IRENA - Changing role of Hydropower 2023

The International Renewable Energy Agency (IRENA) has suggested that in order to completely decarbonise and meet the climate goals of the Paris Agreement, the installed capacity of hydropower, including pumped storage hydropower, should more than double by 2050. To achieve this, annual investments in hydropower will need to grow by roughly fivefold. However, it has been suggested that most hydropower potential lies in developing countries, so financing institutions will need to work together with governments to overcome local risks and limitations and start funnelling much-needed investment into these regions and countries. Hydropower has a high value based on its ability to provide flexible energy generation and other services, but this value is not always recognised by existing markets. The key actions that policy makers can take to recognise the value of hydropower and accelerate its deployment include creating an attractive business environment, developing market frameworks that recognise the value of flexibility and ancillary services, and implementing a combination of incentives and regulatory streamlining that can accelerate the deployment of hydropower. The document produced in the context of IRENA's Collaborative Framework on Hydropower is aimed at policy makers and hydropower practitioners and provides a snapshot of the current status of hydropower and lays out the changing role of hydropower in the coming years.