Reports Show Hydropower's Value Will Likely Grow in Transition to Clean Energy

Two national laboratories issued three publications in Fiscal Year 2023 that analyze how hydropower’s value is likely to increase as the United States transitions to a clean energy grid.

A research team from Argonne National Laboratory published a report that analyzes how integrating more variable renewable energy resources, like wind energy and solar power, into the U.S. power grid might affect the future value of conventional hydropower and pumped storage hydropower (PSH). The team focused on three value streams—energy generation, capacity (or a facility’s maximum power output), and ancillary grid services such as the ability to jump-start the grid during a blackout. The team found that, although conventional hydropower generates most of its value by providing energy, its capacity and ancillary services will increase in value as the power grid adds more variable renewable resources.

The Argonne team also discovered that PSH’s value is most often tied to its ability to provide capacity or backup energy reserves, but its value as an energy storage resource will increase along with the grid’s reliance on more renewable energy. On the other hand, conventional hydropower's total value will decrease as the grid evolves, largely because future clean energy systems will likely lower overall energy prices (making hydropower’s affordability the norm rather than a benefit). However, the team noted that more research on energy storage and ancillary services must be done to fully understand how their respective values might influence hydropower’s total future value.

In two complementary white papers, researchers from the National Renewable Energy Laboratory (NREL) detailed how the roles of hydropower and PSH might evolve as the country transitions to clean energy. They found that hydropower could both support and accelerate the country’s transition by helping to reduce energy costs and providing critical energy storage. In the first white paper, for example, the team estimates that PSH’s 6- to 10-hour storage could have significantly more value over time as compared to shorter-duration energy storage solutions like batteries. While short-duration storage can help get more renewable energy onto the grid in the near term, PSH and other long-duration storage are more helpful in replacing power generation from fossil fuels in the long run.

In the second white paper, the team investigated the value of hydropower flexibility in a low-carbon grid. They found that if the United States replaced hydropower facilities that can provide flexible energy–meaning they can generate energy as needed to meet demand—with a mix of variable renewable energy sources and energy storage, the country would need to more than double its current energy storage capacity and build an additional 11 gigawatts of new wind and solar resources to compensate. Adding that storage would cost about $70 billion. Further, because current hydropower plants store significant amounts of clean energy, these facilities could help the country integrate about 10% of the variable renewable energy needed to achieve a 100% clean energy grid. Hydropower’s ability to operate flexibly helps keep both operating costs and electricity prices low. Without it, average operating costs are projected to increase by an average of 5% and electricity prices by 13% nationwide (though some areas could see increases of more than 40%) according to the report.

All three of these publications can help policymakers, hydropower owners and operators, and grid planners better understand the role of PSH and hydropower in a future clean energy grid. They also corroborate the idea that hydropower will be essential for the country to achieve its ambitious goal to build a clean power system by 2035.