Hydropower modernisation drivers in Latin America and Africa16 December 2020
As a mature technology, hydropower has an ageing fleet with nearly half of its global capacity more than 30 years old. This raises the importance of modernisation and delivering innovations to increase resilience and improve efficiency, write Cristina Diez Santos and María Ubierna, analysts from the International Hydropower Association (IHA).
Hydropower is the largest source of renewable energy. In 2019 it provided almost 60% of renewable electricity generation and 16% of total electricity generation. According to IHA’s 2020 Hydropower Status Report, installed capacity reached 1308GW globally with more than 4300TWh generated in 2019.
In addition to developing new projects, future growth in worldwide installed hydropower capacity is expected to come from the modernisation of existing facilities. The main drivers behind the need for modernisation range from upgrading ageing equipment, to improving energy performance, reducing environmental impacts, and complementing variable renewables like solar and wind.
Two regions where there is significant opportunity for hydropower modernisation are Africa and Latin America and the Caribbean (LAC).
Hydropower in LAC region
In Latin America and the Caribbean, hydropower accounts for almost half of total installed capacity in and is the main source of electricity in many countries. Its development peaked in the decades from 1960 to 1980, with large-scale hydropower plants, including the three binational projects in the region. During these decades, the installed capacity of the region increased fivefold. Currently, more than 100GW of installed capacity is over 30 years old out of 196GW.
Current projections identify that installed hydropower capacity will continue to grow to meet future electricity demand. Considering that an important part of the hydropower fleet in the LAC region was developed more than two decades ago, attention is turning to the modernisation needs of the existing fleet, as well as the sustainable development of new projects.
Itaipu hydroelectric dam on the Parana River on the border of Brazil and Paraguay
Hydropower in Africa
By contrast, the African region has the highest untapped hydropower potential globally, with only 11% currently utilised. In 2019, 906MW of hydropower capacity was put into operation reaching to 37 GW of installed hydropower capacity. A total of 23GW is over 20 years old.
While hydropower installed capacity in Africa has grown in the last ten years at an average annual rate of 4.4 per cent, in terms of generation, the average annual growth reached only 2.4%. Climate change effects and the ageing of the hydropower fleet, with over 60 per cent of installed capacity over 20 years old, are two of the main drivers for the drop in capacity factors.
In addition, energy demand is growing twice as fast as the global average. Despite the strong progress of African governments in ramping energy poverty, the continent still needs to add 20 million people to the electricity network every year from now to 2030.
Why modernisation is important
In Latin America and Africa, as well as other regions around the world, the owners and operators of hydropower projects are actively weighing up the benefits of modernising their systems.
The term modernisation includes any type of rehabilitation, renovation or update of systems, equipment, and civil infrastructure of a hydropower plant, which brings it to optimal conditions to operate within the new and changing demands of the electrical systems. This includes providing increased generation output, climate resilience and adaptation, and ancillary services to enable the penetration of intermittent renewable energy sources into the system.
In terms of plant performance and improvement of the return investment, modernisation helps increase the plant availability, reliability, plant lifetime and safety. It also allows for reducing operation and maintenance costs. From the environmental and social perspective, bringing additional capacity and efficiency comes at no environmental cost. Moreover, modernisation can deliver additional benefits, such as providing greater flexibility services to support higher penetration of variable renewables, building resilience to the system to address more frequent droughts and flood events.
With rehabilitation, the greatest advantage is that many of the environmental and social impacts have already been mitigated, in addition to being high-return investments. This is an aspect of great relevance, due to the need for base generation support in systems and considering the current challenges for the development of new hydroelectric plants, particularly with large reservoirs.
In the Latin American and Caribbean region, a recent sector consultation undertaken by IHA and the InterAmerican Development Bank (IDB) showed that despite the clear drivers for modernisation, more investment and regulatory support is urgently needed to encourage projects.
The joint study by IHA and IDB identified the modernisation potential in terms of the number of plants and installed capacity. This considered a total of 127GW, with hydropower plants older than 20 years old and above 10MW. The results showed that an investment of approximately US$33.5 billion is required to modernise the plants.
Modernisation for climate adaption
Adaptation to climate change needs when modernising a hydropower asset is also a key consideration. Vulnerability studies like one carried out by IDB for Central America and the Andean region, and by the International Energy Agency (IEA) in Africa, are important to determine possible impacts on the inflows, and the reliability and safety of the plant. Hydrological variability affects plant factors, and thus, the firm energy committed to the grid.
A modernisation project can consider a change in the operating regime and open the opportunity to include infrastructure resilience measures. IHA’s Hydropower Sector Climate Resilience Guide offers a methodology for identifying, assessing and managing climate risks to enhance the resilience of new and brownfield hydropower projects.
Further work is needed to guide the future management of ageing dams around the world and support the huge investment decisions that will have to be made. Important directions include reservoir longevity issues and the necessity of upgrading and retrofitting ageing dams. This should extend to include a thorough assessment of climate change impacts on ageing and determination of ecosystem responses to the ongoing loss of reservoir functionality.
The enhancement of climate resilience in hydropower projects can bring multiple benefits. Resilient hydropower systems can support with uninterrupted electricity supply, minimise losses as well as save costs from climate impacts. In most parts of Africa, investment in resilience measures, such as enhancing reservoirs and improving generation efficiency, could help utilise save costs for recovery and reduce losses from the underutilisation of hydropower.
As markets evolve, power flexibility and energy storage are becoming increasingly essential and strongly support the need for hydropower modernisation. Many generators are looking for ways to improve frequency control and other ancillary services to stabilise the grid; this can require hydropower units to operate over an extended range, requiring quicker response ramping, part-load and stop/start capabilities among other improvements.
Covid-19 and mobilising investments
Most recently, the health and economic crises caused by Covid-19 have pushed countries further away from achieving universal energy access. Shifting government priorities has slowed access programmes.
Sub-Saharan Africa has been particularly hard hit, and the IEA currently estimates that the population without access to electricity could increase in 2020 for the first time since 2013. The LAC region has also not escaped the impact of Covid-19. Analysis by IDB shows that electricity demand reduced from 10 to 30 per cent in some countries.
Going forwards, mobilising financial support for the energy sector will play a central role in the reactivation of economic activity. This provides a unique opportunity for investing in the modernisation of existing plants, as well as looking for more innovative solutions to increase the resilience of the system while improving standards of safety and efficiency across the sector.
Cristina Diez Santos is a senior analyst of the research and policy team at the International Hydropower Association (IHA). Cristina leads the area of freshwater management, developing and sharing knowledge on valuing the hydropower’s role in the interlinkages between energy and water sectors. She also works to support the modernisation and innovation of the global hydropower fleet, particularly in Africa. Cristina holds a master’s degree in civil engineering and a master of advanced studies in sustainable water resources from ETH Zurich. Prior to joining IHA, Cristina worked in consulting firms working with the private and public sectors managing water infrastructure projects.
María Ubierna is a hydropower specialist of the research and policy team at the International Hydropower Association (IHA). Her interest lies in transforming academic advances into industry practice, by building and sharing knowledge for the sustainable development of hydropower around the world. María leads the area of climate change, developing evidence, guides and training on climate mitigation and resilience that influence policies to support a sustainable hydropower sector. As a specialist, she also works to support the modernization of the global hydroelectric fleet, in particular, in Latin America and the Caribbean. María has a master’s degree in Civil Engineering specialized in hydraulics and the environment from Spain and a Master of Advanced Studies in sustainable water resources from ETH Zurich. Prior to IHA, she has worked in business consultancy at Accenture and as a research assistant at the Chair of Hydrology and Water Resources Management at ETH Zurich