The geographical scope of a Hydropower by Design analysis may be defined by natural (river basin), technical (power grid) or administrative (state or country) boundaries. It can be determined by the particular issues of interest. At one end of the spectrum, the optimal configuration and operation of a hydropower cascade can be analyzed at the level of a small sub-basin. At the other end, several countries may consider the costs and benefits of connecting their power grids through new transmission lines, with implications for hydropower across a number of basins in an entire region.

In situations with a large geographic scope and numerous potential dams, planners have more degrees of freedom to identify options for improved outcomes than in smaller areas with one or two dams under consideration. However, a large scope also entails significant efforts, and an initial pilot project within a subset of the area may be sufficient to test and demonstrate Hydropower by Design analytical approaches. Even in a situation with only a few dams under consideration, locations and operations can have significant impacts on outcomes, and HbD is very useful to explore the range of options for improved outcomes.

Additional questions to consider

• Are there basins, grids or administrative units with particularly pressing needs for planning, with interesting and/or representative features, good data availability, capacity, or other characteristics that would make them a good choice to introduce Hydropower by Design

  If so, these may indicate priorities and enabling conditions to pilot a HbD initiative.

• Are there forecasts for future electricity demand for these geographies, and how up-to-date are these?

  Reliable forecasts will enable analyses that are more accurate and relevant to support actual decisions. However, note that demand is difficult to forecast and that, if an overall plan exists that shows the preferred projects and their sequencing, the scheduling of these projects can be easily adapted to respond to faster or slower growth

• What alternatives exist in these geographies, for hydropower siting, design and operations?

  It is important to understand the level of information on technical alternatives for planned and existing hydropower projects, in terms of different sites; run-of-river, storage, and pumped storage hydropower; single-purpose and multi-purpose reservoirs; small and large projects, etc., in order to be able to explore all options for tradeoffs between different design and operations scenarios. Ideally, these alternatives would be described in engineering surveys. Component 4 describes technical information requirements in more detail.

• Are there targets for these geographies, for hydropower baseload and peak load generation, and for ancillary services?

  In an ideal situation, these would have been developed through an energy options assessment, and even more ideally through an integrated options assessment for energy and water management: Options assessments compare macro-scale alternatives for meeting objectives (e.g. various mixes of generation sources; achieving water objectives through increased storage vs. conservation), including assessing the extent to which a dam or a set of dams is the best way to meet various objectives (WCD 2000). This process can set broad targets for hydropower generation and other energy and water-management services for a planning area. These targets inform subsequent analyses that compare the tradeoffs associated with meeting various objectives.]

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  Hydropower is generally one of several options for electricity generation within a given geography. Other sources include coal, oil, gas, and biofuel-fired power plants, geothermal, solar, wind, and nuclear. Because of rapid cost and policy changes in power generation, older plans for hydropower development may be outdated and need to be revisited, given the current array of alternatives.

  Understanding the broader energy grid is critical to know what the current and future energy sources and energy users are, and how those are expected to change in the future. If future demand forecasts have declined, energy development may not go forward as planned. If energy needs are increasing and current capacities are insufficient, energy development will most likely accelerate.

• What is the scheduled time frame for hydropower development in the geographies of interest?

  In some geographies, there will be a great sense of urgency to add power capacity, because of insufficient supply, blackouts, and major economic losses. In other, more mature systems, there will be more time to prepare decisions. The time frame will inform whether to focus on planning, licensing, design, or operations, and the time available for developing Hydropower by Design products and engaging with decision makers and stakeholders. Sometimes, time pressure can actually be useful to trigger a planning process: There may be urgency of a major project decision, or a regulatory requirement to update a plan by a certain date. Even if there is a need to make decisions rapidly, these can be improved by a rapid Hydropower by Design analysis effort. In parallel, work can start on more thorough analyses, to select the next generation of projects.

  In geographies with mature hydropower systems, rehabilitating, re-designing, re-operating and in some cases, removing existing projects presents opportunities for improving outcomes. This can typically be done without time pressure, except perhaps in jurisdictions where licenses are on a short time-frame.

Within any given geographical setting, certain stakeholders will have the formal authority and responsibility to make decisions, through formalizing development plans, by committing the developer to invest in the project, granting a license, or approving a loan.

Some of the responsibilities are determined by the type of geography. In a river basin, a basin development authority may be the most influential decision maker; in a power grid, it may be the system operator, regulator or national utility; at the country level, it may be relevant ministries for energy, water and related issues. The different kinds of geographies obviously overlap: a basin is at the same time, part of one or more countries; a power grid may be smaller or larger than a country. Thus, responsibilities are generally shared between several types of organizations.

Generally, the government controls hydropower development, through planning, permitting of private developers, and/or through direct control of state-owned utilities. But there are many different institutional arrangements in which governments exercise control. Some governments have privatized and deregulated the power generation sector, and have no role in planning hydropower systems and selecting new projects for development. In these cases, the government can deny permits, or can impose conditions, but is unable to direct development effectively. In any given situation, it is critical to identify the entities responsible for decisions and the particularities of the situation in which Hydropower by Design will be advanced.

Additional questions to consider

• Which stakeholders have formal authority, and actual influence, over hydropower development decisions? What are the policies, objectives, incentives, and technical capacities of these stakeholders?

  To answer these questions, implementation teams should develop a policy landscape evaluation or map to lay out the decision makers and policies in a formal way, and to understand the links and pathways of decisions among different stakeholders. Depending on the geographies of interest, and the institutions with formal decision-making powers, there may be a wide range of other stakeholders with an interest in hydropower development.

  Even government agencies that represent sectors affected by hydropower, may have little influence over planning and licensing decisions. The Ministry of Fisheries, for example, may be consulted but often has no formal role in hydropower decisions. Local stakeholders and civil society organizations typically have even less influence. Frustration over a lack of influence may translate into conflicts that – depending on the geography – may play out in the political arena, in the courts, or through strikes and blockages.

  Stakeholder identification and engagement is further addressed under Component 2 of this guide. Stakeholder roles need to be understood for the specific geography of interest, in order to address the expectations of all stakeholders in a holistic fashion.

• What permits, licenses, concession agreements, or other authorizations do hydropower projects require? Which authorities issue these licenses, at which stage in the project cycle?

  This is a familiar question for all developers, and should be easy to answer.

• What planning instruments are used for power generation and for other relevant sectors such as water resource development, flood management, irrigation and water supply, fisheries, navigation, nature conservation, etc.? Are these plans binding or indicative, one-off or frequently updated?

  This will provide an overview of the current state-of-the-art of planning in that geography, and reveal any overlaps or gaps that may exist.

• What coordination mechanisms exist between sectors and levels of government to ensure compatibility of plans? Do hydropower projects have to demonstrate their compatibility with plans of other sectors?

  This is important as existing plans may be inconsistent and contradictory.

• How do typical hydropower developers select projects? Are they typically large multi-project organizations, with a pipeline of development opportunities, or single project companies? Are they privately or state-owned, and if state-owned, are they primarily oriented towards commercial objectives or towards development and public interest objectives?

  The objectives and the experience of developers will determine their attitudes towards project selection.

• What are the typical funding sources for hydropower projects, and what additional conditions, if any, do these sources apply?

  In some situations, financiers play a critical role in project selection; in others they are largely passive.

Planning and licensing agencies will use specific criteria to short-list, select and authorize projects and their designs and operational rules.

Because hydropower projects are highly site specific and show a wide range of costs, planning agencies have traditionally favored projects with low costs per installed MW or per produced MWh, to reduce the cost of power in the economy. Developers are equally focused on costs, as well as on rates of return on investment.

Additional criteria - used particularly by government agencies - may relate to project benefits (such as water/energy storage, ancillary power services, regional development, location of customers/load centers, employment, royalties), and to environmental and social impacts. Typically, benefits and impacts are considered project-by-project, rather than cumulatively, and often after a project site has been selected. Also, typically it is assumed that impacts can be largely mitigated, and that therefore they do not need to play a prominent role in project selection.

Where planning and licensing processes are less robust, decisions may be made by politicians. There are examples of politicians cancelling as well as promoting projects, sometimes overruling agency recommendations. Making the planning process more robust can help to de-politicize it.

Additional questions to consider

• What criteria were used to prioritize the projects in the current power sector plan, or the projects that have recently been selected by developers? What criteria are used to define operational rules, for example to balance the competing interests in managing reservoirs for power generation, flood control, and environmental flow releases?

  These criteria can illustrate both the current motivations and the currently available information, and will be important as a starting point for more comprehensive planning.

• Are criteria applied consistently, or are there cases of favoring certain sectors, regions, contractors, etc.?

  There may be informal decision-making criteria in addition to the formal, officially accepted ones, and to gain a realistic understanding of the process it will be important to understand when, how and why these are applied.

Reforms of policies, processes and practices should not be underestimated. Change is difficult and time-consuming to implement. There has to be a demand for reform, even if just an unspecific perception that outcomes could be better. Decision makers must benefit from reforms in some way. Reforms often move in small steps, not achieving a perfect solution immediately; even small successes can motivate continuing engagement. Advocates for reform thus have to be practical and shape their proposals in ways that are attractive to decision makers.

Additional questions to consider

• Which parts of the regulatory frameworks, institutional arrangements and business processes may need to be modified, to embed the approach more permanently?

  Hydropower by Design initiatives can include analysis to help decision makers identify pathways for reform. For example, a government may decide to identify high-priority rivers for hydropower development, while at the same time setting aside other rivers for protection, or keeping them in reserve. Most countries do not have a protected area category specifically for rivers, and a tradition of declaring and managing protected rivers, and a HbD initiative can support the formulation of a regulation for such a new category. The protection of a certain river stretch may also come about as a compensation or ‘offset’ measure for an individual hydropower project. Again, many countries could benefit from a modification of their licensing requirements, to provide clear guidance on river offsets, and such modifications can be supported in the context of a HbD initiative.

• Are there significant legal or structural issues that stand in the way of comprehensive, multi-criteria hydropower planning, and would require high-level decisions to reform?

  Even where decision makers are already convinced of the benefits of HbD, they may have to wait for such decisions.

• Is there a political will to reform that can be built on? Have politicians, government officials or corporate representatives expressed interest in reforms?

  Often there has to be a political mandate or signal to encourage mid-level officials to engage in reform discussions.

• What are the incentives to decision makers to invest in reform? Are there obvious disadvantages from continuing the current approach, or obvious advantages from adopting a new approach?

  The business case for HbD has to be clearly presented and accepted.

• Do decision makers have access to the information that is required to make informed decisions? If additional information is required, can it be generated in a reasonable amount of time, to justify holding off a decision?

  Lack of perfect information will never be accepted as an excuse for inaction, but a staged approach to decisions may be acceptable, as simple, ‘no-regret’ decisions (such as retrofitting an existing irrigation dam with a hydropower facility) are taken first with more complex decisions (such as building a new large multi-purpose storage project) prepared over time.

• Do decision makers have the technical capacities to identify and comprehensively evaluate alternatives? If not, can a trusted advisory relationship be built, or funds be mobilized to contract third-party support, to conduct this analysis?

  Decision-making institutions such as government departments and hydropower companies differ widely in their internal capacities and openness to external advice.

Ideally, Hydropower by Design will be contributing value to an existing decision-making process, by improving the outcomes of that process. Building on the existing decision-making processes in a specific geography has various advantages: it shows respect for the historic knowledge and decision-making culture that already exists, and enables stakeholders to engage in ways they are familiar with, and which they can lead on and take ownership over. It will also allow the process and recommendations to be tailored for the specific circumstances, making them more actionable and politically more feasible. Designing a Hydropower by Design approach should aim for balance between what may be technically most desirable, and what is most likely to result in modifications to decision making processes.

Additional questions to consider

• How do decision makers prefer to engage with the HbD approach?

  There is a wide spectrum of options, from simply observing how HbD has worked in other countries (for example, through presentations and study tours), to small demonstration and pilot studies (with different levels of decision maker involvement), to full-scale introduction across the country.

  It is important to engage in a discussion, to ensure that decision makers are comfortable with the approach taken and will not interpret it as interference in domestic processes. The lead agency for hydropower development (often, the Ministry of Energy) will, at a minimum, have to be aware of, support and remain informed of HbD initiatives, even if others take the initiative. These could be planning, environmental, or water agencies, or - in countries with more limited capacities - donors and development banks. There are also practical considerations in identifying and cooperating with agencies that have resources available to fund HbD initiatives.

• Which regulatory frameworks, institutional arrangements and decision-making processes exist that can be modified and improved?

  It is generally easier to build upon a promising element of the current structure, than introducing a completely new framework. Focusing the HbD initiative on these elements is likely to deliver the greatest impact.

• How can capacity in promising institutions and processes be improved, by involving staff in the design and implementation of HbD analyses?

  This will help to ensure that capacity really is transferred, and staff will be able to continue and expand working with HbD approaches, even after a temporary initiative is finished.

  Partnering with institutions is often most successful when a specific process is tackled jointly. For example, a country may have already introduced an option for Strategic Environmental Assessment (SEA) when it modified its Environmental Impact Assessment legislation, but has yet to gain practical experience with this new tool. In that situation, using the SEA tool as the organizing framework for a HbD initiative, and in the process building capacity and confidence in the institutions, may be the most practical way forward. It helps staff deliver a quality product, and also has the advantage of a legal basis for the results, which may facilitate their official recognition.

  Hydropower by Design, by emphasizing multi-criteria decision making, also involves bringing multiple perspectives from different stakeholders into decision making processes. This can be an empowering experience for stakeholders that have previously not had the information and the access to such processes.