The following article is authored by Chris Baker, Sunshine Hydro CTO and co-founder.

In periods of geopolitical tension, energy becomes more than an economic commodity. It becomes a question of national sovereignty. Wars, supply disruptions and volatile fossil fuel markets repeatedly expose the fragility of energy systems built around imported fuels.

The lesson of the past few years is unmistakable: countries that cannot produce, store and manage their own energy remain strategically vulnerable.

The transition to renewable energy offers a way out of that vulnerability. But renewables alone do not guarantee energy security. Wind and solar are abundant and inexpensive, yet their variability means they cannot always supply energy exactly when it is needed.

For a truly resilient energy system, renewable electricity must also be stored, stabilised and transformed into forms that can be transported and stockpiled.

This is where hydropower, in particular pumped storage hydropower, becomes indispensable – and increasingly, it is also where green fuels enter the picture.

Hydropower has always played a stabilising role in electricity systems. Pumped storage acts as a massive energy reservoir, storing excess renewable electricity when supply is high and releasing it when demand increases.

As grids around the world move toward high levels of wind and solar generation, this ability to store energy over long periods becomes critical.

But an equally important opportunity is emerging alongside hydropower storage: using surplus renewable electricity to produce low carbon liquid fuels (LCLF) such as green methanol.

In this model, renewable electricity does not simply flow through the grid. When supply exceeds demand, that energy can be diverted into hydrogen electrolysers to make green methanol or other fuels. Instead of curtailing renewable generation, the energy is captured and stored in molecular form. The strategic implications are profound.

Electricity stored in batteries or reservoirs can stabilise a grid for hours or days. Energy stored in molecular form can be stored for months or even for years, transported across oceans and used in industries that cannot easily electrify. Green methanol and other clean fuels therefore provide something that renewable electricity alone cannot: deep, long-duration energy security.

Hydropower plays a central role in enabling this system. Pumped storage helps balance renewable generation, ensuring that wind and solar energy are available consistently enough to power both the grid and fuel production facilities. Without large-scale long-duration storage, producing green fuels reliably from renewable electricity would be far more difficult.

Countries with strong renewable resources and hydropower potential therefore hold a strategic advantage in the emerging global energy system.

Australia is one such country. With vast wind and solar resources and thousands of potential pumped hydro sites, Australia has the technical capacity to build one of the world’s most resilient renewable energy systems.

Studies have identified tens of thousands of potential pumped hydro locations across the continent, representing storage capacity far beyond what would be needed to operate a fully renewable grid.

This abundance means planners can focus only on the most suitable sites - those with favourable topography, minimal environmental impact and strong connections to transmission infrastructure. The result could be a renewable energy system with storage capabilities far exceeding those available in most parts of the world.

That storage capability unlocks something even more valuable: the ability to convert renewable electricity into exportable energy products.

The making of green fuels also strengthens the delivery of 24/7 renewable electricity. When set up in the right way, the making of green methanol from a combination of biomass and electrolysed hydrogen makes for a very flexible electricity sink. When electricity is plentiful it can create a greater yield of methanol than can be produced from biomass alone. When electricity is scarce methanol can still be produced from biomass alone, thus allowing electricity to be diverted to service the 24/7 power supply contract.

Instead of exporting coal or gas, countries like Australia could export green methanol, ammonia or other renewable fuels produced from wind, solar and hydropower-supported energy systems.

These fuels could power heavy industry, shipping, aviation and other sectors where direct electrification is difficult. Even better, Australia could use this energy strategically to ship value-added products leveraging the resource where possible.

Just as importantly, they provide a strategic buffer against energy shortages.

Traditional energy security relies on stockpiling fossil fuels. The emerging renewable equivalent is the ability to store large quantities of clean energy in molecular form.

Green fuels allow nations to build reserves of energy that can be stored for long periods and deployed when needed, much like strategic petroleum reserves today.

Furthermore, the link between power and green fuel production allows green fuel storage to act as an order of magnitude cheaper surrogate for electricity storage, like batteries.

The “discharging” is as simple as turning off the production and relying on the fuel storage instead. This way the green fuel storage strengthens the resilience of both the fuel and power market.

Hydropower makes all this possible by ensuring that renewable electricity systems remain stable even as large amounts of energy are diverted into fuel production.

The economic implications extend beyond energy security. Reliable renewable electricity combined with green fuel production can also protect energy-intensive industries that might otherwise face closure due to rising power costs.

Australia’s Tomago aluminium smelter illustrates the stakes involved. The facility consumes roughly 12% of all electricity used in New South Wales, supporting thousands of direct and indirect jobs while contributing billions of dollars to the national economy.

Yet rising power costs and uncertainty around future electricity supply place its long-term viability at risk.

By combining large-scale renewable generation with hydropower storage, it becomes possible to supply such industries with firm, reliable and affordable clean electricity while also enabling green fuel production during periods of excess generation.

This kind of integrated system transforms renewable energy from a variable resource into a foundation for industrial resilience and national competitiveness.

The global energy transition is therefore entering a new phase. The first phase focused on deploying renewable generation. The next phase will focus on how renewable electricity is stored, stabilised and transformed into steady state power for industry and into fuels that can support both domestic economies and international trade.

Hydropower sits at the centre of that transition.

It provides the long-duration storage needed to integrate vast amounts of wind and solar. It bolsters electricity systems that increasingly rely on variable generation. And it enables the reliable production of green fuels that can be stored, transported and exported.

In a world marked by geopolitical uncertainty and growing demand for energy, these capabilities will define the next generation of energy superpowers.

Energy sovereignty in the renewable era will not simply be about generating electricity. It will be about mastering the entire ecosystem - from renewable resources to hydropower storage to green fuel production.

At the heart of that ecosystem stands hydropower, turning renewable electricity into both reliable power and a new class of strategic energy reserves.

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