30 September 2019 – This 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 developing countries.
Hydropower is an important source of electricity as well as the largest single renewable energy source globally. Although the construction of large dams remains a politically, environmentally and socially contentious issue, hydropower 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 new 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 Non-OECD countries/emerging markets. 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 defines 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.
About
This paper was prepared with financial support from the UKRI Global Challenges Research Fund under a project called ‘FutureDAMS’ (ES/P011373/1). The FutureDAMS consortium comprises some 30 researchers across various universities and research institutes working to improve the design, selection and operation of dams to support sustainable development.
Citing this report
Cite this paper as: Markkanen, S and Plummer Braeckman, J (2019) Financing sustainable hydropower projects in emerging markets: an introduction to concepts and terminology. FutureDAMS Working Paper The University of Manchester and University of Cambridge Institute for Sustainability Leadership.
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