Hydropower Grows but Industry Is Changing

New hydropower capacity installed worldwide plunged 36% in 2017 compared to 2016, but the sector remains optimistic about its future despite a transitioning role for hydropower away from baseload power and toward flexible services.

The International Hydropower Association (IHA) revealed in its 2018 Hydropower Status Report that 1,267 GW of hydropower was installed at the end of 2017 (Figure 1). But compared to 2016 when IHA recorded 31.5 GW of new installments, in 2017, the world installed only 21.9 GW, including pumped storage projects. However, the organization remained optimistic, noting that $48 billion of final investment decisions were committed to hydropower projects in 2017.

1. Hydropower capacity and generation by region in 2017. The blue circles show hydropower capacity installed in 2017 (in GW). The dark green circles note estimated generation in 2017 (in TWh). The light green circles show technical potential, assuming maximum generation. Courtesy: 2018 Hydropower Status Report, International Hydropower Association

East Asia and the Pacific region led the world’s hydropower capacity installments, putting online 9.8 GW, mostly in China (9.1 GW), which now has about 341 GW of hydropower installed. While development of new hydropower in China has slowed since its 2014 peak—when more than 30 GW was commissioned—in 2017, the country put online the 2.6-GW Changheba project, the 1.7-GW Houziyan project, and the 700-MW Miaowei project. In August 2017, China Three Gorges Corp. also began construction of the 16-GW Baihetan plant on the lower reaches of the Jinsha River. When that project comes online in 2023, it will be the second-largest in the world, behind the 22.5-GW Three Gorges plant.

Other major projects in the region commissioned last year include the 260-MW Trung Son project in Vietnam, and the first two units of the 400-MW Lower Sesan II project in Cambodia. Among notable pumped storage projects in the region’s pipeline is Australia’s Snowy Mountains Scheme (Snowy 2.0), a 4.1-GW project that will link two large dams and act as a 2-GW battery.

The East Asia and Pacific region was followed by South America (4.1 GW), where Brazil added the bulk (3.4 GW). Brazil, however, has removed several large hydropower projects from its 10-year pipeline in favor of more decentralized renewable energy, as well as owing to looming market reforms, which seek to privatize Eletrobras, the state-owned firm that developed its main large hydropower projects such as Belo Monte (Figure 2), Jirau, and Santo Antônio. The IHA also noted that the region has been stricken with hydrological variability—including four consecutive years of severe drought in parts of Brazil—caused by El Niño. Shifting climate patterns have also prompted several governments to mull long-distance regional interconnections.

Figure 2_BeloMonte_NorteEnergia_2018
2. Last large hydro project? The 11.2-GW Belo Monte project in northern Brazil could be the country’s last mega-project as environmental concerns, indigenous sensitivities, and public unease weigh on development. The first turbine was commissioned in 2016. Unit 6 began generating power in July 2017. All 18 units are expected to be fully operational in 2020. When completed, it will become the third-largest hydropower plant in the world. Courtesy: Norte Energia

In South and Central Asia, which added 3.3 GW, India put online 1.9 GW, including the 1.2-GW Teesta III project in the Himalayan northeastern state of Sikkim. Most of Europe’s 2.3 GW of new installments were in Portugal, which added two pumped storage projects, the 270-MW FozTua and the 780-MW Frades II. Of Africa’s 1.9-GW additions, Angola led installments, putting online the first two power generating units of its 2-GW Laúca hydropower station. North and Central America put online a combined 0.5 GW, mostly through retrofits to existing U.S. facilities.

Global pumped storage capacity also grew 3.2 GW over 2017, bringing total capacity to about 153 GW. The IHA noted more than 100 pumped storage hydropower projects totaling about 75 GW are in the pipeline and could increase existing global storage capacity by 50%—to almost 225 GW—by 2030. As with many baseload units around the world, hydropower’s role is shifting to include flexible balancing and ancillary services, the IHA noted. A survey the organization conducted among major players showed a “high level” of optimism for the new role, rather than antagonism.

Another notable finding in the report is that hydropower sector decision-makers expect to finance or refinance hydropower projects through the green bond market over the next five years. Green bonds are essentially funds for projects that have environmental or climate benefits. The green bond market, which kicked off in 2007 with AAA-rated issues from major multilateral institutions, is seeing tremendous growth. Since 2013, when the International Finance Corp. sold the first $1 billion green bond, large corporations, states, municipalities, and cities have issued bonds. The IHA noted that a coalition of organizers, including the United Nations Framework Convention on Climate Change have set a target of $1 trillion worth of issuances by 2020, up from $160 billion last year.

Notably, the IHA’s 2018 report includes the results of what it said is the “largest and most comprehensive study” of greenhouse gas (GHG) emissions of nearly 500 reservoirs globally, noting that researchers have “struggled to accurately assess the carbon footprint of hydropower” for years. The assessment concludes that if hydropower was replaced with burning coal, 4 billion metric tons (MT) of additional GHGs would have been emitted in 2017. Hydropower use also avoided the generation of 148 million MT of fine particulates, 62 million MT of sulfur dioxide, and 8 million MT of nitrogen oxide. “Hydropower is second only to wind among renewables in offering the lowest carbon emissions per kilowatt hour,” it said. The report also touted a number of the sector’s benefits, including its compatibility with other renewables, and its ability to offer protection from floods and drought.

The sector has meanwhile also been swept up in the global digitalization revolution, and it is now foraying into algorithmic trading, artificial intelligence, and blockchain. Digitalization is also increasingly being used to extend the lifetime of facilities and facilitate integration with other renewables, the IHA said.

—Sonal Patel is a POWER associate editor.