environmental science & policy 43 (2014) 514

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Reprint of The future of hydropower in Europe:

Interconnecting climate, markets and policies
Ludovic Gaudard *, Franco Romerio
Institute for Environmental Sciences, University of Geneva, 1227 Carouge, Switzerland

article info

Available online 17 June 2014

abstract
Hydropower is very important for electricity supply security in the European inter-connexion as well as for the economy of regions (primarily peripheral) that possess water resources.
Its future may however be jeopardized by several factors: climate change, the development

Keywords:

of new renewable energy, the creation of super and micro-grids, and progress in power

Hydropower

storage technology. Energy and climate policy, as well as electricity market design and

Climate change

dynamics play a pivotal role.

Electricity markets
Energy policy

This article carries out a comprehensive analysis of all these factors and discusses the
future of hydropower. This discussion follows an overview of the present situation and of
future drivers. The technical, environmental, economic and political aspects of the problem
are analyzed with an interdisciplinary approach. The stakes as well as the uncertainties are
highlighted.
The conclusion is that hydropower has a promising future, particularly in light of
emerging sustainable energy policy, but that the risks should not be overlooked. Academics
will find a comprehensive interdisciplinary analysis of hydropower in this article, whereas
public bodies, communities and hydropower companies can identify the strategic variables
that should be taken into consideration in the decision making process. The end of water
concessions or authorizations is also evoked.
# 2014 Published by Elsevier Ltd.

1.

Introduction

The fact that hydropower faces a constantly evolving

environment blurs its future. From climate change to
emerging energy policy and electricity reforms, uncertainties
impact any predictions relating to this technology. It is
therefore important to carry out a holistic assessment of
the present situation and of future changes. This article
provides an overview of the most important aspects that
influence hydropowers future. It provides stakeholders and

decision-makers with information on and analysis of the most

relevant environmental, technical, economic and institutional
issues. All these aspects are considered in order to answer the
following questions: What is the future of hydropower? How
will it be impacted by climate change and changes in the
energy sector? Which problems must be addressed today in
order to ensure the sustainable development of hydropower?
Two approaches can be used in order to explore hydropowers future. On the one hand, we can analyze very specific
aspects, for instance the impact of climate change on a
specific power plant. This is what we did in other studies

DOI of original article: http://dx.doi.org/10.1016/j.envsci.2013.09.008

This article is a reprint of a previously published article. For citation purposes, please use the original publication details Environmental
Science & Policy 37 (2014) 172181.
* Corresponding author. Tel.: +41 223790799.
E-mail address: ludovic.gaudard@unige.ch (L. Gaudard).
http://dx.doi.org/10.1016/j.envsci.2014.05.005
1462-9011/# 2014 Published by Elsevier Ltd.

environmental science & policy 43 (2014) 514

(Gaudard et al., 2013a,b). On the other hand, we can adopt a

complementary approach, by developing a comprehensive
analysis of hydropower. This is the approach adopted in this
paper. Due to the fact that problems are complex and data is
relatively poor, it is almost impossible to build a quantitative
model without introducing too many simplifications. We
instead opted for a qualitative approach, encompassing
climate, electricity markets and policy. A variety of knowledge areas should be combined in order to assess the whole
problem using an interdisciplinary approach.
We demonstrate that hydropower can have a promising
future. Uncertainties however should not be overlooked, as
problems are complex and many factors play an important
role. These uncertainties not only affect this technology, they
also affect electricity markets, energy and climate policies, as
well as impacting the adoption of new technologies. Our study
focuses on European countries, but also raises more general
questions relating to hydropower. It takes into consideration a
medium and long-term perspective.
The article includes three main parts. In Section 2, we
present hydropower in the present situation by focusing on its
technical and economic characteristics; its potential; its
contribution to electricity system reliability; the role that it
plays on the market. Section 3 is devoted to future drivers,
namely the impact of climate change on electricity markets
and in particular hydropower; the development of new
renewable energy; the creation of smart super-grids and
micro-grids; and the development of new storage technologies. In Section 4, we carry out a synthesis with the aim of
mapping out the future of hydropower. Uncertainties are
emphasized. Section 5 provides a conclusion.

2.

Hydropower in the present situation

2.1.

Hydropowers characteristics

2.1.1.

Technical aspects

Hydropower produces electricity using kinetic energy from

water (Eq. (1)). Using this energy, a turbine rotates powering a
rotor that generates electricity. Assuming a flow of a certain
speed, the theoretical power is:
Pt 12rQ t u2t

(1)

where Pt is the power at time t [W], r is the water density

[kg/m3], Qt is the water flow [m3/s], ut is the water velocity [m/s]
(Twidell and Weir, 2006).
Hydropower does not store electricity directly, but stores it
in the form of potential energy (Eq. (2)). A pump uses electricity
to bring water into an upper reservoir. When energy needs to
be generated, this water is turbined. The theoretical power
generated from this is:
Pt grQ t Ht

(2)

limit, it may reach 100% in theory (Twidell and Weir, 2006). In

practice, it is up to 95% (Eurelectric and VGB PowerTech, 2003;
IHA et al., 2000). Concerning storage, the total cycle of a pumpstorage-turbine has an efficiency between 65% and 85% (Evans
et al., 2012; Ibrahim et al., 2008). Hydropower is therefore one
of the most efficient technologies at producing and storing
electricity.
The efficiency is also dependant on the turbine type. There
are reaction and impulse turbines (Twidell and Weir, 2006).
The first type includes all turbines that are submerged into the
water, e.g. Francis. The main advantage is that reverse
pumping is possible. The same turbine is used to both produce
electricity and pump water. In contrast, impulse turbines, e.g.
Pelton, use propelled water on the pales. Both cost and
efficiency are higher than in reaction turbines. The choice
between types of turbines depends mainly on the hydropower
plants type, head of water, services desired and costs.

2.1.2.

Classifications of installation

Hydropower is a general term that covers a broad range of

installations. Depending on the type, the services provided
vary. Moreover, institutional and environmental constraints
are not always the same.
In this article, we make a classification by facility type
covering three main categories: run-of-river, storage and
pumped-storage hydropower. In some papers, hydropower
installations are classified by water head, storage capacity,
purpose or size (IHA et al., 2000). We do not consider these
categories, as there is no consensus between countries (Egre
and Milewski, 2002; IEA, 2012a). We should however point out
that a hydropower plant of up to 10 MW is small according to
the EU (ESHA, 2012). They may therefore take advantage of
certain measures aimed at promoting decentralized renewable energy (Kumar et al., 2011).

2.1.2.1. Run-of-river. The energy production of run-of-river

hydropower plants depends on the timing of the inflow. Some
have a reservoir with a capacity no greater than a few days
production (IEA, 2012a). They generate base-load power with
seasonal fluctuations.
These installations are found in many parts of Europe. They
are mainly built in flatter areas (Egre and Milewski, 2002; IEAHA, 2000). The energy comes mainly from the water volume
and not from the head of water. In mountainous regions, on
the other hand, where it is also possible to build such plants,
the flow rate may be low and head of water high. Thus,
important differences exist amongst run-of-river power
plants.
Run-of-river hydropower plants have a low environmental
impact as long as the entire ecosystem is adequately protected
(EAWAG, 2001). Fish ladders represent an important achievement in this respect. Plants without reservoirs provoke fewer
problems. Because the civil engineering works require less
concrete than storage hydropower plants, greenhouse emissions are lower (IEA-HA, 2002).

where g is the gravitational acceleration [m/s ] and Ht the head

of water [m]. The latter is the difference in altitude between
the surface of water in the reservoir and the turbine levels.
The ratio between the theoretical power and effective
power represents the efficiency. Because there is no thermal

2.1.2.2. Storage. The storage time is the main difference

between run-of-river and storage hydropower, which can be
used to manage output seasonally or even annually. They are
mostly situated in mountainous regions or in areas with large

environmental science & policy 43 (2014) 514

natural reservoirs (Balat, 2006). The high head of water

provides the possibility of storing significant energy potential
with minimal storage volume.
Although the resource is renewable, this power production
may provoke an important environmental impact. The
volume of water diverted from its natural watercourse may
cause significant changes to the abiotic and biotic conditions
in and around river systems (Berkamp et al., 2000). Hydro
peaking, which is provoked by the reservoirs intermittent
use and often causes rapid, very strong discharge fluctuations,
may distress aquatic organisms as they do not have sufficient
time to react. In the case of bed load, aquatic life is disturbed
by hydropower plants, as they have an effect on the solid
materials that are transported in a water stream. Flushing
large reservoirs or sand traps can seriously affect rivers
downstream (EAWAG, 2001).

2.1.2.3. Pumped-storage. Pumped-storage transfers energy

from off-peak to peak hours. The energy balance is negative
because efficiency is between 65% and 85%. The profitability of
this type of installation depends therefore on the ratio
between peak and off-peak prices. It must be at least 1.25
for an installation with efficiency of 80%. The main advantage
lies in its ability to generate negative power by playing on the
demand side. Pumps are activated whenever production is
higher than consumption (Rebours and Kirschen, 2005).
With regards to pumping installations, we should make a
distinction between single speed and variable speed systems.
The latter are less efficient but provide a wider portfolio of
services (Ciocan et al., 2012). In particular, they can stabilize
networks in real time.
One should separate pumped-storage into two classes:
open- and closed-loop systems (Wann et al., 2012). The former
is similar to hydropower storage, only a pumping system is
added. Thus, the plants should follow the same constraints. In
particular, one has to take into consideration the environmental impact on the river.
The closed-loop pumped-storage doesnt produce any
energy. Its only a service as previously pointed out. This
type of plant transfers water from one reservoir to another.
The lower reservoir may be a lake, the sea or an underground
cave. In which case, the main advantage is that rivers are not
affected.
2.1.3.

Generating costs

Hydropower generation costs depend very much on the site

where the facility is situated. This technology is very capitalintensive, whereas operating costs are very low, except in the
case of pumped-storage due to the fact that the energy used
must be bought on the market. In general, the generating costs
of existing power plants are relatively low due to the fact that
they were built on the most favourable sites and construction
costs were lower than they would be today. In the future, they
may increase due to the fact that most of them require
renewal for technical and ecological reasons. New rules,
concerning for instance residual water, will lead to a loss of
production and consequently an increase in generating costs.
According to Eurelectric, the projected generating costs
of the of pumped-storage hydropower stations of 1000 MWe, is
73 US$/MWh assuming a discount rate of 5%, and 149 US$/MWh

if the discount rate is 10%. In the case of a combined cycle gas

turbine of 388 MWe, which can also provide flexibility, the
projected generating costs are 75 and 83 US$/MWh, respectively. Taking into consideration the carbon price, the gas
turbines generating cost would be 10.5 US$/MWh higher
(IEA et al., 2010).

2.1.4.

Hydropowers potential

Comparing the hydropower potentials quoted in literature is

difficult due to differences in definitions, geographic coverage
and methodology. Moreover, they depend on technology and
costs. The following definitions, provided by Eurelectric (1997)
are particularly relevant (the corresponding estimations
concerning Europe are also quoted):
Gross potential: The annual energy potentially available,
when all natural runoff in a country is harnessed down to
sea level (or to the border line of the country) without any
energy losses (32203300 TWh/y, Lako et al., 2003; Lehner
et al., 2005);
Technical potential: The total hydropower potential at a
station wall of all sites, that could be, or could have been
developed, considering current technology, regardless of
economic and other restrictions (11401250 TWh/y, Bartle,
2002; Eurelectric, 2011; Hamududu and Killingtveit, 2012;
Lako et al., 2003);
Economic potential: That portion of the technical potential,
which can, or has been developed, at costs competitive with
other energy resources (775 TWh/y, Lako et al., 2003);
Exploitable potential: That portion of the economic potential,
which can be expected to be harnessed considering
environmental or other special restrictions (data not
available);
Developed potential: The already developed potential
(590 TWh/y, Eurelectric, 2011).
Concerning capacity, technical potential ranges between
350 and 375 GW (Hamududu and Killingtveit, 2012; Lako et al.,
2003). The capacity developed up to 2009 is 210 GW, including
35 GW of pumped-storage (without considering Italy, Romania
and Sweden). Thirty gigawatt may be added in the future if all
current projects are completed (Eurelectric, 2011).
The future development of hydro potential in Europe
depends on a set of relatively conflicting trends. Environmental concerns call for a halt on new projects, as is the case in
Norway. New regulations on residual flows may provoke a loss
of production, as will be the case in Switzerland if the law on
water protection is implemented. The requirements resulting
from emerging energy policy, following the decision to phase
out nuclear power, may however relax these rules. The risks
related to such capital intensive investments, which we will
point out below, may represent another deterrent for
hydropower exploitation, particularly in Eastern Europe where
potential remains high.

2.2.

Electricity system reliability

The definition of system reliability depends on the timeframe considered. Three concepts ensue (Batlle and PerezArriaga, 2008):

environmental science & policy 43 (2014) 514

In order to ensure adequate security, the electrical grid

requires ancillary services (AS), which include (Eurelectric,
2004):
Control reserve including primary, secondary and
tertiary reserves. At any given time, enough positive/negative
capacity should be available to compensate the difference
between scheduled and effective production. In the context of
hydroelectric systems, the negative capacity is provided by
pumps. Primary reserves should be available instantly at any
point of the grid. Tertiary reserves, on the other hand, must be
provided within 1530 min at the critical point of the grid.
Secondary reserves are intermediate.
Voltage support must compensate for the decrease in
voltage due to the distance from generation centres.
Active power losses must also be compensated through
the injection of additional power. These services are local and
must be provided where the problems occur.
Black start is necessary in order to restore the electrical
system after a black-out. This means that independent power
plants should be available.
Hydropower provides a significant contribution to ensuring
the reliability of the electricity system. Its technological
portfolio is vast. Thanks to its very short starting time, it is
highly effective as a secondary and tertiary reserve. Variable
speed turbines represent primary reserves. Pumping stations
may supply negative reserves. Voltage support and compensation of active power losses are also provided by hydropowers flexibility. Last but not least, hydropower plants are
able to ensure black start.

time of balancing and ancillary service markets is hours or

days before real-time.
All except real-time markets are financial markets, because
the delivery of power is optional. In general, real-time
markets, notably ancillary service markets, are run by the
system operator as they require central coordination.
Besides the energy, balancing and ancillary service markets, some countries have introduced capacity mechanisms
in order to improve supply security, although their effectiveness is challenged (Batlle and Perez-Arriaga, 2008). In the case
of the capacity payment, the price is fixed by the regulatory
authority and the outcome is determined by the market. In the
case of the capacity market, on the other hand, the regulator
sets the reserve margin supposedly required, whereas price
determination is left to the market. Capacity targets are
established from one to five years in advance, in order to
reflect the minimum lead-time needed for the construction of
new power plants.
We should also mention green certificate markets, which
are however completely detached from the physical flows of
electricity (Soderholm, 2008). Each MWh of green power
produced in eligible plants yields one certificate. Certificates
can be traded on green markets, whereas the electricity
generated in eligible plants can be sold on standard electricity
markets. Certificates are used to enable many types of support
schemes, whether voluntary (such as green labels), or
mandatory (such as supply obligations, portfolio standards
and feed-in systems). However, green certificates are not
labels. They possess no further ecological quality than that it
originates from a renewable source.
Renewable energy sources include hydropower, wind,
solar, geothermal, wave, tidal, biomass, landfill gas, sewage
treatment plant gas and biogases. On the other hand, the
power generated by pumped-storage hydropower stations is
not considered as a renewable energy, due to the fact that
fossil or nuclear energy can be used for pumping.
Today, spot and future markets are a fundamental reality
in the European power system, although the traded products
volume, with respect to annual demand, is less than 10%. In
contrast, balancing and ancillary service markets remain
fragmented. Capacity mechanisms are very controversial.
Green markets are taking-off slowly.

2.3.

2.3.2.

Security (short term, seconds and minutes), which means

keeping the system stable. Consumption must be equal to
production at any given moment in order to achieve a
frequency of 50 Hz. Voltage levels should also respect
certain standards at any point of the grid. All power plants
should be synchronized.
Firmness (short to medium-term, days and months), i.e.
scheduling the existing capacity in accordance with the load
at any time of the day or year. This includes hydro reservoir
management.
Adequacy (long term, years), i.e. planning enough
capacity in order to cover present and future consumption.

2.3.1.

Electric power markets

Design

The so-called electricity market can include different types of

markets (IEA, 2012b). The term most commonly refers to the
spot market, a kind of power exchange, where energy is
contracted one day-ahead. In the intra-day market, trading
takes place up to an hour before real-time, i.e. the time at
which the power flows out of the generators. Forward markets
allow buyers and sellers to hedge risk by trading months or
years ahead. The most important risk relates to price volatility.
Balancing markets should address imbalances due to
forecasting errors (in terms of demand and supply), in addition
to network constraints. The ancillary services market, relating
in particular to primary and secondary reserves, should
ensure equilibrium between demand and supply, or in other
words a frequency level very close to 50 Hz. The contracting

Operation

Fig. 1 shows the operation of a spot market. The price is

determined by demand and supply. All generators that are
dispatched receive this equilibrium price. In a vertically
integrated monopolistic market, the supply curve is given
by the marginal costs of the power plants, whereas in an
unbundled market open to competition, the supply curve is
given by generators bids. In both cases, generators are
dispatched incrementally. Dispatching also depend on various
technical parameters, in particular the power plants degree of
flexibility, their start-up time and certain security constraints.
Gas turbines and hydropower plants with reservoirs are very
flexible, whereas nuclear power plants are not. Two demand
curves are usually taken into consideration, one for peak and
the other for off-peak hours. A distinction between summer
and winter should also be considered. One should remember
that demand must always be equal to supply and electricity

environmental science & policy 43 (2014) 514

new generating capacity. This problem is particularly pertinent in the case of reserve equipments that are used as little as
a few hundred hours a year. The revenue collected may be
insufficient to cover capital costs (Joskow, 2006). Low prices
have been observed on various European markets since 2009,
notably on the European Energy Exchange of Leipzig, due to
the economic crisis and the growing share of new renewable
energy, as we will see below. Forward markets dont seem able
to adequately deal with the missing money problem. The
creation of balancing and ancillary service markets may avoid
the adoption of further interventionist measures, such as
security of supply obligations.
Fig. 1 Demand, supply and prices on the spot market. NRE
means new renewable energy; RoR run-of-river; NU
nuclear; GT gas turbines and HS hydropower storage.

cannot be stored. Furthermore, short-term demand elasticity

is very low (Kanamura and Ohashi, 2007).
Hydropower plants with reservoirs require dynamic management, as the amount of water available is limited by both
intakes and by storage capacity. They cannot constantly
generate at their maximum installed capacity. In order to
prevent the use of hydro-storage when prices are low, one
should consider the opportunity cost. The cost of emptying
the reservoir today may be the benefit of being able to use the
water tomorrow (Forsund, 2007).
Prices are determined by the intersection between supply
and demand, except when capacity limits are reached. In
which case, prices soar. Rationing prices should limit
demand to the amount of energy available. Even small
variations in demand may provoke strong price fluctuations.
In fact, spot prices are extremely volatile.
It is during this high price times that generators should
collect revenues high enough to be able to cover fixed costs
and fund new investments. However, if price peaks remain
low or happen rarely, the so-called missing money problem
presents itself, and could act as a deterrent to investment in

2.4.
Relationships between different types of hydropower
installations and electricity markets
Table 1 highlights the comparative advantages of the different
types of hydropower installations by outlining their relationship with the various electricity markets.
The run-of-river is devoted to energy production. The
presence of a small reservoir may reduce dependence on runoff
timings. It is then possible to transfer energy within hours. Its
capacity to provide ancillary services is however very limited.
Hydropower plants with storage on the other hand, provide
a large portfolio of services. They can be active on all electricity
markets. Ancillary service markets greatly depend on the
availability of these installations. They are not however able to
provide negative supplies.
The primary advantage of pumped-storage lies in its
contribution to ancillary services. It is the only type of
hydropower that is able to provide negative energy. However,
variable speed pumps are required if adjustments are to be
instantaneous. Pumped-storage is only able to generate
energy in the case of an open-loop system.
Green energy can be provided by hydropower plants with or
without storage in so far that they more or less meet stringent
environmental criteria. Generally speaking, it is more difficult
for hydropower with storage to fulfil this type of constraint
due to installation specificities.

Table 1 Hydropower services provided according to the type of power plant. + means that this type of plant is
operational on the market; S the opposite. +/S indicates that additional conditions should be met.
Hydropower classification

Services

Energie

Production
Green
Transfert (hourly)
Transfert (seasonally)

Balancing
Ancillary

Primary
Secondary
Tertiary
Voltage support
Compensation active losses
Black start

Positive
Negative
Positive
Negative
Positive
Negative
Positive
Negative

Run-of-river

Storage

+
+

+
+/
+
+
+

+

+

+

+
+
+








+
+
+
+
+

Pumped-storage
+/

+
+
+
+/
+
+/
+
+
+
+
+
+
+

10

environmental science & policy 43 (2014) 514

3.

Future drivers

3.1.

Climate change

3.1.1.

Impact on the electricity markets

Climate change represents a key driver in power markets

given that electricity is linked to weather variables (Apadula
et al., 2012). In fact, temperature and humidity influence
consumption, production and transmission. Demand, supply
and prices can all be affected.
All technologies are affected by climate change. Water
runoffs, wind speeds, and clouds may influence hydro, wind
and photovoltaic generation, respectively. The efficiency of
thermal power plants, for example coal or nuclear, decreases
with higher temperatures. Extreme weather episodes are
particularly damaging as they can provoke disruptive storms,
flooding, landslides, droughts, and heat wave events. For
instance the latter may provoke the shutdown of nuclear
power plants due to insufficient availability of cooling water
(Kopytko and Perkins, 2011).
Energy consumption also depends on temperatures and
humidity levels. With climate change, seasonal cycles may be
altered. Due to higher temperatures, demand may decrease in
winter months and increase in summer months (EEA, 2006;
Harrison et al., 1998; Rothstein et al., 2008). Cooling will
become more important than heating degree days.

3.1.2.

Impacts on hydropower

By affecting the water regime, climate change alters hydropower potential. According to a survey carried out by
Rothstein et al. (2008), this technology is among the most
vulnerable to climate change. The three main factors that
determine the impact are: the annual runoff, its temporal
distribution and sedimentation (Hamududu and Killingtveit,
2012; Harrison et al., 1998; Kumar et al., 2011).
Any change in this respect may jeopardize the plants
performance and profitability. Due to the fact that hydropower
is very capital intensive and that investments are irreversible,
new projects plans may be abandoned in the presence of such
risks (Harrison and Whittington, 2001; Harrison et al., 1998).

3.1.2.1. Runoff. Since the Seventies, water scarcity has provoked a decrease in hydropower production in Southern
Europe (Lehner et al., 2005). According to the A1b scenario of
the IPCC, this trend will continue if new investments are not
made. Increases in temperatures and decreases in precipitation levels will particularly impact summer flows (Golombek
et al., 2012). In Northern Europe, on the other hand, an increase
in generation is expected (Hamududu and Killingtveit, 2012).
Glacier melting will provoke higher inflows. The Northern
gains will not however compensate the Southern losses.
According to scenario A1b, the net balance will be negative by
the end of the century. Golombek et al. (2012) estimate a
decrease in production of about 15% for Western Europe,
which includes Northern and Southern regions.
Concerning Europes gross hydropower potential (including Eastern countries), Lehner et al. (2005) estimate a decrease
of up to 6%. Mediterranean countries will experience a
decrease between 20% and 50%, whilst Nordic and Eastern

countries will benefit from a production increase of 15% to

30%. In other countries, potential remains stable.
In addition to annual runoff, seasonality also affects the
hydropower plants output. In catchment areas covered by
snow or ice, the water regime may switch from a glacio-nival
to a pluvio-nival regime. This induces an increasing runoff
during the winter and a decreasing runoff during the summer
(Kumar et al., 2011). Precipitation patterns possess their own
rules. However, it is difficult to generalize the results due to
regional specificities.
Installations with storage are less vulnerable to short-term
variations than run-of-river power plants (Lehner et al., 2005).
Reservoirs provide a means of managing flashflow events and
stochastic variability. In addition, plants with higher turbine
capacity, in comparison to the peak runoff, are less exposed to
extreme events (Harrison and Whittington, 2001).

3.1.2.2. Sedimentation. Sediment affects hydropower installations in three ways: it obstructs intakes, deteriorates turbines
and fills up reservoirs (Samadi Boroujeni, 2012). We focus on
the latter as it impacts the long-term management of hydro
dams. About 0.81% of reservoir capacity is lost every year
worldwide (Morris and Fan, 1998; Schleiss, 2013). At present,
losses are higher than the gains brought about by the
introduction of new capacity (Schleiss, 2013). In Europe, the
fill rate is in the lower end of the range at 0.73%/year.
This trend will be amplified as climate change increases the
rate of sedimentation (Peizhen et al., 2001). In fact, in Europe
the glacier retreat may increase sediment formation, due to
the fact that the landscapes equilibrium is broken.
3.2.

Changes in the electricity sector

In the mediumlong term, the electricity sector should

undergo major changes as a result of emerging energy policy,
further electricity market reorganization and technological
progress. Hydropower will be affected by these developments
as well as by climate change. We now examine the
consequences of the changes in the European electricity
mix (notably the penetration of the new intermittent renewable energy), the development of smart grids, the creation of
super- and micro-grids, and the progress in the storage
technology.

3.2.1.

Intermittent renewable energy

The 20-20-20 targets for 2020 and the road map for 2050,
adopted by the European commission, respectively, in 2007
and 2011, focus on the durable reduction of greenhouse gas
emissions and energy consumption, in addition to a strong
increase in energy efficiency and renewable technologies
(European Commission, 2010, 2011). This strategy is shared by
countries such as Norway and Switzerland, which are not part
of the EU. The decision taken by some countries, in the
aftermath of the Fukushima incident, to phase out nuclear
power also implies the promotion of energy efficiency and new
renewable energy.
Photovoltaic (PV) and wind energy are developing rapidly.
In some countries, their share in the electricity mix will
quickly reach a threshold that requires a change in the technoeconomic management of the power system. The natural

environmental science & policy 43 (2014) 514

intermittency of new renewables represents the main issue

(Perez-Arriaga and Batlle, 2012). One should ensure the
optimal integration of the different generating units in order
to guarantee the balance between supply and demand over the
24 h of the day. PV generation is characterized by a day-night
rhythm that is correlated with the daily load curve. Generation
is higher in summer than in winter. Wind power can stay
constant over several days or fluctuate over hours; generally
speaking, average production is higher in winter. The value of
the flexibility provided by hydropower in a system including a
high share of intermittent sources is discussed below.
German experience in recent years shows that the injection
of PV and wind energy into the market provokes a rightward
shift of the electricity supply curve and consequently falling
spot prices. Negative prices were recorded due to the fact that
certain conventional power plants would rather pay a
premium in order to continue generating rather than be taken
out of service for few hours (Nicolosi, 2010). Furthermore, the
spread between peak and off-peak prices is diminishing at the
expense of hydropower with reservoirs. Investments in new
capacity may be jeopardized. It is worth noting that the
injection of increasing amounts of renewable energy into the
system is due to fact that it benefits from a priority in
dispatching rules, fixed costs are subsidized and operating
costs are zero.
Future developments will depend on several variables. The
load diagram may be smoothed thanks to demand side
management measures, as well as the development of storage
technologies that can address the problem of periods of low
consumption. The integration of wind and solar parks situated
in different areas will help mitigate production fluctuations.
The rule already adopted by some countries, that wind turbines
should operate below their maximum output should electricity
system optimization be at stake, will probably be generalized.
Less base-load capacity will be needed as the share of
intermittent energy grows. Flexible installations capable of
filling the fluctuating gap between consumption, base-load
capacity and intermittent generation can be expected to play a
crucial role. Balancing and back-up services will be provided by
gas turbines and hydropower plants with reservoir. The latter
may also store PV or wind-generated energy when the market
cant absorb it. Gas-based generation should facilitate the
transition towards an almost CO2-free electricity system.
The impact on wholesale electricity prices will further
depend on the improvements in market design that we have
already mentioned. In principle, hydropower production
should be traded at a relatively high price because of its
flexibility, and due to the development of balancing and
ancillary service markets (Perekhodtsev and Lave, 2006).
However at present, on the basis of current knowledge, given
the complexity of the problems and uncertainties, it is not
possible to carry out reliable projections in this respect.

3.2.2.

Smart, micro and super-grids

The planned investments in electricity transportation and

distribution are not less important than in transformation.
Investments in this field are driven by three main factors:
improving supply security and reliability; fostering the
European internal market; and integrating significant
amounts of intermittent renewable energy into the electrical

11

system (ENTSOE-E, 2010). Smart, micro and super-grids should

become an integral part of the European inter-connexion.
According to a MIT (2011) study, smart grids represent the
expanded use of new communications, sensing, and control
systems throughout all levels of the electric grid. The IEA
(2011) road map shows that Smart grids co-ordinate the
needs and capabilities of all generators, grid operators, endusers and electricity market stakeholders to operate all parts
of the system as efficiently as possible, minimising costs and
environmental impacts while maximising system reliability,
resilience and stability. Some of these technologies have
already been implemented and are deemed mature, whereas
others require further research and development.
One should stress that by providing new information and
incentives to consumers, smart grids may increase demandelasticity and reduce daily and seasonal peaks in consumption. They may also lead to improved flexibility in the
electricity system, enabling the deployment of further
intermittent generation. In which case, less flexible energy
may be required.
The new micro-grids epitomize the very meaning of smart
grids. They represent small electricity distribution networks
incorporating distributed generation, different kinds of energy
storage, as well as smart meters. Distributed generation may
include renewable energy (including small hydro), combined
heat and power installations, diesel engines, small gas
turbines, etc. Consumers should play an active role thanks
to new information technologies and appropriate incentives,
in particular new designs in electricity pricing. Due to the
electrical networks density in Europe, it is more plausible that
the micro-grids will be operated in parallel to the grid as
opposed to as a stand-alone system. The MIT (2011) study
stresses that micro-grids are expensive because they require
power electronics and sophisticated coordination among
different customers or areas.
The super-grid is composed of large networks for bulk
transmission, capable of interconnecting centres of production and generation located across a wide geographical area. In
this perspective, the so-called electricity highways are
transmission lines with significantly more capacity to transport power than the existing high-voltage lines. The project is
to create a pan-European super-grid, which may even extend
from the Polar circle to the Sahara (ENTSOE-E, 2010). This will
require an enormous financial commitment.
Such a super-grid, integrating large amounts of intermittent energy, calls for the creation of well-organized and liquid
markets in Europe. Notably in terms of balancing and AC
markets. In other words, enough flexible energy should be
provided in order to compensate for the variability of the solar
and wind energy injected into electricity highways. Hydropower with reservoirs may play a critical role in this respect.
New hydro pump storage plants of several thousand MW
capacity may be required, in particular in the Alps, which will
be crossed by these so-called priority corridors. As stated by
ENTSOE-E, A strong Central-European North-South transmission corridor will allow a better integration of the
intermittent sources by combining the wind farm generation
in the North with the pumping storage in the Alps, thus,
helping to achieve real central-European power balancing
(ENTSOE-E, 2010). It is however very difficult to quantify the

12

environmental science & policy 43 (2014) 514

future needs of hydropower in such scenarios due to

complexity and wider uncertainty.

3.2.3.

Storage energy

With increasing penetration of intermittent renewable energy,

the electricity system needs more storage capacity. In general,
we assume that 1 MW of flexible energy is required per 5 MW
of intermittent energy. In principle, electricity may be stored
in its mechanical, electrical/magnetic, thermal or chemical
form. Each technology possesses its own specific potential and
characteristics (Evans et al., 2012; Zach et al., 2012).
Compressed air energy systems (CAES) pump air into
artificial or underground reservoirs when supply exceeds
demand. When electricity is required, the mechanical
pressure is used to run a turbine. Sometimes, they are
combined with a natural gas installation.
Flywheels use the inertia of the wheels to store energy in a
short period/short term timeframe. The electricity surplus is
used to rotate flywheels, which provide electrical power in
the generating phase.
Supercapacitors are improved versions of the common
capacitor. The main difference lies in the density of energy
that can be stored, in the sense that the conventional
capacitors require a lot of space.
Superconducting magnetic energy storage systems (SMES)
store energy in a magnetic form. A circular and cooled supraconductor is used to store a continuum electric current.
Cryogenic energy storage (CES) uses electricity to cool air
until it reaches a liquid phase. When energy is needed, the
compressed gas is heated. Its expansion allows a turbine
to run.
High temperature thermal energy storage (HT-TES) is a
system that stores heat energy through a medium. When
power needs to be generated, the heat stored is used to
transform water into vapour and in turn to run a turboalternator.
Batteries provide a large panel of products; the most
commons are electrochemical.
Table 2 shows the most relevant characteristics of the
various power storage systems. With the exception of certain

types of battery, hydropower is the only mature technology. Its

profitability results notably from the gap between peak and
off-peak prices. The energy transfer potential is particularly
important as a result of its ample energy storage capacity. This
capability is combined with a low level of self-discharge as loss
of energy due to evaporation is low. These characteristics
explain why hydro possesses a strong comparative advantage
over alternative technologies in storing energy and power over
days, months and even years.

4.

Hydropowers future

Fig. 2 represents an electrical system including centralized and

decentralized generation; storage services; consumption;
supply and demand; spot, future, balancing and AC markets;
flows of power through the electrical lines (plain lines) and
flows of information, notably price signals (dotted lines). The
local boundary is also shown. The boxes Climate Change,
Super and MicroGrid, New Renewable Energy and
Storage highlight the future drivers that we presented
above, as well as the systems elements that are impacted.
The most important effect of climate change on
hydropower is the production decrease throughout vast
regions of Europe, due to modification in hydrology and
sedimentation. However, climate policy may represent an
opportunity for this source of energy, as its carbon emissions
are very low in comparison to other technologies. Furthermore, power plants and reservoirs may be designed and
managed to minimize their environmental impact. In this
perspective, hydropower meets the criteria of sustainable
development well and should play a prominent role in the
future electricity mix.
The realization of smart, super and micro-grids, as well
as the creation of large amounts of new renewable energy,
which is mostly intermittent by its very nature, should require
the backup energy provided by hydropower plants with
reservoirs. From this point of view, hydropower should play
an even more important role in the future. The integration of
various sources of renewable energy generated in different
regions, as well as the smoothening of the daily load through
demand side management, may however reduce the need for

Table 2 Comparison of various storage technologies.

Technology
Mechanical
Pumped-storage Hydro
CAES
Flywheel
Electrical/magnetical
Supercapacitor
SMES
Thermal
CES
HT-TES
Chemical
Battery
Source: Evans et al. (2012).

Efficiency
(%)

Power
(MW)

Capital
($/kW)

Capital
($/kWh)

Self-discharge
time (per day)

6585
5089
9395

1005000
3400
0.25

600
8002000
350

100
50100
5000

Very small
Small
100%

9095
9598

0.3
0.110

300
300

2000
10,000

2040%
1015%

4050
3060

0.1300
060

300

30
60

0.51%
0.051%

6090

040

3004000

4002500

0.120%

environmental science & policy 43 (2014) 514

13

energy relies on the availability of these services. For the most

part, generating costs are relatively low.
However, hydropower is part of a complex system, whose
evolution is difficult to assess and quantify. One should fully
recognize the uncertainties that taint the dynamics of the
hydrological system as well as energy markets, and in
turn the future of hydropower. Interdisciplinary research
should be carried out in the future in order to provide
answers to the most critical questions that we have raised in
this article.
Public bodies, communities and power companies should
seize the potential presented by hydropower but should not
overlooking the related risks.
Fig. 2 Electrical system and future drivers.

Acknowledgements

flexibility. Another factor that may potentially alter the

comparative advantage of hydropower in the long term is
the development of new storage technologies to be installed
close to consumption centres or on certain critical points of
the grid. One should recognize that the impact of these trends
on hydropower is yet to be fully understood.
The value of hydropower depends on market design and
price evolution on spot, future, balancing and AC markets.
Only energy markets, with a high penetration of heavily
subsidized renewables, and a large share of fossil fuel energy,
can bring down the price. This represents a serious challenge
for hydropower, in particular for new investments and
renovation. Well-organized balancing and AC markets on
the other hand, may create significant rents to hydropower
plant owners. The critical point is to what extent the market
pays for the daily and seasonal flexibility, needed to compensate the intermittency of wind and solar energy. Green
markets can represent another source of revenue, with the
exception of pumped-storage installations; insofar that fossil
fuel or nuclear energy is used to pump the water.
Before concluding, it should be noted that in some
countries, most of the water concessions or authorizations,
which regulate hydropower exploitation, will come to an end
in the not too distant future. They should be renewed or
granted to another public or private company. Following a
decision by the European Commission (2008), the preferential
right awarded to national or regional utilities in the past
should disappear in order to avoid discrimination against
other European operators. This will probably represent a
concern catalyst for the future of hydropower in years to
come.

5.

Conclusion

Overall, hydropower appears to have a promising future.

When compared to other power generation systems, it scores
quite highly in terms of environmental impact. Although it
may be negatively affected by climate change, its energy
potential remains high. Furthermore, hydropower plants with
reservoirs are able to provide an essential contribution to
electricity supply security. The development of intermittent

This study was carried out within the framework of the UE

project ACQWA (Framework Program 7 of the European
Commission under Grant no. 212250; www.acqwa.ch).

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