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IEA: strong policy actions needed to ramp up hydropower

Hydropower today has a key role in the transition to clean energy not only through the massive quantities of low-carbon electricity it produces but also because of its unmatched capabilities for providing flexibility and storage. However, its growth worldwide is set to slow significantly this decade, putting at risk the ambitions of countries across the globe to reach net-zero emissions while ensuring reliable and affordable energy supplies for their citizens, according to a new report by the International Energy Agency (IEA).

Overall, global hydropower capacity is expected to increase by 17 per cent between 2021 and 2030 – led by China, India, Turkey and Ethiopia. However, the projected growth for the 2020s is nearly 25 per cent slower than hydropower’s expansion in the previous decade.

Reversing the expected slowdown will require a range of strong policy actions from governments to address the major challenges that are hampering the faster deployment of hydropower, according to the report. These measures include providing long-term visibility on revenues to ensure hydropower projects are economically viable and sufficiently attractive to investors, while still ensuring robust sustainability standards.

In 2020, hydropower supplied one-sixth of global electricity generation, making it the single largest source of low-carbon power – and more than all other renewables combined. Its output has increased 70 per cent over the past two decades, but its share of the global electricity supply has held steady because of the increases in wind, solar PV, natural gas and coal. Nonetheless, hydropower currently meets the majority of electricity demand across 28 different emerging and developing economies, which have a total population of 800 million.

“Hydropower is the forgotten giant of clean electricity and it needs to be put squarely back on the energy and climate agenda if countries are serious about meeting their net-zero goals,” said Fatih Birol, the IEA Executive Director. “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. 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.”

The IEA special report is the first study to provide detailed global forecasts to 2030 for the three main types of hydropower: reservoir, run-of-river and pumped storage facilities. Around half of hydropower’s economically viable potential worldwide is untapped, and this potential is particularly high in emerging economies and developing economies, where it reaches almost 60 per cent.

Between now and 2030, 127 billion US dollars – or almost one-quarter of global hydropower investment – is set to be spent on modernising ageing plants, mostly in advanced economies. Still, the projected investment falls well short of the 300 billion US dollars that the report estimates is necessary to modernise all ageing hydropower plants worldwide. 

The IEA report sets out seven key priorities for governments looking to accelerate the deployment of hydropower in a sustainable way. These include locking in long-term pricing structures and ensuring that hydropower projects adhere to strict guidelines and best practices. This kind of approach can minimise sustainability risks and maximise social, economic and environmental advantages.

Responding to the report, Eddie Rich, Chief Executive of the International Hydropower Association (IHA) noted that the world is facing a crisis in energy flexibility and storage.

“If we are to get the most from wind and solar, governments need to incentivise investment in sustainable hydropower to balance up the system when the wind doesn’t blow and the sun doesn’t shine,” he said. “Policy-makers have a huge opportunity to correct this through holistic post-Covid development plans. At the same time, the hydropower sector also needs to step up. Developers have no excuse for projects not to be in line with international good practice.”

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