Project Drawdown defines small hydropower as small-scale hydropower technologies under 10 megawatts, including in-stream hydrokinetic systems. This solution replaces conventional electricity-generating technologies such as coal, oil, and natural gas power plants.
Small hydropower, sometimes referred to as run-of-river or simply small hydro, is similar to large reservoir-based hydroelectricity but does not divert and store large amounts of water. Another type, in-stream hydro, is modeled after tidal energy, in which underwater turbines are anchored to the riverbed and spin from the flowing river current. Due to data availability, this analysis focuses almost exclusively on the former.
Total Addressable Market
Two total addressable markets were developed for this sector solutions, supported on lower and higher climate emissions mitigation targets linked to different levels of electricity demand and renewable energy sources integration. The total addressable market for small hydropower is based on projected global electricity generation from 2020 to 2050, with current adoption estimated at 2.6 percent of generation (i.e., 676 terawatt-hours).
Impacts of increased adoption of small hydropower systems from 2020 to 2050 were generated based on two growth scenarios. These were assessed in comparison with a Reference Scenario, in which the solution’s market share was fixed at the current levels.
- Scenario 1: Due to the uncertainty associated with the development of these technologies, Scenario 1 follows IEA (2017) Energy Technology Perspectives 2DS and B2DS scenarios; IEA (2018) World Energy Outlook SDS; IRENA (2018b) REmap Case scenario; and Equinor (2018) Renewal Scenario, using a medium growth trajectory.
- Scenario 2: This scenario is derived from the yearly adoption scenarios of the same external sources as used in the Scenario 1, though following high growth trajectories.
None of the data sources used explicitly identifies the evolution of small hydro systems for electricity generation; therefore, an assumption was adopted that, in the future, the current share of 12 percent of all hydroelectricity would continue to come from small systems. This adoption results in a market share of 2.15 percent in 2050 (994 terawatt-hours) for Scenario 1 and of 1.6 percent with generation of 1,136 terawatt-hours for Scenario 2 in 2050.
The financial inputs used in the model assume an average installation cost of US$2,785 per kilowatt with a learning rate of 6.4 percent, reducing the cost to US$2,668 in 2030 and to US$2,612 in 2050, compared with US$1,786 per kilowatt for the conventional technologies (coal, natural gas, and oil power plants). An average capacity factor of 48 percent is used for small hydropower, compared with 57 percent for conventional technologies such as coal, natural gas, and oil power plants.
Variable operation and maintenance costs of US$0.003 per kilowatt-hour and of US$88.1 per kilowatt for fixed costs are considered for small hydropower systems, compared with US$0.005 per kilowatt-hour and US$34.7 per kilowatt for the conventional technologies.
Through the process of integrating small hydropower with other solutions, total addressable markets were adjusted to account for reduced demand resulting from the growth of more energy-efficient technologies, as well as increased electrification from other solutions such as electric cars and high-speed rail. Grid emissions factors were calculated based on the annual mix of different electricity generating technologies over time. Emissions factors for each technology were determined through a meta-analysis of multiple sources, accounting for direct and indirect emissions.
The results for the Scenario 1 show that the marginal firsts costs compared to the Reference Scenario would be US$49.4 billion from 2020 to 2050, with just over US$315 billion in lifetime savings. Increasing the use of small hydropower from about 676 terawatt-hours of electricity generated in 2018 (2.57 percent of the market) to around 994 terawatt-hours would require an estimated US$294.6 billion in cumulative installed capacity first costs. Under Scenario 1, this increased adoption could avoid 1.7 gigatons of carbon dioxide-equivalent of greenhouse gas emissions from 2020 to 2050. Scenario 2 results in 3.3 gigatons of avoided greenhouse gas emissions associated with higher marginal first costs of US$80.1 and lifetime savings of US$543.7.
Small hydropower systems impose a smaller impact than larger systems on aquatic ecosystems and local communities; but, like all forms of hydro-based generation technologies, they need to be carefully vetted as they cannot completely prevent stresses on ecosystems and human well-being. Small-scale hydropower has a wide range of designs, equipment, and materials. In-stream hydrokinetic solutions, for example, might play a crucial role in remote mountainous regions in need of electrification where it is uneconomical to install power transmission lines. In-stream hydro offers a reliable and economical method of generating electricity in these remote places. Instead of building expensive electric transmission networks or transporting fossil fuels to run generators, the natural flowing rivers adjacent to many villages can be harnessed to provide a clean and nearly endless supply of electricity.