Hydropower remains the largest renewable electricity source by 2023, says the International Energy Agency’s latest market forecast, while noting that its growth is continuing to decelerate.

The report states that hydropower capacity is expected to increase 125GW – 40% less than in 2012-17 – due mainly to less large-project development in China and Brazil, where concerns over social and environmental impacts have restricted project pipelines. Meanwhile, deployment in India, Africa, and Southeast Asia accelerates in response to new demand, untapped resource potential, and attractive economics to improve electricity access affordably. One-fifth of overall growth (26GW) is from pumped storage hydropower (PSH) projects that help integrate variable renewables. China leads the PSH growth, with notable contributions from Asia Pacific and Europe as well.

Hydropower’s upside in the accelerated case depends on faster progress of projects under development, says the report. China has almost half of the potential for hydro, but this is dependent on full commissioning of mega projects, including the 16GW Baihetan Dam. The remaining potential lies in Asia, the Middle East, and Africa and a considerable amount of pumped storage projects in Europe, MENA, and Australia.

The report states that modern bioenergy will have the biggest growth in renewable resources between 2018 and 2023, because of its widespread use in heat and transport sectors in which other renewables currently play a much smaller role.

The focus on bioenergy is part of the IEA’s analysis of “blind spots” of the energy system – issues that are critical to the evolution of the energy sector but that receive less attention than they deserve – such as the impact of air conditioners on electricity demand, or the growing impact of petrochemicals on global oil demand. Assuming strong sustainability measures are in force, the report identifies additional untapped potential for bioenergy to “green” and diversify energy usage in the industry and transport sectors.