Why isn’t every UK water company generating extra revenue from low-cost hydropower?

British Hydropower Association says Cunliffe report must urgently open the floodgates for best value, climate-friendly hydropower, more reservoirs and long-term resilience in the water industry

The British Hydropower Association (BHA) has today called for urgent action from the water industry and the government to harness the untapped potential of the UK’s water infrastructure to generate renewable energy, income and value for money.

The BHA has described this week’s Independent Water Commission’s Final Report, led by Sir Jon Cunliffe, as a watershed moment for the sector in England and Wales, encouraging long-term investment not short-term thinking.

The BHA supports the Commission’s central finding: that the water sector’s fragmented governance and short-term business cycles are failing to deliver the infrastructure, resilience and innovation which the public expects.

Despite just one fleeting mention of hydropower, in a graph, the 464-page report essentially makes the case for hydropower.

Kate Gilmartin, CEO of the British Hydropower Association said: “We applaud Sir Jon Cunliffe for identifying what the water sector has refused to acknowledge for years. The sector is sitting on a vast, underused resource — millions of gallons in its reservoirs — which could be generating clean, low-cost electricity today.

“Power from water is a practical solution, and one that the current system of 5-year business planning, encouraged by Ofwat, has systematically blocked. The Cunliffe report can unlock the shackles of that system and give water companies the power to untap the vast, renewable, carbon-friendly potential of hydropower energy at long last.”

The Cunliffe report is explicitly critical of the water sector’s reliance on 5-year Asset Management Periods (AMPs), saying it undermines long-term resilience and infrastructure investment, creates feast and famine funding patterns, and discourages assets with multi-decade payback.

Reservoir-based hydropower is a proven, long-lived technology. Many water companies already manage assets that could be adapted to generate clean power with minimal intervention.

Thames Water, the UK’s largest water company with 16 million customers in London and the south-east, is saddled with £20bn of debt and is struggling to stave off financial collapse. Meanwhile, the only reservoirs that have been built in the last 40 years, despite climate change making droughts more likely, have been for hydropower schemes.

Gilmartin adds: “The public must be horrified that water companies, operating in a climate emergency, are letting water flow through their infrastructure without extracting any energy or making income from that energy when hydropower is a proven renewable energy source worldwide.

“This is a massive, missed opportunity, and it stems from a failure of regulation, not of technology. Hydropower turns water infrastructure into an economic asset, not just a liability. It provides renewable energy, helps grid stability, and offers local value with no additional water consumption.”

The BHA is calling for:

• A national audit of hydropower potential across public and regulated water assets,
• Regulatory reform to allow MultiAsset Management Periods investment in long-life renewable generation,
• Clear policy direction from Defra and Ofwat – and its replacement – to encourage water companies to develop clean power as part of their core business model.

As the report rightly notes, future infrastructure must be planned and financed over decades, not electoral cycles. Hydropower power stations, like Kinlochleven, near Lochaber in the west Highlands, is a textbook example of how some schemes still generate electricity more than a century after being built.

Gilmartin concludes: “We need to ask what the opportunity cost is of not putting hydropower on reservoirs which will be there for at least the next 100 years? These are not speculative technologies — they are bankable, buildable and beneficial. If we are serious about Net Zero and energy security, then Power from Water must be part of the plan.”

“This report opens the floodgates. Now we need the political will and regulatory follow-through to unlock the full potential of hydropower.”