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Recommendations of the Global Commission on People-Centred Clean Energy Transitions
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Hydropower, bioenergy, CSP and geothermal

Hydropower

Global annual net hydropower additions are expected to increase to more than 18 GW in 2020 owing to an uptick in large project activity in China. Almost half of China’s growth is from installation of the first units of the Wudongde plant (10 GW); each unit is 850 MW and several were already commissioned this year. The next-largest source of growth is Asia, accounting for 24% of global additions, with significant capacity coming from Lao People’s Democratic Republic (“Lao PDR”), India, Nepal, Viet Nam and Indonesia. Large dams in Turkey and pumped storage in Portugal also drive Europe’s increase in 2020.

Hydropower net capacity additions by country/region, 2018-2025

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Capacity additions continue to increase in 2021 and 2022, averaging 28 GW per year owing to the commissioning of two flagship projects in China. These two projects, Wudongde and Baihetan, have a combined capacity of 26 GW and should be commissioned in 2020-21 (Wudongde) and 2021-22 (Baihetan), with the Covid‑19 crisis expected to have minimal impact on their construction lead times. After these two projects are completed, annual growth in China is expected to slow to an average of 4.7 GW per year during 2023-25, with pumped storage accounting for more than half of annual additions.

Excluding China, global hydropower additions are expected to be stable during the remainder of the forecast period (2021‑25), ranging from 10 GW to 13 GW per year. Asia accounts for 43% of cumulative growth, led by India and Pakistan, with most of the remainder in Southeast Asian countries where the private sector is expected to become increasingly involved in hydropower development. Deployment in Southeast Asia is led by Lao PDR as the country enlarges domestic access to electricity and positions itself as a regional electricity exporter. Rising power demand and affordable universal electricity access also boost capacity additions in Viet Nam and Myanmar , while multipurpose water use spurs dam development in Indonesia.

In Latin America, more than half of growth in 2021-25 is in Colombia, Argentina and Brazil. Large reservoir projects in Colombia and Argentina are expected to be commissioned at the end of the forecast period, while annual additions slow in Brazil after commissioning of the last phases of Belo Monte in 2019. Small-scale hydroelectric projects awarded through recent tenders make up new capacity additions in Brazil through 2025.

Europe’s growth between 2021 and 2025 is led by Turkey, with large projects driving development in 2020 and 2021 and slower deployment during 2023-25 as the FiT for small and medium-sized run-of-river plants is phased out. Excluding Turkey, more than half of new hydropower capacity additions in Europe will be pumped storage, notably in Switzerland, Portugal and Austria. Europe’s pumped storage growth is prompted by the need for system flexibility to integrate increasing shares of variable renewable electricity. Hydropower development in Africa is led by the commissioning of units in Ethiopia, Nigeria and Angola.

Nevertheless, hydropower capacity growth during 2023‑25 could be 50% higher per year on average if project development were accelerated. This would require earlier commissioning of pumped storage plants currently under development in China and fewer interruptions of projects under construction in Africa and Latin America. Development lead times could also be shortened with improved financing conditions, fewer construction delays, and more efficient permitting and licensing within sustainability guidelines.

Global hydropower generation (excluding pumped storage) is forecast to increase 9.5% over the forecast period, rising from 4 250 TWh in 2019 to 4 650 TWh in 2025, and remain the world’s largest source of renewable generation. The increase results mainly from new capacity in markets that lead greenfield project development: the largest single increase (+107 TWh)  is in a country, China, followed by the Asia Pacific region, where capacity growth is accelerating.

Global hydropower generation in 2025 versus age of fleet by region

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Shares of global hydropower generation and capacity growth, 2020-2025

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However, another reason for the generation increase is the assumption that operating conditions over the forecast period will return to pre-2019 levels in several countries after weather conditions caused output to fall from 2018 to 2019. This expectation is prevalent in parts of North America, Europe and Latin America, which are forecast to account for a higher share of the increase in global generation during 2020-25 despite having a lower share of new capacity additions.

Hydropower generation in the United States was down 21 TWh (-7%) in 2019 due to droughts and wildfires in the Pacific Northwest, while droughts also caused substantial declines in Argentina, Paraguay and Mexico. Lower precipitation in parts of Europe, coupled with a heatwave, caused 2019 year-on-year declines of 10% in Norway, 31% in Spain and 13% in France, which have one-third of Europe’s fleet. Load factors in these seven countries are assumed to return to pre-2019 levels by 2025, and their increased output is forecast to make up 16% of the global increase in hydropower generation.

Hydropower will therefore account for 16% of the world’s electricity generation by 2025. To sustain this level, output from existing hydropower plants needs to be maintained; however, substantial amounts of generation will come from fleets that are ageing. By 2025, 40% of the world’s hydropower output will be from countries with fleets that are more than 40 years old, the age at which the first major refurbishments are undertaken to either maintain or increase performance. Roughly two-thirds of this generation is in North America and Europe, where the weighted average age of the fleet is 45 to 51 years old. Maintaining output from these fleets over the forecast period will therefore require significant investments in refurbishment and modernisation. 

Biomass electricity

Global biomass electricity capacity expanded 8.5 GW in 2019, the second-highest level of annual additions on record. China accounted for 60% of last year’s new capacity, primarily made up of energy-from-waste projects. The next-largest market, Japan, was one-tenth of the size of the Chinese market. 

Biomass electricity capacity additions by country, 2017-2025

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The forecast anticipates a 16% decline in bioenergy capacity additions in 2020. Major deployment of biomass power projects is concentrated in relatively few countries, with just ten nations accounting for 90% of new capacity in 2019. Of these, China, Brazil, Japan and the United Kingdom have been the most affected by the pandemic, so potential exists for some project delivery delays. Nevertheless, with forestry activity ongoing and ports operational, widespread supply disruptions of biomass fuels (e.g. wood chips and pellets) for existing projects have not been observed.

Annual additions fall to around 5 GW to 6 GW per year over the remainder of the forecast period. One factor is the transition from policy support through FiT and certificate schemes to competitive auction frameworks in key bioenergy markets (e.g. Japan, Germany and the United Kingdom). Capacity awarded in technology-neutral auctions has been relatively low because of generally higher generation costs for bioenergy compared with wind or utility solar PV technologies, and limited cost reduction potential for bioenergy technologies. Technology-specific auctions for bioenergy are not widespread.

China has also announced that subsidies for biomass-based power projects will switch from the current FiT system to auctions in 2021, with a strong emphasis on projects that harness co‑generation and utilise fuels produced from agricultural or municipal waste.

CSP

Global CSP additions in 2020 are forecast to be half the 2019 level. China leads expansion, with 200 MW expected to come online this year under the generous FiT scheme. However, growth in China falls short of government targets due to high costs and financing challenges. Commissioning of Chile’s 110‑MW Cerro Dominador plant with 17.5 hours of molten salt storage – the largest in Latin America – accounts for the remainder of global CSP capacity growth this year.

CSP capacity additions in selected countries, 2017-2025

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In 2021 and 2022, phase four of the Dubai Electricity and Water Authority (DEWA) Mohammed bin Rashid Al Maktoum Solar Park is expected to start coming online, adding 300 MW of capacity in 2021 and 400 MW in 2022. Its plants will contribute to Dubai’s 2050 Clean Energy Strategy, which aims to achieve 75% clean energy by 2050. The project has closed financing and construction has already begun, with the base of the tower completed in mid-2019.

Morocco’s Noor Midelt I is expected to come online in 2022, adding 190 MW. Preliminary infrastructure work has already begun on the USD 782‑million project, which is expected to close financing from multiple development banks including KfW, World Bank, the African Development Bank and the European Investment Bank. The project will have five hours of molten salt and battery storage capacity.

China’s CSP additions are projected to peak in 2021 as developers rush to complete projects before phaseout of the FiT scheme. However, local governments are expected to provide additional fiscal incentives for the commissioning of various projects under development beyond 2021. Nonetheless, the generation costs of CSP projects are three times higher than for utility-scale PV plants, leading developers to abandon projects.

Capacity additions beyond 2022 are expected to be dominated by China, South Africa, the United Arab Emirates and Morocco, with projects such as Noor Midelt II (which is still in phase of putting out tenders for developers) and the Likana project in Chile, which was acquired by the Cerro Dominador group in 2019. The group plans to bid on the 450‑MW CSP project in a power auction in Chile in 2021. 

Large-scale CSP projects under construction

Country

Project name

Capacity (MW)

Technology

Storage (hours)

Chile

Cerro Dominador

110

Central receiver tower with molten salt storage

17.5

Greece

MINOS

50

Central receiver tower with molten salt storage

5

South Africa

Redstone

100

Central receiver tower with molten salt storage

12

Morocco

Noor Midelt I

190

Parabolic trough with molten salt storage and battery storage

5

United Arab Emirates

Al Maktoum IV Phase I

600

Parabolic trough

 

United Arab Emirates

Al Maktoum IV Phase II

100

Central receiver tower with molten salt storage

15

China

Yumen Xinneng

50

Central receiver tower with molten salt storage

9

China

Changzhou Yumen Dongzhen

50

Parabolic trough with molten salt storage

7

China

Beijing Guohua

100

Central receiver tower with molten salt storage

10

China

Dahua Shangyi

50

Central receiver tower with molten salt storage

6

China

Jinta

100

Central receiver tower with molten salt storage

12

China

Huanghe Qinghai Delingha phase I

135

Central receiver tower with molten salt storage

3.7

China

Shenzhen Jinfan Akesai

50

Parabolic trough with molten salt storage

15

China

Zhongyang Chabei

64

Parabolic trough with molten salt storage

16

China

Yumen Xinneng

50

Beam-down with molten salt storage

9

China

CECIC Gansu Wuwei Gulang

100

Parabolic trough with molten salt storage

7

China

Zhangjiakou

50

Linear Fresnel reflector with solid state concrete storage

14

China

Urat Banner

50

Linear Fresnel reflector with molten salt storage

6

Sources: Nur Energie (2020), Nur Energie in Greece; NOMAC (2020), Redstone CSP IPP; HELIOCSP (2019), Noor Midelt winner optimizes Concentrated Solar Power trough, storage to hit record price; Morocco World News (2019), EDF Renouvelables Wins Bid for Morocco’s Noor Midelt I Solar Plant; DEWA (2019), Mohammed bin Rashid Al Maktoum Solar Park: A leading project that promotes sustainability in the UAE; ACWA Power (2020), NOOR Energy 1; CSP Focus (2020), Yumen Xinneng 50MW molten salt tower CSP plant; CSP Focus (2017), Urat 50MW Fresnel CSP project; Solar Paces (2016), Concentrating solar power projects; AALBORG CSP (2020), 50MWE SGS4 steam generation system for CSP plant; Solar Paces (2018a, 2018b), Concentrating solar power projects.

Geothermal

Global geothermal capacity additions are projected to amount to 0.3 GW in 2020, one-third of last year’s level, which was the highest ever recorded. This year, Indonesia is again expected to lead new development, with 145 MW of capacity added (90 MW from the Rantau Dedap plant and 45 MW at the Sorik Marapi plant), followed by Turkey (+70 MW). These two countries are expected to account for more than two-thirds of new capacity additions in 2020, while the Philippines, the United States and Bolivia are responsible for most of the rest.

A number of projects have been delayed by disruptions to the global supply chain for machinery and materials and by deferrals of strategic decisions (including for financing) caused by the Covid‑19 crisis. Therefore, several small and medium-sized projects originally scheduled to come online in 2020 are expected to be commissioned in 2021 instead. In Turkey, the 10-year FiT scheme for new plants, originally scheduled to end at the end of 2020, has been extended until mid-2021 to cover projects affected by such delays.

Geothermal capacity additions in selected countries, 2017-2025

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Global cumulative geothermal capacity is forecast to increase 7% to 16.5 GW by 2022, with Indonesia, Kenya, Turkey and the Philippines responsible for two-thirds of this growth. In Indonesia, the state-owned company PT Geo Dipa Energi (GDE) has received a USD 300‑million loan from the Asian Development Bank for the 110‑MW expansion of the Dieng and Patuha plants, expected to be carried out during 2020‑23. In Kenya, the county of Nakuru is host to various projects, including an additional 83‑MW unit for the Olkaria power plant expected to come online in 2021. Beyond 2022, Indonesia, Kenya and Turkey continue to lead capacity additions, which are projected to exceed 0.8 GW per year globally on average.

The Indonesian government recently prepared a roadmap for geothermal energy, with the goal of having 8 GW of installed capacity by 2030 (up from 2.1 GW in 2019). However, wider exploitation of the country’s considerable geothermal potential will require the resolution of a number of challenges, including low energy prices, limited local electricity demand, a lack of capital investments, and environmental and social issues.

The government plans to conduct exploration and drilling in 20 geothermal areas during 2020-24, with a view to reduce development risks for future auction plans. Policies aimed at providing better economic incentives to geothermal projects are also under consideration. Provided that Indonesia overcomes the abovementioned obstacles, it could have as much accumulated installed capacity as the United States by 2025.

Finally, geothermal power is also receiving greater interest from oil companies, which recognise opportunities to diversify their activities while capitalising on their drilling expertise.