Hydropower is at the Heart of Flexible Power Generation

By Philip Lowe, Director General for Energy, European Commission
Autumn 2012

Our goals to decarbonise the EU energy system by 2050 and enhance the security of supply are ambitious. We have to do this in a cost-effective way to boost the competitiveness of our economy. This requires a solemn effort in all areas of the energy system. Increasing the renewable energy share to at least 20% by 2020 in the EU overall energy consumption is one effective way of making our energy supply more environmentally friendly. It will also help diversify our energy sources and reduce our dependence on fossil fuels. Furthermore, at a time of economic uncertainty, the renewable energy technology industry can offer more opportunities for development and create new jobs.

As renewable technologies have matured, production of renewable energy has risen steadily, and costs have come down. Today, under favourable conditions wind, hydro, biomass and solar-thermal sources of energy are in principle economically viable. But often the variable nature of renewables, such as wind and solar, makes it difficult to integrate them on a very large scale in our energy system and reap all the possible benefits they can offer.

Hydropower, which accounts for 16% of the European electricity generation portfolio, has today a competitive advantage compared to other renewables. This is mainly related to its capability to efficiently even out fluctuations between demand and supply. Pumping water to a high storage reservoir during off-peak consumption times and using it for hydroelectric generation during peak demand hours can provide a rapid response to cover transient peaks in demand.

As pumped water systems can come on-line very quickly, practically within seconds, they can also be used to smooth out errors in wind forecasts where storage has to step in to fill the time gap between the fall down of wind and the ramping up of gas and coal fired power plants. Pumped hydro storage has an excellent capacity to deliver electricity very quickly. A rapid rise in wind-based electricity may be evened out by rapid take-up of pumping for stabilising the grid for a short period. Therefore, hydropower has almost like a two-in-one effect: as a renewable energy source in itself it serves our climate and security of supply goals and as storable energy it contributes to the stability of the grid.

The new and changing energy market needs more power and more flexibility. Energy experts claim that the unavailability of sufficient energy storage is one of the major challenges of the energy system today. When the variable energy share is lower than 15% to 20% of the global energy consumption the grid operators are able to compensate the variability in the energy production. This is not always the case when the share exceeds this amount. More energy storage would help to tackle this challenge. More energy storage will accelerate the large-scale market introduction of renewables, ensure security and efficiency of energy supply, supply more flexibility and balancing and accelerate the decarbonisation of the electricity grid. It will reduce unplanned power flows, grid congestion, voltage and frequency variations. It is also expected to contribute to stabilising the electricity market prices. However, in economic terms, energy storage does not make much business sense today as it is rewarded only for the kWh it provides and not for many positive services it provides to the grid; In addition, cross-border trading is very difficult because of major differences in national regulations for storage.

40% of the world's existing electricity storage is in Europe and in its neighbouring countries.

Today and for the next 10 to 15 years, over 99% of utility scale storage will be provided by pumped hydro storage. Hydropower is and will remain
an essential piece in the energy puzzle.

At the same time, research and development of new storage technologies, such as hydrogen, batteries, etc. is also necessary.

I believe that synergies between the internal energy market and the storage technologies should be further explored. A favourable framework and consistent signals should be given to the industry and investors. Europe has a chance to become a world leader if the right market conditions are created and the right long-term signals are given to our industry to massively invest in the development and deployment of these technologies.