RESEARCH REPORT

In brief

In brief

  • The rise of intermittent renewable sources to the grid necessitates dispatchable power to offset shortages and ensure dependable energy generation.
  • Hydro is poised to provide grid stability and balance variability through energy imbalance services, load-following and high ramping capabilities.
  • To realize opportunities of the energy transition, operators must address aging infrastructure and enable digitally enabled, data-driven operations.


Hydropower's digital generation

As the world moves toward a clean energy future, an increasing portion of electricity is being supplied by intermittent sources of renewable energy.

This growth in renewables necessitates a rise in dispatchable sources to stabilize the grid. As the world’s oldest and largest source of renewable energy, hydropower has a proven record of rapid generation, utility-scale storage and flexibility, making it well-positioned to enhance grid resiliency.

As relatively high CAPEX costs and increased environmental consciousness have limited the development of new capacity, hydro operators must maximize use of their existing assets and navigate upgrading an aging fleet of assets to be fit for purpose in a rapidly changing energy mix.

There is significant opportunity for hydro operators to address the sector's current challenges and position themselves for a future of growth and value by moving toward a digitally enabled, data-driven operation.

Hydro’s integration with intermittent renewables will accelerate the path to a sustainable energy future.

Hydro’s role in complementing intermittent renewables and the opportunity digital offers to improve hydro’s competitiveness is fueling new paths to value for the sector, placing more focus and value on the modernization required by older plants.

Our report builds on primary and secondary research, including insights from leading hydropower companies and experts in the field to better understand the current challenges and opportunities for further improvement.

The report's seven interviewees and case studies operate hydropower assets across the United States, Latin America, Northern and Southern Europe and Asia. Combined, they represent more than 50 GW of installed capacity.

Five key themes:

Production management and optimization

Digitally improved forecasting and analytics can optimize power production and hedge climate vulnerability.

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Asset analytics

Industry data sharing, consensus on failure mode and data model standards will be key to unlock value from analytics and safeguard hydro’s image.

Process improvement and automation

Making operations and maintenance activities cheaper, simpler and safer with digital can help hydro stay competitive with other technologies.

Connected worker

Hydro’s pivot will require digitally enabled workers.

Cybersecurity

Regulatory compliance alone is not sufficient; a new approach is needed for complete protection.

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As with all renewable technologies, digital will 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 hydropower 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.

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