Monday, March 8, 2021

How Can Utilities Make the Best Use of Their Dollars for Endangered Species and Conservation?

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EPRI and Arizona State University launched the first research project to characterize and estimate the power industry’s costs associated with Endangered Species Act compliance

The wind power industry faces a dilemma as it considers how to address bird and bat fatalities resulting from collision with wind turbines. Particular attention is given to endangered species. To comply with U.S. Fish and Wildlife Service guidelines and Endangered Species Act (ESA) requirements, wind power companies spend millions of dollars each year to monitor bird and bat fatalities at their facilities. Given that collisions of endangered species are rare and that fatality monitoring does not directly support conservation, the large expense raises an important question: Could this money be better spent on efforts that directly conserve or protect endangered birds and bats? It’s difficult to answer this question given the lack of understanding of conservation options’ costs and benefits.

“Many dollars—and significant time and effort—are being spent to track fatalities of endangered birds and bats,” said EPRI Principal Technical Leader Christian Newman. “I wonder whether those resources might be better allocated to purchasing land, protecting habitats, or other conservation efforts aimed at helping those species recover.”

The wind industry’s dilemma is common in the electric power industry. Power companies allocate significant resources complying with endangered species laws. But little is known about how much money is being spent and on what—and whether these expenses could be targeted in ways that maximize benefits for species. Also unknown are the benefits of voluntary conservation: To what extent does it support imperiled species, avoid ESA species listings, and translate into lower ESA compliance costs long term?

In 2018, EPRI’s Endangered and Protected Species Program and Arizona State University (ASU) launched the first research project to characterize and estimate the power industry’s costs associated with ESA compliance. They developed a framework of questions to itemize ESA compliance costs during the planning, permitting, construction, operation, and decommissioning of various utility assets, such as substations and power plants. The framework prompts users to determine the specific actions required for ESA compliance and to estimate the associated direct costs (such as labor and materials) and indirect costs (such as insurance and depreciation).

“Understanding the costs of compliance is vital to good decision making at a project, company, and industry level,” said Newman. “It can help identify efficiencies; adopt proven, best-in-class standards; and develop more effective conservation practices.”

“This is completely uncharted territory,” said EPRI Senior Technical Leader Becca Madsen. “Some public agency ESA expenditures are reported annually, but private sector costs have not been. We want to fill that void, and our collaboration with ASU—with its distinguished record of biodiversity research—is helping us do that.”

“Understanding the risks and opportunities of conservation is a major frontier in sustainable business development,” said Leah Gerber, ASU School of Life Sciences professor, who oversees the EPRI-funded initiative. “We are developing the first comprehensive estimate of costs associated with endangered species regulatory compliance.”

Electric utilities are providing feedback on the framework. They also are sharing compliance cost data, and EPRI and ASU are compiling the data to build a first-of-its-kind cost inventory. Newman expects the framework and inventory to inform discussion among participating utilities about opportunities to optimize investments in endangered species and conservation projects. The research may help build a case for voluntary conservation actions by revealing how the costs of such actions compare with the potential costs of future ESA compliance. EPRI is compiling data from electric utilities on voluntary conservation costs.

“We are incorporating the utilities’ feedback into the framework and will continue developing and testing it,” said Newman. “We also plan to develop guidelines for tracking indirect costs. Our aim with this work is to equip power companies to assess trade-offs in resource management decisions and to consider voluntary conservation alternatives.”

While the research has focused initially on the electric power sector, the team envisions application in other industries. “A comprehensive understanding of the costs and benefits of conservation could help many industries allocate resources more effectively and reduce uncertainty regarding future compliance costs,” said Newman.

Key EPRI Technical Experts:

Christian Newman, Becca Madsen
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Artwork by MCKIBILLO