Financing sustainable hydropower projects in emerging markets: an introduction to concepts and terminology (Working paper) is the first in a series of working papers emerging from the CISL’s contribution to the FutureDAMS project, with a specific focus on the questions around sustainable finance for sustainable hydropower projects in emerging economies.
Hydropower is the largest single source of renewable electricity globally. Although the construction of large dams remains a politically, environmentally and socially contentious issue, it is likely to play a key role in helping countries across the world to achieve the Sustainable Development Goals (SDGs) and the Paris Agreement target of limiting global warming to below 2oC. In this context, it will be increasingly important to understand how to develop socially and environmentally sustainable hydropower projects, and how to finance them.
The purpose of this Working Paper is to introduce the key terms and concepts that are relevant to finance for sustainable large hydropower projects in emerging economies. It is designed to address the needs of readers with little or no prior knowledge of either finance or hydropower, as well as those with limited experience in one of the two topics, but extensive background in the other (such as a hydropower specialist with an engineering background, but limited familiarity with financial concepts and terminology).
The three main parts of the paper provide an overview of hydropower development process, hydropower finance, and risk and risk mitigation. Each of the three sections identifies the key actors and instruments, and describes their roles and purpose. The paper does not seek to engage in any detailed analysis of the various and often complex, value-laden questions surrounding hydropower. Instead, it aims to serve as a reference document to help readers better engage with the complex material on hydropower development and finance.
Note: This article gives the views of the author/academic featured and does not represent the views of FutureDAMS as a whole.~
Image: Stakeholders in a large hydropower project (Markkanen and Plummer Braeckman).