3.2 The Outlook for Hydropower

With less than one-quarter of the world's technical hydropower potential in operation, the prospects for growth in hydro capacity are good. However, long lead times, project design, planning and approval processes, as well as the time required to secure financing for these large multi-year construction projects, mean that capacity growth is more likely to be slow and steady than rapid.

The conventional hydropower activities focus on adding new generating capacity, improving the efficiency/ capacity at existing hydroelectric facilities, adding hydroelectric generating capacity to existing non-powered dams and increasing advanced pumped-storage hydropower capacity.

Emerging economies in Asia (led by China) and Latin America (led by Brazil) have become key markets for hydropower development, accounting for an estimated 60% of global activity (IHA, 2011). OECD economies in North America and Europe are focussing on the modernisation of existing facilities, often leading to increased capacity or generation capability, as well as new pumped storage facilities. However, new greenfield capacity is being added in relatively modest quantities.

China added 16 GW during 2010 to reach an estimated 210 GW of total hydro capacity. Brazil brought around 5 GW on stream in 2010, bringing its existing capacity to 81 GW while a further 8.9 GW is under construction (IHA, 2011 and IHA, 2012). In South America as a whole, 11 GW is planned and a further 16.3 GW is at the feasibility stage (IHA, 2012). In Western Asia, there is a total of 15.5 GW of capacity under construction with India accounting for 13.9 GW and Bhutan for 1.2 GW (IHA, 2012).

Canada added 500 MW of capacity in 2010, raising total installed hydropower capacity to 76 GW. However, the future should see higher rates of capacity coming on stream as more than 11 GW of new projects were under construction in Canada by early 2011. An estimated 1.3 GW of this is due to become operational before the end of 2012 (IHA, 2011 and REN 21, 2011). Canada has a total of 21.6 GW of hydropower capacity at different stages of planning or construction (IHA, 2012). Development in the United States has slowed recently due to the economic difficulties in North America. However, total installed capacity reached 78 GW in 2010 (to which must be added 20.5 GW of pumped storage), producing 257 TWh during the year, up from 233.6 TWh in 2009.

The largest projects completed in 2010 included the 1.1 GW Nam Theun 2 hydropower plant in Laos, China's 2.4 GW Jin'anqiao plant, Brazil's 0.9 GW Foz do Chapeco plant and two facilities (0.5 and 0.3 GW) in Ethiopia (IPCC, 2011).

Interest in pumped storage is increasing, particularly in regions and countries where solar PV and wind are reaching relatively high levels of penetration and/or are growing rapidly (IHA, 2011). The vast majority of current pumped storage capacity is located in Europe, Japan and the United States (IHA, 2011). About 4 GW of new pumped storage capacity was added globally in 2010, including facilities in China, Germany, Slovenia and the Ukraine. The central estimate of total pumped hydro capacity at the end of 2010 was approximately 136 GW, up from 98 GW in 2005 (IHA, 2011).

Worldwide, the installed capacity of small hydro is 61 GW (Catanase and Phang, 2010). Europe is a market leader in small hydropwoer technologies, and it is the second highest contributor to the European renewable energy mix. The European Commission's Renewable Energy Roadmap identifes small hydro power as an important ingredient in the EU's future energy mix.

China has ambitious plans that may not all be realised to start construction on 140 GW of capacity over the next five years (Reuters, 2011). In collaboration with Iran, China also plans to build the world's tallest dam, a 1.5 GW project in Iran's Zagros Mountains. Brazil plans two major projects in the Amazon region, including a 3.2 GW reservoir project due for completion in late 2011 (Hydro World, 2011). In North America and Europe, new plants are also under construction, but the focus is on modernising existing plants and adding pumped hydro storage capacity.

Long-term global scenarios for hydropower

A 2010 report from the International Energy Agency (IEA) projected that global hydropower production might grow by nearly 75% from 2007 to 2050 under a business-as-usual scenario, but that it could grow by roughly 85% over the same period in a scenario with aggressive action to reduce GHG emissions (IEA, 2010c). This is short of the IEA's assessment of the realistic potential for global hydropower, which is a two- to three-fold increase in generation over today's level. They estimate that the majority of the remaining economic development potential is located in Africa, Asia and Latin America (IEA, 2008 and IEA, 2010c). The IEA notes that, while small hydropower plants could provide as much as 150 GW to 200 GW of new generating capacity worldwide, only 5% of the world's small-scale hydropower potential has been exploited (IEA, 2008).

A review of the literature examining the potential contribution of renewable energy to climate change mitigation scenarios by the IPCC identified a median increase in the amount of hydropower generation of 35% by 2030 and 59% by 2050. However, the range of results in the scenarios examined was very wide, with the 25th percentile of results indicating a 34% increase over 2009 by 2050, compared to a 100% increase for the 75th percentile (IPCC, 2011).