The U.S. Department of Energy can reduce the financial danger of building massive hydropower projects by offering government-backed loans that protect against the high costs and uncertainties of construction. These guarantees act as a safety net during the vulnerable years between breaking ground and starting operations, according to the authors of the newly released report.
“By providing targeted loan guarantees or construction-risk backstops, the EDF can limit ratepayer exposure, improve state commission confidence, and enable utilities to move forward with projects that would otherwise stall.” The report adds that this support “addresses a defined risk window — the period between groundbreaking and commercial operation.”
Essentially, these government guarantees help projects get built by providing a financial cushion during the most difficult phase: the long gap between spending money on construction and actually making money from selling power. By stepping in to cover potential losses or delays, the government makes it easier for utility companies to commit to these expensive, long-term projects without worrying that the high initial costs will bankrupt them or lead to massive bill increases for consumers. This backing gives local regulators and private investors the confidence they need to approve and fund the massive infrastructure required to stabilize the power grid.
The report “Winning the AI Race: Tapping into Pumped Storage Hydropower” was published by the National Hydropower Association in March 2026. Produced by the association’s policy experts in Washington, D.C., the document provides a strategic roadmap for leveraging long-duration energy storage to meet the surging power demands of data centers and advanced manufacturing.
