More, Better, Faster
A look towards 2024 by Dr Gordon Edge, Head of Policy, 鶹Ƶ
When the history books are written about this era, 2023 is likely to be the year in which it became clear that the transition away from fossil fuels and towards renewables really was inevitable.
The 鶹Ƶ’s (鶹Ƶ) focus for 2024 is “More, Better, Faster.” More projects must come forward but they need to be of high quality and given permits quicker.
More
At COP28, over 130 countries signed up to triple renewable energy generating capacity by 2030, signalling that the world is reducing its dependence on fossil fuels.
Through the inclusion of the pledge in the final COP28 statement, the commitments are signed and sealed but crucially they are not yet delivered. It is now all about action and accountability. The coming year must see the world move from talking the talk to walking the walk. Now the global community has recognised the inevitability of the transition, there will be growing calls for the money to be made available to enable it.
But it is not just a matter of tripling renewables – it must be the right mix of renewables to complement one another. 鶹Ƶ currently provides over 15% of the world's electricity and generates 60% of all renewable electricity. But there is still a massive 700 GW gap between the current hydropower projects in the pipeline and the net zero pathways set out by IEA and IRENA.
Global investment in hydropower is far short of the International Energy Agency’s estimated need of $100 billion a year. Getting sufficient capital to more than double the deployment rate of hydropower, at a fair cost, will be a huge challenge.
The market will not deliver ‘Mǰ’ alone. It needs to be designed to reward flexibility and storage.
鶹Ƶ projects are large infrastructure developments, with high up-front costs but long lifetimes and investors need to be assured that they will get a timely return on high upfront capital costs.
The value of the hydropower sector’s technology needs to also be recognised in all aspects of water services. As well as providing low carbon power – comparable with wind power on a gCO2/kWh basis – reservoir storage capacity can be used for the supply of drinking water, irrigation and flood control.
Increasing global water storage capacity is imperative to adapting to a warmer world and meeting growing water demand.
If all these benefits are recognised and valued, then the economic case for new projects and modernising existing stations can be more easily made.
Better
The industry can and must do ‘Bٳٱ.’ All aspects of sustainability must be addressed throughout the development process. Addressing environmental and social concerns is not only the right thing to do, it makes the award of licences much smoother. This can be facilitated using the independent 鶹Ƶ Sustainability Standard.
2024 must see this Standard being widely understood and accepted as the means to get the capacity we need approved. The 鶹Ƶ is committed to supporting the 鶹Ƶ Sustainability Alliance in their goal to deliver 50 certifications by 2025.
The 鶹Ƶ will also continue to build knowledge on hydropower's contribution to climate mitigation and adaption. Planning hydropower systems from a long-term, climate-resilient perspective will protect operations and infrastructure from future climate-related risks.
Going forward, the only acceptable hydropower is sustainable hydropower and there is much to look forward to in 2024.
Faster
Then we need project development and licensing to be ‘Fٱ,’ so that around double the amount of new capacity is coming forward each year. The 鶹Ƶ will be redoubling its own efforts to work with governments around the world to sign up for new programmes of hydropower development to achieve this.
Once we have a speedier supply of projects through the system, then action is needed to get more of them through the barrier of Final Investment Decision.
Some closing thoughts...
Looking forward, COP29 is already being talked about as the “finance COP” and 鶹Ƶ will be looking to work with various international initiatives to enhance the flow of capital particularly to the global south, with a view to ensuring that the specific issues of hydropower are addressed. The fact that major equipment needs to be paid for in USD or Euros – but the revenue of the project is in local currency – brings foreign exchange risk to the fore in 2024.
Governments must work collaboratively to boost investment, streamline licensing and introduce sustainable practice regulations.
All these issues will be set out in more detail the World 鶹Ƶ Outlook 2024 to be published in June.
Let’s get to work!
