Chapter 7: Renewables

Renewable energy has been used by humans from the early stages of our history, whether it was  solar energy to illuminate (daylight) and generate heat, or  wind and water to provide mechanical energy for milling wheat or sawing timber. At the heart of renewable energy is the largest nuclear fusion engine which happens to be at exactly the right distance, for our Earth to be in the "habitable zone". As Stephen Peake and Bob Everett note, "solar power, both in the form of direct solar radiation and in indirect forms such as bioenergy, water and wind power, was the energy source upon which early human societies were based." (Peake, 2018, p. 1)

As civilisations progressed, so did their ability to put the sun's direct and indirect energy to good use, whether it was irrigating crops, burning wood for heating, cooking and lighting or sailing ships to carry crops, metals and minerals in early commodity trade. The advent of fossil fuels, especially coal, opened an entirely new chapter in human civilisation and economic progress. The invention of the steam engine catapulted humanity into the industrial age and fossil fuels provided the scale, security and storability which underpinned human societies since the late 18th c.

Coal remained at the heart of world economic growth, powering manufacturing, agriculture, transportation and electricity generation throughout the 19th and early 20th centuries. Oil came to prominence shortly after WWI and displaced coal in transportation soon after WWII. Natural gas rose in importance in the early 20th c. in the USA, and from the 1970s it started being traded internationally, both via pipeline and LNG, as we saw earlier in Chapter 4.

Fossil fuels provided the necessary energy for the rebuilding of Europe and the Far East after WWII and have provided more than four fifths of global energy requirements since the 1970s. It was in that decade that the effects of such intense use of hydrocarbons started being observed. The rapid accumulation of carbon dioxide in the atmosphere attracted the attention of scientists, who started studying the possible impact on global temperatures, the "greenhouse effect" and ultimately climate change.

It is not just the fact that annual emissions have been increasing relentlessly since the 1960s that is of great concern. The effect of greenhouse gas (GHG) emissions, of which carbon dioxide is the majority, is cumulative. Once released in the atmosphere, GHGs stay there for many years, at least 300 for CO2, and contribute to the temperature increase by allowing less of the solar radiation to be reflected back in space. Exhibit 2 shows the cumulative carbon emissions since 1965, while Exhibit 3 shows the cumulative contributions of major economies and regions as of 2024.

In the face of the worsening impact of fossil fuels on climate change, the world refocused its attention to sustainability, which became the third part of a triptych which also included supply security and affordability. Interest in renewable sources of energy, especially for electricity generation, was rekindled and investments in renewables started becoming more visible since 2000 and gained momentum from 2010 onwards.

Here we can see that the levelized cost is affected by the fixed cost of building and operating the generating plant (cost of capacity), as well as the variable cost of producing the electricity. All of these costs are added up on an annual basis, from the construction phase of the plant, all the way to the end of its life. The costs are discounted by an appropriate discount factor and added up to produce a total present value of the cost of generation. This is divided by the total amount of electricity that the plant is expected to produce over its lifetime, in order to produce the present value of the cost of producing a megawatt-hour of electricity.

Two examples of such calculations for various types of generating technologies are given here. In Exhibit 6 we can observe that there is variability in the LCOE in the US, with figures ranging from ca. $30/MWh for onshore wind, to ca. $134/MWh for open cycle turbine. In Exhibit 7, the relevant UK figures are displayed. Observe the large share of fuel and carbon cost in gas generation. Also noteworthy is the relatively large share of capital costs in the LCOE for wind and solar generation and the (expected) absence of any fuel costs.

Even more interesting than a comparison among the LCOE levels of various forms of generation is the development of these costs over time. Exhibit 8 shows a collection of costs of renewable generation and how they have progressed in the decade between 2010 and 2020. Although biomass, geothermal and hydro costs has remained flat or marginally decreased, solar and wind generation costs have actively declined, none more so than solar PV. Even more promising is the fact that all costs of RE generation are competitive with those of fossil fuels, which are represented by the grey area between ca. 0.05-0.15 USD/kWh (or 50-150 USD/MWh). In a world where renewable generation needs to make commercial, as well as environmental, sense this is an important step on the path to long-term decarbonisation.

This "intensity" of solar radiation is known as "power density" and is measured in terms of kilowatt per square metre (kW/sq.m.). On a clear day, the power density at a perpendicular angle to the sun is ca. 1 kW/sq.m., also known as "1 sun". This figure varies according to latitude, season, time of day and cloud cover, all of which affect the angle at which solar radiation hits a particular area and whether there are any obstacles which will diffuse part of this direct radiation. Given the power density at a particular area, we can calculate the amount of energy generated over time.

Earlier on it was mentioned that diffuse radiation is important for daylighting buildings, so that less energy is used in lighting. Even more important is the amount of energy used to heat building spaces, especially when fossil fuels (heating oil or natural gas) or fossil-fuel electricity (coal, gas or oil) are used to provide that heating. Direct solar radiation can be used in both active and passive methods of heating buildings. A typical application of active solar heating is the use of sun's radiation to heat up water, normally at less than 100 ºC. This can be done with rooftop solar panels which are used to concentrate radiation, with the help of a glass cover, on water pipes which can then provide hot water and underfloor heating to a building, either via a storage tank with a heat exchanger (Exhibit 12), or a thermosyphon system (Exhibit 13, whereby the water tank is lying above the solar collectors outside the building). In some cases, solar collectors can be modified to provide heating for larger structures, such as swimming pools. In some countries, solar collector installations are scaled up to provide district heating for communities, villages or even small towns.

The idea of using a mirror to concentrate direct solar radiation to light a fire is not new - it is in fact a basic skill taught to scouts and campers around the world. As early as the mid-19th c. scientists started experimenting with the idea of using large parabolic dishes to drive a steam boiler whose power was used to drive a variety of machinery, from a printing press to a cooker. The advent of abundant and cheap coal, which drove the Industrial Revolution, meant that interest in solar steam engines all but disappeared. It was not until the 1980s that interest in solar power (both CSP and PV) re-emerged, starting in the US which was looking for alternative energy sources after the lessons of two oil crises.

A number of different designs have emerged since, with the two most popular being parabolic line (or trough) collectors and power towers with heliostats, examples of which are shown in Exhibits 15 and 16. Trough collectors use parabolic mirrors to reflect solar radiation onto a central tube which contains a heat-absorbing liquid, typically synthetic oil or molten salt. The liquid is heated up using this radiation and can then produce high-temperature steam via a heat exchanger. In turn, the steam drives a thermal engine which produces the electricity. To optimise performance, the trough collectors follow the sun's path during the day by tilting along their axis (elevation angle). In Exhibit 16, you can see the large array of heliostats and power tower in Seville, in south Spain. The heliostats are essentially large flat mirrors, mounted on a steel base, which can track the sun both in terms of elevation and azimuth angle. 

Exhibit 17 and 18 show two alternative designs: fresnel and parabolic dish collectors, respectively. A fresnel collector mimics the function of a trough collector by creating a wider trough using several rectangular mirror panels and elevating the fluid line. Rather than tilting the entire trough, individual panels are tilted instead to adjust the angle at which the sun's radiation is reflected during the day. A parabolic dish collector tilts in all directions in order to maximise the direct exposure to solar radiation, which is reflected to a point facing the centre of the dish, with typically a Stirling engine mounted on it, which can operate at higher temperatures than a steam engine. For a more detailed exposition of the various designs, see Peake (2018, Chapter 3).

After the surge in interest in CSP in the US, capacity build-up started taking off through the 1990s and especially in the late 2000s with the installation of the PS10 and PS20 projects in south Spain. CSP capacity continued increasing in Spain and the USA in the first half of the 2010s but has flatlined since 2014, as can be seen in Exhibit 19. In 2023 global CSP capacity amounted to just over 6.5GW, with China being the main country to add capacity.

A fundamental shortfall of solar is the availability of the resource. As many critics of renewables may say "when the sun does not shine, fossil fuels are the only reliable alternative". In fact, even when the sun shines the amount of electricity produced can vary depending on the season, cloud cover and maintenance state of the reflective panels. Some of the early CSP plants have the ability to switch to natural gas to continue running their steam turbine, when the sun sets. Increasingly though, CSP plants are built with energy storage capacity which can continue generating steam and electricity for an extra 4 to 10+ hours after sunset. Solar water heating collectors (the thermosyphon system mentioned above) are also a form of CSP, albeit less technologically advanced. Exhibit 20 shows the growth of these solar collectors, which have reached a global capacity of ca. 560 GWht in 2023.

After all which has been said about CSP, with all the benefits of free and clean solar power, but the shortfalls of resource unavailability and initial installation costs, how expensive is concentrated solar power? This question can be explored in Exhibit 21 where IRENA has put together costs of installation for CSP. You can see the development of installation costs for individual projects by size and type, measured in USD/kW capacity. In Exhibit 22, you can see the development of average installation costs (left chart in USD/kW), capacity factors (middle chart in percentages) and levelized costs of electricity (right chart in USD/kWh). Focusing on 2021 figures, we can see that the average cost of installing new capacity jumped to ca. 9,000 USD/kW; multiply this, for example with 50MW, or 50,000 kW and you get an idea of the total installation cost involved. The availability of the resource is measured by the capacity factor, which is affected by the length of day, seasonality, cloud cover etc., and that was 80% on average for 2021. The jumps in both installation costs and capacity factor is most likely due to the inclusion of storage in all new projects, which increases installation costs considerably, but also dramatically improves the availability of solar electricity after sunset. Finally, the cost of producing one kWh of electricity was on average 11.4 cents in 2021, or 114 USD per MWh if you prefer. This does not compare favourably with either solar PV or wind, but it has improved in the last ten years and is now competitive with the fossil fuel LCOE range in Exhibit 8.

The idea of sun's practically inexhaustible energy being converted directly into electricity, one of the most useful forms of energy, is what is particularly appealing in the case of solar photovoltaics (PV). With the etymology of the word meaning "volts (of electricity) from light", PV relies on the conversion of the energy contained in photons into movement of electrons, i.e. electricity. This is done with the help of a semiconductor, which can be either elemental (e.g. silicon [Si] or germanium [Ge]) or compound (e.g. gallium arsenide [GaAs], indium phosphide [InP], or silicon carbide [SiC]). For the vast majority of semiconducting applications, especially for solar cells, silicon is the element of choice.

Compared to other forms of generation, the efficiency of PV cells is relatively low, ca. 25% in lab conditions, often lower in real-life applications. A single PV cell typically produces ca. 1.5W, so to get more sizeable amounts of power cells are connected in rectangular modules, which are then connected side by side into arrays, commonly known as solar panels. The more efficient the PV cells, the less area they need to cover in order to produce the same amount of electricity, but this also depends on the intensity with which the sun is radiating.

To provide some efficiency standardisation of the various types of solar panels available in the market, their power rating is specified in peak watts (Wp),which is their electricity output when the solar radiation incident on the cell has a power density of 1 kW/sq.m. (or "one sun" as we saw earlier). There are two more control factors used for power rating: the cell has to be at 25 ºC ambient temperature and the air mass coefficient is set at AM1.5.

The concept of "air mass" has to do with the angle at which solar radiation enters the earth's atmosphere, which affects the distance the sun's rays travel through the atmosphere, which in turn affects the spectral power distribution of solar radiation. As solar radiation approaches the edge of the atmosphere, its intensity is ca. 1,350 W/sq.m. and the air mass coefficient is AM0. Although this may not seem relevant, this value is useful for space applications, such as providing solar power to satellites. 

China's expansion in solar PV generation was also aided by the parallel expansion in the manufacturing of PV cells and panels. This created a virtuous circle, making larger PV projects economically feasible, which in turn expanded economies of scale in solar installations and manufacturing, bringing dramatically down the overall LCOE for solar PV in the last 10 years. In Exhibit 28, notice how installation costs decreased from 5,310 to 758 USD/kW, a reduction of 85% since 2010. In a similar way, in Exhibit 29, LCOE decreased from 0.460 to 0.044 USD/kWh (or from 460 to 44 USD/MWh), a reduction of 90%.

Impressive as the figures of installed solar capacity may be, even more important is the amount of electricity they actually produce. In 2024, over 2,000 TWh of solar electricity was produced, which amounts to ~6.5% of the over 31,000 TWh of global electricity production. Having this information as context, Exhibit 30 shows the shares of solar electricity generation. China is unsurprisingly ahead of any other country with nearly one third of global solar generation. Second biggest producer is the US, followed by Japan and then India. Europe as a region accounts for nearly a fifth of global solar generation, with Germany, Spain and Italy being the three most important European producers. Exhibit 31 shows the development of solar generation, both PV and CSP, in Europe since 2010. It shows the rapid expansion of production, which reflects the expansion of solar installations, especially PV, throughout the continent.

We close this section on solar with a brief look at the US and Asia Pacific. Exhibit 32 shows the rapid growth of solar PV generation, especially after 2014, when the US Department of Energy started reporting estimated generation from small-scale PV, i.e. installations on residential and commercial buildings. Exhibit 33 shows the development of solar generation in Asia Pacific, where the scene is dominated by China. Once again, note how generation starts climbing dramatically since 2014, coinciding with the beginning of LCOE reduction and a marked increase in utility-scale solar generation projects, predominantly PV. Japan and India are the next two most important solar producers in the region. Japan started expanding its capacity after the Fukushima disaster in 2011, in search of renewable alternatives to the shutdown of nuclear capacity. India has expanded its capacity both with utility-scale projects, as well as smaller community-based projects targeted to off-grid areas, as it has worked hard to increase access to energy (especially electricity) to larger parts of its rural population.

The quest for cheaper, more efficient and more abundant solar power is far from over. Cost reduction was the first milestone towards large scale expansion of capacity installation. There are still further milestones to be reached such as: electricity storage capacity for off-peak baseload generation, as well as peak balancing and ancillary services; efficiency gains and cost reduction in existing monocrystalline and polycrystalline cell manufacturing; use of compound semiconductors, such as GaAs; use of other PV technologies, such as multi-junction PV cells (to extract energy from a larger portion of the light spectrum), concentrated PV (CPV) using increased amounts of direct solar radiation to increase the cell's efficiency, perovskite cells (with much lower production costs, but also shorter life span), organic (plastic) cells which are also much cheaper to produce, and dye-sensitised solar cells (DSSC).

While these developments are exciting and offer a lot of promise on how the role of solar can expand in the future, it is also sobering to remember that crystalline PV cells are still produced using coke reduction in an arc furnace. Any production of solar cell components requires electricity and the generation mix from where this electricity comes is important. Today, the majority of PV cells are produced in China, where over 60% of electricity comes from coal. In addition, as the stock of PV modules increases and their age approaches 30 years, their decommissioning starts becoming a challenge. 

Wind

The effects of solar radiation on earth extend to the hydrological cycle, as well the creation of areas of high and low atmospheric pressure which lies behind the cause cold and hot air masses to move. This "movement" is nothing more than kinetic energy which also known as aeolic energy or, more commonly, wind energy or wind power. Like solar energy, wind energy is public, free and abundant, but it requires the appropriate equipment to capture it and turn it into other useful forms of energy.

Wind power has been used for thousands of year to generate kinetic energy which is then used for a variety of activities, such as milling grain or pumping water. It was only in the late 19th c. that scientists started experimenting with the use of wind to generate electricity. Such applications remained mostly small scale, mainly used to generate power at a domestic level, especially for remote houses and small communities.

It was only since the 1980s that larger scale applications were explored and mainly since the 2000s that we have seen a rapid growth in the use of wind turbines as sources of electricity in national grids. The initial momentum came from Europe and North America, but it is China which currently has the world's largest capacity installed.

Let's have a look at a few basic facts about wind though, before we look at key capacity holders and producers of wind electricity. As discussed earlier, the suns heats up different parts of the earth depending on the angle at which the solar rays hit the surface, which in turn depends on latitude (north/south temperate zones or near the equator) and season of the year. This solar heating causes variations in atmospheric pressure, which gives rise to the wind systems. High pressure regions tend to indicate fine weather with little wind, whereas low pressure regions tend to indicate changeable windy weather and precipitation. 

Speed is one, albeit the most important, aspect of the energy potential of wind; the other one is mass. Equation 2 shows that kinetic energy P is a factor of mass m and the square of velocity (speed) V. Imagive air passing through a cylinder with an area A=100 sq.m. and a length of 10 m at a velocity V=10 m/s. The volume of air passing through the cylinder every second would be 1,000 cu.m. Multiply this by the density of air ρ=1.225 kg/cu.m. and you can get the mass of air passing through the cylinder in kg/s. This relationship tells us that the mass of air m is a function of the density ρ, area A and velocity V and is shown in equation 3.

By substituting equation 3 into equation 2 we get equation 4, which tells us that wind energy depends on:

The accuracy with which we can forecast wind speed levels and variation is of paramount importance to predicting electricity generation, especially when wind forms a large part of the generation mix of an electrical system. Weather forecasters use a number of mathematical models to predict wind speeds and various statistical distributions to model these speeds. A typical such distribution is the Weibull and Exhibits 35 and 36 show two examples: one of a good fit and one of a poor fit. The worse the goodness of fit, the poorer the predictability of wind speeds and wind generation and the higher the need for quick response generation (natural gas, hydro or batteries) to balance excesses or shortfalls of such unpredictable generation.

Hammering a steel pile to the seabed (called a "monopile") is feasible when the offshore location is relatively close to the coast and the draft is shallow. For deeper offshore installations, the structure which supports the tower needs to adapt to the depth of the water, as it is no longer possible to simply fix the base to the seabed. Alternative designs, which borrow from offshore oil and gas platforms are shown in Exhibit 40A. In addition to the monopile (first from the left), you can also see a jacket and tripod (second and third), semi-submersible (fourth), tension leg platform (fifth) and spar (last one on the right).

Historically, the interest in installing wind generation capacity in medium-sized (between 5-100MW) wind farm was developed in the 1990s, mostly in northwest Europe and north America. In Europe, it was Germany which expanded its onshore capacity substantially from 2000 onwards, but Denmark and the UK took the lead in offshore installations. Exhibit 42 shows annual wind installations in Europe during the last decade, while Exhibits 43 shows wind installations by country for the most recent year. The UK remains an important investor in offshore capacity, with Germany, France and Netherlands catching up rapidly in the last few years. It is not surprising to see Europe lead the way, given its wind resource, both inshore (see Exhibit 44) and especially offshore in the North Sea, as can be seen in Exhibit 45.

On the other side of the Atlantic, the United States is estimated to have a potential resource of over 10 TW, with the biggest resource in Texas and considerable potential in Montana, Kansas, New Jersey and Delaware, the latter two offshore. Exhibit 46 shows wind speeds - note the potential in the dark blue areas, both offshore and around the Rocky Mountains. Exhibit 47 shows potential wind capacity estimates by state - note that Texas has ca. one tenth of the total US resource.

While the USA and several EU countries led the first wave of investments in wind generation capacity in the 2000s, by 2010 China caught up by becoming the second largest capacity holder. In the following 10 years, the Chinese expansion in installed wind capacity can only be described as "meteoric". By 2024, China had installed over 500 GW of wind generation, ~45% of the global total of 1,135 GW - Exhibit 48 shows this development.

Installed capacity is one aspect of the story; the other one is actual generation, which depends on the realised wind resource, prevailing weather and whether the wind turbines are available to generate and capable of exporting their electricity to the grid. Exhibit 49 shows wind generation shares in 2024, where China was once again the biggest contributor with ~40% of the 2,511 TWh of global wind generation. The USA takes second place with 18%, while Europe collectively produced 25% of the total, with the main contributors being Germany, UK, Spain and France.

We finish this section with the overall costs of installing and generating wind power and the cost elements involved in installing capacity. The two major trends which have emerged in wind generation are: the tendency towards larger turbines, with longer blades and a larger sweep area; and the increasing interest in offshore installations which can take advantage of greater wind speeds and, therefore, a larger wind resource. Both present challenges. Longer blades require a larger nacelle and a larger base structure to support the weight and ensure that the whole structure can withstand high wind speeds. When this is combined with an offshore location, the engineering and logistical challenge is even further, as the base structure of the turbine needs to be secured (see above for the various offshore structures which have emerged as the offshore depth increases), then the tower raised and fixed on the substructure, the nacelle hoisted to the top of the tower and the blades fixed to the nacelle.

As one can imagine, there are considerable costs involved in the development and production of the turbines themselves, the "civil engineering" costs of procuring and installing the tower and substructure and the supply chain costs of pulling all the equipment together and using specialised transportation and installation equipment to put each structure in its place, either on land or at sea. 

As for the development of capacity installation costs and LCOE, the trends are similar to those for solar PV, albeit the cost reduction has been less steep as wind is a more mature technology that solar PV. Exhibit 51 shows how capacity installation costs for onshore wind have declined over the last decade, from just over 2200 USD/kW in 2010 to just over 1100 USD/kW in 2023, a 50% reduction. During the same period, capacity factors have increased from 27% to 36%, while LCOE has fallen from 111 to 33 USD/MWh (or from 11.1 to 3.3 cents/kWh). Exhibit 52 shows similar information for offshore installations, which are of course more expensive, but achieve on average higher capacity factors and have also shown considerable decline in the LCOE, from 203 to 75 USD/MWh.

Wind generation is the largest of the "new" renewables, which have risen into prominence over the last two decades. It expected to continue to expand, perhaps not as aggressively as solar PV, but in a way which puts it central to the decarbonisation effort of countries which are endowed with the pertinent natural resource. Although historically wind projects have been assisted by government subsidies, such as feed-in tariffs (FiTs), renewable obligation certificates (ROCs), tradable green certificates (TGCs), contracts for difference (CfDs) or other similar instruments, the current tendency is for modern projects to pay for themselves, especially for large-scale, offshore installations. It is now commonplace for governments to auction wind generation rights, so that the lowest bidder can win the right to install new capacity.

Wind generation is not without its problems though. There are several opponents of ever larger installation, which may generate more noise, may be a threat to birds and may obstruct the view of the landscape or seascape. The greatest shortfall though is the interruptibility of this form of generation, i.e. the fact that wind can change speed abruptly, thus causing considerable fluctuation to the electricity output, which then requires substantial balancing costs, as discussed in the previous chapter. There are of course ways to mitigate such risks: storage capacity and interconnectivity. The former is the most obvious solution, which simply uses excess wind generation to charge battery stacks, which can then be discharged quickly, both to maintain system balance and offer additional ancillary services. the latter requires longer term investment in interconnectors and smart grids, so that fluctuations in electricity generation in one grid can be mitigated by generation in another, connected grid. As a brief example consider the North Sea interconnection between the UK and Norway, which links the wind with the hydro generation of the respective countries to balance demand in either country.

Hydro

A fact about hydroelectricity that we tend to forget is that it is the largest source of renewable electricity generation. It accounts for ca. 7% of total primary energy consumption, but its contribution to electricity generation alone is double the previous figure, ca. 15%, as can be seen in Exhibit 53. At the moment, it is almost at the same level as all other sources of renewable generation put together. Currently, existing hydro capacity of 1,220 GW is on a par with that for solar generation and both outpace wind generation capacity, as can be seen in Exhibit 54. Among the top five largest hydroelectric dams, two are located in China (Three Gorges and Xiluodu), two in Brazil (Itaipú, shared with Paraguay, and Belomonte) and the fifth one in Venezuela (Gurí). Capacities in these top five dams range between 10-22 GW, which is a multiple of even the largest coal or nuclear plants. On a country basis, China holds some 30% of the global capacity, while Brazil, Canada and USA follow at a distance with 9%, 7% and 6% respectively - see Exhibit 55.

Water power is quite old and well-established. The basic technology of using watermills to produce mechanical power has been around since around the 1st-2nd c. BC (Peake, 2018, p. 254). Throughout human history water mills have been used for activities as diverse as flour milling, mining, timber sawing, paper-making, iron working, textile weaving and many more. Despite its advantages, water power fell out of favour soon after the introduction of steam. Rather than bringing the production processes near the sources of water energy, it was much more convenient to bring the power of steam, stored in the form of coal, wherever it was convenient to locate these production processes.

Yet, with the advent of electricity and the building of large power stations, water power became synonymous with one main output: hydroelectricity. As noted in Peake (2018, pp. 255-6), the first successful water turbine by Benoît Fourneyron in 1832 was invented in the year of Faraday's discovery of the principle of the electric generator. That was a vertical-axis mechanism, with the entire turbine submerged, the water entering alongside the axis to spin the curved runner blades, before exiting horizontally to become tailwater. The technology was further developed to increase its efficiency, but the turbine was still being used to provide mechanical power. It was not until 1878 that the first small-scale hydroelectric plant was installed by a wealthy Victorian engineer and inventor to provide electric lighting to his manor house in the north of England - perhaps the first example of decentralised distributed generation.

To date, hydropower projects range between small installations with a capacity less than 1MW, to large dams able to produce more than 20GW. The generation capacity of each installation depends on 4 key factors:

• the  height of the water reservoir, also known as the head;

• the power they are able to produce, measured in GW;

• the type of turbine used;

• and the location and type of the structure holding the water

Before going ay further though, how do we calculate the potential power supplied by a hydroelectric plant? That is, how can we estimate the watts (or joules per second) produced by the plant?

Depending on the size and type of the hydroelectric plant, its usage may take one of many forms. Large dams, which can produce large amounts of electricity on a constant basis, are typically used as baseload plants, but may also be used as reserve of energy, or a rapid response unit for peakload generation. Smaller plants, especially those using artificial reservoirs and classed as pumped storage, are typically used for short-term peakload generation and for balancing purposes. They are known as closed-loop hydropower systems, they involve and upper and lower reservoir, both of which typically store smaller amounts of water than traditional open-loop systems, such as those interrupting the flow of a river with a dam. Pumped hydro cannot justify producing over a long hours within the same day; hence the need to use offpeak electricity to pump the water up from the lower to the higher reservoir. An extension of the use of this type of generation is the use of excess renewable (solar of wind) electricity to reverse the flow of water, so it can be stored and used when it is most needed during peak hours.

Although water resources are present in most countries around the world, hydroelectricity is not available globally. Over the last 20 years, total production has increased from ca. 2,500 TWh to nearly 4,500 TWh (see Exhibit 56), falling short of the growth pace of electricity generation in total and therefore losing market share from 17% to 14%. In the same exhibit one can see the growing importance of China in this market; from a sizeable generator among equals in 2000, it is now the leading hydroelectricity producer with ~30% of global hydro generation in 2027, as can be seen in Exhibit 57. Other important producers are Brazil (where hydro generates ca. 60% of the country's electricity), Canada (also ~60%), USA (~10%), Russia (~15%), India (~10%) and Norway (~90%).

The cost of constructing a hydroelectric project depends on a multitude of factors:

• Its scale is a prime consideration; a large project (also known as storage or reservoir hydro) will require bigger civil engineering works, including earth moving works, concrete and steel, to mention but a few, which make up ca. 70% of total costs (IRENA, 2023, p. 154). It will also require more turbines, transformers and higher capacity connections to the grid, in order to export the vast amounts of electricity it produces (remaining 30% of intallastion costs). At the other end of the spectrum, a smaller pumped hydro or run-of-river plant will have low capital expenditure and relatively low operation and maintenance (O&M) costs, but they will also produce much smaller amounts of electricity.

• The engineering, procurement and construction (EPC) costs are the most sizeable, but not the only costs involved. All projects require permitting, with large projects having longer lead times for local, regional, national and sometimes cross-governmental to agree to grant the necessary licences. Additional funds are required for land appropriation, relocation of existing human habitats, compensation to the people whose home and livelihood are affected and reparations to the disruption of the extant eco-system.

• Whereas smaller projects, typically less than 10MW, may be financed with government grants, especially when the investors are local communities, larger projects require project finance, requiring funds provided by a syndication of financial institutions (commercial banks) and the support of supranational organisations such as the World Bank, regional development banks and export credit agencies. For example, Three Gorges required an initial investment of 20 billion USD, took 13 years to complete (1993-2006) and cost an estimated 22-30 billion USD. Twenty years earlier, in 1973, the Itaipú dam required an initial investment of 100 million USD, provided by Brazilian agencies and international banks with the guarantee of the government of Brazil.

Although one may expect a hydropower plant to provide electricity 24/7, the actual output in MWh can be very different from expecations. This may be down to the availability of resource, i.e. water which is affected by precipitation. It may also be down to how frequently hydropower is required by the grid, which affects its capacity factor. As with other forms of generation, hydropower is also defined by three main metrics: installation cost, capacity factor and levelised cost of electricity. Exhibit 58 shows how these three metrics have developed in the last decade on an average basis across all countries and all sizes of plants. On the left panel of that exhibit, one can see the rising installation cost, from 1,459 to 2,806 USD/kW. Exhibit 59 splits projects into large (>10MW) and small (<10MW), where one can see the slightly different paths installation costs have taken over the same period. The middle panel of Exhibit 58 shows the development of the average capacity factor, which has fluctuated between 44-53%, with higher factors attributed to larger plants used mostly for baseload generation and lower factors for smaller plants, such as pumped hydro, which are mainly used for rapid response and peakload generation. The final panel on the right of exhibit 58 shows the development of LCOE: there is a rising trend, starting from 43 USD/MWh and climbing to 57 USD/MWh. The rise of both installation costs and LCOE is attributed to rising supply chain costs of civil, mechanical and electrical engineering and procurement, which are in turn affected by materials and energy costs and inflation.

Despite its obvious advantages and green credentials, hydropower is not devoid of controversial issues. The most obvious one is that to build a dam, thousands of tons of concrete and steel are required, which are often produced in a carbon-intensive manner, using coking coal (steel) and sub-bituminous coal and lignite (cement). Even when making allowances for this initial negative externality of the plant construction, open-loop hydro systems imply that the flow of one or more rivers have to be interrupted by a dam, so that the water power can be stored and then made dispatchable, i.e. controlled.

Interrupting or diverting a river flow may have deleterious effects on the hydrological balance of the area. For example, if a river crosses one or more borders and one country decides to build a dam on its side of the border, the supply of water to the other country may deteriorate or completely be interrupted - examples of this effect are given in the videos below.

In additional to water access and availability, there may be considerable environmental fallout as well. Large scale dam projects may cause disruption to the flora and fauna, not only during the construction period but for many years afterwards. The quality of the construction itself, especially if the building standard are low or not adhered too, may lead to later problems, such as dam failures, cracks and spillages due to heavy rainfall and ultimately even fatalities. An extreme example of this was the collapse of two dams above the Libyan city of Derna in September 2023, caused by the extreme rainfall brought by Storm Daniel (Al-Ansari, 2023).

Aside from extreme events, however, a dam can also interrupt the passage of fish in the river whose flow is being controlled. This may impact the survival of fish species, especially those which travel upstream to reproduce, although the construction of fish ladders on the sides of the dam have alleviated this problem. One of the less obvious side-effects of flooding large areas with static water is the acceleration of the anaerobic decay of dead plant and animal matter, a process which creates methane. The large-scale release of this potent greenhouse gas might conceivably cause harm in the way that a conventional fossil fuel power plant emits CO2. However, a definitive answer cannot be given unless more scientific studies are commissioned, so that a better assessment of this problem can me made.

Last, but not least, a large hydroelectric dam has an impact not only on the environment and the eco-systems in the area it affects, but also on the people living in that area. Villages or towns have to be demolished and people moved to new accommodation, some may lose their livelihood from using the river or cultivating the land around it. The world's largest dam to date, Three Gorges, was held responsible for the displacement of over one mission people who lost their homes, farms and workplaces and restart their lives in newly-built villages away from their original birthplaces.

In summary, despite its obvious green credentials, hydroelectricity may also create controversy, depending on the location and size of the plant. There are many economic, social and environmental advantages, from the provision of large amount of constant or rapid-response electricity, to employment associated with the construction and operation of the hydro plant and to the all-important reduction of greenhouse gas emissions. To counterbalance these positive externalities, critics point disadvantages, such as the high upfront investment and reliance on precipitation patterns, the impact on human habitats and livelihoods, and the effects on aquatic habitats and potential methane emissions. A more detailed treatment of these pros and cons is given in Ramage & Everett (2018, pp. 271-9).

Conclusion

With climate change no longer being a distant threat but an imminent crisis, the use of renewable generation has become more topical and urgent today than ever before. At the time of writing, fossil fuel markets are showing historically high levels of volatility, unpredictability, riskiness and unaffordability. Although in the short term governments will have to ensure the security of supply of these fuels, in the medium term renewable generation offers a potentially attractive answer to the energy trilemma of sustainability, security and affordability. Lower installation and production costs for renewables is the first step to resolving this trilemma. There is still considerable inertia in our energy systems, which have relied on fossil fuels from more than a century and more solar and wind farms alone cannot tip the balance. Investment in smart grid infrastructure, storage capacity, demand side management, distributed generation, interconnectivity within and between grids, and innovation in heating and transportation technology are but a few items on the long list of what could give the energy transition the boost it needs for our world to reach its Net Zero target by 2050. Let's hope it is not too late...

References

Al-Ansari, N. (2023). Libya Dam Collapse: Engineering Expert Raises Questions About Management. The Conversation. 15 September 2023. https://theconversation.com/libya-dam-collapse-engineering-expert-raises-questions-about-management-213546

Boyle, G. & Everett, B. (2018). Solar Photovoltaics. Chapter 4 in Peake, S. (Ed.) Renewable Energy: Power for a Sustainable Future. 4th ed. Oxford University Press. 

Everett, B. et al. (Eds.) (2012). Energy Systems and Sustainability: Power for a Sustainable Future. 2nd ed. Oxford University Press. 

Everett, B. (2018). Solar Thermal Energy. Chapter 3 in Peake, S. (Ed.) Renewable Energy: Power for a Sustainable Future. 4th ed. Oxford University Press. 

Head, C. (2000). Financing of Private Hydropower Projects. World Bank Discussion Paper No. WDP 420 Washington, D.C. The World Bank. https://doi.org/10.1596/0-8213-4799-3

IEA (2022). Renewables. https://www.iea.org/reports/renewables

IRENA (2016). End-of-Life Management: Solar Photovoltaic Panels. https://www.irena.org/publications/2016/Jun/End-of-life-management-Solar-Photovoltaic-Panels

IRENA (2023). Renewable Generation Costs in 2023. https://www.irena.org/Publications/2023/Aug/Renewable-Power-Generation-Costs-in-2022

Kaltschmitt, M., Streicher, W. & Wiese, A. (2007). Renewable Energy: Technology, Economics and Environment. Springer. Berlin, Heidelberg.

Lu, M. & Lam, S. (2022). A Visual Crash Course on Geothermal Energy. Visual Capitalist. https://www.visualcapitalist.com/a-visual-crash-course-on-geothermal-energy/

Lu, M. & Parker, S. (2022). Visualizing the World’s Largest Hydroelectric Dams. Visual Capitalist. https://www.visualcapitalist.com/visualizing-the-worlds-largest-hydroelectric-dams/

Peake, S. (Ed.) (2018). Renewable Energy: Power for a Sustainable Future. 4th ed. Oxford University Press. 

Ramage, J. & Everett, B. (2018). Hydroelectricity. Chapter 6 in Peake, S. (Ed.) Renewable Energy: Power for a Sustainable Future. 4th ed. Oxford University Press. 

Taylor, D. (2018). Wind Energy. Chapter 8 in Peake, S. (Ed.) Renewable Energy: Power for a Sustainable Future. 4th ed. Oxford University Press.