Mercedes Mullins
Hydropower is a renewable energy source that has been regarded as one of the most mature, reliable, and cost-effective power generation technologies in the world. In this context, it is essential to understand how the cost of hydroelectricity compares to that of fossil fuels. Fossil fuels have been the backbone of the energy grid for a long time, but with power bills climbing and climate concerns growing, a shift towards renewable energy sources like hydropower is being considered.
| Characteristics | Values |
|---|---|
| Hydropower costs | Equal the lowest levelized price of electricity compared to all major renewable energy and fossil fuel sources |
| Hydropower's share of electricity production | 14.3% of total electricity generation from all sources |
| Hydropower's share of renewable electricity production | Over 50% |
| Hydropower's flexibility | Can meet demand when wind and solar sources are unavailable |
| Hydropower's environmental impact | Among the cleanest sources of electricity with low greenhouse gas emissions |
| Hydropower's reliability | Can come "online" quickly to meet rapid increases in electric demand and respond to emergency energy needs |
| Hydropower's sustainability | Free from dependence on volatile fuel prices |
| Hydropower's long-term value | Hydropower plants will differ in their construction challenges and costs |
| Fossil fuels' environmental impact | Burning fossil fuels is the largest driver of global climate change and air pollution |
| Fossil fuels' reliability | Able to produce electricity 24/7 |
| Fossil fuels' cost volatility | Natural gas and coal prices fluctuate due to geopolitics and supply shocks |
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What You'll Learn
Hydropower is the cheapest power option for most of the world's economy
Hydropower costs equal the lowest levelized price of electricity compared to all major renewable energy and fossil fuel sources. This means that it is the most affordable option for a significant portion of the global population. The basic requirement for hydropower is the power of moving water, which can be found in rivers, streams, or ocean tides. This natural feature is more readily available than fossil fuels, which are limited and subject to volatile fuel prices.
The use of hydropower also has significant environmental benefits. It is among the cleanest sources of electricity, with low greenhouse gas emissions compared to other energy forms. If hydropower was replaced by coal, up to 4 billion additional tonnes of greenhouse gases would be emitted annually, according to the IHA. Additionally, over 150 million more tonnes of air-polluting particulates would be released into the atmosphere each year. By choosing hydropower, the US alone avoids approximately 200 million metric tons of CO2 annually, which is equivalent to taking 42 million cars off the road.
Hydropower also has the flexibility to meet baseload and peak demands. It can come online quickly to meet sudden increases in electric demand and respond to emergency energy needs. This makes it an ideal complement to variable renewables like wind and solar power. Pumped storage hydropower acts like a green, rechargeable battery, absorbing energy when supply exceeds demand. As a result, hydropower accounts for more than 50% of renewable electricity production globally and is an essential component of the world's flexible electricity supply.
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Hydropower is proven to be more cost-effective than fossil fuels
Hydropower is free from dependence on volatile fossil fuel prices, and much of the money invested in it stays in the country of production. For instance, in the US, hydropower avoids approximately 200 million metric tons of CO2 annually, which is the equivalent of taking 42 million cars off the road. This is significant because burning fossil fuels is the single largest driver of global climate change and air pollution.
Hydropower is also flexible in its design and can be structured to meet baseload and peak demands. It can complement variable renewables like wind and solar, thanks to its flexibility and energy storage services. Pumped storage hydropower, for example, operates like a green, rechargeable battery, absorbing energy when supply exceeds demand.
Additionally, hydropower has a low greenhouse gas emission intensity compared to other energy forms. Independent research suggests that the use of hydropower instead of fossil fuels for electricity generation has helped avoid more than 100 billion tonnes of carbon dioxide in the past 50 years alone, exceeding even the emissions averted by nuclear power. This is equivalent to the total annual carbon footprint of the United States for 20 years.
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Fossil fuels are increasingly volatile and unstable in price
Hydropower is a proven, cost-effective renewable energy source that is reportedly 40% cheaper than fossil fuels. In the US, hydropower is produced for an average of 0.85 cents per kilowatt-hour, which is significantly less than the cost of fossil fuels and natural gas.
Fossil fuels, on the other hand, are known for their volatile and unstable prices. This volatility has been a key driver of inflation in many countries, including Canada, the United States, and the European Union. There are several reasons why fossil fuel prices are increasingly volatile and unstable:
- Geopolitical conflicts and climate-related disruptions can impact both the supply and demand of fossil fuels, leading to price spikes and supply disruptions.
- The growth of transcontinental and international pipelines for exporting natural gas resources has integrated regional markets with global liquified natural gas (LNG) markets. This means that fluctuations in the global LNG market can impact regional prices. For example, a surge in demand for LNG exports due to an extreme weather event or geopolitical conflict can create a price spike in North American or Australian gas prices as domestic supply decreases to meet export demand.
- As global demand for fossil fuels declines due to the worsening of climate change, market responses, geopolitics, and potential imbalances in supply and demand could increase oil and gas price volatility.
- Fossil fuel prices are also impacted by the level of consumer reliance on these energy sources. In Canada, for instance, consumer reliance on fossil fuels magnifies the impact of price spikes and supply disruptions on the economy.
Transitioning energy systems away from fossil fuels can help insulate against volatile fossil fuel prices and reduce energy use and emissions. Well-designed climate policies and investments that support a transition to renewable energy sources, such as hydropower, can help stabilize prices and build a more sustainable economy.
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Hydropower is more reliable than fossil fuels
Hydropower is regarded as the most mature, reliable, and cost-effective renewable power generation technology available in the world. It has the lowest levelized price of electricity compared to all major renewable energy and fossil fuel sources. In the US, hydropower is produced for an average of 0.85 cents per kilowatt-hour (kWh), which is about 40% the cost of fossil fuels.
Hydropower is also flexible, as it can quickly go from zero to maximum output, making it an essential backup power source during major electricity outages or disruptions. It can be structured to meet baseload and peak demands. Hydropower is also affordable in the short and long term. Construction costs can be mitigated by using pre-existing structures such as bridges, tunnels, and dams. Once operational, hydropower provides low-cost electricity and durability over time.
Hydropower is also a domestic source of energy, allowing each state to produce its own energy without relying on international fuel sources. It is free from dependence on volatile fuel prices, and expanding hydro capacity would create hundreds of thousands of jobs.
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Hydropower is a clean electricity source with low emissions
Hydropower costs reportedly equal the lowest levelized price of electricity compared to all major renewable energy and fossil fuel sources. In the US, 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.
Independent research suggests that the use of hydropower instead of fossil fuels for electricity generation has helped to avoid more than 100 billion tonnes of carbon dioxide in the past 50 years alone, exceeding even the emissions averted by nuclear power. This is roughly equivalent to the total annual carbon footprint of the United States for 20 years. If hydropower was replaced by coal, the IHA estimates that up to 4 billion tonnes of additional greenhouse gases would be emitted annually, increasing global emissions from fossil fuels and industry by 10%.
Hydropower produces around 16% of the world's electricity and over 80% of the world's renewable electricity. More than 25 countries in the world depend on hydropower for 90% of their electricity supply, and 12 countries are 100% reliant on hydropower. China, Brazil, the USA, Canada, and Russia are the largest hydropower-producing countries by installed capacity.
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Frequently asked questions
Yes, hydropower is cheaper than fossil fuels. In the US, hydropower is produced for an average of 0.85 cents per kilowatt-hour (kWh), which is about 40% the cost of fossil fuels.
Hydropower is a clean electricity source that is reliable and cost-effective. It is flexible and can be structured to meet baseload and peak demands. It also has a low greenhouse gas emission intensity compared to fossil fuels.
The challenges of building hydropower plants include finding suitable locations for dams and dealing with different types of ground or rocks. Additionally, hydropower may impact wildlife, with an estimated 888,000 bats killed annually by collision with US wind turbines.
