29 December 2015 | Article
Hydropower typically remains the cheapest way to generate electricity of any source where good resources exist. The weighted average LCOE for new small hydropower projects is between USD 0.03 and USD 0.115/kWh in developing countries, while for large hydropower projects the range is between USD 0.02 and USD 0.06/kWh depending on the region. The LCOE of large-scale hydro projects at high-performing sites can be as low as USD 0.02/kWh, while average costs are around USD 0.05/kWh.
Hydropower technologies are mature and learning rates low. Cost reduction potential is therefore small and generally limited to improvements in civil engineering techniques and processes. The importance of hydropower with storage will only grow as the penetration of variable renewables increases, as hydropower's unrivalled ability to provide grid flexibility will prove increasingly valuable.
The total installed costs for large hydropower projects typically range from a low of USD 1 000/kW to around USD 3 500/kW. However, it is not unusual to find projects with costs outside this range. For instance, installing hydropower at an existing dam built for other purposes may have costs as low as USD 450/kW. On the other hand, projects at remote sites, without adequate local infrastructure and located far from existing transmission networks, can cost significantly more than USD 3 500/kW due to higher logistical and grid connection costs.