If 2024 was the rebound after a long drought, 2025 feels like the inflection point. Across trade shows on three continents, and through all of our ongoing projects, we’ve seen hydropower operators move decisively from incremental improvements to structural transformation. The drivers become more pronounced with every year: more volatile power markets, less predictable hydrology, and a rapidly rising share of intermittent renewables; all delivering tangible operational and financial results at scale.
As this trend unfolds, the conversation has shifted. Hydropower is no longer only about steady baseload, it’s about flexibility, speed, and foresight. Below we unpack what stood out in 2025 and why we think 2026 will go even further.
Hydropower in 2025: What Stood Out
A performance upswing under tougher conditions
After the drought-depressed figures of 2023, global generation rose strongly in 2024 and momentum carried into 2025. Operators achieved higher output with tighter margins for error, thanks to faster dispatch and smarter scheduling. Pumped storage hydropower (PSH) continued to scale where market design rewards flexibility, yet the story of 2025 is broader: digitalization turned from pilot to practice, and operations teams gave increased attention to market and trading considerations.
Regional dynamics worth watching
East Asia continued to dominate PSH buildout, with highly automated, data-rich operations improving cycling efficiency and market participation.
Africa saw conventional hydropower additions delivering essential reliability and regional interconnection benefits, with digital tools helping run plants more sustainably and profitably.
Europe focused on modernization and storage - and the continent’s market redesigns strengthened the business case for flexibility, especially with a landmark change in trading intervals (more on that below).
Digitalization and AI moved from promise to practice
In 2025, digitalization wasn’t just a slide. It is fast moving to operations rooms and production planning. We saw:
Machine learning for inflow forecasting
ML models combining weather ensembles, catchment characteristics, snowpack indices, and real-time sensor data are now routinely outperforming legacy statistical baselines - particularly during shoulder seasons when hydrology is most uncertain. The result: tighter forecast error bands, less spill, and more confident market positions.
Automated production planning and dispatch
Cascades and multi-reservoir systems benefit most. Constraint-aware solutions now co-optimize water value, unit technical limits, environmental flow requirements, and market price forecasts - often recomputing every 5–15 minutes. Operators report higher revenues and lower imbalance penalties when optimization runs continuously against updated forecasts.
Digital Twin Simulation - from operations to refurbishment and greenfield investment
Digital twins have moved beyond buzzwords into practical deployment. In 2025, operators are using high-fidelity virtual models to:
Optimize daily operations: Simulate turbine behavior under different flow conditions, predict wear and tear, and test dispatch strategies before applying them in real time.
Plan refurbishment: Evaluate how component and topology upgrades will impact efficiency and flexibility without shutting down the plant. This reduces downtime and improves ROI on modernization projects.
De-risk greenfield investments: Developers run full financial year simulations, testing hydrology variability, unit performance, and market scenarios before committing capital. This approach helps anticipate climate-driven extremes and validate design and hardware choices early.
What this means for 2026: Expect wider deployment of hybrid optimization (hydro + batteries), digital twin simulations for production planning and investing decisions. The tech stack is getting standardized; the gains are becoming repeatable.
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Markets accelerated and hydropower had to keep pace
Volatility is here to stay. With higher penetrations of wind and solar, price curves look like roller coasters: deeper troughs, sharper peaks, and more frequent reversals. 2025 cemented two realities:
- The 15-minute shift in Europe changed hydropower’s playbook
Shorter intervals mean more granular bids, tighter ramping compliance, and a heightened focus on forecast accuracy at sub-hourly horizons. Plants with automated bid creation and dispatch tracking gain a structural edge. Manual processes struggle to keep up. - Intraday is now core business, not a side activity
Intraday liquidity has risen across several markets, and hydropower’s ability to shape output within the day is increasingly monetized. That said, success depends on three things:- Real-time signals - prices, constraints, and physical statuses must stream into decision making in real-time.
- Fast optimization - Data must translate into a production plan and then a bid file in good time for optimal water management.
- Risk discipline - clear guardrails for minimum reservoir levels, environmental flows, and outage risk must be built into decision making.
What this means for 2026: More markets will increase granularity across products, and ancillary services will grow in value. Hydropower operators will formalize “trader-in-the-loop” models—where algorithms propose, humans validate.
Climate variability forced planning to be agile across all horizons
Hydrology used to have patterns you could plan around at a seasonal level. In 2025, operators told us the seasons felt less predictable and timelines for climate events shifted or lengthened. That changed how planning happens:
- Short-term (hours–days):
Operators agreed on rapid reaction protocols - operational playbooks for sudden inflow deviations, market price spikes, or grid constraints. Reactions to black-swan events were streamlined: adjust gates, reschedule units, rebalance reservoirs. - Medium-term (weeks–months):
Dynamic planning became routine. Instead of assuming one expected trajectory, planners use real-time and historical inflow data to identify inflow patterns and keep their production planning and forecasting dynamic, and informed by each hourly data point. - Long-term (seasons):
Resilience work accelerated: sediment management, weather pattern tracking, maintenance scheduling, and seasonal event management. Water value methodologies now explicitly account for price, water and energy scarcity, and volatility, not just average flow.
What this means for 2026: Expect broader adoption of water value calculation models.
What We Expect in 2026
- Digitalization becomes ground 0
Digitalization and operational agility are no longer optional. They are the minimum viable capabilities to thrive in faster markets and more variable climates. Process automation, ML inflow forecasting, and automated production planning will be standard for competitive operators. The differentiator moves to portfolio‑level orchestration and ancillary market trading. - Hybrid flexibility rises
More hydro + battery hybrids to buffer short-duration volatility while preserving hydraulic assets for multi-hour energy shifting and ancillary services. Hydropower’s identity has evolved: beyond reliable generation, it’s the flexibility champion shaping the daily (and sub-daily) balance of renewable systems. - Market design continues rewarding speed and depth
Sub-hourly intervals, enhanced ancillary service procurement, and clearer remuneration for flexibility will expand. Plants that model scarcity pricing and congestion dynamics will lead. Winning operators blend automation with expert oversight, align planning horizons, and measure value not only in MWh but in availability, response speed, and risk-adjusted returns. - Climate adaptation mainstreams
Investments in sediment management, multi-level intakes, and flood/draught resilience will move from project-by-project to programmatic portfolios.
Operator Playbook: How Leaders Are Winning Right Now
Leading operators in 2025 are closing the loop between forecasting and trading by integrating hydrology machine-learning models directly into bid construction. Each forecast update now triggers a recalculation of dispatch and a refreshed bid, creating a rolling cycle that keeps decisions aligned with real-time conditions. By tracking how forecast errors impact profit and loss, these teams continuously improve their models and sharpen their competitive edge.
Automation is taking over routine tasks, allowing algorithms to handle continuous re-optimization and constraint checks while human expertise focuses on strategy—setting risk limits, prioritizing reservoirs, and defining market targets. The principle is clear: guardrails, not handcuffs. Automation proposes; operators approve.
Speed has become a defining capability. Real-time data pipelines stream prices, unit states, and flow conditions into unified decision engines, enabling optimization cycles that align perfectly with market intervals. Contingency scenarios are pre-discussed and ready to deploy, so plans can switch instantly when unexpected events occur.
Resilience is now hardwired into operations. Leaders combine short-term agility with medium-term ensemble planning and long-term civil upgrades. Environmental compliance logic is embedded within optimization models so that profitability and sustainability reinforce each other rather than conflict. Predictive maintenance ensures that critical assets remain available when volatility peaks, securing both reliability and revenue.
Conclusion
This year we joined 61 new hydropower projects, expanding our reach across continents and deepening our work in digital optimization, forecasting, and operational automation. The hands-on learnings from these projects make us genuinely excited for 2026. We anticipate even more innovation and digitalization in hydropower operations, and we aim to remain at the forefront of this transition.
We’d love to hear from you:
- What’s the next capability you’re prioritizing - faster bids, better inflow ML, hybrid flexibility, or resilience upgrades?
- Which market changes are shaping your dispatch strategy most?
Let’s keep the conversation going and keep hydropower at the forefront of a faster, smarter, more resilient energy system.
