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5. HYDROPOWER Hydropower, excluding pumped storage, with a global installed capacity of around 970 GW at the end of 2011, is currently the largest renewable power generation source. At good sites it provides the cheapest electricity of any generation technology. Hydropower is a mature technology and the LCOEs of currently installed projects and those coming on stream are generally low. Hydropower is unique among other renewable power generation technologies in that it also provides other services, such as water storage, irrigation opportunities and flood control. However, ensuring that new hydropower projects respect the three pillars of sustainability will be critical to reducing project lead times and accelerating deployment.19 When hydropower schemes have storage that is manageable, in a reservoir behind the dam, hydropower can contribute to the stability of the electrical system by providing flexibility and grid services. It can help with grid stability, as spinning turbines can be ramped up more rapidly than any other generation source. Pumped storage hydropower is specifically designed to provide these services, as well as to provide an arbitrage between periods of low and high electricity prices. However, the LCOE analysis does not include an estimate of the value of these services, as they are very system‐specific. With large reservoirs, hydropower can also store energy over weeks, months, seasons or even years. Hydropower can therefore provide the full range of ancillary services required to allow a high penetration of variable renewable energy sources, such as wind and solar. The importance of hydropower is therefore likely to grow over time and, although it has long lead times, growth in hydropower capacity projects that respect the three pillars of sustainability will be very important in helping facilitate the high penetration of renewables where remaining resources are yet to be developed. 19 The three pillars or aspects of sustainability are economic, environmental and social. Key findings from the analysis for hydropower include: • Hydropower produces some of the lowest‐cost electricity of any generation technology. The LCOE of large‐scale hydro projects at excellent sites can be as low as USD 0.02/kWh, while average costs are around USD 0.05/kWh. • Small hydropower can be a very attractive electrification option and can provide low‐cost electricity to remote communities or for the grid. • Hydropower is a mature technology, with limited cost reduction potentials in most settings. However, significant low‐cost potential remains to be exploited in many countries. 5.1 HYDROPOWER CAPITAL COSTS Hydropower is a renewable energy source based on the natural water cycle. Hydropower is the most mature, reliable and cost‐effective renewable power generation technology available. Hydropower schemes often have significant flexibility in their design and can be designed to meet base‐load demands with relatively high capacity factors, or have higher installed capacities and a lower capacity factor, but meet a much larger share of peak electricity demand. One key advantage of hydropower is its unrivalled “load following” capability (i.e. it can meet load fluctuations minute‐by‐minute). As a result of this flexibility, hydropower is an ideal complement to variable renewables as, when the sun shines or the wind blows, reservoir levels can be allowed to increase, thus creating a reserve for times when there is less wind or sunshine. Similarly, hydro can meet the demands that arise when large ramping up or down of supply is needed due to increases or decreases in solar or wind generation. Hydropower is the only large‐scale and cost‐efficient electricity storage technology available today. It is also a relatively efficient energy storage option. Despite promising developments in other energy storage Renewable Power Generation Costs in 2012: An Overview 39PDF Image | International Renewable Energy Agency
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