Hydropower Development Facility | Program Profile

Hydropower, under construction site

Helping developing countries harness their hydropower potential safely and efficiently

Around half of hydropower's economically viable potential worldwide is untapped, according to the International Energy Agency. Africa, for example, holds about 12 percent of the global hydropower capacity but only 5 percent is exploited, even though the subcontinent is home to the highest percentage of people who do not currently have access to reliable energy supply. When properly developed, hydropower can deliver affordable energy, thereby closing the energy access gaps, enabling decarbonization and the achievement of climate change targets. The International Hydropower Association estimates that as of 2020, there was 1,330 GW of global installed capacity, making hydropower the world’s largest source of renewable energy. Hydropower solutions are a long-term investment due to their low cost, reliability, efficiency, and flexibility. They also provide essential grid services and water management solutions and enable renewable energy integration into national grids.

However, several barriers need to be removed for governments to tap into this resource. Among the main obstacles are the lack of efficient risk mitigation mechanisms, the inadequacy of frameworks to attract private sector participation, and the unavailability of roadmaps to implement projects while maintaining high environmental, social, and fiduciary standards. In addition, governments need to ensure that hydropower projects are carefully planned and executed. This will avoid safety risks, missing production targets, or cost inflation due to unanticipated circumstances, including but not limited to hydrological risks and geological issues.

To mitigate these risks and help low to middle-income countries harness their full hydropower potential, ESMAP established the Hydropower Development Facility (HDF). HDF helps countries identify and build a pipeline of sustainable hydropower projects by supporting clients in developing and managing next-generation rehabilitation and greenfield projects. The facility also aims to accelerate the deployment of technology that is critical to integrating variable renewable energy into the grid.

HDF provides technical assistance to help governments in the following ways:

  • Improvement of the quality of project preparation and assessments.
  • Provision of financing for projects.
  • Implementation of safe and efficient hydropower projects.
  • Facilitation of the integration of variable renewable energy, such as solar and wind, with hydropower.

In addition to technical assistance, HDF compiles and disseminates innovative knowledge products and provides grants to support four core areas for the advancement of hydropower development:

  1. Environmental and Social Impact Assessments. Advisory to governments on how to increase the value and positive impact of hydropower projects through the adoption of the World Bank’s Environmental and Social Framework (ESF) and Hydropower Sustainability Assessment Protocol (HSAP).
  2. Feasibility Studies. Support governments and financiers in making informed decisions by conducting assessments of the technical, economic, and financial viability of hydropower projects.
  3. Project Implementation. Assist governments in identifying and defining project structures, procurement, and construction strategies.
  4. Capacity Building and Project Management. Strengthen local capacity to manage hydropower projects and plants during the implementation, operation, and maintenance phases.

Our work

Between 2020 and 2021, HDF utilized technical assistance grants to support the following projects:

  • Pumped Storage Hydropower Project in Indonesia. Pumped storage hydropower consists of two water reservoirs at different elevations that can generate power as water moves down from one to the other, passing through a turbine. In the West Java province of Indonesia, the World Bank is financing the construction of the country’s first pumped hydroelectric storage facility. The Upper Cisokan hydropower project will generate 1 GW of energy and contribute to Indonesia’s transition to a lower carbon economy. Between 2020 and 2021, HDF provided technical assistance in the preparation and early implementation of the project. This included knowledge sharing on contract negotiations, environmental and social safeguards, implementation arrangements, owner’s engineer recruitment, climate risk assessments, and project appraisal.
  • The Rusumo Hydroelectric Power Project in Burundi, Rwanda, and Tanzania. The facility supported the construction of a hydroelectric power project at the border between Rwanda and Tanzania. The project aims to generate approximately 80 MW of energy to be shared equally between Burundi, Rwanda, and Tanzania. In 2021, HDF continued to provide technical assistance related to tunneling and blasting activities to ensure that the blasting is performed within permissible limits and in adherence to international environmental, health, and safety standards.
  • Upper Arun Hydroelectric Power Project in Nepal. In Eastern Nepal, HDF supported the preparation of the most ambitious of its project grants, which is envisaged to produce 1060 MW of energy. In addition, the facility provided advisory on energy sector reforms and the acceleration of hydropower development through feasibility studies, project design, and strengthening of energy institutions and governance.

HDF also compiled and disseminated research to enhance the sustainability of hydropower projects and help maximize socio-economic benefits such as short and long-term job creation, access to electricity, increased gender equality, economic growth, and increased safety and security.

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