A drag-type, vertical axis hydrokinetic turbine, partially embedded in a relatively shallow channel streambank, has been introduced to mitigate side wall erosion while producing energy [1,2]. The turbine is deployed at river mid-depth to minimize the interaction with erodible bed and biota, floating debris, ice and logs, and it operates at low tip speed ratio, which is relatively safe for fish. To quantify the turbine performance and wake characteristics and to improve its design, we conduct high fidelity large-eddy simulations (LES) in an open channel flow under different operating conditions and blade geometry. The complex turbine geometry, including the rotor and housing structure, are captured by the immersed boundary method, while the coupled level-set and volume-of-fluid method is used to compute the free surface. The resulting power coefficients at different tip speed ratios are compared against results obtained in a reduced scale prototype experiment, carried out at the St. Anthony Falls Laboratory, for validation. Quantifying the near wake flow structures generated by the turbine and their contribution to the side wall shear stresses, responsible for potential streambank erosion, has become a critical design component. Blade geometry is indeed improved through multiple iterations using the reduced shear stress at the stream bank and the increased power coefficient as a combined metric in our co-design strategy. We believe such a procedure is essential to pursue diffused renewable energy extraction with positive environmental impacts.