The energy transition has provided a framework for designing and implementing renewable energy policies in a growing number of countries in recent years. The discourse from both international energy organisations and national governments around these renewable energy policies highlights its -supposed- sustainable nature. However, much evidence shows that the 'renewable' component of these energy policies and the impact on local communities' sustainable development are much smaller than what is claimed in their discourse. This paper analyses the Mazar-Dudas hydropower project (Ecuador) case study, which is officially classified as a small renewable energy project (21 MW) with presumable low environmental impact and significant positive effects on sustainability of local communities. Although, the sustainability associated with hydropower production is one of the most controversial aspects of this energy production technology. Based on interviews with relevant actors and the subsequent thematic content analysis, the results highlight that the environmental impact is perceived as significant, contrary to what it is said in the official discourse. Additionally, the benefit-sharing scheme's effects of this hydropower project are far below expectations.