International climate funds, set up to finance the global transition to a low carbon future has the potential to invest in hydropower to enable the shift to reliable, affordable, clean distributed smart grids and incentivise infrastructure which is socially, environmentally and technically responsible. A new policy briefing from IIED explores the role of climate finance in supporting the transition of the power sector, why hydropower may be critical to reducing grid level emissions, the current climate finance of hydropower and how hydropower projects can be assessed to meet funding criteria. Intermittent renewables will be unable, alone, to deliver the levels of emission reductions necessary nor can they supply all of the grid ancillary services required for a stable electricity supply.

“Climate funds should be mandated to support the development of hydropower projects with these transition characteristics.”

Transition hydropower, which is defined as being designed explicitly to support intermittent renewables on the grid through the provision of energy storage and grid ancillary services, opens up opportunities to refocus climate finance. Currently, hydropower receives very little funding relative to renewable energy from wind and solar, primarily because of the perception that it does not align with the funds’ mandate. If the subset of transition hydropower was to be assessed it would meet the objectives of climate finance.  Funding hydropower is critical to the transformation of energy services because it facilitates higher penetration of renewable energy on the grid.

“Climate finance investors should consider transition hydropower as a game changer for energy emissions, and an alternative to current short-term approaches that are unlikely to align with a 1.5°C pathway.”

The Solomon Islands’ Tina River Hydropower Development Project is an example of how hydropower can secure climate finance. The project was supported by the Green Climate Fund in 2017. Some of the ways in which the project met the criteria are:

  • The hydropower will reduce greenhouse gas emissions by 49,500t CO2 equivalents per year
  • The annual greenhouse gas emission reduction potential of the project is over two and a half times the government’s commitment in the Nationally Determined Contributions
  • This project enables a shift from 97% diesel to more than 65% renewables and facilitates further integration of solar power onto the grid
  • The project doubles the number of households with energy access by 2021, and reduces the cost and volatility of a diesel-dependent electricity tariff
  • The project agreed a land acquisition process with local indigenous groups through a benefit sharing system.

The case study proves that climate finance can justifiably support transition hydropower, thus the emergence of transition hydropower as a subgroup that successfully meets funding criteria presents a need for strategic refocusing of programming.

Read the full IIED Briefing here: How climate finance can help repurpose hydropower

Note: This article gives the views of the author/academic featured and does not represent the views of FutureDAMS as a whole.

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