Hydropower is undergoing a worldwide renaissance; but what are the factors driving it? In this interview, Richard Taylor, chief executive of the International Hydropower Association, discusses the rate of deployment, the challenges and obstacles, and the wider benefits of hydropower.
A hydropower renaissance is under way with global capacity expected to grow by 50–100% by 2050. What are the main driving factors?
Globally, hydropower reached the landmark of 1,000 GW of installed capacity in 2013. In recent years, the growth of the sector has been ranging between 3–4%. At this rate, the doubling of hydropower capacity would be achieved during the late 2030s.
Certainly, the need for clean, affordable energy, and increasingly, the need to have a flexible tool in the energy mix, has driven interest in hydropower. As we have to adapt to the challenges of climate change and growing populations, the need to manage freshwater systems has also become an imperative.
A further consideration is the variability of imported fuel prices. By using an indigenous source of renewable energy to generate electricity, you mitigate the risks associated with the volatility of fossil fuel import costs.
What are the main challenges and obstacles to the future growth of hydropower?
The decision-making process required for projects to obtain permission to proceed into construction and, subsequently, to commence operations, can be very unpredictable. This is a big challenge for the sector, particularly because there are so many authorities and stakeholders involved in the process.
While there is a great deal of potential in Africa, we have seen relatively low amounts of deployment there to date, but the situation is poised to change."
There is also a lack of incentives to orientate investment towards hydropower. This has been borne out of misperceptions about the specific advantages of hydropower, compounded by the lack of reward in the market for those same advantages: the benefits of hydropower don’t always have a financial value, and that is an obstacle for hydropower projects to be seen as the preferential option.
Risk has to be factored into the process of accessing finance, and hydropower projects, until they’re well-advanced in terms of their implementation, are high risk. That risk-sharing will carry a premium.
This is a problem for large-scale projects in particular, as these typically require high up-front capital costs, despite their very low operation and maintenance costs.
Which are the main regions where growth is likely to be concentrated?
We can expect to see substantial growth in Asia, Africa, and South America, alongside further, but limited, development in North America and Europe. While there is a great deal of potential in Africa, we have seen relatively low amounts of deployment there to date, but the situation is poised to change.
As for Asia, which has the greatest potential for development, we are seeing extraordinary growth in hydropower capacity. China’s exceptional development is set to influence investment in neighbouring countries.
Central Asia, where there is significant potential, is also witnessing increased growth. The countries of the former Soviet Union are planning projects within the context of their national boundaries, but also looking into establishing new regional systems which will rely on international collaboration.
In South Asia, India is taking the lead. This is a large market which is potentially about to see much more activity than in recent times, both within India’s territories and the surrounding countries.
As for South America, there has been a significant amount of hydropower development in Brazil. We are also seeing increased activity across the continent, with notable projects in Colombia and Peru, for example.
Of the various types of hydropower scheme, which are the most likely to contribute the most to growth?
IHA recognises four typologies of hydropower: run-of-river, storage, pumped-storage, and the less established offshore hydropower technologies. Markets have tended to incentivise run-of-river schemes, and in terms of numbers, these are the most popular. Run-of-river projects require the least amount of land use change.
16.4% of the world’s electricity is now coming from hydropower. That is enough to provide for 1 billion people."
Pumped-storage is also driving growth insomuch as it is seen as the primary method of balancing supply and demand within energy systems. Many electricity systems rely on pumped-storage to manage the variability of input and demand.
With regard to storage hydropower, these projects tend to be larger by way of capacity. Considering the need to manage freshwater systems – mitigating the risk of drought and flooding – storage reservoirs will, I think, attract further investment in the future.
The main purpose of hydropower developments is, of course, to generate electricity. What other benefits can projects bring if properly managed?
16.4% of the world’s electricity is now coming from hydropower. That is enough to provide for 1 billion people, which is a conservative estimate. But in terms of delivering power into an energy system, generating electricity is just one component.
Hydropower is characterised by its flexibility: the supply can be switched on and off relatively quickly. This flexibility of service means that hydropower can assist in maximising the benefits of other renewable energy sources, which are typically more variable and less flexible. This complementary role – working in synergy to maximise the benefits of other renewables – is one added value which hydropower can bring.
Hydropower can also bring significant benefits to water management. When storage is involved in a hydropower project, water can be provided for agriculture, industry, and urban areas. Navigable parts of the watercourse can also be improved and extended.
Storage projects regulate river flows to ensure that minimum flows are sufficient for requirements downstream. The careful operation of storage projects also protect downstream areas from flood events, or at the very least, reduce their negative impacts.
What can governments, development banks, commercial companies and NGOs do to catalyse hydropower’s growth?
The hydropower sector has witnessed record levels of growth over the last five to seven years. Now, the challenge for the sector is really to ensure that the industry continues to improve its practices, and that its projects are sustainable.
This is why all the parties involved in hydropower need to work together to ensure that our expectations and responsibilities are understood. IHA seeks to be a platform for building and sharing knowledge about hydropower. With better understanding and dialogue between the various stakeholder groups, we can learn from different perspectives to improve industry practices and ensure sustainable outcomes.
For example, our work around the Hydropower Sustainability Assessment Protocol has involved all of these stakeholder groups to produce a tool which can help determine sustainability performance. With this knowledge, more informed decisions can be made about the sustainable development and management of hydropower projects.
Hydropower has the environmental advantage of being a low/zero-carbon energy resource. But what about the impacts that hydropower projects themselves can have on the environment? What are they, and how can they be mitigated?
We have been working for some time now to establish exactly how low hydropower’s greenhouse-gas footprint is. In partnership with UNESCO, we have developed a tool to investigate the potential for hydropower stations to change the greenhouse gas regime of the river systems in which they operate.
Nonetheless, we are confident that hydropower has one of the lowest greenhouse gas footprints of all the options for energy generation.
Hydropower also regulates the flows of rivers, which can impact habitats and water uses downstream, change erosion and sedimentation patterns, and affect water quality. These impacts have to be assessed and managed properly.
Nonetheless, important habitats can also be created from such schemes, and many projects have been recognised for creating valuable habitat. Environmental concerns also have to be taken into account during the construction period, with issues such as noise, waste, and air quality all requiring careful management.
With all of these issues, the challenge is to assess properly what the impacts of a project will be. We can then use tools and operating procedures to avoid negative impacts as far as possible.
In the case of unavoidable impacts, we move towards mitigating and reducing these while maximising the benefits of the project.
How big a role do you see for mini-hydro and micro-hydro?
The small-scale end of the hydropower sector is equally challenging in terms of engineering and technology. It is precisely the same technology involved in small hydro as it is throughout the different scales right up to the largest projects.
Increasingly, countries are able to trade their hydropower resources through binational or regional partnerships."
The potential for hydro technologies of varying size and scale is extremely useful. Small hydro technologies have been very important in making an electricity supply available in remote areas, including isolated islands. They have played a significant role in bringing electricity to communities for the first time in many parts of the world.
Once small schemes in remote areas are eventually connected to larger grid systems, they can also play an important role in stabilising the electricity supply.
Small hydro technologies can be implemented into existing infrastructure, or infrastructure that has been built for other purposes, such as navigation locks, flood control weirs, and so on. In these cases, hydropower isn’t the case for building the infrastructure, but the benefits which it brings can substantially offset the cost of their development.
What is the potential for large-scale regional hydropower schemes? What additional benefits could they bring?
Hydropower can attract investment from power-intensive industries which require high levels of energy to operate. Often, these industries would not necessarily have located their operations in a particular region without the hydro resource being there.
Increasingly, we have seen these industries choose hydropower as a source of electricity which is preferred because of its reliability, affordability, and low-carbon characteristics. Traditionally, this has been the processing industries, but increasingly, it is including manufacturers.
More recently, the internet industry, which requires energy-intensive data farms in various areas and regions, has come to view hydropower as an attractive source of energy.
Moreover, markets are not necessarily located within the boundaries of a particular country. Increasingly, countries are able to trade their hydropower resources through binational or regional partnerships. The advantage is that a less developed country can supply electricity to larger, neighbouring economies, while benefitting from increased investment in its hydro resources.
River basin developments often straddle several countries, which encourages this type of regional cooperation. Examples exist in almost all parts of the world.
I believe that regional approaches to hydropower will become primary drivers for the sector’s future development. To further this understanding of the role of hydropower in regional development, we’ve been working in recent years with the international financing institutions.
We have worked with our partners in East Africa, South America, and Southeast Asia to explore the many benefits and opportunities which are being realised at the regional level.
This interview was quoted in the May 2015 issue of World Energy Focus, the monthly online magazine published by the World Energy Council. You can download the full issue here. For further information about current trends in hydropower, you can download IHA's new briefing 2015 Key Trends in Hydropower here.