The essential role of hydropower in delivering net zero

Our world is hungry for energy. As industry and populations expand, electricity demand is likely to triple in the next 30 years. But for the sake of our planet, it needs to be renewable: it must be clean, green, modern and affordable.

Hydropower has all those attributes. It provides more generation than all other renewables put together and provides a backup when the wind is not blowing, and the sun is not shining.

More than 1,000 industry leaders, innovators, government representatives and others will gather at the 2023 World Hydropower Congress in Bali, Indonesia, for three days of discussions from October 31, exploring how countries can effectively harness this energy source and transform climate ambition into action. The congress is co-hosted by the Government of the Republic of Indonesia, Indonesian state-utility PLN and the International Hydropower Association (IHA).

Sustainable hydropower is one of the essential enablers of the transition to a safer planet and a decarbonized future, believes Malcolm Turnbull, a fierce advocate of hydropower during his three years as prime minister of Australia and soon to be president of the IHA.

“As a technology, hydropower is an ideal complement to modern, clean energy systems and the only proven technology to do this at scale,” he said. “No country has come close to achieving decarbonization without a significant element of hydropower.”

As much as 50 per cent of all renewable electricity around the world is generated by hydropower, Turnbull pointed out, yet he cautions that more needs to be done.

“Despite encouraging signals that governments, industry and wider stakeholders increasingly appreciate hydropower’s critical role in the electricity grids of the future, there is still a considerable deficit in global capacity,” said Turnbull, who will be taking part in the congress.

“It is imperative that we incentivize sustainable hydropower development through financial and market mechanisms that reward flexibility, accelerate the development of renewables through streamlined permitting and licensing and embed hydropower sustainability practices in government regulation.”

The IHA is calling on governments to adopt recommendations spelled out in its recently released World Hydropower Outlook report, including the incentivization of sustainable hydropower development through financial and market mechanisms.

The report also echoes Turnbull’s call for easier permitting and licensing to hasten the completion of projects but, at the same time, calls on stakeholders to ensure that sustainable standards are met.

Turnbull describes himself as an enthusiastic supporter of pumped storage hydropower, which uses the force of gravity to generate electricity. This type of hydropower requires water to be pumped to a reservoir at a higher elevation at times of low demand and low electricity prices. When demand is higher – and prices are also higher – the water is released, and the flow drives a turbine that supplies electricity to the grid.

This form of stored hydropower – sometimes described as giant “water batteries” – provides greater grid reliability and flexibility and helps to solve the drawbacks inherent in intermittent renewable technologies, such as wind and solar.

“I believe we urgently need to raise awareness about pumped hydro and its vital role in the clean energy transition,” Turnbull says. “This will require the industry to have a higher profile, with the goal of engaging governments and heads of governments to make it happen.

Industrial activity is directly responsible for around one-quarter of global CO2 emissions, primarily because heavy industry – including steel, chemicals, mining and cement – still relies heavily on fossil fuels.

Yet innovation is already making inroads in these hard-to-abate industries around the world, notably in the cement and steel sectors.

An aluminium plant in Karmøy in Norway, for example, has dramatically cut both energy consumption and CO2 emissions by exchanging coal for hydropower.

Financing remains one of the most serious hurdles in the sector, with many investors put off by high initial capital costs and uncertain financial returns, industry experts say.

Global investment in hydropower topped US$50 billion in 2019, according to the International Energy Agency (IEA), although this is still short of the estimated US$100 billion a year required to help meet the organization's Sustainable Development Scenario.

The market cannot deliver that alone. Governments need both to support the high capital costs of large-scale projects to ensure low-cost supply in the future and devise innovative public and private financing models that reward electricity reliability alongside electricity generation.

These will be critical topics at the World Hydropower Congress.

The Hydropower Sustainability Alliance (HSA) will officially be launched at the congress.

A non-profit organization governed by a combination of the public and private sectors, the HSA will set environmental, social and governance (ESG) requirements within the sector under the Hydropower Sustainability Standard, the internationally recognized ESG yardstick for the sector.  

Dr Ashok Khosla, president of the HSA, echoes the widespread belief that all hydropower projects must be guided by the Hydropower Sustainability Standard for them to meet the needs of the future.

"In today's ESG-focused world, ensuring sustainability within the hydropower sector is not an option - it's imperative,” he said. “From public expectations to government regulations and financial institutions' funding criteria, securing a license to operate hinges on demonstrating robust ESG performance.

“Sustainability isn't merely a choice or an add-on; it's the bedrock for securing long-term viability, fostering stakeholder trust and ensuring the industry's future,” Khosla emphasized.

The HSA anticipates that by establishing essential ESG performance benchmarks and recognizing excellence, more projects will be “propelled to achieve and exceed them.” Khosla said.

“The significance of hydropower in the energy transition cannot be overstated and falling short on sustainability standards is a risk we cannot afford,” he added. “Such a setback would represent a profound loss for the global energy landscape." 

The congress will conclude with the adoption of The Bali Statement on Powering Sustainable Growth through hydropower, building on the 2021 San José Declaration.

The statement will call for sustainable hydropower to serve as the backbone of national growth strategies to build thriving, low-carbon economies.

It will also underline the need for policy and regulatory frameworks that match global climate targets and for the implementation of financial mechanisms to encourage new development.

The Bali Statement will be taken to the UN Climate Change Conference – COP28 – that opens in the United Arab Emirates on 30 November.

Main image credit: CTG Baihetan Hydropower Station in China