Output From U.S. Hydropower Plants Rebounds in 2026, Structural Risks Persist

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Written by Aaron Studwell, Ph.D., Energy Meteorologist & Analyst for IIR News Intelligence (Sugar Land, Texas)

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Summary

U.S. hydropower generation is expected to rebound in 2026, but warm winter temperatures and early snowmelt will impact long-term hydro levels. Persistent snow drought conditions and hydrologic variability will constrain output and increase reliance on gas-fired generation and imports across Western power markets.

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EIA Points to Moderate Recovery

Recent projections from the U.S. Energy Information Administration (EIA) point to a moderate rebound in U.S. hydropower generation in 2026. However, for energy markets, the more important signal is that the improving output does not resolve underlying constraints. Longer-term hydrologic deficits and increasing precipitation variability across the western United States continue to impact system reliability. Industrial Info Resources is tracking 451 active capital hydropower projects across the United States, worth $151 billion. Subscribers to the Industrial Info Resources Global Market Intelligence (GMI) Power Project Database can view a list of detailed project reports.

Hydropower Output Set to Recover, But Not Fully Normalize

According to the latest EIA Today in Energy analysis, U.S. hydropower generation is expected to increase by about 5% in 2026, bringing total output to approximately 259 billion kilowatt-hours (kWh).

This follows a modest 1.7% recovery in 2025 after historically low output in 2024. Even with that improvement, generation is still projected to remain about 1.8% below the 10-year average. This reflects the lingering effects of recent snow drought conditions in key western basins.

Hydropower is expected to account for approximately 6% of total U.S. electricity generation in 2026. While it remains a meaningful component of the overall generation mix, its variability continues to present both short- and long-term challenges.

By the Numbers

• 259 billion kWh: U.S. hydropower generation forecast for 2026
• 5%: Forecasted year-over-year increase in 2026 output
• 1.8%: Generation percentage below the 10-year average Despite improving conditions, recovery remains incomplete. Snowpack deficits and uneven precipitation patterns have limited reservoir replenishment, capping potential output even in a year with more favorable weather.

Warm Winter, Early Snowmelt Limit Western Hydropower Outlook

Precipitation across much of the western United States has been near normal to start 2026. However, unusually warm temperatures have led to widespread snow drought conditions. A March heat wave accelerated snowmelt across California, the Southwest, and parts of the Northwest, reducing the amount of water available for sustained runoff.

In the Northwest, where the Columbia River Basin accounts for more than one-third of U.S. hydropower capacity, these conditions have broader implications for the regional energy markets. Hydropower generation in the Northwest and Rockies is forecast to approach 125 billion kWh. This represents a 17% year-on-year increase but is still about 4% below the 10-year average.

While strong atmospheric river events boosted hydropower generation this winter, the early loss of snowpack will likely yield tighter water availability later in the season. This will force an increased reliance on other generation sources, such as natural gas.

Snowpack, Basin Hydrology Drive Outlook

The primary driver behind this variability remains the condition of western snowpack and runoff timing. The western U.S. has experienced repeated snow drought conditions over the past five to six years, within a longer-term drying trend that has persisted for more than two decades.

Hydropower generation depends not just on how much precipitation falls, but on how and when water enters the system. A strong snowpack that melts gradually supports sustained generation, while rapid melt or rainfall-dominated events reduce storage efficiency and limit long-duration output.

This introduces a lag effect within the system. Even when precipitation improves, reservoir levels and downstream generation potential may take time to recover. As a result, short-term gains do not necessarily indicate a return to normal operating conditions.

Implications for Western Power Markets and Grid Balance

For western power markets, hydropower plays a critical balancing role alongside wind and solar generation. When hydro output is below normal, the system often compensates through increased reliance on natural gas-fired generation or imports from neighboring regions.

The projected increase in hydropower generation in 2026 should provide some relief, particularly during summer peak demand. However, the incomplete recovery suggests that system flexibility will remain limited, contributing to tighter supply-demand balances during periods of high load or renewable variability.

In markets where hydropower is deeply integrated, such as California and the Pacific Northwest, even modest deviations from expected output can influence the regional dynamic. This includes impacts on wholesale prices, dispatch decisions, and transmission flows.

For the California Independent Systems Operator (CAISO), reduced hydro availability can tighten reserve margins and increase reliance on gas-fired generation during evening peak periods. In the Pacific Northwest, lower hydro output can shift the region from a net exporter to a net importer of power, altering flows into California and supporting firmer regional pricing.

A System Increasingly Defined by Variability

The broader trend emerging from the EIA outlook is one of increasing variability rather than simple recovery. Hydropower output remains dependent on short-term weather patterns, layered on top of longer-term hydrologic constraints.

This creates a more complex operating environment for grid operators and market participants. Strong hydrologic years can still occur, but they are increasingly interspersed with weaker periods tied to snow drought and shifting precipitation patterns.

At the same time, the growth of wind and solar generation is increasing the importance of flexible resources like hydropower, raising the stakes when hydro availability falls short of expectations.

The result is a system where hydropower remains essential but less predictable. Hydrologic conditions are no longer a background factor--they are an active driver of supply variability, pricing risk, and operational decision-making across the western grid.

Key Takeaways

• Warm winter temperatures and early snowmelt are reducing effective runoff and limiting seasonal water supply.
• The western U.S. remains in a recurring snow drought regime, embedded within a longer-term drying trend.
• Hydrologic timing, not just total precipitation, will drive generation variability and system performance.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).