- Average investment costs for large hydropower plants with storage typically range from as low as USD 1 050/kW to as high as USD 7 650/kW while the range for small hydropower projects is between USD 1 300/kW and USD 8 000/kW. Adding additional capacity at existing hydropower schemes or existing dams that don't have a hydropower plant can be significantly cheaper, and can cost as little as USD 500/kW.
- Annual operations and maintenance costs (O&M) are often quoted as a percentage of the investment cost per kW. Typical values range from 1% to 4%. Large hydropower projects will typically average around 2% to 2.5%. Small hydropower projects don't have the same economies of scale and can have O&M costs of between 1 % and 6%, or in some cases even higher.
- The cost of electricity generated by hydropower is generally low although the costs are very site-specific. The levelised cost of electricity (LCOE) for hydropower refurbishments and upgrades ranges from as low as USD 0.01/kWh for additional capacity at an existing hydropower project to around USD 0.05/kWh for a more expensive upgrade project assuming a 10% cost of capital. The LCOE for large hydropower projects typically ranges from USD 0.02 to USD 0.19/kWh assuming a 10% cost of capital, making the best hydropower power projects the most cost competitive generating option available today. The LCOE range for small hydropower projects for a number of real world projects in developing countries evaluated by IRENA was between USD 0.02 and USD 0.10/kWh, making small hydro a very cost competitive option to supply electricity to the grid, or to supply off-grid rural electrification schemes. Very small hydropower projects can have higher costs than this and can have an LCOE of USD 0.27/kWh or more for pico-hydro systems.
- Significant hydropower potential remains unexploited. The technical potential is some 4.8 times greater than today's electricity generation. The total worldwide technical potential for hydropower is estimated at 15 955 TWh/year.
- Hydropower, when associated with storage in reservoirs, contributes to the stability of the electrical system by providing flexibility and grid services. Hydropower can help with grid stability, as spinning turbines can be ramped up more rapidly than any other generation source. Additionally, with large reservoirs, hydropower can store energy over weeks, months, seasons or even years. Hydropower can therefore provide the full range of ancillary services required for the high penetration of variable renewable energy sources, such as wind and solar.
TABLE 1: TYPICAL INSTALLED COSTS AND LCOE OF HYDROPOWER PROJECTS
Note: The levelised cost of electricity calculations assume a 10% cost of capital