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Hydropower, historically a cornerstone of Switzerland’s energy infrastructure, plays a vital role in balancing the intermittency of renewable energy sources such as wind and solar. Situated at the nexus of Europe’s energy system, Switzerland’s hydro dams act as colossal batteries, ensuring energy stability and flexibility for both national and European grids. However, climate change introduces significant challenges, including altered precipitation patterns, glacier retreats, and shifts in natural inflow seasonality. These changes affect the availability and predictability of water resources, directly impacting the operation and economic viability of hydropower infrastructure. This study addresses the implications of climate change for Switzerland’s hydropower sector, focusing on integrating hydrological variability into energy system models. The approach includes decoupling storage capacity from turbine operations, which enables a detailed assessment of seasonal and inter-annual variability in natural inflows. A refined modeling framework is developed, linking upstream hydro dam storage with downstream river production and incorporating climate-induced changes in water availability. The framework provides tools to evaluate strategies for optimizing turbine capacities, storage operations, and revenue under evolving hydrological conditions. The results demonstrate that traditional models, which embed seasonal variability within turbine constraints, fail to adequately represent the dynamics of inflows and their influence on hydropower operations. Explicit inflow seasonality and glacier melt dynamics enhance the model’s accuracy and operational applicability. This study identifies opportunities to increase the efficiency of hydropower systems by adapting storage and turbining strategies to projected inflow patterns, even under scenarios of reduced water availability. The findings reveal that optimized operations can mitigate the impacts of climate-induced variability while maintaining Switzerland’s contribution to regional energy stability. By demonstrating the potential for operational improvements, this study reinforces Switzerland’s capacity to achieve carbon neutrality by 2050, aligning with its commitments under the Paris Agreement. The optimized use of hydropower resources reduces reliance on imported energy and strengthens the security of supply while contributing to regional energy market stability. Furthermore, this study highlights the importance of integrating advanced hydrological models into broader energy system planning to address both immediate operational needs and long-term sustainability goals. The developed framework and its findings contribute to the global discourse on climate adaptation in energy systems. Hydropower systems in other regions facing similar challenges can benefit from the methodologies and insights presented. This work provides a foundation for further research on the interaction between hydropower and other ren