The Economics of Small Dams

Today’s guest blog is a part of the America’s Most Endangered Rivers® series, and it is about a river that we listed in 2012, the South Fork Skykomish River in Washington.  Rich Bowers, the Hydropower Reform Coalition Pacific Northwest Coordinator, tells us about a new economic report that sheds light on the economics of dam building in the Northwest.

waterfall on the Skykomish River, WA | © Rich Bowers

Waterfall on the Skykomish River, WA | © Rich Bowers

Why would utilities and developers pursue expensive new dams when conservation and more beneficial renewable opportunities exist?  That’s a question I and other river advocates are pondering here in the Pacific Northwest.  We currently have eight new small dam projects on the books for Idaho, Montana, Oregon, and Washington (two applications were filed just last week). Each requires building roads, transmission lines, a dam, powerhouse, and other support infrastructure that will remain for decades. It’s perplexing that we can have this many new proposals in a region that also leads the nation in removing old, uneconomic, and unneeded dams.

To market these dams, promoters claim they are environmentally benign, offer low emissions, and are necessary to produce the power we need.  But the facts are a bit different.  After more than a century of building dams, all of the productive, environmentally sound hydropower sites (more than 83,000 dams in the United States) have been developed.  We have learned that all dams, regardless of size, degrade water quality, harm river-dependent species, and limit downstream recreation.  We are continuing to realize that small dams, including new proposals in the Northwest, are expensive to build, generate little electrical benefit, and have huge impacts if built in the wrong place.

One prime example of an expensive, marginally economic, and ill-sited dam is the proposal at Sunset Falls on Washington’s South Fork Skykomish (Sky) River.  Expected to cost more than $150 million to build, and to produce just one percent of the local utilities energy needs, the dam would remove up to ninety percent of the water from the river and from a series of magnificent waterfalls (Sunset Falls and the upstream Canyon Falls).  One of just four state designated scenic rivers, the Sky is located in a truly magnificent setting, with a backdrop of Mt. Index and the North Cascades Range.

Scenic Skykomish River, WA | © Rich BowersScenic Skykomish River, WA | © Rich Bowers

To grasp how this could ever pencil out, members of the Hydropower Reform Coalition (a partnership coordinated by American Rivers) completed an independent analysis of the dam.  What we learned was that the dam would be an economic nightmare.  It would cost 2.3 times what the local utility is predicting, and in low water years would operate at only 31% of its capacity.  In other years, the dam will only generate power in the spring when power is not needed (spring in the Northwest is when existing dams are running and wind turbines are cranking also).  When demand is high in the winter, this dam would operate far below capacity, and in the summer (the second highest demand period) the dam would shut down completely from mid-July to mid-October.

This is the fifth time Sunset Falls has been studied for hydro development, and in each instance poor economics and unacceptable impacts have kept the Sky free-flowing.  Our analysis shows that this proposal would share the same fate and should not be built.

To learn more about the Skykomish River, about small dam economics, or to read the analysis of the Sunset Falls Project in Washington, go to the Hydropower Reform Coalition website.

5 Responses to “The Economics of Small Dams”

Linda Heron

Ontario’s Green Energy Act and Green Economy Act have encouraged small hydro projects as well. The only way to make small hydro seem economical is to maximize power generation, so they usually use very harmful modified peaking strategies to reap peaking bonuses offered to produce power during peak demand hours. These types of dams rely on huge headponds that hold water back from downstream flow, and result in numerous negative impacts – including a 10 to 20% increase in methylmercury production when land is newly inundated. Degraded water quality and water quantity, significant risks to public health and safety, and place pressures on our fisheries, biodiversity, and endangered species, make any illusion of benefits extremely questionable.


Have been there and it is a 8imply beautiful setting-
I AM so happy the river Dsm has been refused yet again as the Sky river is very special.

Harry McNally

How does dam remove 90% of water, so much more than extra evaporated and ground absorbed unless it flows under ground level or is used for irrigation, presumably compensated for? Can you please help me to understand more?!

    Rich Bowers


    It’s a good question, thanks! So called run-of-river dams are actually the opposite of what they sound like. To produce power, they siphon water out of the river, bypass a section of river, and put the water back in below the powerhouse. For the proposed dam on the Sky, the project would take 2,500 cfs of water, and bypass 1.1 miles of river that includes both waterfalls. Other run-of-river projects can bypass more than ten miles of river. That 2,500 cfs is 90% of the river flow in autumn and winter, and 50% of high spring flows.

Carol Anson

It must just be pure greed to try to dam a river so special and of which we just have a few. The Grand Coulee Dam seems to produce so much power that we sell it to other states. I just can’t believe we need this at all.