Analysis: Hydropower’s flexibility integral to reducing reliance on coal

Europe's largest pumped storage hydropower plant, Grand Maison (1.8GW)

The COP26 summit recognised the need to reduce coal-fired electricity generation. Anna Warren and Rebecca Ellis from the International Hydropower Association (IHA) look at how hydropower can help power systems shift from using coal to more variable renewables.

The Glasgow Climate Pact resulting from COP26 saw numerous countries commit to limit coal with pledges to ‘phase down’ their coal power to help achieve net zero carbon emissions. This will require an urgent ramping up of clean energy sources, including hydropower, to replace coal’s predictability and convenience and support the integration of more variable (intermittent) renewables into national energy grids.  

Coal, the fuel that kickstarted the industrial revolution, is today still in high demand. Coal provides over one third of total global electricity generation but has harmful effects on the environment and people’s health. The International Energy Agency (IEA) estimates that emissions from coal will reach nearly 15 gigatonnes in 2021, or around 45 per cent of global energy-related emissions.

As the baseload of coal-fired power generation begins to be phased out, countries need to look for a reliable form of dispatchable generation that can provide baseload and flexibility services. In many countries, hydropower is a primary source of electricity and an important source of flexibility.  

The need for flexibility

Hydropower has a crucial role to play in achieving a net zero future but increasing hydropower capacity requires the right policy frameworks to secure investments. While there are other sources of flexibility, such as gas, the only proven, reliable clean energy source of dispatchable electricity at scale is hydropower.  

According to the IEA, hydropower plants are a primary contributor to system flexibility, making up almost 30 per cent of global flexible supply capacity based on hour-to-hour ramping needs. In its 2021 Special Market Report on Hydropower, the agency noted “the flexibility and storage capabilities of reservoir plants and pumped storage hydropower facilities are unmatched by any other technology”.  

With the right enabling framework, both IEA and the International Renewable Energy Agency (IRENA) models indicate that hydropower will be the dominant source of system flexibility across days or seasons under 2 and 1.5 degree scenario electricity systems.

Among the government leaders at COP26 to recognise hydropower’s potential as an alternative source of generation and system flexibility was Sadyr Japarov, President of Kyrgyzstan. Setting out how his country intends to be carbon-free by 2050, by moving away from coal to hydropower, he observed that, “renewable energy sources, especially hydropower, will be the locomotive of carbon-free policy.”

Weening the world off coal

A recently released IEA report, ‘Renewables 2021’, sets out how urgent and dramatic the scale-up of the switchover from coal needs to be. It shows that annual renewable energy capacity additions need to be 80 per cent higher than the current forecast to attain the agency’s own 2050 scenario for net zero emissions.

Dr Fatih Birol, Executive Director of the IEA, has said that phasing out the use of coal is essential to achieving the Paris climate targets. “Without addressing this problem, the chances to reach our 1.5C target is close to zero,” Dr Birol said. “I hope all the countries are going to be part of a deal where they can take these early steps for early retirements or repurposing their coal plants.”  

The IEA emphasises the increased importance of sources of flexibility over the next five years, to support the integration of more wind and solar. This means that hydropower and pumped storage hydropower should play a critical role, due to their unique ability to provide dispatchable, flexible power to energy systems with high concentrations of intermittent renewables.

The IEA notes that there may be a slowdown in new capacity in dispatchable renewables like hydropower because of the higher investment required, longer timelines, and generation costs compared with wind or solar. More policy support and recognition of the flexibility hydropower provides is essential to encourage the investment needed in new capacity.

While it is encouraging that two of the countries most reliant on coal – China and India – are leading the way in building new hydropower projects, year-on-year capacity growth still falls far short of what’s required to reach net zero emisions by 2050.  

Market and policy recommendations

Seeking to address barriers to growth, the International Hydropower Association (IHA) in partnership with 13 other governments convened the International Forum on Pumped Storage Hydropower. In September, the forum launched market and policy recommendations, as well as analysis of the barriers facing projects. These aligned with the IEA’s findings that "lack of remuneration and targeted policy support for flexibility are an issue in all countries".

IHA in its Hydropower 2050 report put forward recommendations including: better remunerating hydropower for its grid system services, streamlining licensing and permitting processes, and improving regulatory frameworks to promote plant upgrades and modernisation. In addition, IHA recommended companies adopt sustainability standards to reassure investors, to build climate resilience into planning and operations, and to consider retrofitting non-powered dams with hydropower.

Expanding hydropower’s flexibility across Europe

In Europe, while coal use is decreasing in most countries, the fuel still contributes almost 16 per cent to European energy generation. To accelerate the transition to a cleaner energy system, the European Union (EU) has recently set an ambitious target of 40 per cent renewable energy generation by 2030 and reducing emissions by at least 55 per cent as part of its “Fit for 55” Green Deal legislation.

As a large proportion of this generation will be from variable renewables, expanding the flexibility and system support services that hydropower offers to the power system will become even more important in the years ahead.

This is the context for why the European Commission has funded an €18 million research initiative, XFLEX HYDRO, to demonstrate new technologies that will deliver enhanced flexibility and system support services: across pumped storage, reservoir storage and run-of-river hydropower plants. The technologies include smart digital controls, a hydro-battery-hybrid and variable-speed turbines.

The XFLEX HYDRO project will conclude in 2023 with a technical white paper and roadmap for deployment across the European hydropower fleet, as well as guidelines covering policy and market recommendations. With the political pressure to reduce coal-fired generation and the rapid growth of variable renewables, the outcomes will offer much-needed guidance for how to optimise the services of existing and new hydropower plants in Europe and globally.

Towards sustainable hydropower

IHA will continue supporting the industry in its efforts to develop and operate sustainable hydropower, developed in line with the newly released Hydropower Sustainability Standard, to help deliver on net zero targets.  

Alongside this, we will increase our focus on working with governments and the energy market to obtain better regulatory support for sustainable hydropower modernisation and development, and appropriate market remuneration to incentivise hydropower’s unique grid system services.  

About the authors:

Rebecca Ellis, Energy Policy Manager, IHA

Anna Warren, Deputy Head of Communications, IHA

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