Hydropower. Functionality, benefits and importance of hydropower as the most sustainable energy source.

The history of hydropower goes back a long way. It is said to have been used 5,000 years ago in China and 3,500 years ago on the Nile, Euphrates and Tigris to power the first irrigation machines. While hydropower was mainly used in mills until the beginning of the 20th century, it is now used to generate electricity with the help of generators.

Similar to a dynamo, a hydroelectric plant uses the flow of water to set the turbine impellers in motion. These turbines then drive a generator, which converts kinetic energy into electricity through induction.

The total consumption of electrical energy from renewable sources was 15% worldwide in 2023 and as much as 18% across Europe. Hydropower accounted for 48% of this worldwide and 41% in Europe. There are various types of hydroelectric power plants, mainly divided into pumped storage, tidal and run-of-river power plants.

Run-of-river power plants are usually built on rivers and have a weir that enables controlled accumulation and removal of water to a turbine. However, these power plants have little or no influence on the amount of dammed water. Because of their compact design, they usually fit well into the landscape.

Deutsche Wasserkraft AG focuses primarily on run-of-river power plants in the range of up to 10 MW nominal capacity in Norway, Scandinavia and predestined locations in Western Europe.

The technical advantages of hydroelectric power plants include aspects such as reliability, controllability, environmental compatibility and a long service life. The lifespan of elementary building blocks is sometimes 80 years or more. The technical efficiency reaches more than 90% and is therefore more efficient than other types of power generation.

Hydroelectric power plants are also characterized by low maintenance and operating costs, as the way hydroelectric plants function reduces wear and tear. They are subject to modernization cycles less frequently and rarely require cost-intensive upgrades of key components.

Hydroelectric power plants can ensure continuous and reliable power generation, regardless of time of day and weather conditions. Hydropower thus contributes to the provision of base load, which is constantly required to keep the power grid stable. Furthermore, hydroelectric power plants generally have the ability to react quickly to fluctuations in the power grid.

As a result of the combination of long life and high efficiency, hydropower plants thus achieve “harvest factors” that are several times higher than with other types of power generation.

This combination enables solid cash flows, value retention and low “life-cycle” emissions — a stable and profitable investment over the long term.

Hydropower has a long tradition in Europe and plays an important role in the continent's energy supply. The use of hydropower to generate electricity began in the 19th century and has continued to develop ever since. In countries such as Austria, Switzerland, Sweden and Norway, hydropower is a central pillar of energy supply. Europe has an average annual hydropower generation of around 600 TWh, which accounts for around 17% of Europe's total electricity generation. Norway generates around 140 TWh of this, spread over several thousand plants.

In view of the European Union's climate goals, which include a reduction in greenhouse gas emissions of at least 55% by 2030 and the achievement of climate neutrality by 2050, the demand for renewable energy will continue to rise. Hydropower plays a key role in this, as it is a stable and reliable source of electricity generation that also contributes to grid stability.

Due to the topographical and hydrological conditions, Norway is a predestined location for the construction of new small run-of-river hydropower plants. Social acceptance, manageable size and low impact on nature make the planning and approval process easier and faster. The Norwegian state estimates the expansion potential of hydropower in Norway at 10 TWh. An estimated 2 TWh of this is economically feasible through independent project developers of small run-of-water power plants.

There are currently around 2,000 small hydroelectric power plants in operation in Norway alone. This ensures continuous liquidity in the purchase and sale of run-of-river power plants.

Small run-of-river power plants in Norway are also not subject to any ownership restrictions and fall under the simple corporate tax of 22%. They are therefore free from special taxes such as land lease tax, natural resource tax and concession duties.