Installed global hydropower capacity could reach 1,200 GW in 2022, report says

Rystad Energy research
Analysis of hydropower market investments, total generation (photo courtesy Rystad Energy)

The hydropower market this year could reach a global capacity of more 1,200 GW and investments climb to $36.3 billion, according to Rystad Energy research.

Hydropower is solidifying its position as the most popular renewable energy source, Rystad Energy said. Hydropower accounts for almost one-sixth of the world’s power generation, trailing only coal and natural gas. The industry’s contribution to power generation is nearly 60% higher than nuclear energy and greater than all other renewables combined, including wind, solar PV, bioenergy and geothermal. Power generated through hydropower rose slightly in 2021 to 4,414 TWh, up from 4,360 TWh in 2020, while 14 GW of capacity was added in 2021 and 17 GW in 2020.

Investments in the sector slowed somewhat before 2020 as other renewable sources such as wind and solar PV gained momentum, a situation exacerbated by delays to several major hydropower projects and some regions’ lack of policy changes. The industry is, however, experiencing a renaissance as countries are increasingly motivated to find suitable renewable options to decarbonize their energy supply.

Hydropower is the “backbone of low-carbon electricity generation” and has been rising since the 1970s, said Rysted Energy analyst Karen Satwani. Over the past two decades, the installed global capacity of hydropower has grown from 680 GW in 2000 to nearly 1,200 GW in 2021, a growth rate of more than 75%, she said.

China remains the world leader in total installed hydropower capacity with over 340 GW, more than triple the capacity of runner-up Brazil with 112 GW. The U.S. (84 GW), Canada (81 GW) and Russia (50 GW) round out the top-five list for hydropower capacity globally.

In recent years, Asian and South American countries, led by China and Brazil, have driven global capacity additions. Combined installed capacity in Asia has risen from 462 GW in 2017 to an expected 514 GW in 2022, and total capacity in South America has climbed from 175 GW to an expected 192 GW over the same period.

Most of the capacity additions until 2030 are expected to come from large projects in Asia and Africa. For example, China’s 16 GW Baihetan hydropower project, which began operations from two of its 16 units in June 2021, will be fully operational later this year. In Africa, installed capacity is expected to grow at a combined annual growth rate of 2.5% from 2017 to 2023, driven by Ethiopia, Mozambique and Uganda.

Most of the large projects in Asia and Africa are managed by state-owned companies. Rystad Energy said it expects a slowdown in the pace of hydropower development in China over the coming years due to growing concerns over environmental impact and the shrinking availability of economically attractive sites for large projects. However, India’s new long-term targets and financial incentives are expected to unlock a large pipeline of previously stalled projects as the government aims to boost hydropower capacity by about 55% this decade and reach 73 GW by 2030. No significant capacity additions are expected in North America and Europe for at least two years. Fleet modernization are expected to be a priority on both continents during this decade.

This decade, a considerable portion of investments will be spent on modernizing aging plants in advanced economies. In addition, significant investments are required for existing infrastructure, including upgrades, replacements and the addition of turbines. Most of the spending on modernization will be in North America, Europe and Eurasia, where most of the world’s aging fleet is located. Investments will be required to restore performance and adapt plants to operating conditions that have changed since they were built. Overall, the proportion of investments spent on modernizing and maintaining existing hydropower facilities and infrastructure will be significantly higher than spending on the construction of new power plants in younger markets.

Rystad Energy is an independent energy research and business intelligence company providing data, tools, analytics and consultancy services to the global energy industry.

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