Valuing hydropower resources for concessions

The hydro industry is in a state of transition, so it is now becoming more important for governments to have an understanding of the intrinsic value of a hydropower resource when negotiating a concession. The challenge is to arrive at a formula that provides the investor and the offtaker with sufficient incentives, and yet at the same time ensures that the State receives an adequate return for the use of its resources. There may be lessons to be learned from the extractive industries, where many of the problems are similar.