Hydropower Special Market ReportMarket analysis and forecasts to 2030

Hydropower is the forgotten giant of the electricity sector

TWhLow-carbon electricity generation

Flexible power capacity

5 000
Others4 000

Hydropower

3 000
Gas
2 000
1 000

Coal0
Hydropower Nuclear

Wind & PV

Otherrenewables

Hydropower is the backbone of low-carbon electricity generation, providing almost half of it worldwide today, andmakes a major contribution to the flexibility and security of electricity systems.
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Growth in India & ASEAN partly offsets declines in China

GW

Net hydropower capacity additions

Hydropower capacity growth by plant type (2021-30)

400

100%

350

90%
80%

30070%

25060%

20050%

15040%
30%

100

Run ofriver
Reservoir
PumpedStorage

20%

50

10%

00%
19912000

China

Unclassified

Europe,Eurasia,
N. America

20012010
Latin
America

Asia
Pacific

20112020
Africa &Middle
East

20212030% of emerging &developing countries (right axis)

Reservoir plants lead the expansion by increasing electricity access cost-effectively, providing export opportunities
and multi-purpose use of dams. The need for flexibility stimulates strong expansion of pumped hydro plants.
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Page 3

Public sector role in hydropower remains key

100%

400
350

80%
300
250

60%

Average plant size

Share of capacity additions

Hydropower capacity additions by ownership profile and size

PrivatePublic

200
40%

150

100

Publicaveragesize (right)

20%
500%

0
2000-20102011-2020

Privateaveragesize (right)

2021-2030

The involvement of the public sector in large plants helps mitigate investment risks associated with permitting, social
acceptance and long construction times, while the private sector deploys smaller plants with low risks.
IEA 2021. All rights reserved.

Page 4China backs over half of new hydropower plants in developing world% Chinese involvement

Share of hydropower growth with assistance from Chinese banks or companies, 2021-30
100%
90%
Own

80%
70%

Finance

60%
Partially
Finance

50%
40%
30%

Financeand build

20%

Build

10%
0%
Sub-Saharan Africa

Asia-Pacific (excluding India)

Latin America

Chinese state-owned enterprises bring affordable finance and the experience of building large projects. They also
share project risks with the host country.
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Page 5

Hydropower’s flexibility role is critical in integrating wind & solar PV
Storage capabilities of hydropower plants and batteries (1 full cycle)

Hydro reservoir equivalent
electricity storage capabilities
1 500 TWh

PSH electricity storage capabilities
8.5 TWh

Battery electricity storage
capabilities (incl. EVs)
0.66 TWh

With low operational costs, existing reservoir hydropower plants are the most affordable source of flexibility today,
while pumped storage and battery technologies are increasingly complementary in future power systems.
IEA 2021. All rights reserved.

Page 6More investment is needed to modernise an ageing hydropower fleet
USD billion

Hydropower investment in new plants and modernising existing fleet
800

Modernisation
investment
needs

700
600
500

Modernisation

400
300

200
New power

1000
Main case2011-20with investment needs foraging plants
2021-30

By 2030, more than 20% of the global fleet’s generating units will be over 55 years old. Modernising all ageing plants
would require investment of USD 300 billion, more than double the amount in our forecast.
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Page 7

Faster hydro growth is possible but net zero requires higher ambition

GW

Net hydropower capacity additions, 2021-30
6005004003002001000
Main caseAccelerated case

Net ZeroIn our accelerated case, growth is 40% higher thanks to improvements in policy & market design, such as streamlining ofpermitting, increasing affordable financing, and providing better visibility on revenues for projects under development.
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Page 87 policy considerations• Move hydropower up the energy and climate policy agenda• Enforce robust sustainability standards for all hydropower development with streamlined rules andregulations• Recognise the critical role of hydropower for electricity security and reflect its value throughremuneration mechanisms• Maximise the flexibility capabilities of existing hydropower plants through measures to incentivise
their modernisation• Support the expansion of pumped storage hydropower• Mobilise affordable financing for sustainable hydropower development in developing economies• Take steps to ensure that the value of the multiple public benefits provided by hydropower plants ispriced inIEA 2021. All rights reserved.

Page 9

Report: https://www.iea.org/reports/hydropower-special-market-report

Data explorer: https://www.iea.org/articles/hydropower-data-explorer

IEA 2021. All rights reserved.

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IEA 2021. All rights reserved.

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