Providing 16% of European electricity, hydropower is a key component of power supplies across the continent. Although 0.6GW was added in 2023, IHA’s Senior Policy Manager, Matteo Bianciotto, says the pace of development remains short of what is needed to fully decarbonise the power system. With several new pumped storage and reservoir projects being announced, Bianciotto does admit that these are positive signals for the next two decades.
As Brendan Quigley, COO of Gruner Stucky, added, lessons need to be learnt from recent experience and put in place to improve future projects to develop them faster and make them better.
Portuguese insight
Albino Marques is REN’s Institutional Relations Director in Portugal who says that over the past 20 years the Portuguese electricity system has “totally changed”, and gone “through a revolution”. After introducing a lot of wind power into its electricity system, but having had coal and gas, Marques says it’s “been a challenge to see how the system evolved”.
Acknowledging that hydro has played “a very important role” in the country’s electricity system, he explained that back in the 1950s it was practically only hydro-based. Pumped storage has since stepped up to play a key part, especially as there have been a few recent incidences where the system operator had to curtail wind and solar power. In spring 2024, the number of such curtailments increased considerably in comparison with previous years.
“Without pumped storage,” Marques adds, “this would not have been possible…In my view we need more storage and more hydro pumped storage. Hydro is key for flexibility and pumped storage is able to balance the system.”
Going on to discuss whether the inter connections between European power systems will be enough to accommodate the boom in solar and wind power, Marques explained that the balancing capability correlation is between the amount of hydro in each country’s control area, and the ability to balance the system quickly.
“The countries that can recover and rebalance in less than 15 minutes are those where hydro have an important share, such as Switzerland, Austria, Norway, Spain and Portugal. These are best ones in Europe to recover the balance,” he said.
Underscoring the fact that these inter connections are of importance to increase the capacity for cross-border trade, Marques said each control area must take responsibility for its one security of supply because crisis can happen simultaneously.
“Hydro is the most valuable asset to balance the system,” he re-iterated.
Flexibility of provision
Looking at the flexibility of provision, Janice Goodenough, CEO of Hydrogrid, considered whether European electricity markets are capable of incentivising and renumerating such an attribute.
Positive developments include that the day ahead market, where roughly 80% of all power is being traded, has seen a significant increase in volatility over past five or six years. This, according to Goodenough, has led to an increase in remuneration for flexible power plants. For example, the difference in revenue that can be generated from inflexible run-of-river plants in comparison with flexible pumped storage plants has increased from 15% to 50%.
“In that sense, yes, the market is rewarding flexibility, and the reward has gone up,” Goodenough agrees.
Flexible producers on specific flexibility markets, such as primary, secondary and tertiary reserves, have seen a liberalisation across all of Europe and in most countries the minimum volumes needed to participate in these markets has gone down, Goodenough explained.
“These minimum volumes are down to 1MW or 5MW which means almost all hydropower producers would be able to participate in those markets if they had the technical flexibility. This is second way in which the market very directly incentivises flexibility,” she said.
However, looking to the kind of flexibility required to cover for the so-called ‘dark lull’, where days and weeks of additional flexibility are needed, is still an unsolved problem in the market design, Goodenough admitted.
According to Tobias Keitel, CEO of Voith Hydro, such an increasing demand for flexibility in projects means that extensive effort goes into equipment design to be able to reply to such demand. He says that there is now a much wider set of requests for Voith’s equipment, with modernisation driving flexibility.
Policy focus
Adrian Lindermuth, Policy Advisor at Eurelectric, took a look at new policies within the energy sector. He spoke about the key elements behind the recent electricity market design reform. Such a review of the European sector was not foreseen by the European Commission, he admits, but it was forced to take measures due to the war in Ukraine and the unprecedented electricity price crisis that was triggered.
There were calls from some member states to fundamentally rethink electricity market design but fortunately, Lindermuth says, these ideas did not get sufficient support. The general rules of the European electricity market design remain more or less untouched but there are several important elements that affect hydropower. These include the introduction of simplified access to PPAs where fixed prices reduce price volatility risk. This was introduced for all technologies.
In addition member states are also required to give proper flexible needs assessment on a regular basis to give good picture of what flexibility is needed in terms of time frame. Member states can then decide if market signals are sufficient to drive necessary expansion, or if signals are insufficient, they can introduce flexibility support schemes.
Pumped storage
Iain Robertson Head of Statkraft Scotland, spoke about whether there is a resurgence of pumped storage in Europe. He gave an update on the Loch na Cathrach pumped storage project (formerly known as Red John) that Statkraft acquired from Intelligent Land Investments Group in December 2023.
Robertson says this is an exciting project that will use the globally iconic Loch Ness in the Highlands of Scotland as a lower reservoir, and is getting a lot of attention. In terms of drivers for this project, Statkraft is fundamentally a hydropower company so well qualified as anyone to deliver such a project, he said, adding that the UK needs pumped storage.
Adrian Lindermuth from Eurelectric also spoke about what can help facilitate the development of European pumped storage projects.
“The key is to align communication and messaging,” he said. “Compared with solar and wind power, hydro is much more complex, and it still has issues. If you talk to people in Brussels, the majority do not have an understanding of the different hydropower types and services they provide in energy and transmission. If want the necessary societal and political support,” Lindermuth adds, “we need increase efforts in this regards…much more needed.”
If the industry wants the European Commission to recognise the benefits of hydropower, Lindermuth says that it’s “up to us to engage and share best practice, experiences and concerns”.
Harnessing new energy
Other industry concerns were touched upon when Janice Goodenough was asked about the benefits of digitalisation in the European hydropower fleet. Acknowledging that the digitalisation level in Europe was higher than most other parts of world, Goodenough also highlighted that 40% of the global hydro fleet is more than 40 years old.
“So these power plants come from a time before the internet, and certainly digitalisation, and so lot of investment is need there in hardware and software too,” she said.
Iain Robertson from Statkraft was also asked about potential worker shortages within the European hydropower workforce, and whether it would experience similar problems as North America is facing.
“Yes, absolutely,” he replied, saying that it was especially a problem in supply chains in the Scottish Highlands, but it is also a wider issue. Statkraft is working work with academia and carrying out research to get a correct forecast when trying to address the problem.
In conclusion, the IHA’s Matteo Bianciotto said that is fantastic to have new energy in the business that has been “a little sleepy for while”, adding that across-the-board more skills need to brought in and developed.
The full webinar called ‘A roadmap for better, faster hydropower development in Europe’ can be viewed here.
