Hydroelectricity

Countries and regions making notable progress to advance hydroelectricity include:

• China continues to lead in terms of capacity additions, with 8 GW added in 2023, equal to two-thirds of all global growth. Hydropower remains an important part of the 14th Five-Year Plan for Renewable Energy released in 2022, but capacity additions in 2023 and in the coming years are expected to remain significantly below levels observed in the past decade 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.
• 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. This should enable many hydropower plants to remain operational and modernize, however it is not expected to result in a significant capacity growth.
  

In 2023 global hydropower generation decreased by over 100 TWh (down over 2%) to 4 250 TWh. Generation decreased due to lower than average capacity utilisation factors in several hydropower-rich countries such as Canada, China, India, Viet Nam and the United States caused by persistent droughts.

Capacity additions in 2023 reached 13 GW, 50% below the average of the previous five years and 60% lower than the 32 GW added in 2022. China was responsible for two-thirds of the capacity growth; however, its additions were just one-third of 2022 levels, due to shrinking project pipeline. The deployment is expected to remain below level observed in the last decade due to the depleted availability of suitable sites in the most dynamic hydropower markets, especially China.

In 2023, after decades of maintain a leading position, hydropower became the second the largest renewable electricity technology by capacity, overtaken by solar PV. However, it still remains the largest source of renewable power generation, with 47% share in global production. Current capacity growth trends are not sufficient to place hydroelectricity on a trajectory consistent with the NZE Scenario. Reaching around 5 400 TWh of annual electricity generation by 2030 will require 3.5% average annual generation growth between 2023 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 over 40 GW of new hydropower plants need to be connected to the grid annually through to 2030, which is almost 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 in 2023 to about USD 50 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.