with the Hydromega team on these initiatives.
Are the plans to look at more projects internationally?
While our primary focus has been in North America, we acknowledge opportunities beyond this region. Broadly, at FirstLight, we adopt an opportunistic approach, exploring possibilities that align with the right partnerships and opportunities.
Do you see small hydro as a growing sector, or do you believe pumped storage is the direction in which the industry is heading?
Small hydro and pumped storage represent two intriguing facets of the industry. While I personally have a strong affinity for pumped storage, the reality is that the U.S. has not constructed a new pumped storage facility in over 25 years. It’s an area where we lag behind compared to Europe and China, where new plants are predominantly pumped storage.
Long-term planning by regional groups and utilities uniformly underscores the importance of pumped storage in our future energy landscape. However, challenges arise in the utilization of existing pumped storage assets, which currently operate at around 8% to 9% capacity. With full utilization, we could potentially reach capacity factors of 35% to 40%.
Simultaneously, there are federal licenses already issued for new pumped storage projects, but the critical question is the offtake mechanism in the U.S. — how to secure contracts for financing and construction, where batteries often have the upper hand due to their smaller scale and easier siting.
Batteries benefit from supportive federal and state policies, a trend reminiscent of the early 2000s when wind energy received a significant push through incentives. On the other hand, small hydro faces distinct challenges. The civil infrastructure demands of hydro plants, combined with lower output in small hydro projects, make them comparatively challenging.
While our portfolio spans kilowatt-sized plants to the substantial 1,168 MW pumped storage project, the current economic environment, marked by higher interest rates and inflation, poses challenges for small hydro. Many in the industry are grappling with these dynamics.
What measures or policies do you think could be implemented to promote increased pumped storage development in North America?
Over the past several years, significant strides have been made in overcoming obstacles to pumped storage development. We’ve focused on streamlining the licensing process, removing many hurdles in the regulatory landscape, especially for closed loop pumped storage projects. The primary challenge now lies in the offtake and contracting aspects, impeding broader adoption in the U.S.
To encourage more pumped storage development, a crucial step would be to align storage procurements with technology neutrality. Currently, there is a notable bias towards chemical storage despite the fact that, in terms of price per megawatt, pumped storage often competes favorably or even outperforms batteries. However, siting constraints pose challenges, limiting opportunities for pumped storage projects.
The key impediment at present is the offtake issue. Addressing this requires exploring various contracting opportunities, whether through capacity-only contracts or comprehensive agreements that encompass capacity, energy, ancillary services, and renewable credits. Wider adoption hinges on fostering a market environment that encourages such contracting flexibility.
Why is FirstLight focusing on co-locating solar and batteries, and what is the vision behind offering a bundled, true 24-7 clean energy product?
Our approach to co-locating solar and batteries is rooted in our commitment to delivering a comprehensive clean energy solution. While we’ve achieved success in contracting our existing hydro assets with municipal utilities in Massachusetts and Connecticut, our vision is to advance towards providing a bundled, true 24-7 clean product.
In the evolution of solving the challenge of clean energy, we’ve transitioned from corporate offtakers buying wind RECs in Iowa to co-located renewable energy credits in the same geographic area. The next frontier involves offering a bundled product sourced from multiple clean energy sources that align with the load profile of the buyer. This means delivering a product where every hour can be accounted for with clean energy from our diverse portfolio.
The combination of run-of-river hydro as a baseline, peaking hydro, and the addition of solar and storage brings us closer to realizing this goal. Co-locating solar allows us to leverage our existing skilled workforce, maintaining the efficiency of our hydro facilities while extending their expertise to solar farms and battery storage.
The synergy between these technologies also provides an opportunity for our team to explore new technologies and expand their skill set. Our ultimate goal is to offer a 24-7 clean product, which, to the best of our knowledge, is not widely implemented at the moment. Some pilot programs exist, and companies like TC Energy have made announcements in Canada, but we believe our approach, especially as we expand into offshore and onshore wind projects, will set us apart in the pursuit of a cleaner and more sustainable energy future.
Can you share your vision for workforce development, especially considering the growing need to build a skilled workforce to meet ambitious targets?
When discussing workforce development, it’s crucial to highlight the added benefits of initiatives such as prevailing wage and apprenticeship programs, especially in new builds.
Staying committed to training the next generation is not only aligned with incentives but is also instrumental in shaping the future workforce. As a company, we aim to pair such programs with our new builds, maximizing benefits for both our organization and the industry as a whole. This commitment helps us make a meaningful impact on fostering the next generation of skilled workers.
In the hydropower industry, where there has been concern about an aging workforce, we’ve been able to manage the turnover effectively. Although there is a noticeable transition of institutional knowledge, initiatives like apprenticeship programs and the emphasis on strengthening trades have mitigated the impact. We’ve seen turnover but have maintained asset availability at historic levels.
Regarding our workforce breakdown, we’re experiencing the first wave of retirements – approximately 10 to 15% of our workforce is nearing retirement age. Surprisingly, attracting new employees has not been a significant challenge, particularly since a substantial portion of our field workforce are members of the IBEW. This affiliation not only draws individuals to our workforce but also widens our pool of potential hires through local union halls.
Another noteworthy practice that we’ve adopted involves engaging retirees to support major projects on our legacy assets. This collaboration allows a transfer of critical knowledge from seasoned workers to the next generation, contributing to the continuity and success of our clean energy workforce and initiatives.
