World Energy Outlook 2006

generating capacity from 364 GW in 2004 to 416 GW in 2030. Most of this
increase occurs in Asia, notably in China, Japan, India and the Republic of Korea.
Hydropower output is projected to increase from 2 809 TWh in 2004 to
4 749 TWh by 2030, increasing at 2% year to year on average. The share of
hydropower in total electricity generation continues its downward trend,
falling from 16% to l4%. Only about 31% of the economic potential
worldwide had been exploited by 2004. Most new hydropower capacity is
added in developing countries, where the remaining potential is highest
(Box 6.1). In the OECD, the best sites have already been exploited and
environmental regulations constrain new development. Most of the increase in
hydropower in the OECD occurs in Turkey and Canada. Some OECD
countries provide incentives for small and mini hydropower projects.
Box 6.1: Prospects for Hydropower in Developing Countries
Over the past fifteen years, many large hydropower projects in developing
countries have been adversely affected by concerns over the environmental
and social effects of building large dams. Obtaining loans from
international lending institutions and banks to finance such projects has
become more difficult. Consequently, many projects have been delayed or
cancelled. Five years ago, hydropower was the world’s second-largest source
of electricity; now it ranks fourth.
The remaining economic potential in developing countries is still very
large (Figure 6.5). Several developing countries are focusing again on this
domestic source of electricity, driven by a rapidly expanding demand for
electricity, by the need to reduce poverty and to diversify the electricity mix.
Support from international lenders and interest from the private sector is
also growing.
There is a strong consensus now that countries should follow an integrated
approach in managing their water resources, planning hydropower
development in cooperation with other water-using sectors. There is
significant scope for optimising the current infrastructure. The majority of
reservoirs have been developed for water supply, primarily irrigation. Only
about 25% of reservoirs worldwide have any associated hydropower
facilities (WEC, 2004).
Properly managed, hydropower could help restrain the growth in
emissions from burning fossil fuels. In Brazil, for example, where more than
80% of electricity is hydropower, the power sector accounts for just 10% of
the country’s total CO 2 emissions, four times less than the world average.
142 World Energy Outlook 2006 - THE REFERENCE SCENARIO
© OECD/IEA, 2007