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.

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.

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. 

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.

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.