Actions for investors
Investors have a unique opportunity to power the renewable energy transition by investing in sustainable hydropower.
Here are four reasons investors can be confident of making the right investment in sustainable hydropower:
1. Prioritise investments in renewable energy
Analysts predict renewable energy will continue to enjoy rapid growth over the coming decade as countries look to achieve net zero emissions by mid-century.
Significant opportunities exist in sustainable hydropower, with the International Energy Agency (IEA) predicting the sector will need to almost double in installed capacity by 2050.
Learn more about markets and finance for hydropower.
2. Recognise the low-cost of hydropower over its lifetime
While hydropower projects have high upfront costs during construction, they provide clean energy for many decades with low running costs once in operation. As an example, the Ames hydropower plant in Colorado, USA, is still running today, 116 years since it began operating in 1906.
The longevity of hydropower means that its levelised cost of energy (LCOE) – which measures the cost of an energy source over its lifetime generating cycle – is lower than most other known technologies.
According to a recent study by IRENA, the global weighted-average LCOE of newly commissioned hydropower projects was US$0.044/kWh in 2020, lower than any other renewable energy source except for onshore wind (0.039/kWh).
Read more about hydropower as an affordable source of energy.
3. Invest in projects that certify their sustainability
The Hydropower Sustainability Standard is the only global certification scheme for hydropower operators to accredit their projects as Certified Sustainable. It is supported by industry, governments, and NGOs.
Investors should encourage projects at any stage of development – from planning to operation – to demonstrate their environmental, social and governance (ESG) performance against the Standard.
Learn more about the Hydropower Sustainability Standard.
4. Select projects with a low-carbon footprint
Issuers of green bonds using Climate Bonds Initiative criteria can demonstrate the low-carbon footprint of a hydropower project with an assessment using the G-res Tool.
A free, web-based carbon calculator for reservoirs, the G-res Tool is used to assess and report greenhouse gas emissions for planned or existing projects. Using readily available input data, the tool provides a cost effective way to more accurately assess net emissions.
Learn more about the G-res Tool.
Additional resources
Blog: How investors can avoid funding the wrong hydropower projects
