UK Hydropower Resource Assessment 2022

Executive Summary

This report brings together data from various sources of the installed capacity and location of hydropower installations in the UK and compares these against the values forecast in previous reports. This has been complemented by a survey of British Hydropower Association members and invited non-British Hydropower Association members to consider the appetite for further investment in hydropower and the hurdles faced by the sector.

The report’s aim is to provide an evidenced assessment of the potential of additional hydropower generation as part of a portfolio of low carbon electrical generation technologies to support the UK’s target of net-zero. As with all renewable generation technologies, the answer of how much of the resource can be captured and at what cost and within environmental constraints is a complex area dependent on many factors.

The report proposes an additional deployment of 1000 MW (1 GW) as an achievable target under a supportive policy framework. This would allow hydropower generation of circa 3 GW (a 1 GW addition to the installed base of circa 2 GW in 2022) that could provide an estimated 1.5 % of the increased annual electrical demand of the UK in its net-zero future.

Hydropower has been providing electricity to the UK for over 100 years and our analysis suggests it has cumulatively saved the need to generate 300 TWh from other sources, leading to an estimated saving of 160 million tonnes of CO₂ equivalent emissions over that long time period; for comparison the UK territorial emissions were nearly 450 million tonnes of CO₂ equivalent[1] in 2019. This points to the longevity of hydropower, a key differentiator from other renewable technologies, where investment will typically lead to a very long-lived electrical generation asset with replacement timeframes far greater than other renewable generation such as solar panels and wind turbines. The analysis of hydropower capacity and dates of installation suggests that half of the UK’s current capacity was initially installed prior to 1962 (60 years ago).

The project considered earlier hydropower generation assessments, one of which was the Salford Study, which in 1989 suggested a further viable 322 MW of hydropower could be installed in the UK. In the 33 years since its publication, over 500 MW of hydropower has been commissioned, thus significantly passing the forecast. More recently, there have been detailed studies of the potential hydropower resource for Scotland such as the 2008 study by Nick Forrest, The Scottish Institute of Sustainable Technology and Black and Veatch titled ‘Scottish Hydropower Resource Study’ and the 2012 whitepaper by Nick Forrest and baby Hydro. In addition, there have been detailed studies for England and Wales including the 2010 report from the British Hydropower Association and IT Power, and the Environment Agency’s report in 2010 of the Potential Sites of Hydropower Opportunity. These studies have differing approaches and inputs and unsurprisingly have different estimates for the potential of hydro in the UK.

Since these previous assessment reports of hydropower generation were published, much has changed in the energy policy landscape of the UK. The level of ambition has increased with the UK having set a net-zero target by 2050; the levelised costs of wind and solar PV generation have decreased considerably; the UK has left the European Union and security of supply for energy has once again become a major area of focus.

From the Business, Energy and Industrial Strategy Energy Trends publication[2] in the 12 years from 2010 to 2021 the estimated UK hydropower capacity increased from 1647 MW to 1891 MW, an increase of 244 MW (these values do not include capacity for pumped storage). Over the 5 years from 2017 to 2021 output from hydropower averaged about 1.8% of the supply of electrical energy in the UK but, as the electrical demand is forecast to increase through the electrification of heat and transport demand, if hydropower capacity is not increased, its overall share of supply will decrease to below an estimated 1%. A target of 1.5% of annual UK electrical demand being generated by hydropower in a net-zero system would necessitate a 50% increase of its existing capacity, taking it from 2000 MW to 3000 MW, the proposed target of additional capacity of this report. Sector estimates on the cost of delivering this additional 1 GW of capacity range between £4.5 billion and £6 billion, the majority of which would be spent within UK supply chains, creating and sustaining jobs within the sector.

In the summer of 2022, the UK government launched a consultation titled a ‘Review of Electrical Market Arrangements’[3], as well as publishing a report on the ‘Benefits of long-duration electricity storage’[4]. Both of these focus on the benefit of low-carbon flexibility for generation, i.e., the ability to increase and decrease generation over different timescales to better match electrical demand. In addition, these documents are underpinned by an increased focus on security of supply. The publicly available generation output for hydropower suggests that the majority of hydropower is currently operated with some daily flexibility to better match its output to the higher demand periods within a day. In addition, hydropower is also seasonally well matched to electrical demand with a higher output in winter than in summer. These characteristics point to hydropower not only being a useful means of low-carbon flexibility, but increasingly being an important source of generation when other low-carbon sources are simply unavailable. Hydropower generation can (and does) generate electricity overnight when solar (without storage) simply cannot, it can generate over longer periods of time (days to weeks) when there are low-wind spells, and it generates more in the winter than in the summer, which is a benefit to help match the seasonal heating profile for the UK. These are all advantages as part of a future UK net-zero electrical generation portfolio.

The survey undertaken for this report provides insights on various hurdles the sector faces to build new hydropower schemes, and although many of these can be considered through the lens of financial reward, several are based on the upfront costs in terms of permitting and risks that a scheme may not eventually prove viable. There is a view that a more proportionate system of costs for consents could be helpful particularly for smaller hydropower schemes.

A sound representative estimate from the sector survey suggests 217.5 MW could be built by 2030 under a favourable policy environment by the 49 survey participants, which if scaled up by extrapolating across the whole UK would be up to 1.4 GW. However, extrapolating up to the existing installed base is highly uncertain and although it is broadly consistent with mid-level estimates from previous detailed resource assessments the view in this report is to suggest a more conservative value of 1 GW of additional capacity for hydropower, that would generate an estimated 1.5 % of the UK’s net-zero annual electrical demand.

The results from the survey led to:

• an estimation that nearly 50 MW of additional capacity could be added to the system by expanding hydro sites that are already operational and the confirmation that 19 MW of projects have the necessary consents but have stalled at final investment decision (from the sites of survey respondents)
• the identification that the main hurdles to new hydropower projects are a lack of ongoing financial certainty in a post-FiT framework, difficulty in gaining consents, particularly from the Environment Agency, and obtaining grid connections, especially outside England
• a relationship between the hydropower capacity able to be built by 2030 (rounded to the nearest 10 MW) and the levels of financial support per MWh

In summary, hydropower generation has helped to decarbonise the UKs electricity system for over 100 years; it has yet to fully develop to the levels that have been suggested in previous reports; it has an engaged sector that wishes to develop more; its generation characteristics have an increasingly important role in terms of security of supply as part of an overall net-zero generation portfolio. This all points to the need for the sector to continue to try to find a supportive policy framework with policy makers in order to encourage further deployment. Such a policy could consist of either a Contracts for Difference arrangement or enhanced Smart Export Guarantee, so that new schemes get access to a guaranteed rate of return, which would make many more locations financially viable for hydropower.

[1] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1051408/2020-final-greenhouse-gas-emissions-statistical-release.pdf

[2] Renewable electricity capacity and generation (ET 6.1 - quarterly) – ‘Annual’ worksheet https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1086802/ET_6.1_JUN_22.xlsx

[3] https://www.gov.uk/government/consultations/review-of-electricity-market-arrangements

[4] https://www.gov.uk/government/publications/benefits-of-long-duration-electricity-storage