Hydropower Special Market Report Analysis and forecast to 2030 INTERNATIONAL ENERGY AGENCY The IEA examines the IEA member IEA association full spectrum countries: countries: of energy issues including oil, gas and Australia Brazil coal supply and Austria China demand, renewable Belgium India energy technologies, electricity markets, Canada Indonesia energy efficiency, Czech Republic Morocco access to energy, Denmark Singapore demand side Estonia South Africa management and Finland Thailand much more. Through France its work, the IEA Germany advocates policies that Greece will enhance the Hungary reliability, affordability Ireland and sustainability of Italy energy in its 30 member countries, Japan 8 association countries Korea and beyond. Luxembourg Mexico Netherlands New Zealand Norway Revised version, Poland July 2021. Information notice Portugal found at: www.iea.org/ Slovak Republic corrections Spain Sweden Switzerland Turkey United Kingdom Please note that this publication is subject to United States specific restrictions that limit its use and distribution. The The European terms and conditions are available online at Commission also www.iea.org/t&c/ participates in the work of the IEA This publication and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Source: IEA. All rights reserved. International Energy Agency Website: www.iea.org Hydropower Special Market Report Abstract Abstract The first ever IEA market report dedicated to hydropower highlights the economic and policy environment for hydropower development, addresses the challenges it faces, and offers recommendations to accelerate growth and maintain the existing infrastructure. This report presents ten-year capacity and generation forecasts for reservoir, run-of-river and pumped storage projects across the globe, based on bottom-up country and project-level monitoring. PAGE | 1 IEA. All rights reserved. Hydropower Special Market Report Foreword Foreword A little over two years ago, at the 7th World Hydropower Congress in Paris, I underscored the huge untapped potential of hydropower – the world’s largest source of clean and flexible electricity generation – particularly in emerging and developing economies. I said then that the voice of hydropower was not being heard loudly enough, and I promised that the IEA would be a strong voice for the hydropower community, notably by making hydropower the focus of our Renewables 2020 market report. We did not know then that a global pandemic in early 2020 would deliver a shock of historic proportions to our societies and economies. Today, I’m proud that despite the disruptions we faced in 2020, we are now delivering on our promise of two years ago with this Hydropower Special Market Report. And I thoroughly believe it is worth the wait. This special report is the world’s first study to provide detailed global forecasts to 2030 for the three main types of hydropower: reservoir, run-of-river and pumped storage facilities. The report shows that some things have not changed with the Covid-19 crisis. It finds that there is still a huge amount of hydropower potential worldwide that remains untapped despite being economically viable. This potential is particularly strong in emerging economies and developing economies, where demand for new energy supplies continues to expand rapidly and many people still lack access to reliable energy services. If it is developed sustainably, hydropower can bring major benefits to energy systems in many countries. The report’s forecast unfortunately shows that, based on today’s policy settings, the growth of hydropower globally is set to slow this decade. This is something the world can ill afford. As our report highlights, hydropower is the forgotten giant of low-carbon electricity; it produces more of it than any other source worldwide. And hydropower’s critical contribution clean energy transitions is not limited to the huge amounts of renewable electricity it produces – its capabilities for providing flexibility and storage for electricity systems are also unmatched, making it a natural enabler for integrating greater amounts of wind and solar power. This rare combination of attributes cannot be ignored. The IEA’s recent Net Zero by 2050: A Roadmap for the Global Energy Sector makes it clear that the 2020s have to be the decade of massive deployment of all clean and efficient energy technologies if the world is to have a chance of limiting global warming to 1.5 °C. PAGE | 2 IEA. All rights reserved. Hydropower Special Market Report Foreword Hydropower is unquestionably one of those technologies, but governments must devote significant policy attention to enabling it to overcome some of the major difficulties it currently faces. And all hydropower projects need to meet high standards for sustainability to ensure the energy and climate benefits they can bring are not undermined by negative environmental and social side effects. The gap between rhetoric and action remains a major issue today. Despite encouraging pledges by more and more governments to reach net-zero emissions by mid-century, climate ambitions are not yet backed up by credible policies to drive down emissions. One concrete step governments can take to start closing this gap is to put hydropower squarely back on the energy and climate policy agenda. That is one of seven priority areas for action set out in this report, which I hope will prove useful for policy makers seeking to build a clean and secure energy future. Finally, I would like to thank Heymi Bahar and the team of IEA colleagues who have worked extremely hard, with the support of Paolo Frankl, to fulfil the promise I made to the hydropower community in May 2019. Dr Fatih Birol Executive Director International Energy Agency PAGE | 3 IEA. All rights reserved. Hydropower Special Market Report Acknowledgements Acknowledgements, contributors and credits This study was prepared by the Renewable Energy Division in the Directorate of Energy Markets and Security. Heymi Bahar was the project manager and directed the report. He designed and co-ordinated the study along with Yasmina Abdelilah, who also led the analytical framework. The report benefited from analysis, drafting and input from multiple colleagues. The authors of the report were, Yasmina Abdelilah, Heymi Bahar, François Briens, Piotr Bojek, Trevor Criswell, Kartik Veerakumar and Grecia Rodríguez who was also responsible for data management. The report also benefited from analysis, data and input from Chenlu Cheng, Andrea Dertinger and Kazuhiro Kurumi. Craig Hart and Peerapat Vithayasrichareon from the IEA Renewables Integration and Secure Electricity (RISE) Unit contributed to the analysis and drafting on flexibility. Jinsun Lim and Luca Lo Re from the Energy and Environment Division conducted the analysis and drafted the section on the impact of climate change on hydropower generation. Paolo Frankl, Head of the Renewable Energy Division, provided strategic guidance and significant input to this work. Valuable comments, feedback and guidance were provided by other senior management and numerous other colleagues within the IEA, in particular, Keisuke Sadamori, Laura Cozzi, Laszlo Varro and Peter Fraser. Other IEA colleagues who have made important contributions to this work include: Lucila Arboleya Sarazola, Praveen Bains, Davide d’Ambrosio, Pablo Gonzalez, Shai Hassid, César Alejandro Hernández Alva, Randi Kristiansen, Ryszard Pospiech and Brent Wanner. Timely data from the IEA Energy Data Centre were fundamental to the report, with particular assistance provided by Mathilde Daugy, Julia Guyon, Nick Johnstone, Samantha Mead, Julian Prime, Céline Rouquette, Roberta Quadrelli and Aloys Nghiem and the data science team for their work on scrappers. This work benefited from extensive review and comments from the IEA Standing Group on Long-Term Co-operation, IEA Renewable Energy Working Party, PAGE | 4 IEA. All rights reserved. Hydropower Special Market Report Acknowledgements members of the Renewable Industry Advisory Board (RIAB) and experts from IEA partner countries and other international institutions. The work also benefited from feedback by the IEA Committee on Energy Research and Technology. Special thanks go to the IEA Hydropower Technology Collaboration Programme, and the International Hydropower Association for their valuable guidance on the design process and extensive review comments. Valuable input was provided by Alex Beckitt, Niels Nielson, and Atle Harby (IEA Technology Collaboration Program on Hydropower), Alex Campbell, Joao Costa, Samuel Law, David Samuel, and Nicholas Troja (International Hydropower Association), Angela Africano (GE Renewables), and Richard Taylor (RMT Renewables Consulting Ltd). Many experts from outside of the IEA provided valuable input and reviewed this report. They include: Countries Canada (Natural Resources Canada), China (Energy Research Institute – ERI), European Union (European Commission – DG Energy), Japan (METI, Institute of Energy Economics), Norway (Ministry of Petroleum and Energy), Switzerland (Federal Office of Energy), Turkey (Ministry of Energy), United States (Department of Energy) and Zambia (Ministry of Energy). Other organisations Andritz, Australian National University, BBK, École polytechnique fédérale de Lausanne (EPFL), Électricité de France (EDF), Electric Power Development Company (JPOWER), Electric