“The growth of hydropower plants worldwide is set to slow significantly this decade”, says the International Energy Agency’s new report.
Hydropower is a powerful generator of low-carbon electricity. Added to this is its unmatched capabilities in providing flexibility and storage. No wonder hydropower plays a key role in the transition to clean energy.
While this is so, it has come to the attention of the International Energy Agency that the growth of this valuable form of energy will slow this decade.
According to the Hydropower Special Market Report, this puts at risk the ambitions of countries across the world that aim to attain net-zero emissions while ensuring reliable and affordable energy supplies for their citizens. You may wonder, why the focus on hydropower? Consider a few reasons:
For one, many hydropower plants can ramp their electricity generation up and down very rapidly compared with other power plants such as nuclear, coal, and natural gas.
This makes sustainable hydropower an attractive foundation for integrating greater amounts of wind and solar power, whose output can vary, depending on factors like the weather and the time of day or year.
The report, part of the IEA’s Renewables market report series, estimates that global hydropower capacity is expected to increase by 17% between 2021 and 2030 with China in the lead followed by India, Turkey, and Ethiopia.
However, the projected growth for the 2020s is nearly 25% slower than hydropower’s expansion in the previous decade.
To reverse the expected slowdown, there’s a need for governments to take a range of strong policy actions from governments to address the major challenges that are hampering the faster deployment of hydropower, based on the report.
These measures include providing long-term visibility on revenues to ensure hydropower projects are economically viable and sufficiently attractive to investors, while still ensuring robust sustainability standards.
‘Forgotten giant’, huge potential
In 2020, hydropower supplied one-sixth of global electricity generation, making it the single largest source of low-carbon power more than all other renewables put together.
Over the past two decades, its output has increased by 70% and its share of the global electricity supply remains steady because of the increases in wind, solar PV, natural gas, and coal.
Nonetheless, hydropower currently meets the majority of electricity demand across 28 different emerging and developing economies, with a total population of 800 million.
To this Fatih Birol, the IEA Executive Director said, “Hydropower is the forgotten giant of clean electricity, and it needs to be put squarely back on the energy and climate agenda if countries are serious about meeting their net-zero goals.”
“It brings valuable scale and flexibility to help electricity systems adjust quickly to shifts in demand and to compensate for fluctuations in supply from other sources.
Hydropower’s advantages can make it a natural enabler of secure transitions in many countries as they shift to higher and higher shares of solar and wind – provided that hydropower projects are developed in a sustainable and climate-resilient way.”
Globally, about half of hydropower’s economically viable potential is still untapped, particularly in emerging and developing economies, where it reaches almost 60%.
The IEA special report is the first study to provide detailed global forecasts for 2030 for the three main types of hydropower: reservoir, run-of-river, and pumped storage facilities.
Based on today’s policy settings, China is set to remain the single largest hydropower market through 2030, accounting for 40% of global expansion, followed by India.
However, China’s share of global hydropower additions is reducing due to the decreasing availability of economically attractive sites and concerns over social and environmental impacts.
Between now and 2030 $127 billion- almost a quarter of global hydropower investment- will be spent on modernizing aging plants, mostly in developed economies.
This is the case in North America where the average age of a hydropower plant is almost 50 years and in Europe where it is 45 years.
Still, the projected investment falls short of the USD 300 billion that the report estimates is necessary to modernize all aging hydropower plants worldwide.
Achieving net-zero emissions by 2050
While hydropower remains economically attractive in many regions of the world, the report outlines a number of major challenges it faces.
New hydropower projects often face long lead times, lengthy permitting processes, high costs, and risks from environmental assessments, not to mention opposition from local communities.
These pressures result in higher investment risks and financing costs compared with other power generation and storage technologies, thereby discouraging investors.
The IEA report sets out seven key priorities for governments looking to accelerate the deployment of hydropower in a sustainable way.
These include locking in long-term pricing structures and ensuring that hydropower projects adhere to strict guidelines and best practices. This kind of approach can minimize sustainability risks and maximize social, economic, and environmental advantages.
If governments address the hurdles to faster deployment appropriately, global hydropower capacity additions could be 40% higher through 2030 by unblocking existing project pipelines.
But to put the world on a pathway to net-zero emissions by 2050, as set out in the IEA’s recent Global Roadmap to Net Zero by 2050, governments would need to raise their hydropower ambitions drastically.
Global hydropower capacity would need to grow twice as fast through 2030 as it is expected to do in the report’s main forecast. To achieve this, a much stronger and all-encompassing policy approach would be needed.
