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02 MARKET AND INDUSTRY TRENDS
Other countries in Africa to add hydropower capacity included
Guinea, which tripled its capacity with the completion of the
240 MW Kaleta facility in 2015 (it is anticipated that the plant
will alleviate the country’s energy shortage and also benefit
neighbours in West Africa), and Zambia, where the 120 MW Itezhi
Tezhi plant was completed. 46
Numerous small-scale hydropower projects were completed in
Brazil, India and elsewhere, including Scotland. The Isle of Mull
saw the commissioning of a 400 kW community-owned run-ofriver
hydropower project in 2015. About half of the project cost
was raised through a community share offer; the expected net
return of as much as USD 3.6 million (GBP 2.4 million) over 20
years will serve the needs of the community through a local
charity. 47 (For more on community energy projects, see Feature.)
The World Bank remains committed to continuing its support
for well-designed and well-implemented hydropower projects of
all sizes for both local development and climate mitigation. 48 In
2015, the World Bank announced its new action plan to improve
its resettlement policy, drawing on lessons learned, with the
intention of significantly improving the protection of people and
businesses that may be resettled as a result of World Bankfunded
development projects. 49
Global pumped storage capacity rose by 2.5 GW, with the yearend
total estimated to be as high as 145 GW. 50 China added
1.2 GW of new capacity, and Iran completed the first pumped
storage plant in the Middle East, the 1,040 MW Siah Bishe. 51
Japan added storage with the completion of the second 200 MW
variable-speed unit at Kyogoku plant, on the island of Hokkaido. 52
In Europe, Austria completed construction of the 430 MW
Reisseck II pumped storage facility in 2015, but commissioning
was delayed into 2016. 53
Opportunities for growth in pumped storage may be hampered
in some markets by regulatory restrictions. In China, however, an
estimated 27 GW of new capacity is under construction to help
reduce curtailment of solar and wind power and to accommodate
further growth in variable renewable energy. 54
HYDROPOWER INDUSTRY
Climate-related risk and rising shares of variable renewable
power are driving adaptation in the hydropower industry. During
2015, the industry continued to adapt to manifestations of climate
change – including increased glacial run-off and variability
of rainfall – through operational changes, modifications to
existing plants, and changes to the design of new hydropower
plants. 55 Responses to rising shares of variable renewables
have included an increased emphasis on pumped storage and
coimplementation of hydropower with solar and wind power
plants in order to both maximise the efficient utilisation of variable
resources and conserve water resources. 56
Modernisation, retrofitting and expansion of existing facilities
continued in many locations. These developments reflect
several pressing needs across the industry, including the needs
to refurbish ageing infrastructure in many countries; maximise
resource utilisation to increase efficiency of operations; shift from
baseload operations to cycling and peak operations in many
instances; and increase storage capacity for system back-up,
reduced vulnerability to hydrological variation and improved
overall system resilience. 57
The industry approach to project financing continued to evolve in
2015 with a trend towards risk-sharing among partners. Examples
include developers taking equity shares in new projects, and
public and private parties sharing responsibility for each stage
of project development. Refinancing upon successful completion
of projects, which reduces long-term costs and frees public
funds for further development, is also becoming more common.
Although they are not yet subject to any common standards,
green bonds have become very important to the hydropower
industry because they help lower the risk profiles of projects.
Finally, the alchemy of blended finance – leveraging development
funding with private capital – has created opportunities to meet
varied development goals, such as irrigation and flood control,
while tying the objectives into the revenue-generating aspect of
hydropower development. 58
The most significant providers of hydropower equipment are
GE (United States), Andritz Hydro (Austria) and Voith Hydro
(Germany), each with about equal market shares. Together they
account for about one half of the global industry. 59 Other notable
manufacturers include Harbin (China), Dongfang (China) and
Power Machines (Russian Federation).
Among notable events in the industry in 2015 was the completion
of GE’s USD 10.6 billion (EUR 9.7 billion) acquisition of Alstom’s
energy activities. 60 Andritz Hydro reported unchanged, difficult
market conditions with a continued decline (-5.4%) in new orders,
although sales were up slightly (+4.7%) for 2015. The company
noted that relatively low electricity prices (and low energy prices
in general) led to the postponement of many modernisation and
refurbishment projects, especially in Europe. 61
Voith noted strong sales in North and South America – in Brazil
in particular, despite political instability and weak economic
conditions in that country. 62 The company’s 2015 sales were
unchanged relative to 2014. Despite favourable currency
developments (due to the weak euro), however, the high orders
booked in 2014 could not be sustained, and declined by 5%. 63
Voith considers the North American market promising for both
new plants and refurbishment, even though plentiful shale gas
has depressed electricity prices. 64 The Asian market – including
Indonesia, the Philippines and Vietnam – gained importance
during the year. 65
With a slowdown in domestic contracts, Chinese corporations
have been increasing their involvement in hydropower-related
projects around the world. Their involvement has included both
construction and operations, and they have focused particularly
in Africa, South Asia and South America. 66 In early 2016, China
Three Gorges Corporation acquired two hydropower plants in
Brazil, becoming Brazil’s second largest private power producer.
The State Grid Corporation of China has committed to building
and operating new transmission lines in Brazil, including a longrange
conduit for output from the large Belo Monte project. 67
56