In 2022, more than 34 GW of new sustainable hydropower capacity was commissioned around the world, including over 10 GW of pumped storage - the first time since 2016 that more than 30 GW of new capacity has been brought online in a single year.

The findings, published in the inaugural World Hydropower Outlook by the International Hydropower Association (IHA), a non-profit member association that counts global hydropower leaders including GE, Engie, CTG and EDF as members, also highlights the pipeline of 590 GW worth of capacity currently in development.

Currently, hydropower provides over 15 per cent of the world’s electricity.

However, despite encouraging signals that governments, industry and wider stakeholders increasingly appreciate hydropower’s critical role in the electricity grids of the future, the IHA said there is still a considerable deficit in capacity. Current estimates show that even if all planned developments come online, a gap of over 700 GW remains to meet the 2050 net zero targets. This is roughly equivalent to the total electricity generation capacity of India and Japan combined.

Eddie Rich, CEO of IHA commented:

“Sustainable hydropower is a clean, green, modern and affordable solution to climate change. But the market won’t deliver sufficient hydropower capacity alone. As outlined in the report, it is imperative that we incentivise sustainable hydropower development through financial and market mechanisms that reward flexibility, accelerate the development of renewables through streamlined permitting and licensing and embed hydropower sustainability practices in government regulation.”

“The Outlook sets out a realistic roadmap to enable hydropower and other renewables to deliver against net zero targets. We are calling on governments to consider the recommendations in the Outlook to supercharge development in sustainable hydropower.”

While China continued to lead the field in increasing its hydropower capacity with the addition of 24 GW, Europe enjoyed a year of unprecedented success, which saw capacity rise by 3 GW. Both North and South America introduced an additional 1 GW of capacity respectively, while nearly 2 GW was installed in central and southern Asia, including large projects in Pakistan (Karot, 720 MW) and India (Bajoli Holi, 180 MW).

“IHA calculated the required financial investment to meet net zero targets as US$100 billion a year. However, current investment levels are roughly half this figure. Governments need to assess their broad energy needs including long-term storage and create financial mechanisms that incentivise investment in hydropower, as we’ve seen with the US’s IRA and the EU’s Green Deal”, said Malcolm Turnbull, former Prime Minister of Australia. “While the numbers are at last moving in the right direction, there needs to be a greater push to meet global targets.”

Highlights of the World Hydropower Outlook include:

• IHA’s current pipeline shows 590 GW of hydropower projects at various stages of development, including 214 GW of pumped storage.
• Hydropower generated around 4,400 TWh in 2022, which is over 15% of the world’s electricity. 
• The U.S. announced the Inflation Reduction Act with tax credits to incentivise hydropower development and the Indian Government published their ‘Guidelines to Promote Development of Pump Storage Projects’ to achieve 18.8 GW of PSH.
• China continues to lead hydropower capacity globally, with nearly 24 GW of new capacity brought into service in 2022, including the final units at the 16 GW Baihetan project.
• Nearly 2 GW was installed in central and southern Asia including large projects in Pakistan (Karot, 720 MW) and India (Bajoli Holi, 180 MW), with many large-scale projects nearing completion set to be commissioned in 2024/25.
• Both North and South America gained more than 1 GW in new capacity in 2022, with notable increases in Canada (over 1 GW), Colombia (618 MW) and Chile (477 MW) from several large plants in those countries.
• In Africa steady progress continues with just under 2 GW added in 2022, with a mixture of big projects over 50 MW (Ethiopia, Guinea and Mali) and smaller projects (including in Madagascar, Uganda and Rwanda).

The launch of the inaugural World Hydropower Outlook serves as a precursor to IHA’s biennial World Hydropower Congress, which is taking place in Bali on 31 October to 2 November. More than 1,000 decision-makers, innovators and experts from industry, governments, finance, civil society, and academia will be in attendance.

Policy recommendations included in World Hydropower Outlook:

• Incentivise sustainable hydropower development through financial and market mechanisms that reward flexibility. To meet the objectives of the Paris Agreement and the UN Sustainable Development Goals, IEA estimates that investment in hydropower needs to double to US$100 billion a year. This cannot happen without appropriate market frameworks to incentivise new investment.
• Accelerate the development of renewables through streamlined permitting and licensing. Hydropower planning and approval processes typically take more than five years before a project can even begin construction. Meanwhile, the default option is often to fall back on fossil fuels. The massive deployment of renewables needed to meet global climate goals through sustainable development should be accelerated by streamlining these processes wherever possible.
• Embed hydropower sustainability practices in government regulation. Accelerating development does not mean cutting corners. Application of the Hydropower Sustainability Standard, built and governed through multi-stakeholder consensus, should be integrated into regulatory frameworks to maximise the benefits of projects and mitigate any negative impacts.