Hydropower capacity, including pumped storage hydropower (PSH), should more than double by 2050 if the world is to decarbonise and meet the climate goals set in the Paris agreement, a new report by the International Renewable Energy Agency (Irena) has found.
Annual investment in hydropower should grow fivefold during the period to reach the target, the report said.
This translates to $85 billion per year in investment in conventional hydropower and $8.8 billion in PSH, which is more than three times the investment in hydropower in 2017 and more than five times 2018's figure.
Hydropower is an important component of power systems worldwide and is the largest source of renewable electricity.
“Most hydropower potential lies in developing countries,” the report said.
“Financing institutions need to work together with governments to overcome local risks and limitations, find common ground and start funnelling much-needed investment into these regions and countries.”
The majority of the world’s hydropower capacity is in Asia, accounting for 42 per cent, followed by Europe, North America, South America, Eurasia and the rest of the world.
China is the largest producer of hydropower with 1.3 petawatt hours per year of capacity, followed by Brazil, Canada and the US.
Investment in hydropower has been dwarfed by investment in solar PV and wind technology, despite it being one of the cheapest sources of renewable electricity, over the past decade, the report said.
Renewable energy attracted $1.8 trillion between 2013 and 2018 but only $72 billion was invested in hydropower, which is equivalent to 4 per cent of all investment in renewable energy.
This is a “relatively small amount, especially when considering that it is a mature technology that generates around 65 per cent of all renewable electricity”, the report said.
It added that the world’s hydropower fleet was ageing and would need refurbishment.
“This need presents an opportunity to introduce new technologies and to modernise plants to fit the requirements of today’s power systems,” Irena said.
Existing plants will have to be assessed and retrofitted where necessary to account for increased climate risks and new projects will need to incorporate these risks in their design, it added.
“Hydropower has been an effective source of clean power generation for more than a century,” said Irena director general Francesco La Camera.
“However, with the rapidly evolving energy landscape, it is important to re-evaluate its future role and leverage recent technological advancements that can maximise its potential while ensuring its sustainability and climate resilience.”
How to get there
Emirates (www.emirates.com) flies directly to Hanoi, Vietnam, with fares starting from around Dh2,725 return, while Etihad (www.etihad.com) fares cost about Dh2,213 return with a stop. Chuong is 25 kilometres south of Hanoi.
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1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
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