Roger Gill is the President of the International Hydropower Association (IHA). In an exclusive interview with REGlobal, he highlights how the hydropower sector is vital in driving the renewable energy transition in the world. Speaking from his experience in the renewable energy space spanning over four decades, he believes that existing investments and policies are not sufficient to meet the goals set out in the Paris Agreement and a bigger push will be needed in the future. Meanwhile, he emphasises the need to promote pumped storage hydropower systems in order to support and complement wind and solar power development. Edited excerpts of his interview …

How has the pandemic impacted hydropower project development globally?

On the operations front, since there are relatively fewer people operating large hydro plants, they have been able to sustain electricity generation throughout the Covid period, demonstrating their resilience. In fact, hydropower has proved to be a strong support to grid management. Take for example the case in India when hydropower played a key role in providing flexibility and restoring electricity during a 9-minute power switch-off in April 2020, when demand fell by a staggering 31 gigawatts (GW).

In terms of project development, where one needs to have a lot of initial resources on site, these have been difficult times. The necessity for social distancing and the challenge to obtain finance in these times have put a dent in the growth of the sector. We are waiting for the results to come through, but I think we will see a dip in new project growth.

“Last year, the global hydropower sector recorded a growth rate of 1.2 per cent in installed capacity, but an increase of 2.5 per cent in terms of actual electricity generation. We have to wait to see the quantifiable impact of Covid on growth this year.”

If you look at the broad numbers, last year hydropower ticked over 1,300 GW of installed capacity. This was a very big milestone for our industry. In the last 20 years, we have seen 500 GW of global capacity installed. You might think hydropower development has been predominantly due to last century’s investments, while it is quite the opposite. With about a 65 per cent capacity addition in the last 20 years, the 21st century has been a very significant contributor. Last year, the global hydropower sector recorded a growth rate of 1.2 per cent in installed capacity, but an increase of 2.5 per cent in terms of actual electricity generation. We have to wait to see the quantifiable impact of Covid on growth this year.

What role has the association been playing in driving a change at the global level?

At the turn of the century, we asked ourselves what we have to do for 21st century hydropower and two priorities have emerged. First is a drive to ensure that all new hydropower is sustainable. This is easy to say but far more difficult to achieve and quantify. We have spent the last 15 years developing benchmarks and tools to measure the sustainability of hydropower projects. You can now bring all of that knowledge into your project and run through an assessment process and understand where you score relative to internationally recognised good and best practice in sustainability. We have developed these tools in conjunction with WWF, The Nature Conservancy, and others by engaging in multi-stakeholder collaboration. So, the number one point going forward is to make sure that developing and operating hydro is done sustainably.

The second big thing is pushing for pumped storage hydropower. We are a part of the renewables family and we see a strong role for hydropower in the clean energy transition as it helps to stabilise the intermittency of wind and solar power.

To sum up, our aim is to make sure that hydropower projects are developed sustainably and to get pumped storage hydropower going across the world. IHA has members representing about a third of the world’s entire hydropower capability and we are in every region.

Which countries are leading hydropower development in the world?

No country can come near 100 per cent renewables without hydropower. Costa Rica has almost 100 per cent renewables in its energy mix with hydropower making up 66 per cent. If you look at Norway, it has 95 per cent hydropower, which is a strong part of the Scandinavian grid. Transmission cables are taking that power into other parts of Europe as well. If you look at South America, places like Brazil, Ecuador, and Columbia have about 60-70 per cent hydropower in their energy mix. Paraguay has 100 per cent hydropower, so there are lots of hydropower-dominated South American nations. You also have significant hydropower in Canada and the United States. Africa is a developing region in terms of hydropower, it has a high share of hydropower relative to its energy grid but is still quite small in absolute numbers. Europe has had a very strong position in hydropower development.  Then of course we have China – of the world’s 1,300 GW installed capacity, China has almost 360 GW. This is around a quarter of the world’s total installed capacity with a large pumped storage hydropower capability of around 30 GW.

Which countries are leading in terms of providing the right policy and regulatory environment to promote hydropower development?

The role that governments play is very important. It’s very interesting to see the recent push by India to mandate hydropower in the renewable mix. That will be a standout policy. We are working hard with governments to talk about the stimulus that needs to come after the pandemic. The challenge is primarily linked to long development lead times. Interestingly, IRENA put out some numbers last year, which shows that hydropower, in 2019, had the lowest levelized cost of energy among all renewables at under 5 cents (USD) per kWh. The cost is higher with solar and wind but the time to market, the scale and the ease of private investment is also important.

Australia is an interesting example because there is a very high penetration for solar and wind. Some days, in that market, 50 per cent of the energy is coming from renewables in the middle of the day. Australia expects to see a significant reduction in coal generation in coming decades and a very high penetration from solar. Sourcing adequate storage or firming capabilities is vital, the options are to go for batteries, gas, or pumped hydropower plants. In Australia, today there is just over 8.7 GW of hydropower installed capacity, of which 1.3 GW is pumped storage. On the island State of Tasmania, where I am based, we have an initiative called the Battery of the Nation;  this involves increasing interconnection with the eastern Australian grid (through an additional 1,500MW of undersea cable), repurposing and upgrading existing hydropower, adding new pumped hydro energy storage, and unlocking Tasmania’s world-class wind resources. If the Battery of the Nation vision is fully realised, eventually there could be many thousands of megawatts of new interconnection and pumped hydro capacity to support the future Australian system.

The problem, however, is lead times. Governments need to be thinking right now about how they are going to deal with 2030 and beyond. It may seem a long way away, but take the 2 GW Snowy Hydro 2.0 project in Australia, which is under construction now and not scheduled for completion until 2026 after having been announced in 2017. Governments have to start thinking now about the market arrangements and other challenges that are going to come about in 2030. There are big decisions to be made, but I don’t think we have the right policies in place yet to get pumped hydropower facilities built at a global scale. There’s a lot of pent-up expectations on the industry side but insufficient market settings to get development going. This is one of the main reasons we initiated the International Forum on Pumped Storage Hydropower.

How has pumped storage come along and when do you see it reach a more economical cost level?

I don’t think it is a question of cost. The cost of energy storage using pumped hydro is well understood. As I said, hydro is probably one of the cheapest energy sources. The challenge for now is that markets are not providing revenue streams that you can bank to get these investments in place. If you are selling energy, you can get a power purchase agreement that will make a project bankable. If you have a storage-based facility selling intermittent back-up power, the payment stream is not well developed. It is the same for batteries. You can, however, get batteries in smaller packages and hence reduce the risk. If you come in with a 2 GW pumped storage facility, that is a significant investment that has to have a strong revenue stream. It is important to see how governments can reorganise market structures to provide increased revenue certainty for investments in pumped storage.

“It is important to see how governments can reorganise market structures to provide increased revenue certainty for investments in pumped storage.”

What are some of the noteworthy pumped storage projects globally?

The one I mentioned in Australia, the 2 GW Snowy Hydro 2.0 project definitely stands out. In Switzerland, there is a 900 MW Nant-Drance pumped storage project that is likely to be fully operational in 2021. In Turkey, there is a large 1,200 MW reservoir based project, and in Argentina, there is a 1 GW project underway. There are several projects going on, but we need more. One of the reasons we set up the International Forum on Pumped Storage Hydropower with 11 governments and more than 60 organisations was to talk about how to establish markets and what advice can be given to the world to accelerate the growth of pumped storage.  The world has about 160 GW of pumped storage installed capacity at the moment – storing at least 9,000 GWh of electricity. Indeed over 94 per cent of the world’s entire energy storage is pumped hydro. We need to double this capacity: that’s another 160 GW. But if the market structures are ill defined, investors won’t fund these projects.

Hydropower projects have attracted criticism about their construction practices in many countries. What can be done to implement standard best practices?

This is probably one of the major reasons that IHA exists. We have helped to establish benchmarks and guidelines. In collaboration with WWF and The Nature Conservancy among other organisations, we have developed measurement tools to measure how to resettle communities, dam safety, safeguard water quality, etc. All these priorities have a very defined set of expectations which are published in guidelines on our website. We hope to develop these into a standard for the whole sector, setting minimum performance expectations.  We are doing it together with our NGO partners among others. We want to see only sustainable projects being implemented.

What are the renovation and modernisation requirements of old hydropower projects? How much investment is expected in doing so?

By 2030, about half of the world’s fleet will be due for, or have undergone, modernisation. Right now I am the director of a project in Brazil that is undergoing a 10-year modernisation program. What is happening in South America is happening in Asia and beyond. In the next decade, we will be talking about both major new projects and a large investment in modernisation, so 20th-century projects can keep going well into the 21st century.

We saw around $50 billion of investment in hydropower last year, according to the IEA. But to meet the carbon reduction targets of the Paris Agreement, we need to be spending about $100 billion a year. So, we are simply under-investing. We are seeing a surge in solar and wind and that’s good, however intermittent renewables require hydropower to support them: a recent World Bank study found that 1GW of hydropower can support up to 6GW of variable renewables. If you haven’t got hydropower, you have got a big problem.

What are the key O&M challenges in hydropower projects? How has digitisation and automation come in to play in this respect?

It can be a challenge to convince regulators that you have a sustainable project. That’s why we develop all these tools to get past that stage. The next challenge is linked to bankability; banks also need to be convinced that they are investing in sustainable projects. The market setting, for example, for pumped storage, is a significant constraint. Long lead times are also a challenge because it’s easier to invest in shorter duration projects while pumped storage projects take about 7-8 years to produce electricity. We are not going to see the level of renewable transition unless we have got this storage capability in place. Governments have to recognise, support and maintain stringent regulatory requirements. Those in the industry, though, have the tools and capability to develop hydropower.

“Flexibility to turn the machine on and off in millisecond time periods does require strong connectivity to the control system which can be made possible through digital systems.”

The question of digitalisation is an interesting one because innovation comes along in these times as well. Flexibility to turn the machine on and off in millisecond time periods does require strong connectivity to the control system which can be made possible through digital systems. We have seen digitalisation of past analogue systems. As modernisation comes along, with it comes digitalisation. One of the projects that we have been working on is a project called XFLEX HYDRO. This is a big European Union-funded project looking at how we can improve the flexibility and robustness of our hydropower installations.

What is the potential of cross-border hydropower trading?

Take the case of China. It has an enormous amount of hydropower in the west. This has meant the development of a massive amount of transmission capability to move this energy from one part of the continent to another. We now can move large amounts of energy from the hydro resources within countries. Translate this to the Canadian analogy; in Quebec, enormous amounts of energy (is transmitted) from James Bay right down through other parts of Canada. Energy is traded across to the United States as well. I think the Canadian-US translation from a water resource to a load centre is a classic example of moving energy around.

What is the future outlook of the sector, in terms of technologies, the countries that are going to lead, and the overall capacity we can expect in the short term and the long term?

We have over 1,300 GW of installed hydropower capacity now. But by 2050, we are going to need around 2,150 GW according to IRENA and IEA models. That’s an additional 850 GW. So we have a large amount of energy to produce in 30 years and that is a big challenge. Hence, the $100 billion a year.

“…over 94 per cent of the world’s entire energy storage is pumped hydro. We need to double this capacity: that’s another 160 GW. But if the market structures are ill defined, investors won’t fund these projects.”

Fortunately, we are seeing significant innovation across the sector. The hydropower turbine machines we’ve built in the past operate at a fixed speed, but it is now possible to have a more complex machine that operates at a variable speed. This innovation of variable speed pump turbines opens up additional operating flexibility, and will be important to support the integration of variable renewables.

In summary, there needs to be greater recognition that hydropower is a strong contributor to a low carbon energy future and it provides important multipurpose services like water supply, irrigation and flood mitigation. Hydropower is fundamental to the transition to a renewable future. We will not get to where we want to be without sustainably developed hydropower.