Hydropower Value Drivers

Hydropower will play an important role in future electricity systems.

Hydropower is currently the main source of flexible, clean electricity in the United States and throughout much of the world. As a result, hydropower resources are crucial to the clean energy transition.

“Argonne’s Hydropower Values Drivers project takes an important step in raising awareness of how hydropower resources can adapt to serve the needs of a rapidly evolving grid.”

Hydropower value streams are expected to evolve throughout the clean energy transition.

Working closely with collaborators at the National Renewable Energy Laboratory and Pacific Northwest National Laboratory, Argonne researchers developed a framework to assess how the magnitude of different value streams for hydropower resources may evolve under changing system conditions. The project team applied two commercial production cost models, PLEXOS and GridView, to simulate future electricity prices under different system conditions. These results were passed to Argonne’s Conventional Hydropower Energy and Environmental Systems model to optimize the operation of hydropower facilities under different conditions and establish how operational strategies and value streams may evolve in the future. In total, 461 different scenarios were analyzed.

Sources of value and revenue beyond electricity generation will become increasingly important.

Several key findings emerged from this analysis:

1. Energy will likely remain the primary source of value for conventional hydropower, unless or until there is a dramatic shift in system composition.
2. As power systems decarbonize, grid services and capacity provision will become a more important source of value.
3. Pumped storage hydropower value generally increases as wind and solar generation increases.
4. As wind and solar generation increases, hydropower will need to be more flexible to capture brief high value periods, as a larger fraction of total value will be concentrated in those periods.
5. Fast ramping capabilities will become increasingly valuable in systems with more wind and solar generation and higher prices for grid services.

Argonne’s value drivers framework can be applied to inform future decision making.

This work can be extended to address a range of specific applications including: evaluating value streams for hydropower in fully decarbonized electricity systems; quantifying impacts of new and evolving policy paradigms; identifying potential future interactions with wholesale electricity markets; and integrating hydropower decision making with climate-informed system planning to mitigate the impacts of extreme weather conditions.