A technologically mature industry, hydro has well-established markets in Europe and North America and prospects for global hydropower development are highly encouraging. The World Energy Council (WEC) observes an annual rate of 3 percent growth that’s sure to be maintained in the coming years. Investment is expected for hydropower of all scales; however, large-scale (>100 MW) is expected to provide the vast majority of new capacity. While pumped storage and small-scale hydropower will provide less than 10 percent of future capacity, facilities of these sorts will be most common.
The 14GW Itaipu Hydroelectric Power Plant on the Paraná River was established as a binational project between Brazil and Paraguay. Image via Deni Williams/Flickr.
According to latest figures from the International Hydropower Association (IHA), the 1,036 GW of hydropower capacity generated over 16 percent of global electricity production in 2014.
Looking to the year ahead, IHA identified several trends driving hydropower build-out.
Prominent on the list is hydropower’s ability to function as a grid management asset: delivering base- and peak-load energy, frequency response and black-start capabilities. These solutions are recognized as critical to facilitate a successful transition to renewable energy.
Hydropower storage and grid balancing solutions have historically been utilized by the likes of Norway and Sweden, but Europe’s ever-expanding wind and solar markets are cause for new development. Of note, investment in pumped storage and variable speed technologies is growing. Going into 2016, some 8,600 MW of pumped storage capacity is planning or construction across Europe, with 2,500 MW planned for Swiss Alps by 2017, and 2,000 MW under construction in Portugal, said the IHA.
A second trend fostering steady investment, particular in Northern and Western Europe and North America, is modernization, uprating, and conversion of existing plants in efforts to secure more efficient and sustainable operations. Latvian State utility Latvenergo, for example, is presently engaged in a US $214.5 million upgrade program of its hydropower facilities.
A third driver motivating fresh momentum for hydropower stems from ancillary hydropower functions that can assist nations in adapting to climate change: providing freshwater for irrigation, drought management and flood protection solutions. The so-called water-energy nexus is high on the agenda of the UN, IEA and other international organizations that are providing strong foundations and resources for continued global development of hydropower capacity.
Small Hydropower Development
Against high capital costs associated with hydropower, small hydropower (<100 MW) represents an increasingly attractive solution in developing regions and remote locations otherwise not grid-connected. The Philippines, for instance, has plans for between 150 and 200 micro hydropower plants with a goal of increasing generating capacity by 50 MW. In Africa, Hydroneo Afrique and African Infrastructure Investment Managers are partnering on development of a portfolio of 200 MW small hydropower plants across the continent via an investment of US $500 million over the next five years.
Regional Development In The Year Ahead
Regionally, the largest untapped hydro potential is in Asia, where IHA estimates that new hydropower could generate up to 7,195 TWh/year if developed. Fortunate then that hydropower’s water-energy nexus hits a sweet spot in many Asian countries, providing much needed power to rapidly growing economies, as well as rendering important water management services to nations combatting the severest impacts of climate change.
Already holding a 26 percent share of global hydropower capacity, China aims to reach 350 GW of pure hydropower and 70 GW of pumped storage by 2020. 2016 will see the first year of China’s thirteenth five-year-plan, and with it publication of new hydropower direction and goals. Alongside national expansion, China’s burgeoning hydropower industry has recognized the potential of extending its reach to regions abroad, including Laos, Cambodia, and Myanmar among others; in addition to increased influence in Africa and Latin America.
Egypt’s 2.1 GW High Aswan hydropower plant. Credit: Jorge Láscar/Flickr.
As an example, the coming year will see constructions begin on the 720MW Karot hydropower project in Pakistan; the first project to be financed by China’s $40 billion Silk Road Fund, alongside a subsidiary of the Three Gorges Corporation.
India holds a huge amount of untapped capacity too, plus strong political will to use this potential both nationally and through bi-lateral agreements with neighboring Nepal, Bhutan and Bangladesh. There are some 150 projects currently planned for the northeast of the country alone; while new renewable support schemes and legislation geared to consolidating on hydropower resources is expected in 2016.
Leading hydropower in South America for some years now, Brazil is far from complete with its developments: 2015 saw the partial commissioning of the Jirau (3,750 MW) and Santo Antonio (3,150MW) plants, and there are plans for a further 19 GW within next decade.
Brazil’s successes are in themselves encouraging regional investments. Indeed, the country has set an enviable benchmark in supplying over 75 percent demand for electricity through its 85.7 GW hydropower capacity — something its neighbors seek to emulate. Venezuela, for example, will complete the 2,300-MW Tocoma Hydropower Plant in 2016 — the final project of the Bajo Caroní complex, set to become the world’s largest and most efficient Kaplan generating plant.
Other events holding regional significance for 2016 include: Pakistan’s commencement of a feasibility study for the 2,000-4,000 MW Thakot hydropower project; Malaysia’s ambitious plans to open simultaneous construction of the 1,285-MW Baleh and 1,200 MW Baram projects; and in Sudan, spring 2016 will see commissioning of the 320 MW Upper Atbara and Setit plants. In the United States, new development could be spurred through hydropower incentives that were recently extended through the end of 2016.
Development Through Cooperation
The emerging markets face significant challenges. In Africa and South Asia, low levels of electrification and poor grid infrastructure are common as is regional political instability and financial constraints, all of which will hinder hydropower development.
Critical to overcoming these challenges are collaborative projects fostering hydropower expansion and trade through bilateral or regional arrangements. In addition, international support and financial assistance are providing strong foundations to development.
Older generations of hydropower may still be in operation, but stand to benefit from modernizing. Credit: .freeside/Flickr
Further, both the IEA and IHA highlight transmission as being significant to the optimization of hydropower resources. In many cases, the ability to export surplus electricity is an important incentive to countries facing formidable economics of hydropower as well as those with a low level of national energy consumption.
A prime example is the 1,000km/2000 MW Kenya-Ethiopia interconnect, which will provide foundations critical to Ethiopia realizing its goal as a hydropower hub for Eastern Africa. The project, which expects to get underway in 2016 for operation in late 2018, is estimated to cost US $450 million, and is being financed by the World Bank and the African Development Bank.
In Asia, the CASA-1000 transmission system linking Pakistan, Tajikistan, Kyrgyzstan and Afghanistan via 1,222km of new infrastructure will enable trade of between 1,000 to 1,300 MW via Tajikistan and Kyrgyzstan (with electricity surpluses) to Afghanistan and Pakistan, which experience chronic electricity deficits. A raft of international organizations back the CASA-1000, including the World Bank Group, Islamic Development Bank, and international development agencies of the United States, United Kingdom, and Australia.
New transmission lines are also being established in Europe and Northern America — providing transmission capacity that will bring cheap hydropower electricity to regions without it.
Norway, for instance, is developing a 730 km line to bring hydropower capacity to the UK, which will result in the world’s longest submarine high-voltage cable, with capacity of 1,400 MW.
Although legitimate environmental concerns still enshroud hydropower development, careful negotiation and planning along with sustainable technologies and practices, are lessening ecological impacts of hydropower. While hydropower development is certainly not without challenges, the industry’s landscape for 2016 is one driven by solutions, cooperation and a clear vision for the unquestionable role of hydropower in a clean energy future.
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