24 June 2020
The International Renewable Energy Agency (IRENA) has outlined a Covid-19 recovery plan involving a major scaling up of global investment in sustainable hydropower projects to more than US$70 billion annually.
The agency’s report published today, Post-COVID Recovery: An Agenda for Resilience, Development and Equality, recommends a range of measures that should be adopted by governments over the next three years, and beyond.
Scaling-up public and private energy spending to US$4.5 trillion per year would boost the world economy by an additional 1.3 per cent annually, creating 19 million additional energy transition-related jobs by 2030, IRENA says.
Jobs in the renewables sector could triple to 30 million by 2030, with IRENA estimating that every million US dollars invested in renewables could create three times more jobs than in fossil fuels.
“Renewables have proven to be the most resilient energy sources throughout the current crisis,” said Francesco La Camera, Director-General of IRENA. “This evidence should allow governments to take immediate investment decisions and policy responses to overcome the crisis.
“With today’s recovery plan for governments, IRENA uses its global mandate on energy transitions to inform decision-making at this critical time, while staying on course toward a fully decarbonised system by 2050.”
For the hydropower sector, the report states:
Annual investment in hydropower (excluding pumped storage) should increase from US$22 billion to US$55 billion per year to 2030 to support the recovery and accelerate the energy transition. This represents a 150 per cent increase and is considerably larger than the increases needed for both wind (61 per cent) and solar PV (45 per cent).
For pumped storage hydropower, IRENA recommends an additional US$16 billion per year of new investment.
Fast-tracked licensing, streamlined permitting, centralised planning, customised loans and long-term power purchase agreements are among the measures needed to boost hydropower investment and development.
There is also a strong need to redesign power markets to provide stable long-term signals to renewable power generators such as hydropower while also rewarding short-term flexibility.
Through these policy actions and investment, hydropower could contribute three million jobs by 2030, up from two million today.
Many of the policy measures outlined the report echo recommendations put forward in IHA’s position paper released last month on the role of sustainable hydropower in the Covid-19 recovery.
Commenting on the IRENA plan, IHA Senior Analyst Nicholas Troja said: “Today’s IRENA report again highlights hydropower’s potential to create skilled jobs, reduce greenhouse gas emissions at scale, and help meet the flexibility needs of modern power systems.
“Supported by IHA and the sector, policy-makers must redouble their efforts to implement these sensible measures which would help unlock billions of dollars of investment in sustainable hydropower development.”
Read IHA’s Covid-19 position paper and related reports:
18 June 2020
In response to the Covid-19 pandemic and economic crisis being felt across the world, today the International Energy Agency (IEA) released its Sustainable Recovery Plan.
It seeks to show governments what they can do to boost economic growth, create jobs and put global greenhouse gas emissions into structural decline.
IHA Chief Executive Eddie Rich welcomed the report: “Trillions of dollars will be spent by governments on the economic recovery. As the report demonstrates, sustainable hydropower can not only deliver long term cheap and clean energy, but also tens of thousands of skilled jobs with the right support. It should be near the top of the shopping list.”
It follows a meeting convened by IHA last week, between eleven top energy executives from our member companies and Dr Fatih Birol, the IEA’s Executive Director, on how hydropower can contribute to global recovery efforts.
The detailed report sets out over 30 policy measures to be carried out over the next three years requiring about USD 1 trillion of additional annual investment (from both the public and private sectors). According to the IEA, the potential benefits of such measures include the creation of roughly 9 million jobs, global GDP being 3.5% higher and GHG emissions falling by 4.5 billion tonnes.
Specifically, for the hydropower sector, the report states:
Hydropower has proven to be extremely resilient during the Covid-19 crisis, but challenging conditions such as lower wholesale prices have put revenues and capital flows at risk.
Well-advanced modernisation projects would not only generate skilled jobs but also avoid a steep decline in low-carbon electricity generation and support more flexible operations. The plan includes an additional USD 20 billion being spent each year, over the three years, mainly to support continued generation from existing facilities. Such levels of spending would create tens of thousands of jobs in the sector and extend the operations of around 50 GW of existing capacity.
- Upgrades and construction work at hydropower projects create about 3 jobs per million dollars of capital spending. This is higher than wind (1.5 jobs) but lower than solar PV on a utility-scale (9 jobs). The sector already employs about 2 million people globally.
- To support hydropower development, the report notes the benefits of loan guarantees and preferential loans, where available, to lower the cost of financing. Longer-term policies such as carbon pricing, capacity payment mechanisms and enhanced flexibility markets are also mentioned.
- The GHG abatement costs (< USD 5 per tCO2-eq) of modernising hydropower facilities are very low compared to extending the lifetime of nuclear facilities and new build wind and solar. In addition, the report estimates that an additional 1 GW of hydropower capacity avoids about 3 Mt CO2 emissions if displacing coal.
- The longer-term benefits of hydropower modernisation to improving electricity security, reducing prices and building resilience was also highlighted.
On 9 July, the IEA will host the Clean Energy Transitions Summit in an effort to identify how-to step-up actions to support the proposals set out in the report.
17 June 2020
REN21’s Renewables 2020 Global Status Report (GSR) highlights the impressive growth in renewables over the past five years but points out that governments need to take further action now to ensure a clean energy future.
REN21’s annual report, to which IHA contributes data and analysis on the hydropower sector, is a comprehensive overview of the state of renewable energy. More than 200 GW of new renewable power generating capacity was installed in 2019, the largest increase ever, raising the total globally to 2,588 GW. Of this, hydropower capacity is 1,308 GW.
Renewables accounted for 75 per cent of the global power generating capacity additions. Solar PV appears at the top of the list with 57 per cent, followed by wind (30 per cent) and hydropower (8 per cent). The rapid growth in the installed capacity and penetration of variable renewable electricity (VRE) sources highlights the need for hydropower’s storage and flexibility services.
Pumped Storage Hydropower (PSH) is the most developed energy storage technology in the world. According to the report, the global energy storage market reached 183 GW in 2019, with PSH accounting for 158 GW.
Hybrid systems have a prominent role in providing grid flexibility while decreasing costs and delivering technical benefits. The report presents examples of new hybrid projects of hydropower/solar in Brazil, the Philippines, Russia, and Uganda.
Despite the high growth of renewables in the power sector, REN21 cautions that this should be balanced against the continued growth in global energy demand and the low percentage of renewables in the heating, cooling and transport sectors.
Covid-19 economic stimulus recovery packages provide a unique opportunity to make a systemic shift to a low-carbon economy, but only if governments prioritise “green” recovery measures.
Such measures can deliver job creation and energy security, as well as reduced emissions and air pollution.
“It is clear, renewable power has become mainstream and that is great to see. But the progress in this one sector should not lead us to believe that renewables are guaranteed success. Governments need to take action beyond economic recovery packages. They also need to create the rules and the environment to switch to an efficient and renewables-based energy system. Globally. Now.” concludes Arthouros Zervos, President of REN21.
Eddie Rich, IHA’s CEO, says that there has never been a better time to reassess the global energy system: “It is vitally important that economic stimulus packages not only maximise the short-term benefits of infrastructure investment, but also accelerate the transition towards cleaner and lower-carbon technologies such as hydropower.”
Read more about IHA’s work to influence a green economic recovery.
16 June 2020
Economic stimulus packages involving investment in sustainable hydropower among other renewables will be essential to Covid-19 recovery efforts.
This was the consensus view of senior hydropower industry CEOs and the head of the International Energy Agency (IEA) and International Hydropower Association (IHA).
At a meeting convened by the IHA on 12 June 2020, eleven top energy executives discussed with Dr Fatih Birol, the IEA’s Executive Director, how hydropower can contribute to global recovery efforts.
Ahead of a special IEA World Energy Outlook report on sustainable recovery, Dr Birol emphasised the importance of hydropower to a modern, clean and secure energy future. The impact of Covid-19 on today’s energy sector is unprecedented and has highlighted the important role hydropower plays in providing electricity security and system flexibility, said Dr. Birol.
“The voice of hydropower is not heard loudly enough in the energy and climate debate. It already represents 16 per cent of global electricity demand and 65 per cent of renewables-based electricity with significant potential to grow, including through modernisation or refurbishment of existing hydropower.”
Eddie Rich, IHA’s CEO, and the eleven CEOs and top executives from IHA’s membership, presented a united message on the need for sustainable hydropower as part of the energy mix for a green recovery. “Even more than other renewables, government policies and actions drive investment in the hydropower sector. A ‘green stimulus’ for low carbon technologies and hydropower infrastructure should be a key pillar of government-led recovery packages” he said.
Despite the worldwide need for hydropower’s flexibility and grid management services to support variable renewables, investment is stagnating. Improved market design to compensate for these services are necessary to incentivise investment in plants with storage, such as pumped hydropower.
Yves Marie Giraud, Director of EDF-Hydro, France, said hydropower was the best way and the only way to store energy in large quantities and over long periods, but markets should be designed better to reflect this.
“Usually, we do not have the appropriate market design nor the mechanisms to support storage in general, and pumped storage plants in particular.”
This view was echoed by Stephen Davy, CEO of Hydro Tasmania, Australia, who said: “Pumped hydropower investment is the easiest and most straightforward way to maximise solar and wind generation in the energy system. In Australia we are promoting the market measures required to properly value storage and flexibility.”
In developing countries where the fiscal response to the Covid-19 crisis is limited, multilateral development banks will be critical in financing or refinancing viable projects.
Anton-Louis Olivier, CEO of REH Group, based in South Africa, said: “With the growing emphasis and prevalence of solar and lower cost but intermittent resources, we should not neglect the need for hydro to create the base on which these lower cost technologies can also enter into the market.
“My message to the IEA in dealing with the international financial sector and multilaterals guiding the future of the energy sector in Africa is to remember that hydro, large and small, can still play a significant role in the continent, and can contribute to a growing and decarbonised power sector.”
Dr Birol acknowledged the points made by the industry speakers, including about the importance of storage, modernising plants, and keeping long-term policy support; as well as the multiple non-energy benefits of hydropower, such as flood and drought control, irrigation and climate resilience.
As well as feeding into this week’s IEA World Energy Outlook special report, the discussion will be considered for the IEA’s Clean Energy Transitions Summit on 9 July 2020. Dr Birol pledged to take the feedback from the meeting to the government ministers and policymakers attending the Summit.
Roger Gill, IHA President, said the meeting was very timely for the hydropower sector to outline the measures needed to spur sustainable hydropower and support the recovery, particularly relating to incentivising storage and modernisation projects.
“Sustainability must be at the heart of our response to the crisis,” said Mr Gill. “Over the coming weeks and months IHA will continue to offer our assistance to the industry and press home our message on the role of sustainable hydropower development to support the recovery, boost jobs and to help build low-carbon, resilient economies.”
Other contributions to the meeting included:
“Increased hydropower investment will support the economic revival in China. It is expected that we will start construction of a project involving investment of around USD20bn in the second half of this year. In other parts of the world there is a need for increased investment in hydropower to recover from the crisis.” WU Shiyong, General Manager, Yalong River Hydropower Development Company, China
“I believe that in the recovery from Covid-19 we should be sure to do it in a sustainable way and thinking not just of electricity but also of water. These two needs are very important in the world right now.” Irene Cañas, CEO, Instituto Costarricense de Electricidad, Costa Rica
“We hope the IHA and IEA can support hydropower sustainable development and help in setting up national energy policies so that we have tax incentives, green bonds, and fast-track approval by the authorities; and also potentially look at internationalising the renewable energy certificate initiative.” James Ung Sing Kwong, CEO, SEB Power, Malaysia
“A good measure done by the Brazilian govt was the declaration of suspension of financing and debt service payments for projects being done by the federal bank for up to six months. This could be followed by other countries.
“Brazil is not building any hydropower at this time. Getting even basic engineering design and environmental studies required for the licensing takes between two to three years. We should urgently resume the preparation of projects.” Gil Maranhao Neto, Chief Strategy, Communications & CSR Officer, ENGIE Brasil, Brazil
“One of the main concerns is the low cost of electricity around the world, it will be very difficult to finance hydropower projects. We see that sustainable hydropower projects are competing with wind and solar for example with green subsidies. It’s important to find ways to get the right long-term market conditions to support hydropower development.” Hörður Arnarson, CEO, Landsvirkjun, Iceland
“This technology of hydro has proven you can run it during a pandemic situation so if you look through the lens of future modernisation, how do we pandemic-proof our hydro plants? How do you minimise the impacts?” Herbie Johnson, General Manager, Southern Company, US
“It is important to focus on maintaining the existing capacity of the hydropower fleet through refurbishment activities. We would also like the IEA to support a long-term framework for the future.” Hilde Bakken, Executive Vice President, Statkraft, Norway
IHA publishes 2020 Hydropower Status Report and Covid-19 paper
28 May 2020
The Covid-19 pandemic has underlined hydropower’s resilience and critical role in delivering clean, reliable and affordable energy, especially in times of crisis.
This is the conclusion of two new reports published today by the International Hydropower Association (IHA).
The 2020 Hydropower Status Report presents latest worldwide installed capacity and generation data, showcasing the sector’s contribution to global carbon reduction efforts. It is published alongside a Covid-19 policy paper featuring recommendations for governments, financial institutions and industry to respond to the current health and economic crisis.
“Preventing an emergency is far better than responding to one,” says Roger Gill, President of IHA, highlighting the need to incentivise investments in renewable infrastructure. “The events of the past few months must be a catalyst for stronger climate action, including greater development of sustainable hydropower.”
Now in its seventh edition, the Hydropower Status Report shows electricity generation hit a record 4,306 terawatt hours (TWh) in 2019, the single greatest contribution from a renewable energy source in history.
The annual rise of 2.5 per cent (106 TWh) in hydroelectric generation – equivalent to the entire electricity consumption of Pakistan – helped to avoid an estimated additional 80-100 million metric tonnes of greenhouse gases being emitted last year.
The report also highlights:
- Global hydropower installed capacity reached 1,308 gigawatts (GW) in 2019, as 50 countries and territories completed greenfield and upgrade projects.
- A total of 15.6 GW in installed capacity was added in 2019, down on the 21.8 GW recorded in 2018. This represents a rise of 1.2 per cent, which is below the estimated 2.0 per cent growth rate required for the world to meet Paris Agreement carbon reduction targets.
- India has overtaken Japan as the fifth largest world hydropower producer with its total installed capacity now standing at over 50 GW. The countries with the highest increases in 2019 were Brazil (4.92 GW), China (4.17 GW) and Laos (1.89 GW).
- Hydropower’s flexibility services have been in high demand during the Covid-19 crisis, while plant operations have been less affected due to the degree of automation in modern facilities.
- Hydropower developments have not been immune to economic impacts however, with the industry facing widespread uncertainty and liquidity shortages which have put financing and refinancing of some projects at risk.
In a companion policy paper, IHA sets out the immediate impacts of the crisis on the sector as well as recommendations to assist governments and financial institutions and enhance hydropower’s contribution to the recovery.
The recommendations include:
- Increasing the ambition of renewable energy and climate change targets which incorporate the role of sustainable hydropower development.
- Supporting sustainable hydropower through introducing appropriate financial measures such as tax incentives to ensure viable and shovel-ready projects can commence.
- Fast-tracking planning approvals to ensure the development and modernisation of hydropower projects can commence as soon as possible, in line with internationally recognised sustainability guidelines.
- Safeguarding investment by extending deadlines for concession agreements and other awarded projects.
- Given the increasing need for long-duration energy storage such as pumped storage, working with regulators and system operators to develop appropriate compensation mechanisms for hydropower’s flexibility services.
2020 Hydropower Status Report
IHA Covid-19 communications
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Visit IHA's Covid-19 communications centre: hydropower.org/covid-19
Will Henley, IHA Head of Communications