REGION profile

North and Central America

The abundance of natural resources in North and Central America makes the region highly suited for renewable energy production. A large portion of the electricity market is supported by hydropower and has been for decades.‍‍
Generation by hydropower (2022)
723 TWh
Hydropower installed capacity (2022)
206 GW
Capacity added (2022)
1011 MW
Pumped storage installed capacity (2022)
96 MW
Pumped storage capacity added (2022)
22 GW

At a glance

The hydropower industry has had encouraging boosts this year in North and Central America, with policy changes that will further unlock the potential to develop and modernise hydropower. North America's substantial hydropower potential is predominantly concentrated within Canada, the United States, and Mexico. Mexico, with its varied topography and extensive river systems, holds an estimated 20 GW of exploitable hydropower potential. Canada, rich in water resources, has an estimated technical hydropower potential of 160 GW and the U.S. has an estimated exploitable potential at over 65 GW. In 2022, 1 GW of hydropower was developed, continuing with previous years’ development. Most notably, the U.S. Inflation Reduction Act (IRA) and Canada’s 2023 budget will both incentivise hydropower development through innovative tax credit schemes.

Malpaso dam and spillway, Mexico. Credit: ANDRITZ.

There was also an increase across countries to modernise existing hydropower projects, which expanded their capacity and increased their expected lifespan, to continue providing renewable energy to communities and power systems for longer.  

To develop North and Central America’s sustainable hydropower projects, investment in the industry needs to follow the policy announcements. The path forward requires innovative technical solutions, inclusive and respectful engagement with indigenous communities, a strong commitment to environmental sustainability, and regulatory streamlining.

Undergroud Power house, Angostura, MexicoCredit: ANDRITZ

Latest developments

Hydropower provided Canada with approximately 61 per cent of the country’s total annual electricity generation and represents more than half of its total generation capacity. The 2023 Canadian Budget introduces a Clean Electricity Investment Tax Credit, which is a 15 per cent refundable tax credit for eligible investments in non-emitting electricity generation systems including hydropower (regardless of scale) and PSH, with new projects and refurbishment of existing projects to be eligible.  

The Keeyask power plant in Manitoba (695 MW), the last two of seven generating units were placed in service and the Romaine 4 power plant (245 MW) in Québec reached completion. The last unit came on-line, completing the commissioning of the four-plant cascade system, totalling its generation capacity to 1,550 MW.  

The Champlain Hudson Power Express is a ground breaking high-voltage direct current underwater and underground power cable project that will transfer 10.4 TWh of hydropower from Québec to New York City, expected to be commissioned in 2026.

Canadian TC Energy Corporation is the owner and developer of two pumped hydropower storage projects. The Ontario Pumped Storage Project (1 GW) is expected to become operational in 2030 and will create more than 3,800 jobs. Alberta will host TC Energy’s other project, the 75 MW Canyon Creek Pumped Hydro Energy Storage Project, which will provide up to 37 hours of on-demand, flexible, clean energy and ancillary services to the electricity grid.

Newfoundland and Labrador Hydro have proposed to expand the 604 MW Bay d'Espoir hydroelectric generating station, which began operating more than 50 years ago and includes seven generating units in two powerhouses.

In British Columbia, construction of the 1.1 GW Site C hydro project in Peace River, is ongoing, with the installation of the first turbine runner in 2022 and is expected to be operational in 2025.  

The Independent Electricity System Operator (IESO) in Ontario released two reports in 2022: the Pathways to Decarbonization (P2D) and the Annual Planning Outlook, both of which emphasise the need to take action to realise the potential of long-lead time hydropower projects. The IESO has highlighted that permitting and approvals must be streamlined, and Indigenous community participation is essential for success. The P2D assumes an additional 2,000 MW of long-duration storage will be added in the late 2030s to meet adequacy needs.

Hydropower provides approximately 11 per cent of Mexico’s total annual electricity generation and continues to grow in the country, with the government investing directly in the modernisation of existing fleets and developing new projects. Mexico’s federal power company Comisión Federal de Electricidad (CFE) has recovered 261 MW of capacity so far as part of its plan to overhaul its aged hydroelectric generation portfolio. Modernising the units has allowed the company to draw 31 per cent more power from them.  

Mexico’s CFE is advancing several projects including modernising 13 hydroelectric units and the construction of three new generators, as well as the operation of six combined cycle units the company awarded to Siemens and Mitsubishi. A new 10 MW turbine-generator unit will be added to Amata Dam and two new generators will be constructed at the future Santa Maria and existing Picacho dams and four small hydropower generators will be modernised at the Portezuelos 1 and 2 and the Encanto and Minas projects.  

United States of America
There were significant policy announcements in the U.S. which are expected to spur investment in both new and existing hydropower.

While droughts have made headlines in the past year in the U.S., researchers from the Pacific Northwest National Laboratory found that even during the most severe droughts observed in the last two decades, hydropower has sustained 80 per cent of average power generation, which is approximately 20 per cent of electricity demand across the West. The U.S. Department of the Interior and the Bureau of Reclamation have both stated that improving the systems across the U.S. is a priority.

A brand-new small hydropower project at the University of Notre Dame, Indiana, U.S., will power an estimated 7 per cent of the electricity for the campus. The 2.5 MW state-of-the-art facility started generating power in May 2022 and has operated at about 70 per cent capacity. This project is offsetting 9,700 tons of carbon dioxide annually, benefitting the University and the surrounding community.  

Honduras is projected to add 200 MW from hydropower plants by 2025, supplying electricity to at least 120,000 homes across the country.  

Empresa Nicaraguense de Electricidad, the state-owned utility, is modernising two power plants and is seeking financing for two hydropower projects that would add nearly 50 MW to the company’s generation capacity.

A group of Panamanian lawmakers submitted a draft bill to the national assembly that would declare a 15-year moratorium on granting permits and concessions for new hydroelectric projects in the Chiriquí province. This region is home to most of the country’s hydropower plants, among them the country’s largest – the 300 MW Fortuna plant. Hydropower has been beneficial to the country, but greater regulations need to be implemented ahead of further construction.

Case Study

The United States made several major investment announcements in 2022 that will positively impact the hydropower sector. Following the success of the Infrastructure Investment and Jobs Act (commonly known as the Bipartisan Infrastructure Law) signed in November 2021, the US$370bn Inflation Reduction Act (IRA) adopted in 2022 is the nation’s most significant climate legislation to date. The landmark measure recognises that hydropower plays a critical role in accelerating the transition to a more reliable, clean energy grid. The tax credits created by the IRA will provide investment certainty upgrades at existing hydropower facilities, incentivise development of new pumped storage facilities, retrofits of non-powered dams with hydropower generation and new marine energy and hydrokinetic generation by creating a 10-year investment tax credit and production tax credit framework for these projects.  

The tax credits provided by the IRA will be equivalent to other renewable technologies such that a megawatt of electricity produced from hydropower receives the same level of federal tax support as a megawatt produced from other zero-carbon resources.  

Additionally, earlier in the year, the U.S. Department of Energy (DOE) announced US$8m for technologies to increase hydropower flexibility. The following projects were awarded the money:  

• General Electric’s research to develop a cost-effective and easy-to-implement method to increase hydropower units’ ability to ramp electricity generation.
• Littoral Power Systems Inc’s Turbine and Generator upgrade system that designs, builds, and field tests a rapidly deployable upgrade system for existing hydropower plants.
• Oregon State University’s Hybrid Hydropower-Storage Units that demonstrates and quantifies the value of a hybrid hydroelectric-storage generation units.

Fundamentally, the framework established by the IRA and the DOE could help the hydropower industry by supporting billions of dollars in investment in building new projects as well as maintaining and enhancing existing infrastructure.  

Interesting Fact  

One cannot speak about hydropower in North America without invoking the concerns of Indigenous rights.  

In the United States, the ‘Uncommon Dialogue’ initiative launched in 2021 set the blueprint for Native American tribes, environmentalists, and the hydropower industry to reach a deal in 2022 on a proposed legislative package that could boost clean energy as well as river conservation. This will give tribes the authority to put conditions on permits for things like protection of tribal cultural resources and fish passage.  

In neighbouring Canada, a settlement was reached with West Moberly First Nations, BC Hydro and the Canadian government regarding financial benefits, contracting opportunities and jointly developed recommendations for land management measures over provincial Crown lands for the Site C hydro project in British Columbia.  

In addition, the Québec portion of the CHPE line to bring hydropower to New York City will be co-owned by the Mohawk Council of Kahnawà:ke (MCK), representing the Indigenous people whose community lies close to the start of the line. As noted by the MCK, “this project demonstrates that collaborating with an Indigenous community can prove to be mutually beneficial for industry and Indigenous communities alike”.

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