Risk and reward profile for the lifetime of a hydro project: A financier’s perspective

Sustainably developed hydropower is expected to remain a mainstay technology for achieving universal access to energy and facilitating the energy transition. The International Energy Agency’s ‘Net zero scenario’ [IEA, 20211] estimates that at least 1300 GW of new hydropower capacity, double the existing capacity, would need to be added by 2050 to decarbonize the energy sector, while achieving universal access. While a significant amount of new hydropower capacity needs to be added, the existing hydropower infrastructure requires rehabilitation and upgrading. This paper reports how financing requirements can support this growth in hydropower and explores how the roles of the private sector and public sector change during a project’s life cycle.