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Hydroelectricity, also known as hydropower, water power or hydro energy, is a type of renewable energy technology that converts the energy of moving water into electricity. Hydroelectric power is created when water (typically from reservoirs and dams) is channelled through water turbines. More than 160 countries generate some level of their electricity through hydropower.1
In 2023, hydroelectricity was one of Australia’s top three sources of renewable energy, along with solar and wind.2 Six per cent of all renewable energy generated in Australia in this period was through hydro. 2

Hydroelectricity is generated when a flow of water – usually from hydroelectric dams – is passed through turbines that can generate electricity. When the water moves through the turbine blades, it causes them to rotate, allowing the generator to convert the motion into electricity (hydropower).
Hydroelectric power generation works in five simple steps:
Like natural gas, solar power or even nuclear power, hydroelectricity is another energy source that can power homes and businesses across Australia. However, hydroelectricity is a renewable source that is better for the environment than its fossil fuel counterparts.
So, if your home or business uses any amount of electricity, there’s a chance it’s been (at least partially) generated through hydropower.
Hydroelectricity is considered a renewable energy source because it relies on the natural water cycle and gravity to generate electricity. While it does use turbines to convert energy, at its core, no fossil fuels are burnt to produce hydropower.
While hydroelectricity doesn’t generate pollution, hydropower plants and facilities can have negative impacts on the environment. For example, building a new plant may cause damage or destruction to natural ecosystems, change water temperatures and impact wildlife. Similarly, harvesting the materials used to build a plant can produce emissions, which may affect the environment.3
While in some specific cases it’s possible to have a home micro hydropower system, at a minimum, you would need access to a regular flowing water supply (e.g. a river or stream) and be willing to pay high upfront costs for the system. In most cases, hydropower is not a suitable form of energy generation for individual homes.
Instead, you could invest in a solar panel system if you’re looking to use more renewable energy at home or be less reliant on the electricity grid. You can also compare electricity plans as some may offer GreenPower plans, where electricity retailers will purchase accredited renewable energy on your behalf.
Currently in Australia, hydropower isn’t a main source of electricity, but we still have a number of ongoing hydropower projects.
Australia is home to multiple hydropower facilities. The biggest is the Snowy Scheme located in New South Wales that’s comprised of eight hydroelectric power stations that have a generation capacity of at least 5 megawatts (MW).4
Tasmania has the highest hydroelectricity generation, with approximately 80% of the state’s electricity coming from hydropower.5
PHES systems are an important part of hydroelectricity production, as they allow excess electricity to be stored and used when electricity demand is high. They’re similar to solar storage batteries, which allow you to store excess electricity your solar panels produce and use it when it’s most convenient for you.3

While hydroelectricity itself is an important renewable energy source of electricity production, pumped-storage hydropower systems are just as important. They work by allowing electricity to be stored and used when it’s needed most. Here’s how they work:
Being a renewable type of clean energy that doesn’t rely on fossil fuels, hydropower provides a multitude of benefits to electricity generation. By utilising hydropower instead of other fuel sources, we can see benefits that include:
Like with any form of electricity generation, there are disadvantages that come with developing hydroelectricity facilities:
As the Head of Energy at Compare the Market, Meredith O’Brien believes in educating Australian customers about the everchanging gas and electricity market so they can adjust their energy usage habits and get the most out of their energy plans.
Meredith has six years within the energy industry, following 15 years of experience in financial services and is currently studying a Master of Business Administration. Meredith is a dedicated customer advocate who is passionate about empowering Australians to find the right products to suit their needs by removing the confusion from comparing.
1 ARENA – Australian Government. Hydropower/Pumped Hydro Energy Storage. Updated April 2025. Accessed August 2025.
2 Department of Climate Change, Energy, the Environment and Water. Renewables. Updated 2024. Accessed August 2025.
3 U.S. Energy Information Administration. Hydropower explained. Updated November 2022. Accessed August 2025.
4 Snowy Hydro. The Snowy Scheme. Accessed August 2025.
5 AEMC. Tasmania. Accessed August 2025.