Summary of Managing Financial Risks from Hydropower

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Hydropower is affordable and environmentally friendly, but it has one major drawback – its reliance on rainfall. In periods of low water supply, hydropower producers have to import energy, at some cost, and governments often must intervene. Energy economists Luciano Canale, Gazmend Daci, Hilda Shijaku and Christoph Ungerer of the World Bank discuss ways of making hydropower more reliable and cost-efficient. Anyone interested in financing alternative energy sources will find this report illuminating.

About the Authors

Luciano Canale et al. are energy specialists and economists at the World Bank.



Hydropower is a favored form of renewable energy across the globe, but rainfall can be variable. 

Some 35 countries now provide more than 50% of their electricity using hydropower. However, its production is financially volatile, because water supply can be inconsistent. When rainfall and reservoirs are low, energy production falls below consumption.

Hydropower producers must then seek often costly ways of making up the discrepancy, such as by importing electricity. Albania, which is heavily reliant on hydropower, has suffered such a problem; its expenditures on ...

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