The growth of global hydropower capacity is poised to slow significantly this decade, jeopardising the low-carbon energy transition and the availability of affordable electricity in developing regions.
A report from the International Energy Agency (IEA) forecasts a 25% slowdown in new capacity additions through to 2030, compared to the previous decade.
That will still be a 17% increase between 2021 and 2030, led by China, India, Turkey and Ethiopia.
Hydropower is often overlooked as a clean energy source, despite the fact its output has grown 70% over the past 20 years and in 2020 it supplied more electricity than all other renewables combined.
This “forgotten giant” of clean power should be put firmly back on the agenda if net-zero commitments are to be accomplished by mid-century, said IEA executive director Fatih Birol.
“It brings valuable scale and flexibility to help electricity systems adjust quickly to shifts in demand and to compensate for fluctuations in supply from other sources,” he added.
“Hydropower’s advantages can make it a natural enabler of secure transitions in many countries as they shift to higher and higher shares of solar and wind – provided that hydropower projects are developed in a sustainable and climate-resilient way.”
Half the global potential for hydropower capacity remains untapped
According to the IEA, around half of the economically-viable potential of hydropower worldwide remains untapped – while in emerging and developing economies this increases to 60%.
The energy source already supplies the majority of electricity demand in 28 of these developing regions with a combined population of 800 million people – but as electricity demand continues to grow, building new reliable sources of affordable low-carbon power in these countries will be a key driver of global decarbonisation efforts.
Almost a quarter of overall hydropower investment this decade – around $127bn – is planned to be spent on modernising ageing facilities, mostly in advanced economies like North America and Europe where average asset ages are between 45-50 years old.
But even that level of spending is less than half what the IEA estimates is necessary to comprehensively upgrade existing global infrastructure.
Meanwhile, several obstacles to the development of new projects – including long lead times, lengthy permitting processes, high costs and risks from environmental assessments, and opposition from local communities – threaten to slow the addition of new capacity.
“These pressures result in higher investment risks and financing costs compared with other power generation and storage technologies, thereby discouraging investors,” the IEA said.
Governments can galvanise activity in the sector by offering long-term pricing structures and ensuring hydropower projects adhere to strict guidelines and best practices – helping to make new ventures economically viable and sufficiently attractive to investors.
If these challenges can be overcome and existing project pipelines unlocked, global capacity additions could increase 40% by 2030, the agency said.
