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Hydropower is still the cheapest source of electricity

by Baset Asaba on Feb 11, 2018




Despite the wide adoption of other renewable energy sources such as solar and wind, hydroelectricity maintains its position as the cheapest source of electricity globally at a cost of US$0.05/kWh.

A recent report by the International Renewable Energy Agency (IRENA), entitled Renewable Power Generation Costs in 2017 says that the global weighted average levelised cost of electricity (LCOE) from new projects commissioned in 2017 was US$0.05/kWh from hydropower, compared with US$0.06 for onshore wind, $0.07 for bioenergy and geothermal projects and $0.10 for utility-scale solar photovoltaic.

Hydro’s LCOE varies regionally, with 2016-2017 values being $0.04/kWh in Asia, $0.05 in South America, $0.06 in North America, $0.07 in Africa, Eurasia and the Middle East, $0.10 in Central America and the Caribbean and $0.12 in Europe.

Although electricity from hydropower is already cheaper than fossil fuels, the report indicates costs for other renewables should drop, as technology improves.

“Electricity from renewables will soon be consistently cheaper than from fossil fuels,” the report says. “By 2020, all the power generation technologies that are now in commercial use will fall within the fossil fuel-fired cost range, with most at the lower end or even undercutting fossil fuels.”

Its benefits notwithstanding, hydropower development activity lags that of other renewables, the report says. New capacity additions of renewables in 2016 was 162GW, coming from solar photovoltaic (71GW), wind (51GW), hydropower (36GW), bioenergy (9GW) and concentrating solar, geothermal and marine (1GW).

Hydropower “is the largest source of renewable electricity generation today,” at 3,996 TWh in 2015, says the report.

However, its share has been declining over time, IRENA, says, with hydro capacity accounting for about 75% of the world’s total renewable capacity in 2010 but only about 50% in 2016. In terms of electricity production, hydro accounted for 81% of all electricity from renewables in 2010 but 70% in 2016.

The report also acknowledges the value pumped storage hydro provides for energy storage, with more than 96% of the total energy storage capacity globally provided by pumped storage.

“For now, pumped hydro is still the only technology offering economically viable large-scale storage,” the report says. “The importance of pumped hydro storage, and indeed reservoir hydropower, is likely to grow over time as the shift to a truly sustainable electricity sector accelerates, not just for the low-cost storage it provides, but for the flexibility it brings to integrate high levels of variable renewables at minimal cost.”

Although a new concept in the GCC, Dubai Electricity and Water Authority (DEWA) is already exploring the possibility of pumped hydro storage.

The utility is planning to build a 400MW pumped hydro storage island that will add to existing efforts towards diversification of its electric power generation.


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