Markets and finance
Investment in sustainable hydropower will help countries meet their carbon reduction targets and drive economic development
"It’s important to find ways to get the right long-term market conditions to support hydropower”
- Hörður Arnarson, CEO of Landsvirkjun at an IHA convened meeting with the International Energy Agency
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Overview
Despite the strong demand for clean energy, securing favourable financing for hydropower development is a challenging and complex task.
According to the International Energy Agency, hydropower investment needs to double to US$100 billion a year to help meet the objectives of the Paris Agreement and the Sustainable Development Goals.
This level of investment would support an additional 850 GW of hydropower capacity being commissioned by 2040. Much of this investment is needed in developing countries throughout Africa and Asia.
Many market and policy frameworks however do not adequately incentivise investment in greenfield developments. Services that hydropower provides, particularly pumped storage hydropower, are not fully recognised nor adequately remunerated. This is despite the services provided by pumped storage facilities being vital to integrate variable renewables into power grids.
According to the International Energy Agency, hydropower investment needs to double to US$100 billion a year to help meet the objectives of the Paris Agreement and the Sustainable Development Goals.
This level of investment would support an additional 850 GW of hydropower capacity being commissioned by 2040. Much of this investment is needed in developing countries throughout Africa and Asia.
Many market and policy frameworks however do not adequately incentivise investment in greenfield developments. Services that hydropower provides, particularly pumped storage hydropower, are not fully recognised nor adequately remunerated. This is despite the services provided by pumped storage facilities being vital to integrate variable renewables into power grids.
Our action
The International Hydropower Association (IHA) works with developers, investors, international financial institutions and NGOs to unlock greater investment for sustainable hydropower.
In an effort to promote investment in sustainable hydropower in key African markets, we are working with the finance and legal community on a guide to assist developers and investors navigate critical legal and bankability issues. This guide is due to be published in early 2021.
Through the International Forum on Pumped Storage Hydropower, launched in November 2020, we are working with partners to devise policy recommendations to incentivise and de-risk the development of pumped storage.
We are also working with partners to agree recognised eligibility criteria to fund hydropower projects through green bonds, an innovative new investment instrument. Green bonds are fixed income loans for the finance and refinance of projects and assets that help address environmental and climate risks.
In an effort to promote investment in sustainable hydropower in key African markets, we are working with the finance and legal community on a guide to assist developers and investors navigate critical legal and bankability issues. This guide is due to be published in early 2021.
Through the International Forum on Pumped Storage Hydropower, launched in November 2020, we are working with partners to devise policy recommendations to incentivise and de-risk the development of pumped storage.
We are also working with partners to agree recognised eligibility criteria to fund hydropower projects through green bonds, an innovative new investment instrument. Green bonds are fixed income loans for the finance and refinance of projects and assets that help address environmental and climate risks.
Contact us
Email iha@hydropower.com for further information
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