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New report calls for rethink of energy cost metrics, says hydropower systematically undervalued


A new report prepared for WaterPower Canada argues that one of the electricity sector’s most widely used cost metrics is distorting investment decisions and undervaluing long-lived hydropower assets. The study, Evaluating the True Value of Hydropower, says that the Levelised Cost of Energy (LCOE), which is commonly used to compare generation technologies, does not adequately capture system reliability, asset lifespan, or long-term replacement costs. As a result, it can make capital-intensive hydropower projects appear less competitive than they are over the long term. The accompanying media primer states that LCOE “does not


reflect how electricity systems actually operate over time,” and fails to account for whether electricity is available during peak demand, how long assets last, and how often infrastructure must be rebuilt. The report identifies “capacity value” – a resource’s ability to


deliver electricity during peak demand – as a major omission in standard LCOE analysis. Hydropower typically has high capacity value because it can


provide firm supply during peak hours. In contrast, wind and solar often have low or zero capacity value during peak periods, depending on jurisdiction and season. Using Ontario as an example, the report cites Independent Electricity System Operator data showing hydropower capacity values of roughly 70–78% of installed capacity during peak periods, compared to significantly lower values for wind and solar. When a capacity cost is applied to account for backup


requirements, the relative economics shift. In one illustrative example in the report, a winter-peaking jurisdiction applying a long-term capacity cost significantly increases the adjusted LCOE of solar and wind compared to hydropower The report also highlights asset lifespan as a structural issue in cost comparisons. Hydropower facilities commonly operate for 80 to 100 years or more. Wind and solar facilities typically operate for 20 to 30 years. Over a 100-year period, hydropower infrastructure is built once, while wind and solar installations may need to be rebuilt three to four times. Standard LCOE calculations often assume 20- to 30-year recovery periods and do not include the cost of full replacement


cycles. Nor do they incorporate the residual value of long-lived civil infrastructure that continues operating well beyond the modelled period. According to the report, this “replacement chain” effect can


materially alter long-term system costs. The study outlines several methodological adjustments to address


LCOE limitations, including: ● Incorporating capacity value costs. ● Recognising residual asset value beyond typical modelling horizons.


● Converting nominal LCOE into real long-term values ● Accounting for full replacement cycles over extended system lifespans Stakeholder interviews conducted for the report indicate


broad agreement that LCOE is useful as an initial screening tool, particularly when comparing similar technologies. However, stakeholders cautioned that it does not provide a system-wide cost assessment and may not reflect long-term infrastructure realities. The findings come as many countries accelerate electrification


and expand clean generation to meet climate targets. The media primer states that relying on simplified project-level cost metrics can lead to higher total system costs, increased need for backup capacity, repeated capital investment, and higher costs for ratepayers over time. The report concludes that when capacity value and asset lifespan


are incorporated into long-term system planning, hydropower can emerge as one of the most cost-effective non-emitting resources — not because it is inexpensive to build, but because it is durable, reliable, and long-lived. WaterPower Canada says the objective is not to replace LCOE,


but to update planning frameworks so that infrastructure decisions reflect full system costs over multiple decades. For international markets facing rising peak demand, grid stability challenges, and large-scale decarbonisation, the report argues that better valuation tools will be essential to ensure reliable and affordable clean energy transitions.


Austria


ANDRITZ production capacity to expand as 2025 results point to hydropower growth International technology group ANDRITZ is expanding turbo generator manufacturing capacity in Austria while reporting satisfactory preliminary financial results for 2025, reflecting growth in its hydropower business and rising global demand for power generation equipment. The company announced plans to invest a higher double-digit million euro amount by 2028 to expand production sites in Linz and Weiz. The expansion is expected to create around 350 skilled jobs over the coming years and respond to increasing demand for turbo generators linked to global energy consumption and grid stability requirements. Turbo generators play a role in decentralised power generation and frequency stabilisation. ANDRITZ has produced generators in Weiz, Styria,


for more than 70 years, and has been active in hydropower equipment manufacturing in Linz for nearly 80 years.


expanded and modernised by around 3,700m2


In Linz, the ANDRITZ production facility will be ,


with a focus on assembling and testing hydrogen- cooled turbo generators. The site’s access to the Danube River enables shipment of equipment weighing up to 300 tonnes. In Weiz, new production halls and generator manufacturing facilities are scheduled for completion by 2027, enabling production of air-cooled turbo generators and key components for hydrogen- cooled units, including rotors and stators. Recruitment has begun for mechanical and electrical engineering technicians, mechatronics technicians, welders, manufacturing technicians and other specialists. Manufacturing roles will be concentrated in Linz, while Weiz will also require staff in engineering and project management. ANDRITZ said it is working with technical colleges,


universities and Austria’s Public Employment Service to build a long-term talent pipeline. The ANDRITZ production expansion aligns


with broader business trends reported in the group’s preliminary 2025 financial results. Despite macroeconomic and geopolitical challenges, ANDRITZ recorded order intake growth to €8.9bn, up from €8.3bn in 2024, corresponding to a book-to-bill ratio of 1.13. Revenue declined by 5% to about €7.9bn, affected by foreign exchange translation effects linked to the strong euro, while the comparable EBITA margin remained stable at 8.9%. The company continued capacity adjustments in its pulp & paper and metals segments while expanding in hydropower. It expects project activity to remain stable in 2026, supported by a strong order backlog and growth in hydropower, with revenues forecast between €8.0bn and €8.3bn and a comparable EBITA margin between 8.7% and 9.1%.


www.waterpowermagazine.com | April 2026 | 5


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