Role of Large Hydropower in Development Cooperation

Role of Large Hydropower in Development Cooperation

Climate change, energy access  and reliable energy supply are challenges for many developing countries. In this context hydropower increasingly regains importance for traditional donors. The World Bank, for example, considers hydropower as crucial factor to solve the contradictions between economic development, increase of energy demand and needs for climate friendly energy generation. Its recent report “Toward a Sustainable Energy Future for All” (2013) highlights the role of hydropower as a sustainable form of energy supply.

Hydropower is reliable, technically mature and possesses a high efficiency factor of more than 90%. As a form of renewable energy it fulfills an important function for energy security and climate protection, as well as for water storage infrastructure. Its global share on electricity production is 16.5%. It accounts for 85% of total electricity production of total renewable energies. However, especially in Africa (92%), Asia (80%) and South America (74%) there is still development potential, some of which already gets developed today.

Reasons for Development Cooperation to engage in the Hydropower Sector

• Poverty reduction and rising energy demand
  

In the light of an increasing demand for electricity in developing countries and emerging economies hydropower as cost efficient and climate friendly energy source, which is an important issue for German Development Policy. Almost one quarter of world’s population has no access to electricity. According to the International Energy Agency (IEA 2013) energy demand will increase by 30% until 2035. An adequate and reliable energy supply is an important catalyzer for economic development and facilitates the overcoming of poverty. Furthermore, the realisation of additional revenue from power purchase from hydropower generation may trigger further economic development.

• National economic benefits

A reliable power supply is the basis for the economic development of a country. Large hydroelectric power stations may deliver a stable and low-priced electricity supply. Moreover the water reservoirs may contribute to other purposes like irrigation in agriculture, for drinking water supply or flood protection.
Large hydropower always represents major infrastructure projects with high investments which can also strengthen the regional economy. Sites are often located in remote, so far barely tapped regions. Besides enhanced transport infrastructure the local population often benefits from new income opportunities, an improved education system or new health facilities (hospitals etc.), which often are an additional effect of the infrastructure upgrade.

• Climate change

Hydropower is independent from (imported) fossil fuels and from international energy markets and price fluctuation. It is a long life, low-price renewable energy source. Its ability to serve as base load within the electricity grid qualifies hydropower as complementary and thus as facilitator of variable renewable energies such as wind or photovoltaics. With respect to water management issues and the adaptation to climate change reservoirs can play a major role in the context of flood protection and drought resilience.

• Development of energy infrastructure
  

Especially in developing countries there is a large, untapped hydropower potential and many countries have plans to unlock it as cheap and stable energy source. The social and environmental impacts of these large interventions in nature and landscapes often are not reflected and addressed in an appropriate manner. The German Development Cooperation and other international donors have long reaching experience with the assessment and mitigation of these impacts. Knowledge transfer can play a major role here to make hydropower development more sustainable; large needs can be observed especially in Africa.

Role of Donor Countries and Implementing Organizations

Activities of GIZ

• Development of environmental and social standards
  

On behalf of the German Ministry for Economic Cooperation and Development (BMZ) GIZ is engaged in the International Sector Dialogue on sustainable hydropower development and the further advancement of  the Hydropower Sustainability Assessment Protocol (HSAP). Besides a general and comprehensive improvement of the sustainability of hydro projects the HSAP addresses early-stage assessment and the integration of hydropower in strategic energy, water and environmental planning. The HSAP protocol is the product of a multi-stakeholder-process and is carried on by developing and emerging economies, by industrialized countries and investors, project developers, industry, and NGOs.
GIZ is elaborating instruments for risk reduction in terms of political, financial and reputational risks for developers and financial donors in order to trigger investments in sustainability issues of hydropower projects.

• Cross-sectorial coordination / Nexus

Water, energy and food are linked to each other in a multifaceted way. A prime example in this context is hydropower and its water storage reservoirs which are able to fulfill multiple purposes such as energy generation, flood protection, irrigation for agricultural land, or drinking water supply. The coordination requirements between those purposes and diverse sector demands are posing particular challenges to many countries. GIZ offers approaches and instruments to contribute to solving those.

• Risk prevention and increase of public acceptance

Planning gaps and insufficient consideration of sustainability aspects not only harm public perception of a project’s developers and investors, but especially local population and the regional economy. German Development Cooperation can provide support to foster hydropower sustainability through a solid and comprehensive planning process that considers all relevant stakeholders. Risks during construction and operation can thereby be anticipated and minimised.

• Local benefit sharing
  

Large hydropower implies significant impacts on both the environment and the space of living of the local population. Through the application of appropriate mechanisms it has to be ensured that not only the (in most cases international) project developers take profit, but also the local population. In contractual agreements mechanisms should be established to share not only the project’s disadvantages but also the benefit with the local communities, i.e. direct and indirect gains (e.g. from power purchase) and effects for the regional economy (job creation, social and technical infrastructure upgrade).

• Transboundary water management
  

Many hydropower dams are located on transboundary rivers and can have severe effects on the runoff regime and for downstream water users. The German Development Cooperation supports the formation of strong and efficient river basin organizations and the negotiation of transboundary treaties which can prevent from conflicts about resources. The dialogue between river basin management authority and energy planning authority is to be strengthened.

Further Information

• Hydro portal on energypedia