Annex IX: Valuing Hydropower Services Phase II
BACKGROUND
IEA Hydro initiated a programme (Phase I) to investigate the value of services provided by storage hydro projects through the establishment of the economic values of energy management, water management and other socio-economic services. All hydropower projects which have any form of reservoir (even diurnal storage) are multipurpose and the services analysed are potentially applicable to all projects. Historically, the broad range of energy and non-energy services provided by hydropower plants have not been explicitly valued, being part of a utility’s mission.
Since the start of Phase I, two key issues affecting the hydropower sector have arisen; the penetration of variable renewable energy (VRE) sources has increased substantially and the potential impacts of climate change are being recognized. These dynamics pose both challenges and opportunities for hydropower and require further exploration and analysis beyond the scope of the original Annex work. This will form the basis of Phase II.
Phase II will consider the role of hydropower in producing significant amounts of firm renewable energy and storage to support VRE’s, and providing flexible energy services to support electricity systems – collectively termed ‘hydro balancing’. Specifically, Phase II will develop an understanding two key strategic themes:
- how hydropower will be valued in future electricity market scenarios, and
- how hydropower will be valued under alternate climate change scenarios