Innovation in action: XFLEX HYDRO's role in achieving a net zero energy future

In a rapidly evolving European energy landscape, the need for power grid flexibility has become increasingly critical. The transition towards renewable energy sources, such as wind and solar, poses challenges to ensure a stable and reliable electricity supply. As the deployment of renewable energy capacities surges and traditional fossil fuel-based generation is gradually phased out, it leaves grids vulnerable to fluctuations in generation output when the wind doesn’t blow, and the sun doesn’t shine.

The transition to water, wind and sun necessitates innovative solutions to balance supply and demand, ensuring grid stability in the face of variability inherent in non-dispatchable renewable energy sources.

The XFLEX HYDRO project was developed in response to this pressing need, demonstrating how hydropower, as a flexible, dispatchable and controllable renewable energy source, can play a pivotal role in achieving a secure and sustainable energy future for Europe.

XFLEX HYDRO explained

The crucial role of hydropower in Europe’s energy transition

Europe boasts over 200 GW of installed hydropower capacity, making it a significant existing contributor to the renewable energy mix. However, the traditional role of hydropower in providing baseload generation is evolving, with increasing emphasis on its flexibility capabilities. Hydropower plants can rapidly adjust their output to match fluctuations in demand, provide essential grid services such as frequency regulation, and store energy for extended periods, offering a reliable means to address the intermittency of wind and solar.

The XFLEX HYDRO project looked at optimising and enhancing the flexibility potential of existing hydropower assets through the integration of innovative technologies such as variable speed units, hydraulic short circuit, and hybridisation with battery energy storage. By demonstrating the feasibility and effectiveness of these solutions across a range of hydropower plants, XFLEX HYDRO paves the way for a more resilient and adaptable energy system.

Recommendations for driving innovation forward

XFLEX HYDRO provides a set of practical policy recommendations, designed to navigate the complexities of integrating flexibility-enhancing technologies into established energy frameworks. They serve as a practical guide for governments, regulatory bodies, and industry stakeholders, aligning diverse interests toward fostering innovation in the European hydropower sector.

1. Recognise and value hydro flexibility as an essential service to the power system to achieve a successful energy transition

The recognition and valuation of ancillary services, including inertia, frequency control, voltage management, and black-start capability, are pivotal in ensuring grid stability across Europe. Within this landscape, hydropower emerges as a cornerstone, offering a comprehensive array of flexibility services essential for meeting the evolving needs of the system. However, the current flexibility market presents notable fragmentation among European countries, leading to disparities in remuneration for these critical services. In many cases, the compensation is inadequate or non-existent. We need more, better and faster investment in these systems for hydropower to meet its flexibility potential.

Alqueva pumped storage hydropower plant, Portugal.

2. Remove regulatory barriers for unrestricted implementation and operation of hydro flexibility technologies

Unlocking the full potential of existing hydro assets and incorporating new technologies requires the removal of regulatory barriers hindering the implementation and operation of flexibility upgrades. To address this, there is a need to define, implement, and enforce standardised grid stability services across various European TSOs. This standardised approach will assist plant owners and operators in comprehending the required services and evaluating the necessary technical capabilities of their assets.

Alto Lindoso reservoir storage hydropower plant, Portugal.

3. Provide remuneration mechanisms enabling investment in flexibility

Existing electricity and ancillary services markets, when available, operate on a real-time demand matching system with the cheapest available offer. While effective in covering associated operational costs, these markets often fall short in providing the necessary long-term revenue visibility required to justify new investments in flexibility technology upgrades. Remuneration mechanisms capable of ensuring stable revenue for the provision of flexibility services to the grid are crucial.

Frades 2 pumped storage hydropower plant, Portugal.

4. Facilitate cross-border collaboration for efficient exchange of flexibility services

Encouraging international collaboration among European countries is imperative for the efficient exchange of hydro flexibility services and expertise. By fostering cross-border connections, countries can mutually benefit by sharing resources and expertise, optimising the utilisation of hydro flexibility on a broader scale.

Vogelgrun run-of-river hydropower plant, France.

5. Streamline licensing renewals for optimised hydropower operations

Simplifying the licensing process, removing obstacles, and accelerating permitting procedures not only reduces uncertainties linked to license renewals and ownership transfers but also provides a clear and predictable framework in which power companies can operate. Offering guarantees for payback periods that extend beyond the asset's current licensing period enables the best investment decisions from the system perspective.

Grand'Maison pumped storage hydropower plant, France.

6. Conduct system-level analysis to anticipate and address future flexibility needs

A system-level analysis is crucial to effectively address future challenges and ensure that the electric power system can deliver a safe energy transition. Regulators and industry stakeholders, armed with this knowledge, can make better-informed decisions today to ensure that the hydropower sector remains adaptive and resilient in the face of the evolving energy landscape.

Z’Mutt pumped storage hydropower plant, Switzerland

7. Promote support mechanisms for the modernisation of ageing hydropower infrastructure

To secure and enhance the benefits provided by ageing European hydropower plants, it is essential to establish financial or tax mechanisms supporting the modernisation of infrastructure. Operators should be incentivised to perceive this process as an opportunity to reassess the capabilities of existing assets and offer improved flexibility services to the grid.

By advocating for these recommendations, the XFLEX HYDRO project aims to drive innovation, enhance flexibility, and contribute to the realisation of a resilient, secure, and sustainable energy future for Europe. Read the full report here.

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