The “forgotten giant” of low-carbon electricity needs a sweeping policy and investment push to put it in line with net zero goals and to support a faster expansion of solar and wind, the International Energy Agency (IEA) have said in a recent report.
According to the report, the growth of hydropower plants worldwide is set to slow significantly this decade, putting at risk the ambitions of countries across the globe to reach net-zero emissions while ensuring reliable and affordable energy supplies for their citizens.
Hydropower today has a key role in the transition to clean energy not only through the massive quantities of low-carbon electricity it produces but also because of its unmatched capabilities for providing flexibility and storage. 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.
Global hydropower capacity is expected to increase by 17% between 2021 and 2030 – led by China, India, Turkey and Ethiopia – according to the Hydropower Special Market Report, part of the IEA’s Renewables market report series. However, the projected growth for the 2020s is nearly 25% slower than hydropower’s expansion in the previous decade.
Reversing the expected slowdown will require a range of strong policy actions from governments to address the major challenges that are hampering faster deployment of hydropower, states the report, which sets out seven key priorities for governments looking to accelerate the deployment of hydropower in a sustainable way, including locking in long-term pricing structures and ensuring that hydropower projects adhere to strict guidelines and best practices.
In 2020, hydropower supplied one sixth of global electricity generation, making it the single largest source of low-carbon power – and more than all other renewables combined. Its output has increased 70% over the past two decades, but its share of global electricity supply has held 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, which have a total population of 800 million.
IEA Executive Director Fatih Birol 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.”
The IEA special report provides detailed global forecasts to 2030 for the three main types of hydropower: reservoir, run-of-river and pumped storage facilities. Around half of hydropower’s economically viable potential worldwide is untapped, with this potential being particularly high in emerging economies and developing economies, where it reaches almost 60%.
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 has been declining due to the decreasing availability of economically attractive sites and growing concerns over social and environmental impacts.
While hydropower remains economically attractive in many regions of the world, the report highlights 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, and 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 report (available to view in full here) goes on to set 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.