Hydropower Market Report

By Elizabeth Ingram

Each year in this issue of Hydro Review, we look to the future of the hydropower market in the U.S. and Canada. The sources we used to inform our predictions of the future this year are the International Energy Administration’s (IEA) World Energy Outlook 2016, U.S. Department of Energy’s (DOE) Hydropower Vision and Canada’s Energy Future 2016 from Canada’s National Energy Board.

To understand the hydro future in these two countries, it is important to have a good view of global trends. On a long-term view, IEA says cumulative global investment in hydropower from 2016 to 2040 is expected to be $1.7 trillion under its New Policies Scenario (the central scenario in its World Energy Outlook 2016) and $2.3 trillion under its 450 Scenario (consistent with a 50% chance of limiting global warming to 2 degrees Celsius).

For context, “Renewables contributed 23% of global electricity supply in 2014 (the most recent year for which comprehensive statistics are available), of which more than 70% was from hydropower and 17% from variable renewables,” IEA says in its report. In addition, in the future, “Hydropower remains the most important contributor to low-carbon power, [with] output increasing by more than half in all scenarios, with the biggest increase (3,000 TWh) and highest market share (20%) occurring in the 450 Scenario.”

However, with a projected significant increase in non-hydro renewables being added globally, storage mechanisms are needed to stabilize the grid. And, as IEA says, “Pumped storage hydropower continues to dominate the provision of large-scale energy storage.” In fact, “[Pumped storage hydropower plants] still comprise the majority of planned power storage deployments today: 27 GW of pumped storage plants are expected to come online in the next ten years, mainly in China, the United States and Europe,” according to the IEA report.

With the above context, let’s look at where hydropower is headed in the U.S. and Canada in 2017 … and beyond.

Presenting the data

Most of the data in this section comes from the DOE’s Hydropower Vision report, released last July at HydroVision International 2016.1

As Figure 1 indicates, new hydropower generation capacity in the U.S. will grow between now and 2050, but the rate of growth varies greatly depending on a variety of factors. The highest growth occurs with a combination of advanced technology, low cost finance, critical habitat (ecologically sensitive areas) and high fossil fuel cost.

With regard to pumped storage in the U.S., the scenario is even more drastic (see Figure 2). IEA says, “Today more than 30 GW of storage capacity is installed in the United States, the vast majority of which is pumped hydro storage.” Per the Hydropower Vision report, under a business as usual scenario, new pumped storage capacity is not expected to be developed. The maximum rate of development (about 55 GW by 2050) is anticipated to occur with a combination of advanced technology, low cost finance and high fossil fuel cost.

A third – significant – area where hydro capacity is expected to grow in the U.S. is through upgrades of the existing hydropower fleet. As Figure 3 shows, significant potential exists, with nearly 1,800 plants having upgrade potential that totals 6,856 MW. This equates to growth of about 9%.

Consequent to all the potential growth in new generation mentioned above, total electricity generation from hydropower could grow significantly by 2050 (see Figure 4). Under the scenario of advanced technology, low cost finance and critical habitat, total generation in TWh could reach nearly 400 TWh.

Both the IEA and DOE reports discuss Canada, but they do not give specific projections for hydropower. IEA does include Canada in a list of countries that are “in a league of their own when it comes to the share of electricity generated from renewable sources.”

For specific Canadian projections, I turned to the National Energy Board of Canada, which has published Canada’s Energy Future 2016: Update — Energy Supply and Demand Projections to 2040. This online update features an open source dataset that focuses on electricity generation. Table 1 shows that electricity generation from hydropower was projected to rise by 2.1% from 2015 to 2016 but drop by 1.5% from 2016 to 2017.

The only Canadian province where generation is expected to increase from 2015 to 2017 is Ontario; for the rest, generation is expected to remain consistent or even decline overall.

What about MHK?

DOE’s Hydropower Vision did not cover the marine and hydrokinetic energy market because “…marine and hydrokinetic technologies are defined by Congress as separate and distinct from hydropower.” IEA does consider marine energy to be a renewable energy resource, just like hydropower. However, it is important to note that IEA includes marine (tidal and wave) power in its variable renewable energy category along with wind, solar and run-of-river hydro.

IEA’s report says that worldwide marine electricity provided only 1 TWh of all consumption, and projections was that would be 3 TWh by 2025 and 30 TWh by 2040 with current policies, 6 TWh by 2025 and 54 TWh by 2040 under the New Policies Scenario, and 7 TWh by 2025 and 92 TWh by 2040 under the 450 Scenario.

Specific to the U.S. (Canadian numbers were not provided), marine energy provided no electricity generation in 2014. Under the New Policies Scenario, this contribution was expected to rise to only 1 TWh by 2025 and to 5 TWh by 2040. This 5 TWh of generation was expected to come from a total installed capacity of 2 GW. Under the 450 Scenario, marine energy in the U.S. is anticipated to provide 3 TWh by 2030 and 14 TWh by 2040 from 1 GW and 5 GW of capacity, respectively.

Only time will tell

So what does the future hold for hydropower in the U.S. and Canada?

IEA gives some great insight on the global scale: World energy demand for hydro was 335 Mtoe in 2014. With current policies that was expected to be 414 Mtoe by 2025 and 515 Mtoe by 2040. Under the New Policies Scenario, IEA predicted 420 Mtoe by 2025 and 536 Mtoe by 2040. And under the 450 Scenario, that is expected to rise to 429 Mtoe by 2025 and 593 by 2040. So, depending on the global environment, energy demand for hydropower has the potential to grow by an impressive 77%.

In addition, IEA says that under the 450 Scenario, hydropower could go from providing 16% of the power generation mix (in TWh) in 2014 to 20% by 2040.

No matter the scenario, IEA says hydropower will remain one of the lowest-cost electricity generation technologies (in dollars per MWh) in the U.S., with only onshore wind, geothermal, and utility PV being less expensive (see Figure 5).

At the same time, challenges certainly exist. The election of Donald Trump as President of the U.S. has brought a great deal of uncertainty regarding the country’s energy future, particularly with regard to renewables. And given the tie between the U.S. and Canada in terms of electricity interconnections and hydropower exports/imports, President Trump’s actions could have far-reaching implications.

Time will tell, and we’ll do our best to keep you up to date. For news as we report on it, visit www.HydroWorld.com.

Elizabeth Ingram is managing editor of Hydro Review.

Notes

1Welch, Timothy, “How the Hydropower Vision Can Drive Growth,” Hydro Review, Volume 35, No. 10, December 2016, pages 16-19.

2OECD/IEA World Energy Outlook 2016, IEA Publishing. Licence: www.iea.org/t&c.

Exporting North American hydropower expertise

The International Trade Administration’s Top Markets report series ranks projected future export markets for U.S. firms.

With regard to hydro, the export markets with the strongest potential are Canada, India, Venezuela, Brazil, Mexico, Peru, Russia, Vietnam, Philippines and Malaysia. ITA indicates U.S. equipment suppliers are competitive in Canada.

More information is available at trade.gov/topmarkets.

At HydroVision International 2017– held in Denver, Colo., U.S., in June – the U.S. Department of Commerce and PennWell will welcome international buyer delegations in a joint effort to stimulate U.S. exports. Learn more at www.hydroevent.com.

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