The current production of water energy in Poland is much lower than the theoretical and technical potential. The aim of the article is to analyse the current state of hydropower in Poland as well as the prospects and conditions for development. Poland's total technical hydropower potential is estimated at 12,000–14,000 GWh/year, but currently, approx. 20% of this potential is used. The considerations undertaken in the study concern, for example, pumped-storage power plants and the development of small hydropower plants. Hydropower plants are not only important from the point of view of electricity production and storage, but also fulfill many other functions, including the general social, which is an essential element of the implementation of the concept of sustainable development. The analyses show that the hydropower sector in Poland may be an important element of low-carbon energy and an important element of energy security. Increasing the volume of electricity production from hydropower by 5% will contribute to the growth in CO2 reduction by 140,702 tons. The stabilization function of the power system in Poland is also significant.