Modernisation initiatives driving new wave of hydropower development in North America
The 2025 World Hydropower Outlook, released by the International Hydropower Association (IHA), reveals that a wave of modernisation and new project development is reshaping the hydropower landscape in North and Central America – but continued progress will depend on more consistent political support and regulatory reform.
Across the region, hydropower is a mature but underleveraged energy source. While the United States and Canada are investing in modernising ageing infrastructure, and Central American nations are adding capacity to reduce fossil fuel use, hydropower still faces significant policy and market barriers. Political momentum has not kept pace with support for solar and wind, despite hydropower’s vital role in delivering reliable, low-carbon power to balance renewable grids.
The Bipartisan Infrastructure Law (BIL) continues to benefit hydropower in the United States, with over $430 million awarded to nearly 300 projects for grid resilience, safety improvements and environmental upgrades. Pumped storage is also gaining momentum, as 67 new projects across 21 states are poised to add over 50GW of storage capacity. However, licensing and policy challenges persist. Nearly 40% of the non-federal hydropower fleet must be relicensed by 2035 – a process that is often prohibitively complex and costly without more government support.
In Canada, hydropower continues to account for nearly 60% of electricity generation, and several provinces are expanding capacity. British Columbia’s Site C project reached a commissioning milestone in 2024, and a new interprovincial partnership between Quebec and Newfoundland & Labrador will see the joint development of nearly 4,000MW of new hydropower. Ontario is advancing plans to recontract hydropower facilities recognising the benefits for flood control, irrigation and the support of local ecosystems, while pumped storage is gaining traction in both Ontario and Nova Scotia.
Central America and the Caribbean also saw signs of progress, with new investments in both greenfield developments and modernisation. Panama’s 228MW Changuinola II is under construction; Costa Rica completed upgrades to the La Garita plant and announced a new 53MW project; El Salvador marked the first full year of operations at the 64MW 3 de Febrero plant; and the Dominican Republic is pursuing multiple projects, including pumped storage proposals.
However, the region faces mounting pressure from climate-related events. Severe droughts and heatwaves in Mexico and Central America have strained power systems and reduced hydro output – highlighting the need for adaptive planning and better integration with other renewables.
Malcolm Turnbull, IHA President, says: “Encouragingly, this year’s World Hydropower Outlook shows that global new capacity is accelerating after several years of stagnation. Hydropower is playing an increasingly vital role in the global energy transition. Continued momentum will require bold policy action, including reforms to reward hydropower’s multiple benefits, and faster permitting. And in the face of growing climate volatility, we must build not just clean energy systems, but resilient ones.”
Eddie Rich, IHA CEO, says: “As the renewable energy market continues to grow, the story of this year's Outlook is clearly that pumped storage hydropower is at the forefront as the world looks to more energy storage. It also reaffirms that all forms of hydropower remain essential to achieving global climate and development goals.”
North and Central America in numbers:
Generation by hydropower: 637TWh
Total installed capacity: 207.5GW
Capacity added in 2024: 541MW
Total pumped storage installed capacity: 22.4GW
Pumped storage capacity added in 2024: 96MW
