3 ways the data centre boom is creating opportunities for hydropower: World Hydropower Outlook
3 ways the data centre boom is creating opportunities for hydropower
Data centre operators are buying hydropower plants and exploring joint energy developments. Partnerships like these have significant potential to drive investment across the hydropower sector, provided they deliver reliable power and benefits for the wider electricity system.
Access to renewable electricity is becoming a defining factor in the expansion of digital infrastructure. As artificial intelligence drives demand for computing capacity, technology companies are looking beyond conventional electricity procurement and taking a more direct interest in the assets that supply their power.
The 2026 World Hydropower Outlook explores how hydropower is responding to this demand through long-term supply agreements and projects that bring generation and computing facilities together. Since its publication, further developments in Italy and Lesotho show how these relationships could evolve. They suggest that data centres could become partners in hydropower investment, with implications for both established assets and new developments.
The scale of demand provides a strong incentive. The International Energy Agency’s updated 2026 analysis projects that global data centre electricity consumption will roughly double from 485TWh in 2025 to 950TWh in 2030. Hydropower can contribute to meeting that growth by providing renewable generation and the flexibility needed to integrate variable sources like wind and solar. How much it can deliver will depend on the resources available and the commercial arrangements that turn demand into investment.
1. Buying a stake in the power supply
In July 2026, Italian cloud and data centre operator Aruba announced the acquisition of three operational hydropower plants along the Stura di Lanzo river in Piedmont. The purchase brought the company’s total portfolio to 11 plants, with approximately 11.6 MW of installed capacity and annual generation exceeding 60 GWh. The three newly acquired facilities contribute around 10 GWh a year.
Aruba’s approach gives it direct ownership of part of its electricity supply. Its selection criteria included water availability and upstream infrastructure that regulates river flow, alongside geographic diversification. The company also recently installed a third turbine at the hydropower plant within its Ponte San Pietro data centre campus.
The wider significance of these acquisitions for the hydropower sector is that they give a digital infrastructure company a direct interest in the long-term performance of its generating assets, which also links maintenance and upgrade decisions more closely to its own electricity needs.
Aruba’s case illustrates how smaller operational plants can form part of a wider corporate energy strategy, alongside the large supply agreements highlighted in the Outlook. The company continues to purchase renewable electricity to meet its remaining requirements, and so its model combines self-generation with market procurement.
2. Developing both power and digital infrastructure
Lesotho’s proposed Kobong project, announced in June 2026, takes a different approach: planning energy infrastructure and digital demand as part of the same development. US energy developer Convalt Energy describes an estimated US$6.2 billion scheme combining pumped storage with solar generation and other energy infrastructure, alongside an AI data centre platform. Its current project overview includes 1,200 MW of pumped storage and identifies domestic electricity supply and regional power trading among the intended markets.
The distinction between conventional hydropower and pumped storage is significant here. Pumped storage uses electricity to move water uphill, then releases it to generate when needed. Its contribution is to store energy and make it available according to demand, which helps a wider energy system provide a more reliable supply.
Kobong is therefore best understood as a proposed integrated energy and digital infrastructure scheme. It remains subject to feasibility studies and financing, as well as permitting and definitive project agreements.
Even so, the proposal raises a notable commercial possibility. Planning a large electricity consumer alongside new generation and storage could help developers establish a market for their output earlier in the process. A credible long-term customer could strengthen a project’s financing case, while coordinated development could align electricity infrastructure with the timing of the data centre’s expansion.
For these projects to secure financing, the expected demand needs to be backed by contracts that lenders can rely on. Developers need firm commitments on how much electricity will be purchased and when demand will materialise, while technology companies need assurances that power will be available on a timetable compatible with their investment plans. Both sides must agree who carries the risk if construction or customer demand falls behind expectations.
3. Hydropower as a location advantage
East Africa may provide another example, where an expanding hydropower system attracts digital investment. BirrMetrics reports that Ethiopia is positioning its hydropower resources as an advantage in competing for AI data centres, especially in the wake of last year’s completion of the 5,150 MW Grand Ethiopian Renaissance Dam, Africa’s largest power plant. The high-altitude climate in and around Addis Ababa also offers potential benefits for cooling.
In Uganda, Synectics Technologies has outlined plans for a 100 MW data and high-performance computing centre associated with the Karuma hydropower plant. This proposed development provides another example of the growing links between existing hydropower assets and digital infrastructure, following the partnerships in South America highlighted in the Outlook.
While these examples show how hydropower can help attract investment in data centres, developers also need reliable electricity grid infrastructure and strong fibre connectivity. As BirrMetrics highlights in Ethiopia’s case, the regulatory framework for international cloud investment and cross-border data flows will also influence whether that potential translates into projects.
When it comes to governments, attracting a large electricity customer creates a broader planning question. Digital investment may help generate revenues that support electricity infrastructure, but its demand needs to be considered alongside households and existing industries, which is especially pressing in developing economies where electricity access remains limited or supply is unreliable.
A growing role for hydropower
Hydropower can make a substantial contribution to the data centre boom. The examples in Italy and Lesotho show how digital demand could support that contribution through asset ownership and coordinated infrastructure development. Meanwhile, East Africa demonstrates the potential for hydropower to become an advantage in attracting investment.
The next step is to establish partnerships that translate those opportunities into dependable electricity supply and lasting value. For the hydropower sector, success will mean securing customers whose commitments support investment while ensuring that new digital loads are integrated into the wider system.
These commercial and planning questions will inform the session “Data centres and beyond: hydropower for industrial off-takers” at the 2027 World Hydropower Congress in Sydney.
