Hydropower is the world’s largest source of renewable energy, accounting for a fifth of global electricity. Harnessing water responsibly can help take electricity access to millions of people, especially in sub-Saharan Africa and South Asia where lack of access to power is most acute. For example, sub-Saharan Africa has 300 gigawatts of undeveloped hydro potential—enough to quadruple sub-Saharan Africa’s total generating capacity of 80 GW.

Stable and affordable electricity supply is also crucial for ending extreme poverty and driving economic growth.

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 while mitigating any risks. The World Bank Group is committed to helping its clients continuously improve the way they approach hydropower so as to better manage such risks and better share the benefits of this renewable resource.  

Last Updated: Sep 15, 2015

Hydropower is not only a vital renewable energy resource, but for many countries, it is the only renewable energy source that has the potential to expand access to electricity to large populations.

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 could also provide power generation for industrial, manufacturing and commercial operations that create jobs.

The World Bank Group is firmly committed to the responsible development of hydropower projects of all sizes and types— run of river, pumped storage, and reservoir—including off-grid projects meeting decentralized rural needs.

Sustainability: Hydropower projects entail significant economic, environmental, and social risks, which must be managed carefully at all stages. The Bank Group has developed safeguard policies used by many that address and reduce potentially adverse social and environmental impacts. The Bank Group also helps client governments strengthen their capacity to incorporate environmental and social dimensions in hydropower projects at an early stage. That typically includes consultations, benefit sharing, and inclusion of indigenous peoples.

We support the Hydropower Sustainability Assessment Protocol, an enhanced sustainability assessment tool, which provides a useful and comprehensive framework for hydropower developers to monitor and benchmark the performance of their projects. The private sector, governments, NGOs, and multilateral organizations (including the World Bank Group) came together to define the tool and we will continue to engage with the forum that governs the Protocol to encourage its use and improve the tool over time.

Financing: Since 2003, World Bank Group funding of more than $9.2 billion has contributed to the installation or restoration of 16 GW of hydropower. The World Bank typically acts as a “convener,” bringing other financiers to the table. Over the last five years, World Bank financing covered around half of the costs of the projects it financed (55 percent), with the balance coming from other players, such as host country governments (19 percent), the private sector (15 percent) and other development banks (10 percent). The World Bank only supports hydropower projects of demonstrated economic viability. For all projects, the macroeconomic and fiscal effects and risks of its investments on the national economy of the country are carefully assessed.

Last Updated: Sep 15, 2015

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 project affected families recorded a real 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 the 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 the cost of power delivery. The total project cost is about $4.2 billion for the first stage, which consists of two phases and a total installed capacity of 1,080 MW in each phase.

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 who will benefit from the incremental power generation. The project aims to do this by facilitating the expansion of 80 MW hydropower generation capacity and construction of transmission lines. It will also allow for greater power trade between Rwanda, Tanzania and Burundi. Power generation expected from the project, at an estimated cost of $ 0.062/kWh, is expected to dramatically reduce costs and replace thermal generation in the region, at the exceedingly high cost of about $ 0.25/KWh.

Last Updated: Sep 15, 2015