In the latter part of the 19th and early part of the 20th century many new hydropower projects were built throughout the United States.  By 1940, 40% of all electrical generation in the United States was produced by hydroelectric power.  During this period, major improvement in turbine and generator technology brought increased turbine efficiencies.  The technology gains during this period included the development of the Kaplan turbine which provided a system of movable turbine blades and movable wicket gates that could control flow to maintain high turbine efficiencies over a wide range of flow conditions.

The advent of coal, nuclear power and gas-fired generation decreased the relative contribution of hydroelectric generation from the period 1940 to 1980.  In 1980 Congress enacted two pieces of legislation which provided a market for electrical energy produced by independent power producers and created tax incentives for new hydroelectric development.  From 1980 to 1986 a large number of new small-scale hydroelectric projects were developed throughout the United States.  The majority of these projects were at existing dams. 

In 1986 Congress eliminated the tax credits for hydroelectric development and later deregulated the price of natural gas.  Hydroelectric generation at new developments could not economically compete with natural gas generated electrical power for several reasons.  First, the capital cost and development period for the construction of such natural gas generators were significantly less.  Second, the cost of natural gas was low.  Natural gas prices in 1990 were approximately $2.50 per million btu’s compared to the current price of over $8 to $9 per million btu’s. From the late 1980’s through 2005 there was little new hydroelectric development. 

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Today, hydro's promise is clear. Hydropower is the leading source of renewable energy in the United States. The fact that hydropower production can be predicted on a “day ahead” basis makes it a reliable and dependable source of energy. The current need for renewable power, free of greenhouse gas emissions, dependance upon foreign energy sources, and the increased costs of other generation has created a new resurgence in the development of hydroelectric projects, particularly those at existing dams. 

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