Delivering Better Hydro

The International Hydropower Association addresses global issues facing hydropower and the focus to deliver “better hydro” worldwide.

By Alex Trembath

In a world facing the pressures of population growth, complex water and energy challenges, and a changing climate, the tangible benefits hydropower can provide to society are possibly greater today than they ever have been.

Hydropower can only deliver to its full potential if developed responsibly and in collaboration with a broad range of stakeholders. A much richer dialogue within the hydropower community and advances in technology have enabled rapid progress in key areas such as reporting on hydropower’s carbon footprint, ensuring projects are climate resilient, and assessing sustainability. However, many challenges remain.

On May 9 to 11, the 2017 World Hydropower Congress in Addis Ababa, Ethiopia, will bring together representatives of governments, business, finance, civil society, academia and industry to build a common understanding of how better hydro can be delivered.

Hydropower in 2017: Where are we now?

The continuing increase in demand for reliable, clean and affordable power is driving growth in hydropower, as countries seek to meet the carbon reduction goals set out in the Paris Agreement. In 2016, an estimated 30.7 GW of new hydro capacity was installed worldwide.

It is particularly noteworthy that the above figure includes 6.2 GW of pumped storage, almost double the amount installed in the previous year. This signifies growing recognition of hydropower’s role in supporting energy systems, in particular balancing variable renewables such as wind and solar.

We are also seeing significant steps forward in global interconnections, as transmission systems are advanced on regional and intercontinental scales to enable the massive growth in renewable technologies to meet energy demand. For example, discussions are under way among energy companies in China, Japan, Russia and South Korea regarding the creation of an “Asian Super Grid,” in which an ultra-high-voltage grid would link electric grids across regions, countries and continents to transmit electricity generated from regions with abundant clean, renewable sources like hydropower.

Challenges and opportunities of climate change

The growing worldwide momentum to address the challenges of climate change is at the heart of the drive for renewables. Changing climatic conditions have the potential to both positively and negatively impact the hydropower sector in the future. Financial institutions are seeking to address climate-related risk by ensuring that projects are planned and operated to be resilient to climate change.

What is needed for the hydropower sector is a clear set of climate resilience guidelines that can ensure both future and existing hydropower projects are resilient in the face of the uncertainty regarding future climate change and natural disasters.

There is a need to communicate climate resilience and adaptation measures to investors in a simple and clear manner. The World Bank has identified this need and has launched a new study to develop a set of guidelines that can ensure projects are resilient and, where possible, are designed to take best advantage of any opportunities created by the direct effects of climate change, as well as to ensure projects will be safe and reliable and can provide adaptation services to incentivize policy and investment.

At a meeting hosted by World Bank in February 2017, sector experts met and agreed on the vision for what these guidelines should include. Covering practical risk assessment and mitigation, the guidelines should be recognized by investors and multilateral organizations. Moreover, one Climate Bonds Initiative eligibility criterion for financing hydropower projects will require measurable evidence of climate resilience.

Making better hydro happen

With an ever-increasing focus on ensuring that hydropower projects are built in the right way and in the right place, utilizing all its multiple benefits, momentum is growing for the establishment of a support facility for hydropower project preparation. Such a facility would optimize private-sector engagement by managing a revolving fund that would assist in the selection of the most appropriate project type and location according to the needs of the country or region.

By incorporating international good practice in developing project blueprints, the facility would also help ensure that projects are built to the highest environmental standards and are compatible with the Paris Agreement climate goals. This would allow developers access to the growing green bond market, which nearly doubled in value in 2016, reaching a record US$81 billion in issuances.

The 2017 World Hydropower Congress will address this topic with a set of high-level sessions and bilateral meetings.

Hydropower can provide significant tangible benefits but it must be developed responsibly and in collaboration with a broad range of stakeholders.

Digitization: New opportunities

An increasing number of hydro facilities have equipment reaching the end of its asset life, such as generator windings, rotors and turbine components. By 2050, it is estimated that roughly half of the entire fleet of existing hydropower equipment will require modernization.

The upgrading and replacement of turbine equipment at existing stations represents about 15% of investment in the hydropower sector. Modernization projects can offer opportunities for improved efficiency and increased capacity in some cases but must be done sustainably and with consideration for climate resilience. Asset management decision-making tools are being used more globally to assist utilities in decisions, where a “tipping point” decision is needed between asset replacement or modernization to extend the life of the project.

The digitization of hydropower plants, control systems and surrounding networks is an emerging trend that promises to optimize asset management and performance. For example, hydropower systems are increasingly being digitized to allow hydro to work together with other renewable resources to provide increased flexibility and enhanced control for ancillary services, such as frequency control and balancing services.

Other digital innovations include cybersecurity, plant and fleet optimization, outage management, condition monitoring equipment and energy forecasting. Together, these innovations are providing hydropower asset owners with actionable insights from data to increase the value of hydropower assets.

New reporting mechanism for hydro’s carbon footprint

An international research initiative has developed a framework for calculating the net greenhouse gas emissions of freshwater reservoirs. To accurately account for hydropower’s carbon footprint, pre-impoundment emissions specific to each reservoir will now be considered, as well as the multiple services provided by the reservoir.

As hydropower financiers and development banks are seeking to further refine guidelines on eligibility criteria for sustainable and green hydropower, there exists a significant risk that hydropower may be excluded from some financing and investment mechanisms due to the perceived GHG emissions from reservoirs.

The new conceptual approach has led to the development of the G-res tool, which will be launched at the 2017 World Hydropower Congress. The tool will provide estimates of net GHG emissions from planned and existing reservoirs, contributing a much more consistent estimate of hydropower’s GHG footprint, while establishing hydropower projects on a level playing field with other renewable energy resources for access to premium markets and “green” investments.

Advances in assessing project sustainability

The Hydropower Sustainability Assessment Protocol has become broadly recognized as the primary tool for evaluating sustainability performance, having been implemented worldwide. The range in the tool’s application has grown, from full assessments through to guided internal assessments that are playing a strong role in building internal capacity.

New initiatives such as green and climate bonds are increasingly recognizing the protocol. For example, the Barclays MSCI Green Bond Index lists a published protocol assessment meeting as “basic good practice” in its eligibility criteria. The Climate Bonds Initiative is working with a multi-stakeholder group as it develops its own eligibility criteria.

This evolution in protocol use has pointed to the need to develop further complementary derivatives to enable practical application while protecting the strong quality control elements of the tool. Two priorities for its evolution are an environmental and social derivative focusing on fundamental sustainability topics and the development of international industry good practice guidelines.

2017: Charting the course for better hydro

The 2017 World Hydropower Congress takes place for the first time in Africa and will focus on delivering better hydro and, ultimately, better development for all. The event will help the sector set the course for hydropower development and operations over the coming decade, with the aim of ensuring reliable and resilient water and energy systems for all.

The UN Sustainable Development Goals and Paris Agreement will provide a powerful background for discussions between business leaders, policy makers, experts, researchers, non-governmental organizations and civil society. The congress will be an important milestone in ensuring hydropower can make the greatest possible contributions toward the sustainable development goals and other international commitments, while managing the challenges of a changing climate.

Plenary and focus sessions will delve into specific aspects of better hydro, from long-distance transmission and regional interconnections to water security and sustainability assessment. More than 100 high-level speakers will explore a range of perspectives and examine how initiatives of government, businesses, finance, civil society and academia can advance sustainable development.

The congress is organized with the support of the African Union Commission, UN Economic Commission for Africa and World Bank Group. Find out more and register at www.hydropower.org/congress.

This article contains extracts from 2017 Key Trends in Hydropower, which analyzes data on new installed capacity and the most significant developments in the sector. You can download the briefing and other hydro publications at www.hydropower.org/publications.

Alex Trembath is communications manager with the International Hydropower Association.