Hydropower Costs | Renewable Energy Hydroelectricity Costs vs Other Renewable & Fossil Costs

Hydropower costs reportedly equal the lowest levelized price of electricity compared to all major renewable energy and fossil fuel sources.

This clean electricity source is regarded as the most mature, reliable, and cost-effective renewable power generation technology available in the world. Hydropower operations usually have flexibility in their design as well and can be structured to meet baseload and peak demands.

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World Hydropower Electricity Production

Hydropower produces around 16 % of the world’s electricity and over 80% of the world’s renewable electricity.

Currently, more than 25 countries in the world depend on hydropower for 90 % of their electricity supply (99.3 % in Norway), and 12 countries are 100% reliant on hydro. Hydropower also produces a large share of electricity in 65 countries and is used at some level by more than 150 countries. Canada, China, and the United States have the largest hydropower generation capacity.

According to the International Renewable Energy Agency (IRENA), hydropower is the most flexible source of power generation available. It is also capable of responding to demand fluctuations in a short time sequence.

“Although other plants, notably conventional thermal power plants, can respond to load fluctuations, their response times are not as fast and often are not as flexible over their full output band. In addition to grid flexibility and security services (spinning reserve), hydropower dams with large reservoir storage be used to store energy over time to meet system peaks or demand decoupled from inflows. Storage can be over days, weeks, months, seasons or even years depending on the size of the reservoir.”

The National Hydropower Association (NHA) highlights that hydropower generation benefits consumers through lower electricity costs. States in this country getting the majority of their electricity from hydropower include Idaho, Washington, and Oregon. On average, residents there have energy bills which are lower than the rest of the country. Relying only on the power of moving water, hydro prices don’t depend on unpredictable changes in fuel costs.

When evaluating cost factors, hydropower shows the lowest levelized cost of electricity across all major fossil fuel and renewable energy sources. In addition, it actually costs less than energy efficiency options, according to a recent study from Navigant Consulting and the American Council on Renewable Energy (ACORE).

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The above chart shows the relatively low cost of hydro in terms of maintenance, operations, and fuel costs when compared with other electricity sources and across a full project lifetime. For hydro projects, a longer lifespan (the Navigant study assumed 50 years) means not only are costs spread across a longer timeframe but also takes into account that the power generating equipment used at these facilities can often operate for long periods of time without needing major replacements or repairs.

Annual Operations & Maintenance Costs

The IRENA study concludes, “Hydropower is the only large-scale and cost-efficient storage technology available today. Despite promising developments in other energy storage technologies, hydropower is still the only technology offering economically viable large-scale storage. It is also a relatively efficient energy storage option.”

IRENA reports average investment costs for large hydropower plants with storage typically range from as low as $1,050/kW to as high as $7,650/kW, while the range for small hydropower projects is between $1,300/kW and $8,000/kW. Adding additional capacity at existing hydropower operations or existing dams that don’t have a hydropower plant can be significantly cheaper, and can cost as little as $500/kW.

New technologies are also viewed as holding tremendous promise for further hydropower development, including marine and hydrokinetics.

Installed project costs – as opposed to levelized electricity costs – also need to be considered regarding hydropower. There is no standard, based on the various types and sizes of hydro projects and number of technologies deployed.

Hydropower Facts

Via the Wisconsin Valley Improvement Company:

  • Worldwide, about 20% of all electricity is generated by hydropower.
  • Hydropower provides about 10% of the electricity in the United States.
  • Norway produces more than 99% of its electricity with hydropower.
  • New Zealand uses hydropower for 75% of its electricity.
  • In the US, hydropower produces enough electricity to serve the needs of 28 million residential customers. This is equal to all the homes in Wisconsin, Michigan, Minnesota, Indiana, Iowa, Ohio, Missouri, Nebraska, Kansas, North and South Dakota, Kentucky, and Tennessee.
  • Hydropower can come “on line” quickly to meet rapid increases in electric demand and respond to emergency energy needs.
  • In the U.S., hydropower is produced for an average of 0.85 cents per kilowatt-hour (kwh). This is about 50% the cost of nuclear, 40% the cost of fossil fuel, and 25% the cost of using natural gas.

Hydropower Development in the Future

James Conca, writing for Forbes, states: “…developing countries are planning to dramatically expand hydroelectric power generation in their desperate need for electricity and irrigation.” Not only do such countries use their own resources without breaking the bank, hydropower is proven to provide low-carbon, long-term, reliable baseload electricity generation.

Over 620 hydroelectric dams are presently under construction and some 3,000 are planned for the near-future. Most of this hydropower development is taking place in Latin America and Asia.

Concerning future development in this country, the NHA contends hydropower is this nation’s most available, reliable, affordable, and sustainable energy source. The basic requirement calls only for the power of moving water, whether it happens to be rivers, streams, or ocean tides.

“Free from a dependence on volatile fuel prices, much of the money invested in hydropower stays in America and expanding hydro capacity would create hundreds of thousands of US jobs.”

Linda Church Ciocci wrote in the StarTribune, “At the national level, hydropower is combating climate change more than any other renewable resource. Thanks to hydropower, the US avoids approximately 200 million metric tons of CO2 annually — the equivalent of taking 42 million cars off the road.”

Conca’s Forbes calculations show the current level of worldwide hydropower development will require about $3 trillion in investment to produce about 60 trillion kWh of electricity by mid-century. On the plus side, “It would provide irrigation water and sufficient power to raise almost a billion people up out of abject poverty. And this much hydropower would avoid 50 billion tons of carbon emissions from entering the atmosphere,” Conca said.

Environmental Impacts

Hydropower may stand tall as we search for inexpensive renewable power sources. However, it can come with a significant price, including damming most of Earth’s important rivers.

Writing for Vox, Brad Plumer’s crystal ball shows this potential consequence:

“If built, these dams could provide electricity for millions of poor people who don’t have it. But dams can also be extremely controversial. Some projects can end up displacing thousands of people and destroying river habitats — something the United States learned the hard way last century. What’s more, recent research has questioned whether hydropower is as climate-friendly as once thought.”

The clean side of this energy source may be great; but the disruptive side needs to be considered with the utmost care. Those are costs too, and they don’t show up in the levelized cost of electricity calculations.

Image: Hydropower dam in Italy via Shutterstock

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1 thought on “Hydropower Costs | Renewable Energy Hydroelectricity Costs vs Other Renewable & Fossil Costs”

  1. Dear Mr. Meyers,

    I am doing a project at Miller Middle School. I need to know how much a hydroelectric dam cost to construct. Thanks.


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