The International Energy Agency has released its World Energy Outlook 2023, which says “The energy world remains fragile but has effective ways to improve energy security and tackle emissions” and includes data on hydropower’s contributions.
“Energy markets, geopolitics, and the global economy are unsettled and the risk of further disruption is ever present,” the report said. While fossil fuel prices are down from their 2022 peaks, continued fighting in Ukraine is now accompanied by the risk of protracted conflict in the Middle East. The macroeconomic mood is downbeat, the global average surface temperature is already around 1.2°C above pre-industrial levels and greenhouse gas emissions have not yet peaked.
The emergence of a new clean energy economy, led by solar PV and electric vehicles (EVs), provides hope for the way forward. Investment in clean energy has risen by 40% since 2020. More than 500 GW of renewables generation capacity are set to be added in 2023 – a new record.
This new Outlook explores different scenarios that reflect current real-world conditions and starting points. The Stated Policies Scenario (STEPS) provides an outlook based on the latest policy settings, including energy, climate and related industrial policies. The Announced Pledges Scenario (APS) assumes all national energy and climate targets made by governments are met in full and on time. Much additional progress is still required to meet the objectives of the Net Zero Emissions by 2050 (NZE) Scenario which limits global warming to 1.5°C.
Key findings in the report are:
- We are on track to see all fossil fuels peak before 2030
- China has changed the energy world, but now China is changing
- New dynamics for investment are taking shape
- Meeting development needs in a sustainable way is key to moving faster
- Ample global manufacturing capacity offers considerable upside for solar PV
- A wave of new LNG export projects is set to remodel gas markets
- Affordability and resilience are watchwords for the future
- We need to go much further and faster, but a fragmented world will not rise to meet our climate and energy security challenges
References to hydropower are scattered throughout the report. For example, IEA said that hydropower resources in LAC and Africa could facilitate the integration of more solar PV. In addition, dispatchable low-emissions capacity – fossil fuel capacity with CCUS, hydropower, biomass power, nuclear, and hydrogen and ammonia-based plants – play a critical role in smoothing variability across seasons.
However, it’s not all rosy. EIA said the call on the tight gas market was exacerbated by a poor year for hydropower and nuclear output in Europe in 2022. This triple deficit meant that there was almost 160 bcm of “missing gas” to replace in 2022. In addition, aluminum production in China was disrupted by hydropower shortages.
Most of the flexibility required across all timescales today is provided by dispatchable thermal power plants and hydropower (including pumped storage). In IEA’s three future scenarios, much of the needed additional short-term flexibility is provided by batteries and demand response, especially after 2030. Thermal power plants and hydropower continue to provide most seasonal flexibility. The share of hydropower in the supply of short-term flexibility falls as needs increase rapidly, but it remains an important source of seasonal flexibility and is the main source of the seasonal balancing required after 2040.
Market designs and regulations need to ensure that the dispatch of pumped storage, reservoir hydropower and other forms of long-term energy storage is aligned with the long-term flexibility needs of the system, IEA said.
