Socio-economic impacts of hydropower in the UK

BiGGAR Economics was commissioned by the British Hydropower Association to assess the potential economic impact of hydropower in the UK. The objectives of this study were:

• consider the strategic benefits of delivering more hydropower;
• quantify the economic benefits that the hydropower sector generates for the British economy through its role in electricity markets;
• assess the potential economic impacts of constructing additional capacity; and
• highlight the local and community impacts generated through growth in the sector, including local energy networks.

Key Findings

Hydropower in the UK has socio-economic benefits through its impact on the wholesale electricity market, the direct employment and GVA it supports and through the support it provides to host communities. Our study found that:

• Hydropower reduces the wholesale cost of electricity by displacing the demand for expensive peaker plant generation. This impact is greatest during the winter months and in the early evening, when it is most expensive to bring peaker plant generation online and hydropower output is greatest. In 2019, it was estimated hydropower reduced the wholesale cost by £275 million. During the energy price crisis in 2022, the impact of hydropower was even greater and it was estimated the impact on the wholesale cost of electricity was £1.1 billion.
• The construction and operation of an additional 1 GW of hydropower would support employment and generate GVA across the UK. The majority of the £5.5 billion investment required to add this capacity would be spent within the UK. This would support 4,100 jobs across the UK during the construction period and generate £4.8 billion GVA.
• Hydropower enables communities to benefit from their natural capital. This includes directly using the power on their doorstep, working on the projects during both the construction and operations phases and supporting the energy transition locally. The direct financial income from schemes also supports anchor institutions, enables diversification and increases the economic resilience of rural communities. The development of new schemes, designed with the needs of local communities in mind, can support economic development and wellbeing in communities across the UK.

Further reading

The full impact and summary reports are available from the links below:

• Socio-economic Impact of Hydropower in the UK – Summary Report
• Socio-economic Impact of Hydropower in the UK – Full Report