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Financing of Private Hydropower Projects

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  • Chris Head

Abstract

This study provides an overview of the issues and challenges related to the private financing of hydropower projects in developing countries. From the very limited pool of projects that have already reached or are nearing financial closure, ten have been chosen for the study from five countries with the most active in promoting private hydro development. Collectively the case study projects provide a reasonable cross-section of private hydro schemes that have been or are being developed. The financing of greenfield private infrastructure on a limited-recourse basis in developing countries faces certain common issues irrespective of the type of project. However, hydropower faces additional difficulties caused by the site-specific nature of projects, high construction risk and long construction periods, their capital-intensive nature with a high proportion of local costs, unpredictable output subject to river flows and broader water management constraints, complex concession process to achieve transparency in the award and pricing of output, and environmental sensitivities. The study suggests the need for longer-term financing to better suit hydropower characteristics, a regulatory framework and realistic public-private risk-sharing arrangements responsive to the requirements of hydropower projects, and the careful preparation of projects by the public sector to enable their formulation on an adequate technical and contractual basis for development as a private concession.

Suggested Citation

  • Chris Head, 2000. "Financing of Private Hydropower Projects," World Bank Publications - Books, The World Bank Group, number 15190.
    • Handle: RePEc:wbk:wbpubs:15190
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    Citations

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    Cited by:

    1. Scholtens, Bert & Veldhuis, Rineke, 2015. "How does the development of the financial industry advance renewable energy? A panel regression study of 198 countries over three decades," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113114, Verein für Socialpolitik / German Economic Association.
    2. Saule Baurzhan & Glenn P. Jenkins & Godwin O. Olasehinde-Williams, 2021. "The Economic Performance of Hydropower Dams Supported by the World Bank Group, 1975–2015," Energies, MDPI, vol. 14(9), pages 1-22, May.
    3. Christa N. Brunnschweiler, 2006. "Financing the alternative: renewable energy in developing and transition countries," CER-ETH Economics working paper series 06/49, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    4. Dogmus, Özge Can & Nielsen, Jonas Ø., 2019. "Is the hydropower boom actually taking place? A case study of a South East European country, Bosnia and Herzegovina," Renewable and Sustainable Energy Reviews, Elsevier, vol. 110(C), pages 278-289.
    5. Awojobi, Omotola & Jenkins, Glenn P., 2015. "Were the hydro dams financed by the World Bank from 1976 to 2005 worthwhile?," Energy Policy, Elsevier, vol. 86(C), pages 222-232.
    6. Brunnschweiler, Christa N., 2010. "Finance for renewable energy: an empirical analysis of developing and transition economies," Environment and Development Economics, Cambridge University Press, vol. 15(3), pages 241-274, June.

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