Hydropower Future: Between Climate Change, Renewable Deployment, Carbon and Fuel Prices

Abstract

Hydropower represents an interesting technology: affordable, renewable, and flexible. However, it must cope with climate changes and new energy policies that jeopardize its future. A smooth transition to sustainability requires decision makers to assess the future perspectives of hydropower: about its future revenue and related uncertainty. This investigation requires a multidisciplinary approach as both streamflow and energy mix will evolve. We simulated future streamflow based on eight climate scenarios using a semi-distributed hydrological model for our case study, the Tremorgio hydropower plant located in southern Switzerland. Next, using a hydropower management model we generated income according to these streamflows and twenty-eight electricity price scenarios. Our results indicate that climate change will modify the seasonality of inflows and volumes exploitable for hydropower generation. However, adaptive strategies in the management of reservoirs could minimize revenue losses/maximize revenue gains. In addition, most market scenarios project an increase in revenues, except in the case of high wind and solar energy penetration. Markets do not provide the right incentive, since the deployment of intermittent energy would benefit from more flexible hydropower.