The World Bank Group (WBG) believes that its mission to help eliminate poverty and enable a more equitable sharing of prosperity cannot be achieved without universal access to electricity.

Hydropower is the world’s largest source of renewable energy, accounting for almost a fifth of global electricity. Harnessing water responsibly can help get electricity to millions of people. In sub-Saharan Africa, where the energy access deficit is greatest, less than 10% of hydropower potential has been tapped. That represents 400 GW of undeveloped power – enough to quadruple the continent’s existing capacity.

By 2025, 2.4 billion people will be living in countries without enough water to meet their needs. Water security is threatened by mismanagement of water resources and changes in weather patterns due to climate change, as well as increasing demand. Floods and drought cost between 5 – 10% of GDP annually in some of the poorest countries, with consequences that linger for many years. Multipurpose hydropower projects can improve local water resource management, and increase water security, as well as offering irrigation and flood management services. Hydropower projects can therefore make important contributions to both climate change mitigation and adaptation.

While hydropower development offers great opportunities, it also comes with complex challenges and risks that vary significantly by the type, place, and scale of projects. Factors such as resettlement of communities, flooding of large areas of land, and significant changes to river ecosystems must be carefully considered and mitigated. While it is known that lakes and reservoirs emit varying amounts of greenhouse gases (GHGs), their net emissions are usually much lower than those from fossil fuel based sources of electricity. Today, hydropower reduces annual global emissions by some 2.8 billion tons of CO2 equivalent every year.  The WBG will continue to support well-designed and implemented hydropower projects of all sizes for both local development and climate mitigation reasons. The WBG has become more active and experienced in large and smaller hydro projects in the past decade, with due attention to environmental and social impact. 

Last Updated: Apr 10, 2017

While the majority of the WBG’s work on hydropower focuses on rehabilitation and modernization of old schemes, the WBG is also firmly committed to the responsible development of hydropower projects of all sizes and types—run of the river, pumped storage, and reservoir—including off-grid systems and mini-grids powered by hydro. In some regions, such as Southern Africa and the Himalayan region, hydropower is the main renewable energy source for affordable access to electricity to large unserved populations.

The WBG helps clients to understand the potential impact, costs and benefits of hydropower projects in addition to environmental and social safeguards in hydropower projects. These include consultations, benefit sharing, and the inclusion of indigenous peoples. 

The WBG believes that when hydropower projects are carefully selected and developed in a socially, financially and environmentally sustainable way, the development outcomes are impressive. Hydropower projects can offer significant energy, water and food security benefits, help with flood management, as well provide  investments in roads, social infrastructure, and skills to support local or economic development. Energy benefits of large-scale hydropower include that is low-cost, flexible and reliable and provides baseload power in the most climate-friendly way. Hydropower is increasingly important as a back up to variable renewable power sources such as wind and solar.

Since the 2003 Water Resources Strategy, which stated that the World Bank would re-engage in hydraulic infrastructure, about 150 projects related to hydropower – including rehabilitation, technical assistance and greenfield projects – have been approved. This represents a total of $13.6 billion in financing ($7.8 billion for hydropower components) and includes IBRD/IDA, GEF and Recipient Executed Activities. Roughly half of the 15 projects in the pipeline are in Africa.

World Bank engagement in hydropower focuses not only on financing projects, but also on building the capacity of governments and their partners to plan, design, build and operate economically, environmentally, financially, and socially sustainable hydropower.

Last Updated: Apr 10, 2017

Some specific project examples include:

  • India: Rampur Hydropower Project. In December 2014, the 412 MW Rampur run-of-river project was fully commissioned. The project was conceived as an important step in improving the reliability of India’s Northern Electricity Grid through the addition of flexible, low carbon energy. With an IBRD loan of $400 million, the project constructed the run-of-river facility, which is being operated in tandem with the existing Nathpa Jhakri Power Station. A final impact evaluation of the project show improvements in many important social indicators, including increases in literacy rates, permanent housing and size of houses. Moreover, 99% of families affected by the project recorded an increase in assets and/or income.
  • Pakistan: IDA Credit and Guarantee Dasu Hydropower Project. By delivering 2160 MW of clean hydropower, this project will improve access to socio-economic services for local communities in Pakistan and boost its utility’s capacity to prepare a pipeline of hydropower projects. The project, approved in May 2014, will benefit millions of consumers in Pakistan by easing the country’s power crisis, reducing persistent blackouts and cutting power delivery costs.
  • Rwanda, Tanzania and Burundi: Regional Rusumo Falls Hydroelectric Project. This $469 million project aims to help people in the northeast region of Tanzania who are not currently connected to the grid, and customers of utilities in Burundi and Rwanda get access to electricity. The project aims make more power available to these three countries by facilitating the expansion of 80 MW hydropower generation capacity and construction of transmission lines, allowing them to trade electricity easily amongst each other. Power generated from the project, at an estimated cost of $ 0.062/kWh, is expected to dramatically reduce costs and replace thermal generation in the region, which currently costs about $ 0.25/KWh.

Last Updated: Apr 10, 2017