Hydropower is super interesting. As the oldest form of renewable energy, it accounts for more than half (58%) of the world’s renewable energy, with approximately 1,300 GW installed (at the end of 2018). Electricity generation from hydropower projects achieved a record 4,200 TWh in 2018, the highest ever contribution from a renewable energy source. While hydropower is a huge renewable power source, it also has had its challenges—environmental impacts among them. As the industry and the world move forward in the energy transition, the onus is on hydropower operators to proactively demonstrate the steps they are taking to minimize the environmental risk and impact of their operations.
We recently launched a report that highlights hydropower’s significant opportunity to use digital technologies to become more operationally efficient, safer and play a larger role in supporting intermittent renewables. Not only is hydropower is supporting the growth of wind generation and solar power, but the levelized cost of electricity (LCOE) is becoming more competitive. And digital-led modernization presents significant opportunity to continue to drive down LCOE.
To explore the digital opportunities for hydro, we brought together nine hydropower operators, representing more than 120 GW of hydropower capacity in Norway. Participants shared cases on production and commercial optimization, operations, automation, predictive maintenance, workforce management, supply chain and cybersecurity. From that insightful collaboration we developed this report, to draw attention to leading practices and share some of the most innovative cases. We focused on five themes:
- Production management and optimization. Potentially delivering 5% to 15% reduction in lost production. Forecasting of external factors such as weather and water inflow, internal factors including reservoir level and market conditions to optimize power production, minimize spillage and integrate other renewable energy sources like intermittent wind and solar.
- Asset analytics. Potentially increasing revenue by 0.5% to 1% while decreasing maintenance CAPEX 2% to 5%. Collection and analysis of data on asset conditions and performance to optimize asset operations and maintenance (O&M). Transitioning from reactive and periodic maintenance to predictive maintenance. Sharing data across the industry to prevent failures as it protects the general public perception of hydro.
- Process improvement and automation. Automation and improvement of O&M processes by means of digital and internet of things (IoT) technologies for remote operations to make them safer, less labor- and capital-intensive and more efficient. This is the area with the widest gap across players—with some players operating highly automated plants with central control centers, while other players still require a high level of manual intervention in daily operations.
- Connected Workers. Empowering the workforce with digital technology through increased access to data for decision making, streamlined administrative tasks, enhanced training and collaboration and other digital initiatives to improve work efficacy and safety. Although leveraging digital is now common in many industries with a large field force, the hydro industry’s aging workforce means this will be the area of biggest culture change.
- Cybersecurity. Adopting a continuous-response model to cyber threats and enhancing threat intelligence capabilities through advanced data analytics to build a proactive defense plan. Hydropower is critical infrastructure to the electricity grid and the local environment, so operators need to minimize the impact of malicious attacks.
As with all renewable technologies, if the industry can achieve the required culture change—such as moving from reactive or scheduled maintenance to predictive, working together as an industry to develop and share a standard hydro data model and fault hierarchy, trusting mobile technologies and productivity tools—digital could transform the competitiveness of hydro. As the largest installed source of renewable energy and energy storage, the value of hydropower, particularly pumped hydro, increases in markets with high penetration of wind and solar. Although new hydropower might struggle in competitiveness in some markets against natural gas peaking plants or batteries, existing hydro will become more valuable, and in markets with the appropriate geographic conditions, hydropower will be an attractive complement to the greening of the energy mix.
Read our report for more insights, and I welcome your comments and questions.