2050 2045 E es n v 2040 er cti 2035 g e y Technolog y P ersp Technology Roadmap Hydropower INTERNATIONAL ENERGY AGENCY The International Energy Agency (IEA), an autonomous agency, was established in November 1974. Its primary mandate was – and is – two-fold: to promote energy security amongst its member countries through collective response to physical disruptions in oil supply, and provide authoritative research and analysis on ways to ensure reliable, affordable and clean energy for its 28 member countries and beyond. The IEA carries out a comprehensive programme of energy co-operation among its member countries, each of which is obliged to hold oil stocks equivalent to 90 days of its net imports. The Agency’s aims include the following objectives: n Secure member countries’ access to reliable and ample supplies of all forms of energy; in particular, through maintaining effective emergency response capabilities in case of oil supply disruptions. n Promote sustainable energy policies that spur economic growth and environmental protection in a global context – particularly in terms of reducing greenhouse-gas emissions that contribute to climate change. n Improve transparency of international markets through collection and analysis of energy data. n Support global collaboration on energy technology to secure future energy supplies and mitigate their environmental impact, including through improved energy efficiency and development and deployment of low-carbon technologies. n Find solutions to global energy challenges through engagement and dialogue with non-member countries, industry, international organisations and other stakeholders. IEA member countries: Australia Austria Belgium Canada Czech Republic Denmark Finland France Germany Greece Hungary Ireland Italy Japan Korea (Republic of) Luxembourg Netherlands New Zealand Norway Poland Portugal Slovak Republic © OECD/IEA, 2012 Spain International Energy Agency Sweden 9 rue de la Fédération Switzerland 75739 Paris Cedex 15, France Turkey www.iea.org United Kingdom United States Please note that this publication is subject to specific restrictions The European Commission that limit its use and distribution. The terms and conditions are available online at also participates in http://www.iea.org/termsandconditionsuseandcopyright/ the work of the IEA. Foreword Current trends in energy supply and use are technologies such as wind power and solar unsustainable – economically, environmentally photovoltaics. It can foster social and economic and socially. Without decisive action, energy- progress, especially in developing countries. This related greenhouse gas (GHG) emissions could roadmap considers that both annual hydropower more than double by 2050, and increased oil capacities and generation should by 2050 roughly demand will heighten concerns over the security double from current levels. of supplies. We can and must change the path we Hydropower is a competitive energy source are now on; sustainable and low-carbon energy already today, but its further deployment still technologies will play a crucial role in the energy faces important regulatory, financial and public revolution required to make this change happen. acceptance issues. This roadmap identifies To effectively reduce GHG emissions, energy those barriers and includes proposals to address efficiency, many types of renewable energy, carbon them, including technology and managerial capture and storage (CCS), nuclear power and new improvements enhancing the environmental transport technologies will all require widespread performance of hydro. deployment if we are to reach our greenhouse-gas emission goals. Every major country and sector of Other IEA technology roadmaps have already the economy must be involved and action needs included a special focus on the diffusion of clean to be taken now, in order to ensure that today’s energy technologies in countries beyond the IEA. As investment decisions do not burden us with the bulk of the growth of hydropower will come from suboptimal technologies in the long term. large-scale projects in emerging economies, the IEA benefited greatly from full-fledged cooperation from There is a growing awareness of the urgent need to Brazil in elaborating and publishing this roadmap. turn political statements and analytical work into Brazil, a leader in hydropower, shared its vast concrete action. To address these challenges, the experience and knowledge. We are both confident International Energy Agency (IEA), at the request that this novel and fruitful co-operation will broaden of the G8, is developing a series of roadmaps for as we continue to seek solutions to the world’s some of the most important technologies needed energy challenges. to achieve a global energy-related CO target in 2 2050 of 50% below current levels. Each roadmap develops a growth path for the covered technology from today to 2050, and identifies technology, Maria van der Hoeven financing, policy and public engagement milestones Executive Director that need to be achieved to realise the technology’s International Energy Agency full potential. Hydropower is the largest single renewable Edison Lobão electricity source today, providing 16% of world Minister of Mines and Energy electricity at competitive prices. It dominates the Federative Republic of Brazil electricity mix in several countries, developed, emerging or developing. In many others it provides significant amounts of clean, renewable electricity. It also helps control water flows and availability. Its extreme flexibility is a strong asset for electric systems, and will be vital to accommodate and facilitate the growth of variable renewable energy This roadmap reflects the views of the IEA Secretariat and the Ministry of Mines and Energy of the Federative Republic of Brazil, but does not necessarily reflect those of the individual member countries of the IEA or the OECD. The roadmap does not constitute advice on any specific issue or situation. The IEA and the Ministry of Mines and Energy of the Federative Republic of Brazil make no representation or warranty, express or implied, in respect of the roadmap’s contents (including its completeness or accuracy) and shall not be responsible for any use of, or reliance on, the roadmap. For further information, please contact: [email protected]. Foreword 1 Table of contents Foreword 1 Acknowledgements 4 Key findings 5 Key actions in the next ten years 6 Introduction 7 Rationale for hydropower 7 Purpose, process and structure of this roadmap 8 Hydropower today 9 Overview 9 Diversity of hydropower 11 Classification by hydraulic head or powerplant size 14 Energy services 15 Vision for hydropower deployment 18 Regional scales 20 The broader context of renewable deployment 24 Pumped storage hydropower deployment 25 Contribution to CO abatement 27 2 Sustainable hydropower development 28 Environmental issues 28 Socio-economic issues 32 Public acceptance 32 Sustainable approach to development 33 The energy-water nexus 36 Economics 38 Costs 38 Support mechanisms 41 Financial challenges 42 Technology improvements: roadmap actions and milestones 46 Technical improvements 46 Managerial improvements 47 Innovations in pumped storage hydropower technologies 49 Policy framework: roadmap actions and milestones 51 Setting up/improving the policy framework 51 Ensuring sustainable development and gaining public acceptance 52 Overcoming economic and financial challenges 53 Conclusion: near-term actions for stakeholders 55 Acronyms and abbreviations 57 Detailed potential estimate in South and Central America 58 References 59 2 Technology Roadmaps Hydropower List of figures Figure 1. Global electricity generation by fuel, 1973-2010 9 Figure 2. Hydroelectricity generation, 1965-2011 11 Figure 3. Electricity generation from recent additions to hydropower (left) and other renewables (right) 12 Figure 4. Cascading hydropower plants 13 Figure 5. Pumped storage plant 13 Figure 6. Pelton, Francis and Kaplan turbines 14 Figure 7. The Scandinavia - Northern Europe interconnections 16 Figure 8. Regional hydropower technical potential and percentage of undeveloped technical potential (2009) 18 Figure 9. Expected mid-term evolution of hydropower installed capacity (GW) 19 Figure 10. Hydroelectricity generation till 2050 in the Hydropower Roadmap vision (TWh) 19 Figure 11. Historical hydroelectricity generation and projections in ETP 6DS and 2DS, in TWh and shares of total electricity generation 20 Figure 12. Fuel mix in power generation and in the 2DS, 2009-50 25 Figure 13. Estimates of lifecycle GHG emissions in electricity generation (excluding land-use changes) 30 Figure 14. Major dams under development today – of which 60% are multi-purpose 35 Figure 15. Costs of electricity storage technologies 40 Figure 16. Share of HP projects per host country 41 Figure 17. Improvement of hydraulic performance over time 46 Figure 18. Evolution of production over time 48 Figure 19. Concept of an energy island 50 List of tables Table 1. Top ten hydropower producers in 2011 10 Table 2. Countries with more than half their electricity generation from hydropower in 2009 10 Table 3. Definitions of small-scale hydro in different countries 15 Table 4. Expected PSP capacities in 2050 27 Table 5. Possible barriers and enabling factors for hydropower development 28 Table 6. Variations of the LCOE of a representative hydropower plant with WACC and load factor 38 Table 7. Minimum and maximum LCOE for selected electricity generating technologies 39 List of boxes Box 1. Hydro backing wind power: the Denmark - Norway connection 16 Box 2. Hydro facilitating wind power in Portugal 26 Box 3. The Nam Theun 2 project: a model for sustainable development? 32 Box 4. IHA Hydropower Sustainability Assessment Protocol 33 Box 5. The Brazilian approach: from river basin inventories to integrated energy planning 34 Box 6. Strategic environment assessment of multi-purpose hydropower development. 36 Box 7. Sensitivity of LCOE to variations of capacity factor and cost of capital 38 Box 8. Financing the Nam Theum 2 project 43 Box 9. Auction procedures in Brazil and the role of the BNDES bank 44 Table of contents 3 Acknowledgements This publication was prepared by the International (CEPEL); Luiz Guilherme Marzano (CEPEL); Jian-Hua Energy Agency’s Renewable Energy division (RED), Meng (WWF Global Water Security Initiative) ; in co-operation with CEPEL, the Brazilian Electric Paul Nel (Aurecon); Johansen Jan Oivind (Ministry Energy Research Center on behalf of the Ministry of Petroleum and Energy, Norway); Christine van of Mines and Energy. Cédric Philibert and Carlos Oldeneel (Hydro Equipment Association); Victorio Gasco were the co-ordinators and main authors Oxilia (OLADE); Clemente Prieto (Iberdrola); Tormod of this report, together with Maria Elvira Maceira Schei (Statkraft); Pierre Schlosser (Eurelectric); Karin from CEPEL, and Niels Nielsen, Secretary of the Helen Seelos (Statkraft); Steve Usher (International Implementing Agreement for a Co-operative Journal on Hydropower and Dams); Walter Vergara Programme on Hydropower Technologies and (Inter-American Development Bank); and Francisco Programmes (Hydropower IA). Paolo Frankl, head Romário Wojcicki (Ministry of Mines and Energy of the Renewable Energy Division, and Albert Geber of Brazil). de Melo, Director-General of CEPEL, provided The authors would also like to thank Peter invaluable guidance and input to this work. Márcio Chambers, Rebecca Gaghen and Marilyn Smith Zimmermann, Deputy Minister of Mines and Energy for skilfully editing the manuscript, as well as the of Brazil, and Didier Houssin, former Director of IEA Publication Unit, in particular Muriel Custodio, Energy Markets and Security at the IEA, provided Cheryl Haines and Astrid Dumond. Bertrand Sadin additional guidance and input. Several other IEA created the design and the layout. colleagues also provided important contributions to the work on this roadmap, in particular Uwe Finally, the support of the Brazilian and French Remme, Cecilia Tam and Zuzana Dobrotkova. governments, through CEPEL and ADEME, the French Agency for Energy Management and the The authors are very grateful for all their inputs to Environment, and Iberdrola, is fully acknowledged. all reviewers. Their list includes Luisa Almeida Serra (Energias de Portugal); Pedro Bara Neto (WWF Living Amazon Network Initiative); Fabio Batista (CEPEL); Alex Beckitt (Hydro Tasmania); Emmanuel Branche (Electricité de France); Arnaud Chaffoteaux (Alstom); Fernanda Costa (CEPEL); Jorge Damazio (CEPEL); Rajesh Dham and anonymous contributors (United States Department of Energy); Paulo Cesar Domingues (Ministry of Mines and Energy of Brazil); Jakob Granit (Stockholm Water Institute); Prieto Hernandez (Iberdrola); Gilberto Hollauer (Ministry of Mines and Energy of Brazil); the International Hydropower Association (IHA); Wim Jonker Klunne (CSIR, Republic of South Africa); Ruud Kempener (IRENA); Arun Kumar (Total); François Lemperière (Hydrocoop); Alberto Levy (Inter- American Development Bank); Maria Luiza Lisboa 4 Technology Roadmaps Hydropower Key findings z Hydroelectricity presents several advantages over z Both reservoir and pumped storage hydropower most other sources of electrical power, including are flexible sources of electricity that can help a high level of reliability, proven technology, high system operators handle the variability of other efficiency, very low operating and maintenance renewable energy such as wind power and costs, flexibility and large storage capacity. photovoltaic electricity. z Hydropower is the major renewable electricity z In order to achieve its considerable potential generation technology worldwide and will for increasing energy security while reducing remain so for a long time. Since 2005, new reliance on electricity from fossil fuels, capacity additions in hydropower have generated hydropower must overcome barriers relative to more electricity than all other renewables policy, environment, public acceptance, market combined. design and financial challenges. z The potential for additional hydropower remains z Large or small, associated with a reservoir considerable, especially in Africa, Asia and or run-of-river, hydropower projects must Latin America. This roadmap foresees, by 2050, be designed and operated to mitigate or a doubling of global capacity up to almost compensate impacts on the environment and 2 000 GW and of global electricity generation local populations. The hydropower industry over 7 000 TWh. Pumped storage hydropower has developed a variety of tools, guidelines and capacities would be multiplied by a factor of protocols to help developers and operators 3 to 5. address the environmental and social issues in a satisfactory manner. z Most of the growth in hydroelectricity generation will come from large projects in z New turbines and design make modern emerging economies and developing countries. hydropower plants more sustainable and In these countries, large and small hydropower environmentally friendly; better management projects can improve access to modern energy helps avoid damage to downstream ecosystems. services and alleviate poverty, and foster social z Hydropower projects require very substantial and economic development, especially for up-front investment, which can range up to local communities. In industrialised countries, tens of billion USD. Although hydropower is upgrading or redevelopment of existing plants the least-cost renewable electricity technology can deliver additional benefits. and is usually competitive with all alternatives, z Hydropower reservoirs can also regulate water financing remains a key issue. This roadmap calls flows for freshwater supply, flood control, for innovative financing schemes and market irrigation, navigation services and recreation. design reforms to ensure adequate long-term Regulation of water flow may be important to revenue flows and alleviate risks for investors. climate change adaptation. Key findings 5 Key actions in the next ten years Concerted action by all stakeholders is critical to With respect to financial challenges, governments realise the vision laid out in this roadmap. In order and relevant stakeholders should: to stimulate investment on the scale necessary z Include the financing of hydropower on to achieve the aimed-for levels of sustainable governments’ policy agendas and develop new hydropower, governments must take the lead public risk-mitigating financing instruments. in creating a favourable climate for industry z Develop effective financial models to support investment. Actions necessary to achieve these large numbers of hydropower projects in targets relate to the policy and market framework, developing regions. sustainability and public acceptance, financial z Provide guidance to determine the real value challenges and further technology development. of hydropower and pumped storage, and With respect to policy, governments should: mechanisms for remuneration. z Establish or update an inventory of hydropower z Establish economic tools to assess the non- potential, at river basin level where appropriate; energy contributions of multi-purpose include options for upgrading or redeveloping hydropower developments. existing plants to increase performance; assess With respect to technology development, feasibility of adding hydropower units to dams governments and industry should: originally developed for flood control, irrigation, navigation or drinking. z Expand, co-ordinate and disseminate results of technology development to improve operational z Prepare hydropower development plans with performance and reduce costs of development. targets; and track progress towards meeting these targets. Least-developed countries could z Ensure that the industry develops technologies receive appropriate support to this end. at hydropower plants to better support the grid integration of large amounts of variable z Develop and promote a policy framework and renewable energy. market design for appropriate and sustainable hydropower projects. With respect to sustainability and public acceptance, governments and relevant stakeholders should: z Ensure that developers and operators document the approach to sustainability that will be followed, such as environmental impact assessment reports and/or voluntary protocols. z Disseminate information to public and stakeholders on hydropower’s role in producing sustainable energy and contributing to targets for climate change reduction. z Consider sustainability issues in the co-ordinated operation of hydropower plants at electrical- interconnected river-basin level to take advantage of hydrological complementarities. 6 Technology Roadmaps Hydropower Introduction There is a pressing need to accelerate the Rationale for hydropower development of advanced energy technologies in order to address the global challenges of Hydropower is a mature and cost-competitive energy security, climate change and sustainable renewable energy source. It plays an important role development. This challenge was acknowledged by in today’s electricity mix, contributing to more than the energy ministers from G8 countries, China, India 16% of electricity generation worldwide and about and Korea, in their meeting in June 2008 in Aomori, 85% of global renewable electricity. Furthermore, Japan, where they declared the wish to have IEA it helps stabilise fluctuations between demand and prepare roadmaps to advance innovative energy supply. This role will become even more important technology: in the coming decades, as the shares of variable renewable electricity sources – primarily wind We will establish an international initiative with power and solar photovoltaic (PV) – will increase the support of the IEA to develop roadmaps for considerably. innovative technologies and co-operate upon existing and new partnerships [....] Reaffirming our The contribution of hydropower to decarbonising Heiligendamm commitment to urgently develop, the energy mix is thus twofold: the primary benefit deploy and foster clean energy technologies, we is its clean, renewable electricity. The secondary recognise and encourage a wide range of policy benefit is as an enabler to greater contribution of instruments such as transparent regulatory other renewables on the grid. frameworks, economic and fiscal incentives, and Hydropower development often contributes other public/private partnerships to foster private sector benefits. The most important are water supply, investments in new technologies... flood and drought control, and irrigation; but To achieve this ambitious goal, the IEA is developing navigation and recreational activities also have a series of roadmaps to advance the development their place. These objectives can conflict at times, and deployment of low-carbon energy but are more often complementary. Providing such technologies, under international guidance and in multiple outcomes from sustainable hydropower close consultation with industry. These technologies development is central to this roadmap. are evenly divided among demand side and supply side technologies. Hydropower is too often overlooked in energy This hydropower roadmap has been developed policies. Policy makers, especially in industrialised in collaboration with CEPEL, the Brazilian Electric countries, tend to believe that the economic Energy Research Center, representing the Brazilian potential for hydropower plant was exhausted Ministry of Mines and Energy. The strong rationale decades ago, and/or that hydropower plants are behind this co-operation is the fact that the bulk of detrimental to the protection of the environment, the current and future development of hydropower or unsafe. The possible contribution of hydropower will take place in emerging economies; Brazil to help balance fluctuations in electricity supply has accumulated considerable experience in the from wind and solar PV is not always understood. development of sustainable hydropower, while However, economic conditions are changing fast, carrying out deep reform of its power sector. This technologies are improving, and environmental, conjunction makes Brazil’s experience invaluable for social and economic conditions of sustainability other countries – whether developing, emerging or are better understood and more often taken already industrialised. into consideration. In general, the safety of dams is now very high, and there are substantial The overall aim of the technology roadmap series options to increase the capacity, efficiency and is to advance global development and uptake of environmental performance of old plants – and key technologies to achieve a 50% reduction in CO many opportunities to build new ones, especially in 2 emissions by 2050 (over 2005 levels). The roadmaps emerging and developing economies. will enable governments and their industry and financial partners to identify the steps needed and implement measures to accelerate required technology development and uptake. Introduction 7 Looking to the future, the most important drivers The IEA convened a first Hydropower Roadmap for hydropower development will continue to be: Workshop in Paris, France (26-27 May 2011) to z long and productive local generation capability initiate the work, with a broad agenda including and low life-cycle costs; environmental and financing issues. The Brazilian Electric Energy Research Center, CEPEL, hosted z proven reliability of electricity production, with a second workshop in Rio de Janeiro, Brazil (10- few service interruptions; 11 October 2011), with a focus on the Americas z safe operation, with minimum risks to and Asia. The IEA convened a third workshop in hydropower staff and the general public; Paris (9 May 2012) to discuss the shared vision z environmental and socially sustainable for hydropower deployment and key actions and development, providing climate change milestones. Finally, a short wrap-up session was mitigation; organised in Washington, DC (30 May 2012) in the z flexible operations, energy services enhancing margins of the meetings of the IEA Hydropower grid stability and enabling use of variable programme. renewables; This roadmap is organised in six major sections. z large-scale energy storage for seasonal load It starts with the status of hydropower today, balancing; revealing its diversity.1 It continues with a vision z provision of many non-energy services such for future deployment of hydropower, given its still as flood control, water supply and irrigation, undeveloped potential, detailing regional scales; especially in the context of growing freshwater this section includes considerations on the broader needs and adaptation to climate change; context of renewable deployment and the role of z upgrades, redevelopments and improvements to hydropower as an enabler for variable renewables. existing hydropower plants; The following section considers the dimensions of sustainability, detailing environmental issues, socio- z addition of hydropower facilities, where feasible, economic and public acceptance issues, sustainable to existing dams originally built to provide flood approaches to deployment, and the energy-water control, irrigation, water supply and other non- nexus. The fifth section reviews the economics energy purposes; and of hydropower – costs, support mechanisms and z energy security with local generation. financial challenges. The roadmap then looks at continuing and future technology improvements, before addressing the policy framework, listing Purpose, process and actions and milestones. It concludes by listing near- structure of this roadmap term actions for stakeholders. This roadmap aims to identify the primary actions and tasks that must be undertaken to accelerate 1. Note, however, that this roadmap does not include information hydropower development and deployment globally. on tidal and wave plants. Hydropower is a mature energy technology; most technical improvements today aim to minimise its possible negative environmental impacts and maximise its environmental benefits, while maintaining very high efficiency and acceptable costs. Hydropower plants have low running costs and shield end-users against fossil fuel price volatility, but their potentially extended technical life carries heavy initial investment costs. Hence, financing is possibly the most critical issue; its solution rests in large part on policy framework and market design. Governments, whether in developing, emerging or mature economies, thus bear a critical responsibility in enabling the deployment of hydropower. 8 Technology Roadmaps Hydropower