In 2023, hydropower made up about 27% of utility-scale renewable electricity generation in the United States. This resource has a key role in ensuring electricity grids remain reliable and stable as they evolve to incorporate more variable renewable energy sources, like wind energy and solar power. A robust hydropower supply chain in the United States is critical to support new construction hydropower facilities as well as upgrades, refurbishments, and relicensing activities at existing facilities.
In August 2024, the U.S. Department of Energy’s (DOE’s) Water Power Technologies Office (WPTO) released the Hydropower Supply Chain Gap Analysis, which evaluated various sectors of the supply chain, from mining and extraction to installation and construction.
Drawing on feedback from hydropower industry stakeholders, researchers identified five major gaps:
- Unpredictable and variable demand signals for materials and components. In general, hydropower systems have exceptionally long lives (e.g., 30–50 years), so replacements and refurbishment schedules have cycles that are years or decades.
- Severely limited or nonexistent domestic suppliers for materials and components. Only one or two—or in some cases, no—domestic suppliers exist for materials and components.
- Federal contracting procedures and domestic content laws. There are several procurement regulations and/or general practices that inhibit the development of the domestic hydropower supply chain.
- Foreign competition, foreign subsidies, and ineffective trade policies. Discussions with companies in the hydropower industry highlighted inequitable competition from foreign companies and ineffective trade policies as issues in the hydropower supply chain.
- Shortage of skilled workers. Hydropower manufacturing and upstream support industries suffer from a significant lack of expertise in the workforce. As these industries have been offshored over the last 40 years, skilled workers have retired or moved to other industries.
To address these gaps, researchers recommended to:
- Lead with the federal fleet to prime the development of an aggregated, consistent demand signal. Nearly 50% of the domestic hydropower fleet is federally owned. The potential demand signal from new federal facilities and refurbishments can be significant. Federal procurement processes should be evaluated to ensure that they are effective in developing the domestic supply chain while obtaining the hydropower and pumped storage hydropower equipment and services the federal fleet needs.
- Increase awareness of the domestic supply chain through the development of databases of domestic manufacturing and installations. Developing tools to predict demand is another way that WPTO can help both the federal and private fleets. Tools currently in development or undergoing enhancements include a database of domestic suppliers along the hydropower supply chain and a tool that allows users to see data (e.g., size, turbine type) on individual hydropower generation units.
- Work with other low-carbon technologies and industries to create a significant, steady, and predictable demand signal for common materials. While the demand from the hydropower industry is in the billions of dollars annually, it is not sufficient to build out a domestic industry, especially in the material and component sectors. However, many of the components and materials used for hydropower systems (e.g., transformers and electrical steel) are also used in other clean energy technologies, such as wind energy, and for upgrading the electric grid. Industries such as ship manufacturing and defense supply chains also have commonalities with hydropower. These industries can be leveraged so that the aggregate demand can address gaps in their respective supply chains.
- Continue workforce development efforts. There are few low-carbon energy technologies that have as significant of a gap in educational programs as hydropower. In addition to expanding academic programs, there is a vast array of experiential-type programs that can help raise the awareness of hydropower and its opportunities, including internships/fellowships/apprenticeships, experiential placements, job fairs, primary and secondary school competitions, collegiate competitions, programs that place veterans and other unique workforce segments, and more.
The Hydropower Supply Chain Gap Analysis built on the Hydropower Supply Chain Deep Dive Assessment, part of a series of reports produced in response to Executive Order 14017 “America’s Supply Chains.” This executive order directed the Secretary of Energy to submit a report on supply chains for the energy sector industrial base. It also aimed to help build more secure and diverse U.S. supply chains, including energy supply chains.
The deep dive assessment examined the hydropower supply chain to identify potential bottlenecks, challenges, and opportunities, particularly if the U.S. demand for hydropower components grows significantly to meet decarbonization targets.