Hydroelectricity

Countries and regions making notable progress to advance hydroelectricity include: 

• China continues to lead in terms of capacity additions, with 24 GW added in 2022, equal to three-quarters of all global growth. Hydropower remains an important part of the 14th Five-Year Plan for Renewable Energy released in 2022, but capacity additions are expected to slow down in the coming years due to a diminishing number of suitable sites and environmental constraints. 
• India is continuing to develop several large hydropower projects, with significant capacity expected to come online in the coming years. Hydropower is one of the crucial technologies for fulfilling a commitment to reach 500 GW of non-fossil electricity capacity in 2030. 
• Europe commissioned almost 2 GW of pumped storage hydropower capacity in 2022, the largest amount since at least 1990. Two projects in Switzerland and Portugal aim to facilitate integration of solar PV and wind. 
• In August 2022, the United States passed the Inflation Reduction Act, which increases and extends support in the form of tax credits for hydropower technologies. 
  

In 2022 global hydropower generation increased by almost 70 TWh (up close to 2%) to 4 300 TWh. Generation increased thanks to strong capacity deployment in 2021-2022, but the global capacity utilisation factor remains below historical levels due to persistent droughts in hydropower-rich countries such as Canada, China, Türkiye and the United States, as well as in western Europe.  

Capacity additions in 2022 reached 32 GW, 40% higher than the average of the previous five years but lower than the 35 GW added in 2021. China was responsible for three-quarters of the capacity growth, thanks to the commissioning of several large-scale projects. However, the current project pipeline indicates a slowdown in the coming years due to the depleted availability of suitable sites in the most dynamic hydropower markets, especially China.  

Although hydropower remains the largest renewable electricity technology by capacity (38% of renewables total) and generation (50%), current capacity growth trends are not sufficient to place it on a trajectory consistent with the NZE Scenario. Reaching around 5 500 TWh of annual electricity generation by 2030 will require almost 4% average annual generation growth between 2022 and 2030, which may be especially challenging considering accelerating disturbances to water availability caused by climate change and an ageing hydropower plants fleet. On the capacity side, an average of almost 50 GW of new hydropower plants need to be connected to the grid annually through to 2030, which is about twice the average of the last five years. Much greater effort globally, especially in developing and emerging markets, will be required to achieve that pace of growth. 

With hydropower fleets in many advanced economies dating from the large construction wave of the 1960s to the 1980s, almost 40% (476 GW) of the global fleet is at least 40 years old (the average age is 33). When hydropower plants are 45-60 years old, major modernisation and refurbishment are required to maintain or improve their performance and increase their flexibility. In addition to renewing major equipment such as turbines and generators, investing in modernisation and digitalisation can significantly increase plant flexibility, make the plant safer, and resolve environmental and social problems such as inadequate drought management and flood control, depending on the country’s regulations. 

Advance planning is crucial for hydropower plant refurbishment, as waterflows – in addition to environmental and water regulations – may have changed since the plant first became operational and may not allow the plant to operate at historical levels. Market regulators should ensure proper incentives for plant operators to build a business case for much needed refurbishment, or risk a decrease in the performance of hydropower plants, which are an extremely important piece of clean power systems, thanks to their flexibility. 

Hydropower is a well-established renewable power technology, with almost 150 years of history. Innovation in this field never stopped, however, and is currently primarily focused on increasing the flexibility of plants through changes in turbine design and operational patterns, and through digitalisation. The main aim is to enable hydropower plants to better fulfil the needs of modern power systems with more variable demand and increasing penetration of intermittent renewables. Hydropower plants, especially of the reservoir type, are the most suited to providing the power system with much needed emissions-free flexibility. 

Public-sector involvement has been critical for hydropower expansion. However, renewable energy policy attention in the past two decades has focused primarily on increasing the deployment of wind and solar PV technology (and lowering their cost), mainly through support schemes such as installation targets, financial incentives and long-term power purchase contracts.  

More than 100 countries have introduced short- and long-term targets and financial incentives for wind and solar PV, but fewer than 30 have policies targeting new and existing hydropower plants. As hydropower projects have longer pre-development, construction and operational timelines than other renewable energy technologies, investment risks are higher, requiring specific policy instruments and incentives as well as a longer-term policy perspective and vision.  

Sustainably developed hydropower plants need to be recognised as renewable energy sources. Governments should include large and small hydropower in their long-term deployment targets, energy plans and renewable energy incentive schemes, on a par with variable renewables.  

Investment in hydropower capacity continued its downward trend, decreasing by over 10% in 2022 to less than USD 65 billion. Taking into consideration the projects pipeline, further decreases in investment are expected in the coming years, highlighting a need for much more effort to put hydropower on track with the NZE Scenario.  

Beyond the global renewable energy initiatives that include hydropower (see Renewables), other international organisations, collaboration programmes, groups and initiatives aim to accelerate renewable power use around the world, including hydropower:  

• The IEA Hydropower Technology Collaboration Programme aims to increase awareness, knowledge and support for the sustainable use of water resources for hydropower development and management.