The World Bank Group is 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 projects meeting decentralized rural needs.
The Bank Group supports interventions and demand management approaches to address and integrate energy consumption and water resource issues in ways that maximize benefits and minimize risks. This arises from the recognition that hydropower is not only a vital renewable energy resource, but for many countries, it is the only renewable energy that has the potential to expand access to electricity to large populations. Yet it remains underdeveloped in many countries, especially in Africa, where less than 10% of hydropower potential has been tapped.
When designed properly, hydropower projects can deliver benefits far beyond energy and water security. They often lead to investments in roads, social infrastructure, communications, and skills building to support local or regional economic development. They can also provide power generation for industrial, manufacturing and commercial operations that create jobs.
The intent in such projects is to recognize the potential synergies and efficiencies available when hydropower infrastructure is considered within the broader landscape of development and poverty reduction. Multipurpose hydropower dams can support adaptation to increasingly extreme weather conditions by strengthening a country’s ability to regulate and store water and so resist flood and drought shocks.
By having the World Bank Group cover the investment risk, countries can secure investment from the private sector to realize their energy and water security projects. Perceived high risk has traditionally inhibited private sector investment in infrastructure in many countries.
Sustainability: There are better and worse ways of doing hydropower projects. Hydropower projects entail significant economic, environmental, and social risks, which must be managed. The Bank Group has developed safeguard policies used by many that address and attenuate potentially adverse social and environmental impacts.
The Bank Group also helps client governments strengthen their capacity for early incorporation of environmental and social dimensions in hydropower projects, including consultations, benefit sharing, and inclusion of indigenous peoples.
The Bank Group supports the Hydropower Sustainability Assessment Protocol, an enhanced sustainability assessment tool used to measure and guide performance in the hydropower sector, launched in Brazil in 2011.
The Protocol is the fruit of several years of effort by representatives from social and environmental NGOs (Oxfam, The Nature Conservancy, Transparency International, WWF); governments (China, Germany, Iceland, Norway, Zambia); commercial and development banks (Equator Principles Financial Institutions Group, World Bank); and the hydropower sector, represented by the International Hydropower Association, to develop the protocol.
Financing: Since the 2003 Water Resources Strategy, which states that the Bank would re-engage in hydraulic infrastructure, the World Bank (which includes the IBRD/IDA, GEF and Recipient Executed Activities) has approved about 100 projects related to hydropower (fiscal years 2003-13), for a total of US$5.7 billion in financing.
The World Bank portfolio since 2003 shows:
- 48% of projects were for green-field investments, 27% supported rehabilitation, and the remaining 25% were for technical assistance and preparatory studies.
- Of our green-field and rehabilitation projects: 36% were storage hydro, 31% run-of-river, and 30% programs for small-scale development (including off-grid micro hydro). The remaining 3% of projects were pumped storage.
During this period, the Bank Group also facilitated 21 carbon market transactions around hydropower to offset emissions from other technologies. Of these, approximately 60% were for run-of-river projects.
The IFC has approved 42 hydropower projects totaling US$1.3 billion over the last decade.
Last Updated: Mar 24, 2014