Hydropower's Undervalued Potential in a Decarbonizing World: Strategic Infrastructure for Grid Resilience and Long-Term Sustainability

In the race to decarbonize global energy systems, hydropower remains a cornerstone of underappreciated potential. While solar and wind dominate headlines, hydropower's dual role as a reliable baseload energy source and a grid-stabilizing asset is being redefined by technological innovation and cross-border collaboration. As nations grapple with the dual challenges of climate resilience and energy security, strategic investments in hydropower infrastructure are emerging as a linchpin for long-term sustainability.

Decarbonization and the Hydropower Renaissance

Hydropower's contribution to decarbonization is not merely about generating clean electricity-it's about enabling the integration of intermittent renewables. Singapore, for instance, has pioneered a hybrid approach by importing hydropower from Sarawak while expanding battery storage systems. Sembcorp Industries' 326 MWh energy-storage system on Jurong Island, now capable of providing grid inertia during disruptions, exemplifies how hydropower and storage technologies can work in tandem to stabilize renewable-heavy grids, as demonstrated by Sembcorp's storage test. This model aligns with Singapore's broader strategy to source 40% of its electricity from regional renewables by 2035, underscoring hydropower's role as a bridge between traditional and next-generation energy systems.

Globally, the International Energy Agency (IEA) forecasts that hydropower capacity will grow by 50% by 2030, driven by upgrades to existing infrastructure and new projects in climate-resilient designs, according to the IEA Hydropower report. This growth is critical: hydropower already accounts for 16% of global electricity generation and remains the largest source of renewable energy. Yet its potential is often undervalued due to outdated perceptions of environmental risks. Modern projects, however, are increasingly incorporating climate resilience metrics, such as adaptive reservoir management and flood-mitigation technologies, to address historical concerns, as detailed in the Hydropower Sector Climate Resilience Guide.

Grid Resilience: Hydropower as a Climate-Proof Anchor

Extreme weather events are reshaping grid resilience strategies. The U.S. Department of Energy's $2.5 billion Grid Resilience Utility and Industry Grants program explicitly prioritizes hydropower projects that enhance system stability against wildfires, floods, and heatwaves, as reflected in the DOE grants program. These initiatives reflect a growing recognition that hydropower's flexibility-its ability to ramp up or down quickly-makes it indispensable for balancing variable renewables.

In East Africa, Ethiopia's Grand Ethiopian Renaissance Dam (GERD) has already demonstrated this potential. By April 2025, GERD had generated 2,700 GWh in its first ten months, surpassing projections by 26%, while supplying power to neighboring countries like Kenya and Sudan, as reported by Capital Ethiopia. Similarly, Tanzania's Julius Nyerere Hydropower Plant, now operational at 2,115 MW, is addressing energy shortages while supporting irrigation and industrial growth, as noted in an EnergyNews report. These projects highlight how hydropower can serve as both a climate adaptation tool and an economic catalyst.

Case Studies: From Southeast Asia to South Korea

Southeast Asia's hydropower sector, though vulnerable to climate impacts, is adapting through innovation. Vietnam's Thua Thien Hue project and Laos's Xe-Pian Xe-Namnoy Dam faced disruptions from extreme rainfall, but newer projects are integrating climate modeling to mitigate risks, as the IEA executive summary documents. Meanwhile, South Korea's 11th Basic Plan for Long-Term Electricity Supply and Demand (BPLE) aims to quadruple renewable capacity to 121.9 GW by 2038, with hydropower playing a key role in balancing its expanding solar and wind portfolios, according to an IEEFA analysis.

Cyprus's EU-backed smart grid initiative further illustrates the strategic value of hydropower integration. By modernizing distribution systems, the island nation is enhancing its ability to absorb renewable energy while reducing outage risks, as reported by the Cyprus Mail. These examples underscore a global shift: hydropower is no longer a standalone solution but a foundational element of diversified, resilient energy systems.

Challenges and the Path Forward

Despite its promise, hydropower faces headwinds. Climate change threatens Southeast Asia's hydropower capacity factor, projected to decline by 4.6% by 2059 due to shifting rainfall patterns, as the IEA executive summary notes. In Nepal, seasonal mismatches between supply and demand are driving investments in storage-type hydropower to address winter shortages. These challenges demand tailored solutions, such as energy banking concepts and transnational grid interconnections.

For investors, the key lies in prioritizing projects with robust climate resilience frameworks. The Hydropower Sector Climate Resilience Guide, developed by the World Bank and European Bank for Reconstruction and Development, offers a blueprint for assessing risks and embedding adaptive measures. Similarly, Singapore's collaboration with Sembcorp to test grid-stabilizing battery systems highlights the importance of hybrid technologies in future-proofing infrastructure.

Conclusion: A Strategic Imperative

Hydropower's undervalued potential lies in its ability to harmonize decarbonization, resilience, and economic growth. As the IEA notes, maintaining and upgrading existing infrastructure could unlock 1,200 GW of additional capacity by 2030, according to the IEA Hydropower report. For investors, this represents a unique opportunity to support projects that are not only environmentally sustainable but also economically transformative. In a world increasingly defined by energy volatility, hydropower stands as a testament to the power of strategic, forward-looking infrastructure.