Energy leaders say governments urgently need to incentivise hydropower

2 February 2021 - The heads of the International Energy Agency (IEA), International Renewable Energy Agency (IRENA) and International Hydropower Association (IHA), together with former Australian Prime Minister Malcolm Turnbull, joined forces today to highlight the need for greater investment in sustainable hydropower.

Watch the high-level panel on YouTube.

In a public webinar organised by IHA, Chief Executive Eddie Rich said policy-makers need to act fast if hydropower is to fulfil its role in supporting the decarbonisation of the energy mix.

“Despite being the largest renewable energy source in the world and providing 96 per cent of all energy storage, hydropower doesn’t create the same excitement or attract the same R&D investment as wind, solar, hydrogen and lithium batteries,” he warned.

Towards carbon neutrality

IEA Executive Director Dr Fatih Birol agreed that greater focus needed to be placed on the sector, saying: “Hydropower needs to get the attention it deserves to play its part in the clean energy transition.”

The IEA believes 2021 will be a critical year as there is widespread political support for countries to be net-zero by 2050, huge Covid-19 economic recovery packages, and the opportunity to agree on a binding roadmap at the United Nations Climate Conference (COP26) in November.

“We are working with many governments and industry stakeholders to come up with a good plan for hydropower,” said Dr Birol.  

IRENA Director General Francesco La Camera emphasised hydropower's multiple benefits and future demand. “When we talk about achieving carbon neutrality or 100 per cent renewables, it is not by chance that the countries that are very close or very advanced to this objective are the countries with hydropower."

IRENA’s Global Renewables Outlook estimates that an additional 850 GW of hydropower is required by 2050 for the world to stay on a climate-safe track in line with the Paris Agreement.

“[Hydropower] is not just to provide electricity,” he said. “It is providing flexibility and balancing services that allow for the penetration of variable renewables. There are also other services that hydropower may provide in terms of increasing resilience to floods and drought that are caused by climate change.  

“It is important that policy makers understand this very clearly,” added Mr La Camera, who earlier in the day announced a new partnership with IHA to accelerate the development, financing and deployment of sustainable hydropower.  

Mechanisms to reward developers

Mr Turnbull highlighted his time in office, when he prioritised hydropower development. He said it became clear to him that hydropower was needed due to the increased roll-out of variable renewables, which demanded more energy storage.  

“If we want to have that capacity for long duration storage, we’ve got to get on with it and we’ve also got to make sure we have the mechanisms to reward developers,” he said.

The IEA believes the clean energy transition will not happen if everything is left to markets alone, continued Dr Birol. “There is a need to provide incentives from the governments side in order to have a clean energy transition which is secure and affordable at the same time.  

“[There is a need] to value the services that hydropower, including pumped hydro, provides. Without a value, without remuneration, we will not see major developments happening.  

“The bulk of the potential is in the emerging world, in the developing countries in Asia, Latin America and elsewhere and we are unfortunately seeing that capital is not going into those countries for the clean energy transition as much as it needs to.

“How to find a way to bring significant amounts of investment there is in my view critical,” he said.

Matching projects and resources

Mr La Camera agreed that the market alone cannot secure hydropower growth. “There is much to be done in matching the projects and the financial resources.”

IRENA has established a climate investment platform to address the need for better access to renewable energy finance by developing countries. It has already received almost 200 project financing applications.

“We are ready to work with the association [IHA] on trying to understand through the investment forum how we can match the demands of [hydro] planners and financial resources,” said Mr La Camera.

“If we want to accelerate the energy system - if we want a cleaner energy system -hydropower needs to play one of the main roles in the family of renewables.”

Planning is crucial to sustainability

Regarding the new energy infrastructure needed, and the issue of sustainability and social and environmental impacts, Mr La Camera commented that the planning stage is crucial.  

“It is important in the planning that we think not of the single plant, but the whole system and propose plans in a wider context. What are the different benefits so that the costs of the projects are balanced?

“On this, the association [IHA] is working well with the establishment of a sustainability standard,” he added.

‘We’ve got to generate a sense of urgency’

Engaging with governments requires re-education about hydropower, according to Mr Turnbull.  

“We’ve got to stress the urgency factor, we got to make sure people understand what pumped hydro is.

"It has largely been forgotten until very recently. There’s been no new pumped hydro built in Australia for 50 years or more, and there’s been a similar pattern around the world,” he said.

There are opportunities in relation to the types of hydropower plants and different options for storing electricity. He emphasised that while pumped hydropower is a proven technology, batteries and green hydrogen will also be part of the solution.  

“Any prudent government in its approach to the clean energy transition should… make sure they’re doing everything and above all recognise that they have to get on with it.

“Storage capability, if it’s pumped storage, requires years, so that means you have to plan ahead,” said Mr Turnbull.

Dr Birol agreed it is important to look at all clean energy technologies and said the challenge is to deliver them in a secure and affordable way.

“[All renewable energy forms] serve different roles and support each other in different ways,” added Mr Rich.

“IHA has set up the International Forum on Pumped Storage Hydropower, to look at solutions to the types of questions that have been raised today.”

Watch the webinar online on YouTube.

In September 2021, IHA will bring together the world’s leading hydropower change-makers to decide priorities for the sector at the World Hydropower Congress. The biennial event is the leading international forum for innovators, experts and policy-makers to shape better energy strategies, influence smarter investment decisions and deliver international good practice.  Learn more.

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