European Hydropower Dawdles as Hydrogen and Batteries Soar

It’s the oldest and the biggest of all the clean energy
technologies, but hydro has an uncertain role in Europe’s
decarbonization plans.

Over the past five years, Europe’s base of conventional
hydropower and pumped hydro capacity grew at about 1 percent a
year, reaching 251 gigawatts in 2019,�according to
the International Hydropower Association (IHA).

That feeble growth rate roughly tallies with scenarios developed
by the European Network of Transmission System Operators for
Electricity, which indicate that Europe could reach 277 gigawatts
of hydropower and pumped hydro capacity by 2030 and 280 gigawatts
by 2040.

And that’s if everything goes smoothly. In the meantime, green
hydrogen and batteries pose a rising threat to hydropower plants
and their future profits.

“Forecasting growth in hydropower is always challenging as this
depends on a range of policy and commercial decisions and market
conditions,” David Samuel, senior analyst at the IHA, said in an
email. “By 2030 total installed capacity could be somewhat higher
or lower depending on the progress of major projects that are
planned or under construction.”

The challenge from batteries and green hydrogen

Even at the upper end of forecasts for hydro, the buildout would
pale in comparison to other renewables. Between now and 2030,
Europe is looking to install roughly 159 gigawatts of solar above
132 gigawatts
it has today, based on
by the International Renewable Energy Agency. Europe
may install another 118 gigawatts of wind this decade on top of the

205 gigawatts
already in place, according to
WindEurope’s central scenario

Perhaps more telling, given its dispatchable nature, is how the
buildout of new hydro (pumped or otherwise) will compare to
batteries and green hydrogen.

European Union study
on energy storage, published in May,
estimates Europe will need to install 108 gigawatts of pumped hydro
and battery capacity between now and 2030. But only around 15
gigawatts of that will be pumped hydro.

In other words, over the next decade battery capacity could
increase at more than five times the rate of pumped hydro and more
than three and a half times faster than the growth of all types of
hydropower combined.

green hydrogen
, which is in its infancy today, could overtake
new hydro capacity in Europe over the coming decade. This month,
the European Union set a target of
40 gigawatts
of electrolyzer capacity by 2030, up from 250
megawatts today.

Spot market uncertainty works against new hydro

The reasons for hydro’s middling role in European
decarbonization over the next decade are not hard to fathom.

As a mature generation technology, it already occupies pride of
place in many European electricity mixes. With up to 70 percent of
potential hydro sites already developed in Europe, according to the
IHA, further opportunities for deployment are limited.

New hydropower projects are notoriously difficult to get off the
ground, which is why future developments are likely to focus on
pumped hydro conversions. “Modernization efforts will be
increasingly important to boosting Europe’s hydropower capacity,â€
said Samuel.

“Upgrading existing plants with improved technologies and
enhanced flexibility, such as faster grid response, will be
important to ensure that existing sites are properly equipped for
the changing needs of the grid system,†he said.

Geographical constraints and permitting hassles aren’t the only
factors tilting the playing field away from new dams and toward
upgrades and pumping adaptations. When it comes to major hydro
projects, the sector faces a serious funding problem.

European investors are expected to take on massive upfront
investment risks in exchange for uncertain spot market revenues,
according to a June research note from Rory McCarthy, principal
analyst for energy storage at Wood Mackenzie.

“The scale of CapEx required for new pump storage, [set]
against a fully merchant risk business model and more stringent
environmental planning legislation, means we do not see any new
build unless a purpose-built revenue-based and construction
planning supporting policy is introduced,â€
McCarthy said

The bright spots for hydro

In spite of these challenges, Europe’s existing hydro plants
will continue to play a huge role, and new pumped hydro may find
legs in certain markets. Hydropower has a much higher installed
power and energy capacity than most other storage technologies.

Spain, for one, has largely been able to absorb large wind
contributions to its energy mix thanks to its hydropower and pumped
hydro reserves. Spanish firms Iberdrola, Repsol and privately-owned
Villar Mir Energía are aiming to build almost 1.8 gigawatts of new
pumped hydro capacity, according to
local reports
, as Spain pushes ahead with a renewables-heavy
national energy and climate plan.

“I believe developments like these are much more critical
right now,†said Brian Gaylord, principal analyst for Latin
America and Southern Europe at Wood Mackenzie, in an email.
“System flexibility will be critical as Spain moves towards
higher levels of wind [and] PV penetration.â€

Elsewhere, there are suggestions for turning coal mines into
hydro reservoirs and “better use can be made of existing
capacity,†said Tom Andrews, senior consulting analyst at
Cornwall Insight, in an email.

“Norway sources almost all of its power from hydro resources
and has considerable potential for additional capacity but limited
domestic demand,†Andrews said. “New 1.4-gigawatt
interconnectors to Great Britain and Germany are under
construction, which will allow Norwegian hydro reservoirs to act as
a battery for much of northern Europe.â€

Still, Andrews cautioned hydropower’s natural advantages may dim
as technologies like green hydrogen begin to mature.

Hydrogen is “a fuel which can be used over multiple vectors: to
power cars, trucks, trains, ships and planes, to blend into
existing gas networks to meet peak winter heat demand, as well as
to convert back into power.”

“Hydrogen can also be transported both within countries and
internationally,†Andrews added. “This international dimension
gives the hydrogen economy an additional cachet which even
innovative pumped hydro solutions will struggle to match.”

Source: FS – GreenTech Media
European Hydropower Dawdles as Hydrogen and Batteries