The modernisation of the hydropower fleet in Latin America and the Caribbean needs to go beyond 'business as usual', write Arturo Alarcón, Senior Energy Specialist at the Inter-American Bank (IDB) and Maria Ubierna, Hydropower Specialist at the International Hydropower Association (IHA) in a joint blog.
Read the blog in Spanish on IDB's website.
Hydropower is the largest source of renewable energy, amounting to nearly 50 per cent of global renewable electricity generation capacity, and representing 17 per cent of total global generation capacity among all sources. According to the International Hydropower Association (IHA)’s 2020 Hydropower Status Report, installed capacity has reached 1,308 GW globally with more than 4,300 TWh generated in 2019.
Latin America and the Caribbean (LAC) is the second fastest growing region in the world for hydropower, where Brazil leads the way with 4.92 GW of added capacity in 2019. In total, the capacity in the LAC region reached 196 GW in 2019, with Brazil making up more than half of this (109 GW). Hydropower electricity generation in the region exceeds 50 per cent of the share of electricity supply in several countries.
Due to its multiple benefits, hydropower will remain the largest source of renewable electricity for years to come, because of its significant untapped hydropower potential and the existing installed capacity. Nonetheless, to maintain the existing hydropower fleet in optimal operating conditions, a number of actions are needed.
Hydropower development in the region began at the end of the 19th century, peaking in the decades from 1960 to 1980, with large-scale hydropower reservoir plants, including the three binational projects in the region. During these decades the installed capacity of the LAC region increased fivefold. As a result, today an estimated 70 GW of plants have already exceeded their expected lifespan.
Hydropower needs for modernisation
By hydropower plant modernisation, IHA means any type of rehabilitation, renovation or upgrading of systems, equipment and civil infrastructure, which brings the plant to optimal operating conditions within the new and evolving demands of the electricity grid. This includes providing increased generation output, climate resilience and adaptation, and ancillary services to enable the penetration of intermittent renewable energy sources into the system.
In the current scenario, where many countries are undergoing an energy transition, the modernisation of the existing hydropower fleet needs to go beyond business as usual to contribute to regional energy security, climate change mitigation and cleaner energy systems. The digitalisation of assets will be crucial to provide advanced grid flexibility services without compromising the hydropower stations’ reliability. The collection and processing of real-time data will enable generation adjustments for the needs of the grid with higher security and safety, as well as increased generation output.
Since 2018, IHA has been working with the Inter-American Development Bank (IDB) to advance knowledge on hydropower modernisation and digitalisation in the LAC region, with a workshop at Salto Grande Hydropower Complex (pictured above) and a session at the World Hydropower Congress 2019. Building on these international exchanges, IDB published a technical note on the trends, challenges and measures on digitalisation in October 2019 following a survey of the region’s hydropower sector. Following these efforts, IDB and IHA engaged in a study to understand the modernisation potential of the LAC region’s hydropower fleet and shed light on estimated investment requirements for the benefit of hydropower stakeholders, regulators, and policy makers.
The regional study covered 363 stations (≥ 10 MW and > 20 years) in 26 countries in Latin America and the Caribbean with an installed capacity of 127 GW which represents 65 per cent of total installed capacity in the region. The data analysis identified 20 stations with an installed capacity of over 15 GW in high and urgent need of modernisation, representing over US$ 5 billion of estimated investment need in electrical and mechanical systems.
In total, the estimated investment need for electro-mechanical systems and equipment in the region was US$ 33.6 billion, with almost half of it, US$ 15.3 billion, in Brazil alone. Next, the Andean subregion and the Southern Cone (excluding Brazil) count with an estimated investment need of approximately US$ 6 billion respectively, each.
Covid-19 crisis in LAC
The Covid-19 pandemic has also impacted the Latin America and Caribbean region. The measures governments have taken to mitigate the health crisis have led to a marked decrease in electricity demand. Analysis by the IDB shows that electricity demand has reduced from 10 per cent to even 30 per cent in some countries. The crisis will lead to new measures and priorities in the energy sector in the coming months. How long-term national plans and climate change commitments will be affected is, as yet, uncertain.
The energy sector, and the electricity sector in particular, will play a central role in the reactivation of economic activity, both in terms of providing a reliable service, but also in terms of investments that are intensive in labour and create direct economic growth. While the decrease in demand in many countries might delay investment in new hydropower plants, it also provides a unique opportunity for investing in the modernisation of existing plants, as the cost of service interruption will be lower with an excess of generation.
Moreover, digitalisation is climbing to the top of the regional agenda as fundamental to prepare the infrastructure and systems required to confront these type of challenges in the future, increasing the reliability of the system, and ensuring higher efficiency and safety for the whole electricity sector.
Upcoming activities include joint IDB-IHA webinars to increase the awareness on modernising the LAC hydropower fleet, sharing results for each subregion, and the publication of a technical note for policy-makers to support the transition of the ageing hydropower fleet to the needs of the 21st century.
He holds a Ph.D. in Electrical Engineering (focus in power systems planning) and a Master’s degree in Electrical Power Engineering with Business, both from the University of Strathclyde, in Glasgow, Scotland (UK). He is an Electromechanical Engineer from the Universidad Privada Boliviana.
Before joining the IDB he worked as a researcher at the Institute for Energy and Environment at the University of Strathclyde in Glasgow (UK), developing new planning methods for renewable and distributed generation, smart grids, energy storage and power systems.
María leads the area of climate change, developing evidence, guides and training on climate mitigation and resilience that influence policies to support a sustainable hydropower sector. As a specialist, she also works to support the modernization of the global hydroelectric fleet, in particular, in Latin America and the Caribbean.
María has a master’s degree in Civil Engineering specialized in hydraulics and the environment from Spain and a Master of Advanced Studies in sustainable water resources from ETH Zurich. Prior to IHA, she has worked in business consultancy at Accenture and as a research assistant at the Chair of Hydrology and Water Resources Management at ETH Zurich.
This blog post is based on a study on hydropower modernisation needs in Latin America and the Caribbean commissioned by IDB and carried out by IHA in 2019-2020.
Access the resources from the digitalisation workshop that took place at Salto Grande Hydropower Complex and the sessions on modernisation and digitalisation at the World Hydropower Congress 2019 in the online e-library in Hydropower Pro.