Hydropower generation benefits consumers through lower electricity costs. States that get the majority of their electricity from hydropower like Idaho, Washington, and Oregon on average have energy bills that are lower than the rest of the country. Relying only on the power of moving water, hydro prices don’t depend on unpredictable changes in fuel costs.
Hydropower offers the lowest levelized cost of electricity across all major fossil fuel and renewable energy sources, and costs even less than energy efficiency options, according to a recent study from Navigant Consulting and the American Council on Renewable Energy (ACORE).
LEVELIZED COST OF ELECTRICITY FOR VARIOUS POWER AND ENERGY EFFICIENCY OPTIONS, ¢/KWH
Assumes Federal & state incentives. CSP assumes trough technology. Natural gas price of $4.57/MMBTU. Source: Navigant Consulting, Inc. 2010
The levelized costs show above reflects the relatively low cost of hydro in terms of maintenance, operations and fuel costs when compared with other electricity sources and across a full project lifetime. For hydro projects, a longer lifespan (in the Navigant study, assumed at 50 years) means not only are costs spread across a longer timeframe but also takes into account that the power generating equipment used at these facilities can often operate for long periods of time without needing major replacements or repairs.
These low balance-of-system costs only make it more critical that we expand the country’s hydropower capacity, but like any other major power generating source, significant up-front costs remain, and the right mix of tax and other policy incentives will foster growth of this reliable, cost-effective and clean resource. In addition, the new technologies that hold tremendous promise – such as marine and hydrokinetics – need continued R&D funding in order to reach their full potential. Learn more about the policies that support hydro development.
A look at the installed project costs – as opposed to levelized electricity costs – for various types and sizes of hydro projects reveals a wide range, and a number of technologies need continued or expanded federal incentives, supportive tax and regulatory environments and other support to improve and deploy at the project level.
| Hydropower Technology | MW Range | Installed Cost ($/kW) | Discussion |
|---|---|---|---|
| Conventional Hydro (impoundment) | 50 (average) | $1,000-$5,000 | A mature technology, conventional hydro falls at the lower end of the range of installed costs, particularly for upgrade projects at existing sites. New dams and greenfield sites are more expensive. |
| Microhydro | < 0.1 | $4,000-$6,000 | The installed cost for low-impact hydro systems is not expected to decline in the near term. |
| Run of River (diversion. | Approx. 10 | $1,500- $6,000 | Similar to conventional hydro, installed costs for run-of-river can vary widely. |
| Pumped Storage | >500 | $1,010-$4,500 | Traditional pumped storage is a proven technology and costs are not expected to decline going forward. The new underground pumped storage technology has been quoted at $2,000/kW and cost declines can be expected going forward, if the concept proves itself. |
New types of hydro that have yet to be widely deployed also carry different costs.
| Marine Technology | Expected Commercial Cost | Discussion |
|---|---|---|
| Wave | Installed Cost (in 2020) is expected to be approximately $2,500/kW | Wave technology is still under development and needs R&D support to realize the promise of ocean power. |
