From 2021 to 2030, the world is expected to add about 230GW of new hydropower capacity

The International Energy Agency recently released a report that it is expected that from 2021 to 2030, the global installed capacity of hydropower will increase by 17%, or 230 GW
.
However, net installed capacity is expected to decrease by 23%
during this period compared to the previous decade.
The contraction was due to
slowing project development in China, Latin America and Europe.
However, growth in Asia Pacific, Africa and the Middle East partially offset these declines
.

Largest single market: China

China will remain the largest single hydropower market by 2030, accounting for 40%
of global capacity growth forecasted.
However, in recent years, China's share of new global hydropower increments has been declining
.
The pace of hydropower development in China has slowed
due to growing concerns about environmental impacts and the economic attractiveness of large-scale projects.
In India, the world's second-largest growth market, new long-term targets and fiscal incentives are expected to kick-start a large number of previously stalled projects
.

On the other hand, growing electricity demand and export opportunities are driving faster hydropower expansion
in Southeast Asia and Africa.
Laos and Nepal are developing electricity export projects
.
Sub-Saharan Africa is expected to have the third
highest growth in hydropower capacity in the world over the next decade due to its huge untapped potential and the need to increase electricity supply at low cost.

Hydropower development in Brazil has historically driven capacity expansion in Latin America, but it has slowed
due to limited economically viable sites, diverse needs, and environmental concerns.
Looking ahead, Colombia and Argentina will lead the growth
of hydropower in Latin America.
Turkey's hydropower development is strong and is expected to drive Europe's largest capacity expansion
in the coming years.
In North America, electricity export opportunities will spur action
to realize some of Canada's untapped hydropower potential.

Strongest participation: Chinese enterprises

By 2030, more than half of all new hydropower projects in Sub-Saharan Africa, Southeast Asia and Latin America will be built, financed, partially financed or owned
by Chinese companies.
China's role in hydropower development is greatest in sub-Saharan Africa, where it is expected to participate in nearly 70% of new installed capacity
by 2030.
These include the Ethiopian Renaissance Dam
, the largest hydropower project currently under construction on the continent.

In Asia (excluding India), nearly 45% of all hydropower plant capacity planned to be built by 2030 involves Chinese companies
.
Hydropower projects in Pakistan and Laos are expected to be financed or constructed
by Chinese companies.
In Latin America, more than 40% of hydropower expansion is expected to involve Chinese companies, including significant investments
in Argentina, Colombia and Peru.

Hydropower is the backbone of low-carbon power generation and today provides nearly half of the world's electricity
.
Hydropower contributes 55% more than nuclear and is also greater than all other renewable energy sources combined, including wind, solar photovoltaic, bioenergy and geothermal energy
.

In 2020, hydropower accounted for 17% of global electricity generation and is the third largest source
of electricity after coal and natural gas.
Over the past 20 years, the total installed capacity of hydropower worldwide has increased by 70%, but its share of total electricity generation has remained stable
due to the growth of wind, solar photovoltaic, coal and natural gas.

The most flexible energy source: hydropower

Since the 70s, emerging and developing economies have led global hydropower growth, largely through public sector investment
in large power plants.
Today, hydropower meets most of the electricity needs of 28 emerging and developing economies with a combined population of 800 million
.
In these countries and regions, hydropower offers a cost-effective way
to expand access to electricity.

However, in advanced economies, the share of hydropower in electricity generation has been declining, and power plants are aging
.
In North America, the average service life of hydropower plants is close to 50 years; In Europe, the average time frame is 45 years
.
These ageing facilities, despite providing affordable and reliable renewable electricity on demand for decades, need to be modernized to ensure they can contribute
to power security in a sustainable way for decades to come.

Hydropower plants also make a significant contribution
to the flexibility and safety of the power system.
Compared to other power plants such as nuclear, coal, and natural gas, many hydroelectric power plants can increase and decrease their power generation very quickly, and hydroelectric power plants can also be stopped and restarted
relatively smoothly.
This high degree of flexibility allows it to quickly adapt to changes in demand and compensate for fluctuations in other power supplies
.
This makes hydropower an important option
to support the rapid deployment and safe integration of solar PV and wind into power systems.
Hydropower can supply large amounts of low-carbon electricity on demand and is a key asset
in building a safe and clean power system.
Today, hydroelectric plants account for nearly 30% of the world's flexible electricity supply capacity, but they have the potential
to offer more.

Globally, about half of the hydropower economic potential remains untapped
.
The potential is particularly high in emerging and developing economies, at nearly 60 per cent
.
Throughout the life cycle of a power plant, hydropower provides the lowest greenhouse gas emissions per energy sourced, as well as multiple environmental benefits
.

The best means: policy support

Governments play an important role
in ensuring that hydropower potential is sustainably realized.
Strong sustainability standards and measures are needed to boost investor confidence and gain public acceptance
.
Today, environmental assessments for hydroelectric power plants can be long, costly and risky, which can discourage investment
.
Therefore, hydropower projects need to meet clear and widely accepted sustainability criteria to make them viable
.
Ensuring that hydropower projects adhere to strict guidelines and best practices minimizes sustainability risks while maximizing social, economic and environmental benefits
.
This approach also shortens the lead time
of the project.

The IEA stressed that policy measures that provide more certainty about future revenues can reduce investment risks and ensure the economic viability
of hydropower projects.
Since the 1950s, more than 90 per cent of hydropower plants have been developed
under conditions that provide certainty of income through power purchase guarantees or long-term contracts.
This has happened in both vertically integrated and liberalized electricity markets
.
Today, challenges such as complex permitting procedures, environmental and social acceptance, and long construction cycles can lead to higher investment risk
.
In advanced economies, the business case for hydropower plants has deteriorated
due to falling electricity prices and a lack of long-term revenue certainty.
Long-term visibility into revenue, especially for large hydropower projects with long lead times, can significantly reduce financing costs and improve project viability, thereby facilitating investment
.
This is especially important
when the private sector is involved.