Study identifies benefits of hydro in Europe

7 July 2015

A macroeconomic study carried out on behalf of members of the hydropower industry has identified the direct and indirect benefits of hydropower in Europe, while suggesting that production could be increased across the continent by about 20% before 2030.

The study - The hydropower sector's contribution to a sustainable and prosperous Europe - comprises the most comprehensive economic data set on the European sector available to date, and clearly outlines hydro's benefits to the 28 EU member states, alongside Norway, Switzerland and Turkey.

Supported by the International Hydropower Association (IHA) and Eurelectric, the study was conducted by technical consultancy DNV GL, on behalf of 21 hydropower companies.

The study calculates the total value creation of hydropower in Europe to be around EUR 38 billion per year, similar to the current GDP of Slovenia. This figure is projected to grow to around EUR 75 to 90 billion by 2030.

The report identified that the hydropower sector in Europe supports around 120,000 jobs (full time equivalent), each bringing an average annual value of around EUR 650,000 to the European economy.

At the same time, the authors note that European hydropower companies (both power producers and equipment manufacturers) invest an average of EUR 8 to 12 billion each year, while projected investments could reach EUR 180 billion by 2030 in favourable market conditions.

Hydropower stood out from other renewables in terms of public revenues in Europe - the sector's EUR 15 billion in annual tax revenues far exceeds the limited subsidies granted to small hydropower projects.

The study considered the multipurpose benefits of hydropower installations beyond electricity generation, including reservoir functions such as water supply, navigation and tourism.

These are estimated to deliver an economic value of around EUR 10 to 20 billion each year in addition to the value creation quoted above. This figure does not take flood protection and mitigation into account, as a more comprehensive assessment will be required to precisely quantify the economic value of these benefits.

Drawing on two energy scenarios published by the European Commission, the study goes on to explore how hydropower can contribute to meeting the EU's binding low-carbon targets, which call for 27 per cent of the continent's energy consumption to come from renewables by 2030.

The report notes that hydropower delivers all three priority objectives of EU energy policy, providing affordable, secure and sustainable electricity.

Crucially, the study highlighted hydropower's ability to increase the share of electricity generated from variable renewables, noting how storage and pumped storage technologies are both evolving to support the further integration of other renewable sources of energy into the European power system.

The authors noted that European hydropower plants have a total storage capacity of more than 220 TWh, equivalent to around 25 days of average electricity consumption across the continent.

Looking forward, the study suggests that hydropower production could be increased by around 20% in Europe before 2030, bringing new opportunities for investment in secure and sustainable energy.

Currently, hydropower supplies around 380 TWh to the 28 EU member states, and 600 TWh to Europe, equivalent to 13 and 18 per cent of total electricity generation, respectively. The report's authors predict that European hydropower will be able to generate 700 TWh by 2030 and 750 TWh by 2050, an increase of approximately 31 per cent, or 200 TWh.

Nonetheless current market conditions and policy frameworks could limit the scope of development. This study has provided substantial data and recommendations which will enable policymakers at both national and EU levels to improve the possibilities for hydropower development - a crucial step towards meeting the low-carbon targets for 2030 and beyond.

To download the full report, click here.



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