Global Small Hydropower Market
Small Hydropower Market size was valued at USD 2.6 billion in 2023 and is projected to reach a valuation of USD 3.9 billion by the end of 2035, rising at a CAGR of 3.4% during the forecast period, i.e., 2024-2035. In 2024, the industry size of small hydropower is estimated at USD 2.7 billion.
The small hydropower market is expanding at a stable rate as countries try to increase the share of renewable energy sources in their electric power generation mixes and improve rural electrification. Small hydropower systems generally refer to those systems that do not exceed 10 MW, and are well suited for the countries that are endowed with adequate water supplies. To increase their net-zero targets and bolster energy security, governments, and private sectors are turning to small hydropower adoption. In March 2024, two projects were inaugurated in Nigeria by the European Union in the energy sector, including a small hydropower project launched under a USD 9.49 million contract aimed at helping Nigeria switch to green energy.
Another factor that is proving influential in small hydropower market is technology which is making the process more efficient and cutting costs at the same time. In April 2023, Shizen Energy of Japan commissioned a 2.2 MW Pelton turbine to the Kuroda Hydroelectric Power Plant in cooperation with GUGLER. This was the first megawatt-class turbine installation in Japan for GUGLER, and showed how innovation played a crucial part in increasing the power of hydropower. The given developments have pointed out the significance of partnership and technology in the improvement of small hydropower plants internationally.
Growth Drivers
Challenges
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Base Year |
2023 |
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Forecast Year |
2024-2035 |
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CAGR |
3.4% |
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Base Year Market Size (2023) |
USD 2.6 billion |
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Forecast Year Market Size (2035) |
USD 3.9 billion |
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Regional Scope |
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Capacity (Upto 1 MW, 1-10 MW)
The 1-10 MW segment in the small hydropower market is poised to exhibit CAGR of over 4% till 2035, due to the rising need for mid-reach renewable power. These systems are suitable for regional grids, the extension of electricity to rural areas, and industrial use because they do not require many installations. For example, Meghalaya successfully commissioned the 7.5 MW Ganol Hydro Project in January 2023 and demonstrated that mid-range capacities can ensure local energy self-sufficiency. They help in mitigating grid stress situations and integrating more diverse sources of electricity in the development parts of the world. Realization of the scale and cost-of-capital constraints in scaling hydropower requires careful consideration of this segment’s growth.
Component (Civil Construction, Power Infrastructure, Electromechanical Equipment, Others)
The electromechanical equipment segment is likely to dominate small hydropower market share of over 38.2% by 2035, due to its significance in the generation of power in the system. Sophisticated turbines, generators, and controls are necessary to enhance the efficiency of the hydropower plant and the plant’s durability. In April 2024, Voith Hydro acquired modern equipment that would be used in the production of parts that are used to build hydropower plants to show its strategic direction towards modernization. The emphasis on the modernization of equipment correlates with the tendencies observed worldwide regarding improving the performance of plants and their emissions. The increasing requirement for effective hydropower solutions is anticipated to increase investments in the electromechanical segment globally.
Our in-depth analysis of the global small hydropower market includes the following segments:
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Capacity |
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Component |
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Type |
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End user |
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Asia Pacific Market Statistics
Asia Pacific small hydropower market is poised to register around 3.9% growth till 2035, with factors like growing investments in renewable energy and a need for small hydropower. The region is moving quickly to clean energy to reduce carbon emissions and play a part in the overall decarbonization process. Small hydropower is gradually presenting itself as a key solution to the difficulties of rural electrification and power supply scarcity. This increase is due to the shift in the region to employ sustainable growth as a way to foster economic growth.
India plays a pivotal role in the small hydropower market in Asia Pacific. As per a report, the total installed capacity of small hydropower in India was 5003.25 MW in March 2024. In the fiscal year 2023-24, all these small hydropower plants together generated 9,485.04 million units (MUs) of electricity. These installations are equally important for improving rural electrification as well as supplying stable energy to the unserved regions. The strategic vision of the National Electricity Plan to diversify and reduce reliance on fossil fuels in India also plans to increase the hydropower capacity.
Hydropower development is witnessing rapid advancements in China due to large-scale investment and policies. In May 2024, the National Development and Reform Commission (NDRC) endorsed the construction of a hydropower plant in the Xizang autonomous region that will cost USD 8.43 billion. The plant is expected to produce more than 11, 280 GWh of electricity per year according to the power output of each plant. This project shows China’s efforts to increase renewable energy plants, secure energy sources, and control greenhouse gas emissions. Hydropower continues to be an important part of the country’s renewable energy mix and strengthens its position in the global small hydropower market.
North America Market Analysis
North America small hydropower market size is expected to reach USD 531 million by 2035, primarily due to the rising number of investments going into renewable energy and the modernization of infrastructure in the region. The strategy of carbon emission decrease and improvement of the stability of grid has stimulated the development of the small hydropower market in the region. Small hydropower has been identified as vital in the development of additional power sources, especially in rural areas that cannot support the big power plants. This consistent increase underlines the need to preserve sustainable energy to support North America future climate targets.
The U.S. is one of the leading countries in North America small hydropower market, with its total number of hydropower plants being 2,252 and the total installed capacity of hydropower plants being 80.58 GW in 2024. While evaluating the hydropower position in the overall renewable energy generation mix in 2022, the hydropower share of renewable electricity generation was at 28.7 percent, which is significant. To sustain this output, the modernization of existing facilities and the construction of small hydropower plants are crucial. Furthermore, the increase in the generation of small hydropower will additionally contribute to more electrification of rural areas and enhance energy security.
Hydropower further remains a dominant source of renewable energy in Canada in its continued bid to shift to green energy sources. In April 2024, Ontario Power Generation (OPG) signed a memorandum to invest in the modernization of five hydropower plants in the Niagara area during the next fifteen years with the help of GE Vernova. This initiative shows Canada approach to bringing new life to aging structures to increase productivity and production. These upgrades shall enhance the stability of the grids and decrease emissions, further enhancing the country’s position as a leader in sustainable energy development. Hydropower is central to Canada’s plan for achieving the goals of reducing emissions and extending power to isolated regions.
The small hydropower market is relatively fragmented, with key companies aiming at technology development and M&A strategies. The market is highly concentrated, with Voith GmbH, ANDRITZ, and Siemens Energy being the key players in the small hydropower market that offer turbines or control systems. In April 2023, Shizen Energy partnered with GUGLER to set up a 2.2 MW Pelton turbine in the Kuroda Hydroelectric Power Plant in Japan, first introducing a megawatt-class turbine in its country. This is a significant achievement for the plant as it enhances Japan renewable power capacity to show the country’s dedication to investing in more green energy. The collaboration demonstrates the production competition in the small hydropower market and the pressure companies experience as they seek to use the latest technologies to meet society’s increasing energy needs.
Here are some leading companies in the small hydropower market:
Author Credits: Dhruv Bhatia
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