Hydropower: How droughts are affecting the world's biggest renewable energy source

Hydropower is one of the world’s oldest sources of renewable energy, converting the power of water into electricity. It is also the largest, generating more than all other renewables – and is expected to stay in the lead well into the 2030s.

However, hydroelectricity generation increased by just 2% in 2022, according to the International Energy Agency (IEA). And a new report from energy analyst Ember shows that global hydropower generation substantially dropped off in the first half of 2023 compared to the same period in 2022. This, in turn, led to an overall increase in fossil-fuel power generation to make up for the gap.

So what’s behind this significant change in energy generation?

Ember attributes the loss of 8.5% in hydroelectricity generation to droughts, most notably in China, which accounted for about three-quarters of the global decline. China is the world’s largest producer of hydroelectricity by capacity, according to statistics from the International Renewable Energy Agency (IRENA).

Similarly, the US – in third place for global hydro production – has announced a drop-off of 6% this year. The U.S. Energy Information Agency attributes this to “above-normal temperatures” rapidly melting the snow in the northwest of the country, where most hydroelectricity is generated. And the Energy Information Agency predicts a fall of nearly a fifth in the northwest this year, compared to 2022. Some of this will be offset by California, where drought conditions improved, leading to more rain and higher hydroelectricity output.

Only Brazil, the world’s second-largest producer of hydroelectric power, is expecting a bumper year in 2023. The country recorded an increase of 64 billion kWh in 2022 – a trend expected to continue this year given the exceptionally high amounts of water stored in Brazil’s dams.

Along with the impact of climate change on rainfall, which the IEA describes as “erratic”, there has also been a notable slowdown in hydropower expansion. This trend is particularly affecting China, Latin America and Europe, the IEA says, with growth in Asia-Pacific, Africa and the Middle East partly offsetting its impact.

In China, for example, this slowdown is due to a declining number of suitable sites as well as environmental concerns, with the latter also holding back new investment elsewhere. In fact, the IEA reports that global investment in hydropower capacity decreased by more than a tenth in 2022 and looks set to continue on this downward trajectory.

Another major factor is old and outdated installations. In advanced economies, many plants were built between the 1960s and 1980s, according to the IEA. It estimates that 40% of existing facilities have been around for 40 years or more, and need to be modernized and refurbished.

The report also points out that hydropower has been low on the agenda of government renewable energy policy over the past two decades, which has been more focused on the expansion of wind and solar technology.

In its Fostering Effective Energy Transition 2023 Insight Report, the World Economic Forum uses Brazil as one example of what countries can do to make the most of hydropower. Recommendations include removing regulatory barriers to further the commercialization of hydropower services and providing greater financial support for integrating hydroelectricity generation with other renewable energy sources.

The IEA recommends that sustainability rules for both existing and new projects need to be clearer, and mitigating the negative social and environmental impacts of hydropower expansion should be prioritized to win both public and investor support.

However, the World Economic Forum’s Global Risks Report 2023 puts failure to mitigate and adapt to climate change as the top two concerns risk experts have for the next decade. So, even with all the support mechanisms outlined above, in the face of drought and other environmental impacts, it seems the future performance of hydroelectric power stations will also depend on the effectiveness of global climate action.