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Sam Payne: Could hydropower propel us to net zero?

Sam Payne, CEN's Climate Programme Manager

We sit on a relatively untapped, consistent source of clean energy in the UK. Used for millennia to hull grain, process ore and keep our great British cotton industry spinning, our waters fueled our country. With the potential to not only help power the country but also overcome the issue of energy storage from wind and solar, is hydropower the underdog of British renewable energy?

As a renewable energy source, run-of-river hydropower has a tried and tested track record. Water channelled from a river, through a turbine can generate electricity for as long as the river runs. One of the first British factories, Cromford Mills, was powered by the River Derwent when established in 1771. In the 240 years since, and with the help of the electric motor, hydropower has developed into a key player in electricity generation, accounting for 15 percent of global electricity generation in 2020.

However, perhaps the biggest opportunity for hydropower could be as the solution to our energy storage dilemma. “What happens when the sun doesn’t shine, or the wind doesn’t blow” is one of the biggest questions about our transition to renewable energy. Long Duration Energy Storage (LDES), such as pumped storage hydropower, is one solution, allowing low carbon electricity generated when it is windy or sunny to be used on still, cloudy days.

Pumped storage hydropower (PSH) can utilise excess renewable power from solar and wind at times of lower electricity demand through pumping water from lower to upper reservoirs. Then at times of low wind or solar power (or higher demand on the grid), water can be released through a turbine to supplement the supply, preventing the need to fire up a coal or gas power plant.

The growth in clean power generated by wind and solar is due to outstrip demand in 2023 and by 2030 it is expected that there will be an oversupply of renewable and nuclear energy more than half the year. However, unless the barriers to storing low carbon electricity can be met, this excess power will be wasted, disincentivising investment in renewables, and at times of low generation, we will still rely on imported gas. As much as 24GW of LDES could be required to manage the intermittent nature of renewable energy in the UK alone. We have huge potential for PSH, with 3GW online and a further 5.2GW either given or awaiting planning consent.

To fully utilise the power of wind and solar energy in the UK, we need to overcome the barriers to energy storage. High upfront capital costs and a lack of revenue certainty have been identified as two of the biggest barriers to the market. Whilst hydropower is eligible for the Contract for Difference scheme, these tend to favour electricity generators rather than storage solutions. Instead, a cap and floor mechanism - whereby below a ‘floor’, revenues are topped up by consumers, and above a ‘cap’, earnings are returned to consumers - could provide the flexibility required to support LDES solutions.

A cap and floor scheme is already in place for electricity interconnectors, facilitated by Ofgem, to encourage investment and reduce risk for investors and developers. A similar scheme for LDES projects, such as PSH, could increase the storage capacity for low carbon energy in the UK, increasing our energy security and ultimately propelling us towards net zero.


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