HomeIndustry SectorsFinance and PolicyFinancing small hydro remains a challenge

Financing small hydro remains a challenge

Wim Jonker Klunne, senior researcher renewable energy at the Council for Scientific and Industrial Research (CSIR) in South Africa, says that while hydropower and in particular small scale hydro, has huge potential in Africa, “Financing small hydropower is still a bit of a challenge, in particular if we are talking about off grid systems that cannot benefit from selling power to the national utility.”

“Even more so than other renewables, small hydropower requires a substantial upfront investment. Combine this with a long lifespan of more than 30, 40 or 50 years, finding a feasible investment model is still something we are battling with. This is not to say that it is impossible to have small hydro as a viable investment, but it certainly needs long term thinking and in most case some kind of financial support by either government or donors.”

He believes that one of the main challenges is that the technology, although mature and successfully applied in numerous projects, is relatively unknown to policy and decision makers. “The limited available technical skills to design and implement small hydro and limited local manufacturing do hamper the uptake of the technology.”

However, contrary to common perception, South Africa is doing well in small hydro at the moment. A substantial number of systems are currently under development. “The fact that recent hydropower training by the South African Institution of Civil Engineering (SAICE) did attract full houses in Bloemfontein and Durban is a good indicator that this sector is really getting attention at the moment.”