You are listening to Redefining Energy. Your co hosts from Berlin Gerard Reid and from London Laurent Segalam.
Today on redefining Energy, we're going to talk about hydropower.
Yes, each energy source as is on attribute in term of green, in terms of intomitency, in term of price relativity, in term of capex. None is perfect. But what is sure is we are not too king enough about idle. But first award from our.
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Well, I agree to we're not talking enough about hydro and I want to say I think we're not talking enough about pumped hydro in particular because pumped hydro gives you flexibility. And we talk quite a lot about this Dounkel flouter or in other words, what do we do in these dark days when there's no wind and solar?
Well, guess what? You store it? Right?
And store it?
How do you store it? You store water that sticks up on the top of a reservoir. Right, So I think it's really, really really critical.
If you look at the big picture, and I've got all those data from Amber Climate, because really when it comes to electricity, they're the best. So hydro is the largest source of clin energy globally. It's fourteen percent of the global energy production. Now, what is interesting is compared to win and solar, the generation of hydro between to eighteen and to twenty three was flat worldwide because of drought,
low rainfall, especially in China the US. Now there's been a strong recovery the first half of two twenty four. And if you look at the countries, you really have the big threes. You have China first, then Brazil, then Canada, then US, Russia, India and Norway. And to give you an idea, China is as big as the next four. Extraordinary China play here.
Wow, China is the renewable king.
It's not just hydro, it's solar, it's wind, and there's everything at this energy transition.
That's the reality.
So it's important to properly manage that resource. And of course when we say properly managed, we're talking about digitization.
Which is why we're bringing on Jana's Goodenough, who is the CEO and founder of Hydrogrid, which is an Austrian based business focused on as well as helping hydropower plants optimize unapprove efficiencies.
Look globally the capacity of all the idle plants in the world, the average is forty four percent. So it's kind of the same as of show win. But you can dispatch it whenever you want. That's what makes it extremely valuable.
Yeah, exactly, well said, Well, let's bring around the show.
Johnny's welcome to the show.
Thank you so much for having me.
Jannis.
The reason we brought you almost to talk about hydro and the role of hydropower the energy transition. At the end of the day, you've been doing a hydropower for a long life. How do you say the state of hydropower.
And how do you see the future of it.
First of all, hydropower is a technology that is old but good, and because it's so old, it's not given nearly as much attention with regards to the huge role that hydro has to play for a successful energy transition. The hardware, the turbines and the gates, all of that has been around for one hundred years. The efficiency has been optimized to the second digit after the comma that we have a future in hydro that is going to be about digitalization to bring that fantastic technology to the
twenty first century. And I'm excited of that road ahead.
Can I jump in straight away with Joe just said that digitalization? So how can you digitalize our hydropower station? Because at the end of the day, orders coming down a mount and comes to a dam and then you lead it to a turbine, right, I mean, what's there to digitalize?
What's to digitalize is kind of the real time reaction to continuously changing circumstances. So hydropower plants have the blessing and the curse that they are strongly influenced by their environment. The weather is constantly changing, there are a bunch of environmental requirements that hydropower producers have to constantly be aware of with regards to flood and drought management, fishing, tourism.
So hydropower plants are very closely integrated with their environment, and that means you need to be continuously reacting to that environment. And this reaction is the part where digitalization comes in. But there are also other parts of across the hydropower life cycle where digitalization comes in when we
speak about building new power plants, predictive maintenance. So there are a number of applications throughout the whole hydropower life cycle there where there's an important role for digitalization.
Jenny's if I look at hydro the past twenty years, is you really have two stories. On one hand, North America Europe where pretty much everything that could be dammed has been damned, while we've seen a lot of development in China, a bat in India, and to a certain degree they continue in Latin America. How do you see the global market?
Hydropower is moving at different paces, in different continents, so to speak. So let's start maybe with the one that is the most far advanced, which is Europe. We're on the one hand side, we have probably the highest percentage of built out capacity in relation to the potential, and we also have the highest and most advanced liberalized power markets. So in Europe pretty much every country has a fully liberalized power markets, from long term future markets to day
ahead intra day including ancillary services. When we move west to North and South America, we are technologically or in terms of the power market side a bit further behind. So in the US there is first of all, still in many places, quite a tightly regulated market, and over the last few years there's been a lot more focus being given to wind and solar. In addition, in the US,
we have a quite large potential of unpowered dams. In the US, there are I believe two five hundred powered hydro dams, but there are actually eighty thousand, eight zero non powered hydro dams, meaning hydro dams that could in principle be used for power generation but are currently not.
This is a huge potential that's currently unused. There is a study from the Department of Energy that using only the most feasible ones out of the world, those non power dams for power generation could add about twelve gigawatt of hydropower generation to the existing hundred gigawatts of hydropower generation that currently exists.
Can I just interrupted and just explain why nobody knew as talks about hydro We all talk. All you hear about is tax credits going into winds, solar, bath rais, but nobody talks about hydro So why is that?
Honestly, it baffles me. Also, the reason is number one. I believe hydro is seen largely from a water management perspective, flood management, draft management, and the power generation capacity of hydro is seen almost like a b side. And there have been quite a lot of efforts where from an environmental point of view, hydro power maybe has been painted not in the best light. In a few cases maybe rightfully so, but for the largest part not rightfully so
at all. So it's a big root cause why the US specifically has a lot of up to do with regards to hydropower buildout but also hydropower digitalization.
What you said about Europe really was that we were sort of the most developed hydro marker, right, And I suppose what I'd love to hear is what potential do you see in Europe in and around new build going forward?
In Europe? Clearly a big part of the technologically feasible potential has been built, but there is still something left to do, specifically when it comes to smaller and medium sized assets and when it comes to flexibilizing those assets.
So we see, for instance, in the Nordics, Norway, Sweden, Finland, that there is a huge number of small and medium sized hydropower plants which physically would have the capability to become storage hydropower plants, but which for reasons of the concession that was given maybe fifty or one hundred years ago,
are currently not able to store any water. So that's a point where even without constructing a completely new power plant, you could significantly increase the practical usability to the grid by making these plants flexible, which on the one hand, increases their power output because you can run at a better efficiency point. You can collect more water, so you're better able to deal with variations in rainfall, and of course it makes them also usable as a green battery to the grid.
I hear you, and of course we'll go more into the detail of it. Hydro adds certain im more value to the grid and additional wind. But you know a lot of our listeners are infrastructure investors, private infrastruture investors, so wind okay, yeah, I've had some problem recently, but you know, you know how much it costs, you know how long it's going to take. There's a scale effect hydro. The last big project in Europe was this Swiss Pompidro I mean graces, but it took fifteen years to build
it means that's probably the case pretty much everywhere. It's much less a private investor game than a public whether it's public utility or you know governments, which of course go at their own pace and the budget sometimes goes pretty much out of control. As an investor, do I want to touch hydro? I'm kind of freaking out as an investor. Now once it's built, I can understand very clearly. So is that the same analysis you're doing in relation to investing in a new capacity.
Yes, that's absolutely true. So another reason why from an investment point of view, wind perhaps has been more favored compared to hydro is the very very long lifetime of hydro, So investors think in kind of return on investment. Hydropower plants have a lifetime of one hundred years, but you can't really capture that in a business plan. You're thinking
they're in annual return rates. So Wind over the last decade perhaps has often been seen as the more safe bet because again there has been subsidies for wind giving you a fixed return, and also the commissioning process may be easier. There are perhaps less environmental factors to consider, and you can calculate your return within ten twenty years, so that is another factor for sure.
Let's see probably Europe. Let's look about Canada, South America before we move to Asia.
If we look a bit north from the US, the big brother Canada actually has almost the same amount of hydropower as the US, so eighty three gigawab And here we see a move towards a power market liberalization. So there has recently been a liberalization in Ontario and now power producers are moving away from this central dispatch model
to a liberalized power market. Looking to the South of America, here we still have to a large extend state regulated markets, but in more and more of these countries, plants now have the option to try aid at least part of their power in a newly created liberalized market. There's also some funding incentives to modernize hydro through digitalization and other projects.
But here we see that really the impact of climate is significant because the variation here on here with Elninio La Nina is really big, and this is some of the biggest challenges that these producers in South of America face. And maybe we want to move east as well to China.
Talk about Asia.
Yeah, China specifically, we don't have the fully exact numbers, but based on what we know, China is about three hundred and sixty gigawa of hydro capacity growing fast out of a total of about five hundred and fifty gigawat in East Asia and Pacific. So here we see a rapid expansion across all sizes, so small, medium, and large hydro.
And this is for mini producers and also suppliers in the hydro industry, a market that is hard to ignore because in terms of speed of new build, Asia is definitely where it's happening because there is the largest potential of currently unfinished or unbuilt projects still definitely lies in Asia and Asia Pacific.
But that's where you come in because as we all know, there's a lot of value about being able to dispatch clean power at the flick of a switch. But of course you can't have just a guy calling another guy
and say okay, pisto on on, pistol off. The way we see it, if you look at and Boss report, eighty percent of the new capacity addition in the world are wind and solar, which means we are putting more intermittency on the system, which indirectly brings more and more value to the flexible assets and in particular high or so can you elaborate a bit on.
That, please, yes, exactly. In order to master a renewable energy transition, we are adding all this wind and solar what we actually have going forward. It's not an energy problem, it's capacity and storage problem. We are going to very quickly be in the situation where we have plenty of renewable energy, but it's going to be difficult to deliver that energy to the consumer when they need it. And there's really only a handful of technologies that we have
available today that can be used to store energy. The first one of those is demand response, meaning not storing the energy, expecting the consumer to adjust his consumption behavior to match when the energy is available. There are a bunch of projects out there in this area, both on
the industrial and on the household side. I personally don't believe in them, because we have become very accustomed to the energy being there when we want it, and anything that asks the end user to reduce their comfort by even the slightest amount I don't think personally is going to happen.
Let's not put down the rabbit hole of demand response. Let's talk about storage. On the other side, do you see the role of a hydro power.
In USh Given that we talk about storage, there's only really a small number of technologies that we have available, and that is effectively hydro storage and batteries. Now, both of these have their pros and cons. Hydro storage has the advantage that it is very large storage volume, it's quite quick to respond, but the downside is it's not possible everywhere. You need the geographic circumstances to be able to build a hydro dam, so it won't work everywhere
in the world. And it's also a centralized form of storage, meaning you can't put this in every little household. On the other hand, battery technology has the advantage that you can build battery pretty much at any size and scale. You can put them pretty much wherever you want, and you can also use them in a completely decentralized fashion. The benefit is they also are rapid in terms of reaction,
but they have significantly smaller storage volume. By storage volume, I meantio between Megawa and Mega what ours capacity?
I agree with you centralize five days against decentralized two or three hours. So this is where you see not really a competition but I would say a good complimentarity between the two technologies.
Exactly, we're going to need both.
Jana's sort of as I love that.
Really what we need to do is we need to combine hydro power plants with going forward with batteries.
I mean, how do you see that.
Yes, that's a very exciting opportunity going forward. So it's not needed for hydropower plants who already have storage capacity right them power plants, but for run of river power plants, this ability to have what we like to call hybrid hydro.
Combining hydro run of river with battery capacity can bring us the best of both worlds, the combination of being able to turn smaller run of river power plants into somewhat decentralized storage power plants, and that really allows to combine the best of both worlds from both technologies.
Jenny's you pointed out, and you know, we hear that a lot that you know, the sun doesn't always shine, the wind always well, but you know, the hydros you had some good years and bad years, and we saw Glass year China had to restart coal plants because the hydro resources were very low, and the same in Europe in two twenty two. Of course price of gas because of Russia went through the roof, and of course the nuclear park in Europe was a bit of a disaster.
But also at the same time there was the hydro production in Spain and Italy was an absolute disaster. So your company, your software is helping also manage the supply better. We kind of took for granted that the dams will always be full, and it's probably not the case anymore. So how can you help manage a resource which is also impacted by climate change.
What we see over the last year is that the variations year on year are becoming bigger. To give just one practical example, in Norway, within the last ten years, we both had a one hundred year flood and one hundred year drought year within the period of five years. So that tells you that something is going on and that we probably have to expect that with climate change, the year on year variations make it bigger. On a global scale. Of course, it evens out to some degree.
You don't have at the same time that rot in Brazil and in Norway and in Malaysia. But locally this can be a significant issue. The problem is there's not really another technology to balance that out except fossil fuels, because you can't count on the fact that wind and hydro are negatively correlated, or solar and hydro being negatively correlated.
So we realistically will need some amount of perhaps backup capacity to ensure that even in those years when the new renewables so both wind, solar and hydro are not delivering to the point where we need them, that perhaps flossil fuels will still have a role to play to pick up the slack.
Janis we started this whole conversation talking about digitalization, and I think it's probably a good place to sort of come to the end of this podcast.
We can you talk about digitalization.
And what that means and how you see that going forward.
There are a number of places in the hydro life cycle where digitalization comes into play. It comes into play during the building phase to use for instance, virtual digital twins of the power plant to find the right dimensioning of the turbine given the hydrological conditions, etc. It comes to play in the maintenance area, so with predictive maintenance, trying to prevent or predict when failures are going to
happen and to prevent or reduce down times. And then the third part is in the daily operation of the plant, which is also where a software like Hydrogrid Insight comes into play, which is about digitalizing the production planning process and the optimal management of water and optimal trading and selling of power.
So could you dig it to that latter part then and explain what that means, because the way I think of a hydro power plant is it's almost like somebody's switching a lever and switching.
On and off like that. But I presume in the future that's not how we're going to be doing there.
Correct. What you just described was how hydropower plants were operated probably fifty years ago, and in many places not that much has changed since then, but a lot needs to change if we want to make hydropower fit for the twenty first century. So, since power markets are becoming more and more volatile through the addition of intermittent renewables, power markets are also becoming more and more short term.
As a result, it's a bigger and bigger chunk of the total revenues that come from short term power markets. That's the one factor, and the other factor is embedding of hydro power in its environment and the need to react quickly to changes in the weather conditions. In order to manage a power plant efficiently for the twenty first century, you need to be able to react very quickly, in almost real time to changing events. And that's what, for instance,
a hydropower production planning software like Hydrogrid Insight does. So we connect to sensor data from the power plant, we combine these with weather data from weather data suppliers as well as power market data from the power exchanges, and come up in real time with an inflow forecast as
well as an intelligent production plan. So you can think of this a little bit similar as autonomous driving for cars but for power plants, meaning the plant is then able to seer itself intelligently in real time based on weather and market conditions.
Joenny's when I look at the markets now, I see negative prices at noon, and then we see the evening ramp up. If I just look at California, you have a seventy gigawat I mean seventeen new clap plant just for California, a ramp up in a few hours. And I know you've been mostly in your but now you're starting to go in the US, So I would say those types of pricing means that you need to be much more granular in the way you're going to use
your capacity. Do you see an evolution and using digital in the way those flex assets are being used and monetized.
Yes, And the importance of this has gone up significantly over the last five or ten years. While five years ago, the difference in revenue between running your plant intelligently based on the power market for a flexible plant was in the range of ten to fifteen percent. Now with the increase in volatility, it can be up to fifty percent, which means that hydropower producers which don't tap into this
potential are really losing their competitiveness in the market. And what that means is it also disengages the investment in new hydropower. So the whole industry really has an important role to play to digitalize, to make hydro power again a super exciting investment, and to show that hydro has a crucial role to play for a renewable energy transition.
Johnas look, one of the greatest challenges of the energy transition is going to be this dunkle slouter in the words when there's nowhere and no solar and I presume that the real opportunity for all forms of hydro.
Power, yes, exactly, dunkle flout the Statistically, there can be periods of up to two to three weeks where the wind isn't blowing as much as we would like it to. And then in addition, every single day we have the natural pattern of sunlight, so we need to transmit capacity
from the day to the night. And this is the part where hydropower is crucial and where there is currently no other technology that can cover the scap because batteries, even with the huge advances, are not yet at the point where we have twelve to twenty four hours of storage capacity or even two to three weeks of storage capacity.
This is where we need hydro crucially, and where as much as my environmentalist heart would like it to be different, where I believe that still we are going to need some amount of fossil fuel generation simply as a backup to cover these periods of dunkliflouten.
Ch just make this the last question.
At the end of the day.
You're an entrepreneur in this space, and I'd really love to hear your vision of your own business over the next three to five years, and where you see going and what you want to achieve.
In three to five years. I would like hydrogrid to be the established digitalization solution for hydro power, to be the globally leading player in this field, and to be the established operating system for all those hydropower operators who want to make hydro power for the future.
Well, Jonas, we wish you all the best going forward with your vision.
Well, Jenny's thank you very much, and you are trying to turn the tide because frankly, hydro as the worst worst pr message and it's such an easy and obvious technology to push forwards and tell you I don't know he's in charge because they are useless, but you are great. So you should be not only the voice but also the face of hydrol so we can really push that technology.
Thank you so much for having me on, and thank you also for giving a spotlight to hydropower, which I agree it absolutely deserves. So thank you for being part of the solution.
So jar Jenny's extraordinary entrepreneur.
Absolutely and revolutionizing an industry that needs revolutionary Please, I'm sorry just the way I just look at these hydro plants and the way they've been rung, they haven't changed. They've been run for the last one hundred years, so there's much more they can do. So what she's doing is helping them digitalize and optimized. And this is brilliant, absolutely brilliant.
Yeah, you're talking the intro about palm storage. China is seeking to expand it's pumpid rock capacity to one hundred and twenty gigawat from fifty five gigawad now and they just open and I'm trying to not butcher the name the thing, ning term storage to tenure to build two billion, three point six gigawad twelve hours, so somehow is the same power as in clip point for five percent of the cost. It's the big it's the biggest pumpider in the world thing ningm Storage exactly.
Which brings me to another point that it's a little bit of.
A distraction, which is I just recently saw that Sweden has decided they are going to.
Build new new nuclear and I'm trying of thinking myself, they should be building pumped hydro that's what they should be.
Doing, right, But as we said during the conversation, we are representing the private sector and if you look at who are the big developers, it's a three gorge term. It's Hydro Quebec, bi Ciro electro Bras that crab so one hundred percent of public owned company. So it's really part of a national strategy and it's a tough risk for private investors.
It has indeed rawn you're absolutely right on as.
We can discuss until the end of the night about long jeoationary storage. But my personal opinion is the following. And I've seen a recent tender for eight hours long jeerationary storage in Australia and guess what it was won by Wu E and Lidia my own. Yeah, so that's it. Lidia my own is probably going to conquer the below twelve hours because they're getting so cheap and you know, so ubiquitous. But we need Pompiro. There's a very interesting
program in Scotland for instance. For private investor, it would be a good idea to put the cap and floor regime. I'm sure that would bring a lot of investor in. Yeah. I love Pompyro and I love what Jennie is doing because managing in a much more granular way in relation to the market. In combination with wind and solar, the hydro resources that will bring a lot of value to the grid.
Let me add one other things, roll on. Actually, I think the future is to combine lettyr mim a pumped hydro and actually not just pumped tyrol, which I'm talking about round the river hydro as well, because it flexibilizes you over that ten hour period, as you said, to do together, are going to be the winners come forward.
Yeah, yeah, yeah, yeah, okay, Jah. It was interesting conversation. My message to the International Hydro Power Association is get a bitter a pr agency because right now jonas for president, Janas for pres Yeah, yeah, Jenny's for president, because they don't get the coverage that they deserve. Bring new people in and bring new dynamics in because this is a
fantastic resource which is overlooked. And doing that podcast is also a way to trying to inject the humph that we've see in wind, solar and batteries into the IDOL sector with a bit snoozing right now.
Yeah, And I think the best thing we could do is you take the word hydrogen and get rid of gen.
Let me just go hydro.
Solve all our problems, right exactly? Okay, Chad was great talking to you with thank Camudia, our sponsor. We thank Jenny's for coming on the show, and I talk to you next week.
But orders thank you for listening to Redefining Energy.
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