27/3/20

Hydropower is keeping the lights on – challenges & opportunities await

This is a challenging time for individuals and communities, for the world economy, for business, the energy sector and hydropower.

Our thoughts are with those facing difficult personal and business decisions in the coming weeks and months.

The Covid-19 pandemic will reset our society and economy in ways we cannot yet imagine. When we recover from this crisis – and we will recover – we can expect to see significant new approaches to global governance, economic development, environmental and social sustainability and energy systems. There will be a rethink about our critical infrastructure and interconnections between countries.

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For the hydropower sector, the pandemic risks hampering supply chains, delaying construction, reducing demand and making some projects uncompetitive. Yet it has been hydropower plant operators who have, in many countries, helped keep the lights on to provide essential health and other services.

We can draw comfort and inspiration from the stories emerging from IHA’s members from across the globe. Hydropower utilities, manufacturers and researchers have been providing reassurance to communities, donating medical supplies and providing support to vulnerable people, while ensuring energy and water supplies are uninterrupted.

Ernst Bergen, Paraguayan Director-General of Itaipu Binacional, one of the world’s largest hydropower stations, put it well when he praised his team for their heroic efforts: “We have to guarantee energy for our population. Our colleagues who work in the plant are as much heroes as nurses or doctors - because if we do not produce energy, there could be incalculable chaos.”

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While the long-term impacts are unknown, the International Hydropower Association (IHA), will help prepare for the future by ensuring decision-makers draw the right conclusions and make the right political choices going forward:

1. Rethink, don’t replay, economic models

We have all seen the pictures of newly pollution-free skies over Wuhan and other major cities. It is both a sobering and inspiring picture. We all know that the high demand for energy will return as it did after the global financial crisis of a decade ago. Then, aided by low oil prices, CO2 levels recovered quickly.

As we prepare for the rebound this time, we must rethink, rather than replay, the way we run the economy. As IEA executive director Fatih Birol warns, "There is nothing to celebrate in a likely decline in emissions driven by economic crisis because in the absence of the right policies and structural measures this decline will not be sustainable… [governments should] not allow today's crisis to compromise the clean energy transition”.

Governments and businesses should take the opportunity to focus on long-term national development planning. Their plans should include two priorities: 1. stimulating the economy to generate employment and 2. expanding renewable energy to help protect the planet.

The world economy will need a boost. Investing in long-term productive infrastructure, like sustainable hydropower plants, is a good way to provide jobs and security. Each hydropower project can provide 100 years of low-cost clean energy, flood control and drought mitigation and irrigation. Hydropower’s flexibility and storage services can accelerate adoption of wind and solar energy, and its lifetime carbon footprint is as low or lower than any other form of energy.

2. Rebuild institutions to enable long-term choices

This is a once in a hundred years economic and societal event. However long it lasts, when the virus has run its course, governments, developers and investors will be in debt and cash strapped.

Due to the ongoing uncertainty, at least in the short-term financing will remain difficult. Low gas prices will be tempting for many countries seeking cheap electricity. But the recent volatility in the oil markets has once again highlighted the relative stability of cash flows that renewable energy projects, in particular hydropower, can deliver for investors over the long term. Governments and policy makers must make bold, long-term political decisions today.

The World Bank Group and International Monetary Fund arose out of the ashes of the Second World War to rebuild a disrupted world. The present crisis presents stark new choices for multilateral financial institutions, many of which will be reformed or rebuilt, and will be expected to rise to the challenge to help national governments make and fund long-term plans. The crisis could also reshape the international energy landscape. There could, for example, be a strengthened role for the IEA or IRENA to coordinate the clean energy transition.

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3. Future-proof hydropower development: sustainable and efficient

But planning and investment alone is not good enough. It must be better targeted than before. IHA together with a coalition of social and environmental NGOs, governments, financial institutions and industry has developed a set of internationally recognised sustainability tools that can test and validate projects against agreed definitions of good and best practice. In 2020, there is no reason for any new hydropower development – greenfield or refurbishment – to fall short.

The changing energy mix also places increased demands on hydropower to provide flexible, reliable power services, adapting to variable, and at times volatile, supply and demand. New and innovative hydropower technologies will help integrate variable renewable energy sources such as solar and wind into the power system. In Europe for example, IHA is part of XFLEX HYDRO, a consortium of 19 partners demonstrating new hydropower technologies such as smart controls, enhanced variable- and fixed-speed turbine systems, and a battery-turbine hybrid.

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What will IHA do?

Throughout this crisis, IHA will support our members and partners and work to advance sustainable hydropower. We are inviting our members to share their experiences through a Covid-19 survey and will hope to draw together these findings and other statements into a future webinar.

When we are through the crisis, IHA will be ready to help the hydropower sector bounce back for renewable, sustainable energy.

Even today, hydropower companies and other stakeholders can continue to remotely test hydropower projects against globally accepted sustainability, carbon footprint and climate resilience standards, taking advantage of the tools and new online training services offered by IHA.

As a truly global, digital-first organisation, we will continue advocating for our members and providing online services, through our website Hydropower.org, through our members’ community Hydropower Pro, and through our Knowledge Networks. We will be monitoring the sector, publishing and promoting good practices.

In adjusting to the new global reality, we believe the hydropower sector needs a seat at the international table to influence the strategic and policy decisions that will inevitably follow. We will listen to our members, help them achieve the highest standards in sustainability, and be their voice on the world stage.

Eddie Rich

eddie.rich@hydropower.org

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