Hydropower Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Type (Mini Hydropower, Micro Hydropower), By Capacity (Above 100 MW, Under 10 MW, Others), By Component (Civil Construction, Electromechanical Equipment, Electric, Power Infrastructure, Others), By End-User (Industrial, Utility, Others), By Region, By Competition, 2018-2028

Published Date: December - 2024 | Publisher: MIR | No of Pages: 320 | Industry: Power | Format: Report available in PDF / Excel Format

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Hydropower Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Type (Mini Hydropower, Micro Hydropower), By Capacity (Above 100 MW, Under 10 MW, Others), By Component (Civil Construction, Electromechanical Equipment, Electric, Power Infrastructure, Others), By End-User (Industrial, Utility, Others), By Region, By Competition, 2018-2028

Forecast Period	2024-2028
Market Size (2022)	USD 220.08 billion
CAGR (2023-2028)	5.19%
Fastest Growing Segment	Utility
Largest Market	Asia Pacific

Market Overview

Global Hydropower Market has valued at USD 220.08 billion in 2022 and is anticipated to project robust growth in the forecast period with a CAGR of 5.19% through 2028.

The hydropower market refers to the global industry encompassing the generation, distribution, and utilization of electricity produced from the kinetic energy of flowing water. It revolves around harnessing the power of water, typically in the form of rivers, dams, and reservoirs, to generate renewable and sustainable energy.

Hydropower is one of the oldest and most widely adopted methods of electricity generation, with a rich history dating back centuries. It involves the conversion of water's potential energy into electrical energy through turbines and generators. Hydropower projects vary in size, from small-scale installations serving localized communities to large, multi-megawatt facilities supplying power to entire regions.

Key components of the hydropower market include

Hydropower PlantsThese facilities are designed to capture the energy of moving water and convert it into electricity. They can be categorized into various types, such as run-of-river, reservoir, and pumped storage hydropower plants, each with its unique characteristics and applications.

InfrastructureHydropower projects often require extensive infrastructure, including dams, penstocks, turbines, generators, and transmission lines, to efficiently deliver electricity to consumers.

End-UsersThe electricity generated by hydropower is distributed to various end-users, including residential, commercial, industrial, and utility sectors, contributing to the diversification of energy sources and meeting growing electricity demands.

Environmental ConsiderationsThe hydropower market is increasingly focused on minimizing environmental impacts, such as habitat disruption and water resource management, while maximizing energy production and efficiency.

Policy and RegulationGovernment policies, incentives, and regulatory frameworks influence the growth and development of the hydropower market, promoting renewable energy adoption, environmental sustainability, and grid integration.

The hydropower market continues to evolve, driven by a global shift toward renewable energy sources, energy security concerns, and efforts to reduce greenhouse gas emissions. It plays a vital role in addressing the world's growing energy needs while contributing to environmental sustainability and climate change mitigation.

Key Market Drivers

Renewable Energy Transition and Decarbonization Efforts

The global hydropower market is being driven by the worldwide transition toward renewable energy sources and ambitious decarbonization goals. As countries seek to reduce their reliance on fossil fuels and mitigate the impacts of climate change, hydropower stands out as a clean and sustainable energy option. It produces electricity without emitting greenhouse gases, making it a crucial component of clean energy portfolios.

Governments and organizations worldwide are setting targets to increase the share of renewable energy in their energy mix. For instance, the European Union aims to achieve 32% renewable energy consumption by 2030. Hydropower plays a pivotal role in helping nations meet these targets, making it a driver of growth in the global market.

The integration of hydropower into national energy strategies is further supported by international agreements like the Paris Agreement, which encourages countries to reduce their carbon emissions. As nations work to fulfill their commitments under such agreements, the development of new hydropower projects and the modernization of existing ones become paramount drivers in the global hydropower market.

Energy Security and Diversification of Energy Sources

Energy security is a critical driver in the global hydropower market, especially in regions where dependence on fossil fuels or energy imports poses significant risks. Hydropower provides a reliable and domestically sourced energy supply, reducing vulnerability to energy price fluctuations and supply disruptions.

Countries view hydropower as a means to diversify their energy sources and reduce their dependence on imported fossil fuels, enhancing their energy security. Hydropower projects, both large and small, contribute to a stable energy supply, which is essential for economic growth and national security.

In addition, hydropower's ability to provide energy storage through pumped storage hydroelectric plants adds to its significance in maintaining grid stability and ensuring a consistent power supply, particularly in areas prone to extreme weather events or geopolitical tensions.

Economic Development and Job Creation

The development of hydropower projects generates substantial economic benefits, including job creation and infrastructure development. These projects typically require a significant workforce for construction, operation, and maintenance, providing employment opportunities in both urban and rural areas.

Hydropower investments stimulate local economies by supporting industries such as construction, manufacturing, and services. Additionally, hydropower projects often lead to the development of new infrastructure, including roads, transmission lines, and water management systems, which can have positive ripple effects on regional development.

For many developing countries, hydropower projects represent a source of revenue and foreign investment, helping to finance other critical infrastructure projects and improve overall living standards. As such, the economic development potential of hydropower is a compelling driver for its growth on a global scale.

Technological Advancements and Innovation

Technological advancements are driving the global hydropower market by enhancing the efficiency and environmental sustainability of hydropower generation. Innovations in turbine design, materials, and control systems have led to increased energy output and reduced environmental impacts.

For instance, advanced fish-friendly turbine designs and fish passage technologies have mitigated the environmental impact on aquatic ecosystems, addressing a key concern associated with traditional hydropower dams. Additionally, the integration of digital technologies, such as artificial intelligence and remote monitoring, has improved the operational efficiency and reliability of hydropower facilities.

Pumped storage hydroelectric plants are benefiting from advancements in energy storage technologies, contributing to grid stability by efficiently storing and releasing electricity during peak demand periods. These technological innovations drive investments in the hydropower sector and make it a more competitive option in the global energy landscape.

Climate Resilience and Adaptation

Hydropower's role in climate resilience and adaptation is becoming increasingly critical as the world faces more frequent and severe climate-related challenges, such as droughts and extreme weather events. Hydropower infrastructure, including dams and reservoirs, can provide water storage and flood control capabilities, helping communities manage and adapt to changing climate conditions. In regions with water scarcity, hydropower projects are often designed to prioritize water resource management, ensuring a reliable water supply for agriculture, drinking water, and energy generation. These adaptations enhance the resilience of communities to climate-related risks.

Furthermore, hydropower contributes to reducing greenhouse gas emissions by displacing fossil fuel-based power generation, thus aligning with climate adaptation and mitigation strategies at both national and international levels. This climate resilience and mitigation potential make hydropower an essential driver in the global effort to combat climate change.

Grid Integration and Energy Transition

Hydropower plays a vital role in integrating intermittent renewable energy sources, such as wind and solar, into the electricity grid. Its ability to provide baseload power and grid stability complements the variability of renewables, ensuring a reliable electricity supply.

As countries increase their reliance on intermittent renewables to meet their clean energy targets, the need for flexible energy sources like hydropower grows. Hydropower can quickly respond to fluctuations in electricity demand, making it an ideal partner for wind and solar power.

Moreover, the flexibility of hydropower allows for the rapid adjustment of output, which is valuable in managing grid stability during sudden changes in supply and demand. This capability is especially relevant as more nations aim to achieve high levels of renewable energy penetration.

In conclusion, the global hydropower market is driven by a combination of factors, including the transition to renewable energy, energy security, economic development, technological advancements, climate resilience, and its role in grid integration. As the world seeks sustainable and reliable energy solutions, hydropower continues to be a crucial player in meeting these challenges and achieving a cleaner, more secure energy future.

Government Policies are Likely to Propel the Market

Renewable Portfolio Standards (RPS)

Renewable Portfolio Standards (RPS), also known as Renewable Energy Standards (RES) or Renewable Energy Portfolio Standards (REPS), are a prominent policy driver in the global hydropower market. These policies require utilities and energy providers to generate a specific percentage of their electricity from renewable sources, including hydropower.

RPS policies vary from country to country and state to state, but they all share the goal of promoting clean energy production. Hydropower, as a reliable and established renewable energy source, often plays a significant role in helping regions meet their RPS targets. Governments set specific benchmarks and timelines for increasing the share of renewables in the energy mix, spurring investment in new hydropower projects and the modernization of existing ones.

One example is the U.S., where various states have implemented RPS policies, each with its own targets and compliance mechanisms. These policies incentivize the growth of hydropower capacity, ensuring a steady market for this clean energy source.

Feed-in Tariffs (FiTs)

Feed-in Tariffs (FiTs) are another effective government policy that promotes the growth of the global hydropower market. Under FiT programs, governments offer fixed, premium rates for electricity generated from renewable sources, guaranteeing long-term contracts to renewable energy producers, including hydropower facilities.

FiTs provide stable and attractive returns on investment for hydropower project developers and investors. These policies are particularly beneficial for smaller-scale hydropower projects that may face financial uncertainties without such incentives. By offering favorable pricing structures, governments encourage the development of both large and small hydropower projects, contributing to the diversification of the energy mix.

Germany is known for its successful FiT program, which has driven significant growth in renewable energy capacity, including hydropower. Other countries, including Spain and Japan, have also implemented FiTs to stimulate investment in clean energy sources.

Tax Incentives and Investment Credits

Tax incentives and investment credits are essential government policies that provide financial benefits to hydropower project developers and investors. These incentives help offset the initial capital costs of constructing and upgrading hydropower facilities, making these projects more financially viable.

Common tax incentives include Investment Tax Credits (ITCs) and Production Tax Credits (PTCs). ITCs provide a percentage-based reduction in the upfront cost of building new hydropower plants or modernizing existing ones. PTCs offer tax credits for each megawatt-hour of electricity generated from qualifying renewable sources, including hydropower.

In the United States, the federal government has utilized both ITCs and PTCs to encourage investment in renewable energy projects, boosting the growth of the hydropower sector.

Environmental Regulations and Licensing Processes

Environmental regulations and licensing processes play a pivotal role in shaping the global hydropower market. Governments implement stringent regulations to ensure the responsible development and operation of hydropower projects, safeguarding the environment and aquatic ecosystems.

These regulations mandate comprehensive environmental impact assessments (EIAs) and require project developers to implement measures for mitigating ecological disturbances. For example, fish-friendly turbine designs and fish passage systems are often required to protect aquatic life during hydropower operations.

Governments also establish licensing processes that involve public consultation, permitting, and compliance with environmental standards. These processes provide a framework for assessing the feasibility and sustainability of hydropower projects while addressing stakeholder concerns.

The licensing and regulatory frameworks differ by country and region, but they all aim to strike a balance between energy development and environmental protection. By ensuring responsible hydropower development, governments facilitate the growth of the sector while maintaining environmental integrity.

Incentives for Small and Micro Hydropower

To encourage the development of small and micro hydropower projects, many governments implement specific incentives and policies tailored to these scales of facilities. Small and micro hydropower are often considered ideal for rural electrification, off-grid communities, and decentralized energy generation.

Government policies for small and micro hydropower may include grants, subsidies, preferential tariffs, and simplified permitting processes. These incentives make it more financially feasible for local communities and small enterprises to invest in hydropower projects, contributing to regional development and energy access.

In India, for example, the Ministry of New and Renewable Energy (MNRE) has implemented various programs and incentives to promote small hydropower projects and electrify remote areas.

Hydropower Research and Development Funding

Government funding for hydropower research and development (R&D) is a critical policy driver that fosters innovation and technological advancements in the sector. By allocating resources to R&D initiatives, governments support the development of more efficient and environmentally friendly hydropower technologies.

These R&D efforts focus on various aspects of hydropower, including turbine design, fish passage systems, sediment management, and grid integration. The goal is to enhance the performance and sustainability of hydropower projects while minimizing environmental impacts.

In the United States, the Department of Energy's Water Power Technologies Office provides funding for research projects aimed at advancing hydropower technologies. This funding promotes innovation and helps hydropower remain a competitive and viable clean energy source in the face of evolving energy challenges.

In conclusion, government policies play a pivotal role in driving the global hydropower market by promoting renewable energy adoption, offering financial incentives, regulating environmental aspects, supporting small-scale projects, and funding research and development. These policies collectively contribute to the sustainable growth of the hydropower sector as a clean and reliable source of electricity.

Key Market Challenges

Environmental and Ecological Concerns

One of the foremost challenges facing the global hydropower market is the significant environmental and ecological impact associated with the construction and operation of hydropower projects. While hydropower is a renewable and low-carbon energy source, it can have adverse effects on aquatic ecosystems, water quality, and local habitats. These concerns have led to increased scrutiny and opposition to new hydropower developments.

Habitat Disruption and Species Impacts

Hydropower projects often involve the construction of dams and reservoirs, which can alter river and aquatic habitats. The flooding of large areas for reservoirs can submerge terrestrial ecosystems, displacing wildlife and altering natural migration patterns for fish species. Many fish species, such as salmon and trout, rely on free-flowing rivers to spawn, and the presence of dams can disrupt their life cycles.

Water Quality and Sediment Management

Reservoirs formed by hydropower dams can trap sediment and alter natural sediment transport in rivers. This can lead to downstream erosion and adversely affect aquatic ecosystems. Additionally, stagnant water in reservoirs can result in water quality issues, such as increased nutrient levels and algal blooms, which can harm aquatic life.

Fish Migration and Passage

One of the critical ecological challenges of hydropower is the impact on fish migration. Dams can block fish from reaching their spawning grounds, which can have detrimental effects on fish populations. To address this challenge, fish-friendly turbine designs and fish passage systems are being developed, but retrofitting existing dams can be costly and complex.

Balancing Energy Production and Ecosystem Conservation

Balancing the need for clean energy generation with the conservation of natural ecosystems is a persistent challenge in the hydropower sector. Striking this balance requires careful planning, innovative technologies, and adaptive management strategies.

Addressing these environmental and ecological challenges in the global hydropower market necessitates a holistic approach that considers the ecological and social impacts of hydropower projects. Governments, project developers, and environmental organizations are increasingly working together to find solutions that minimize harm to ecosystems while maximizing the benefits of clean energy production.

Aging Infrastructure and Retrofitting

Another significant challenge in the global hydropower market is the aging infrastructure of existing hydropower facilities. Many hydropower plants were constructed several decades ago and are now in need of upgrades and modernization to maintain their efficiency and reliability. Retrofitting these facilities poses both technical and financial challenges.

Aging Turbines and Equipment

One of the primary technical challenges is the aging of turbines, generators, and other critical equipment. Over time, these components experience wear and tear, leading to reduced efficiency and increased maintenance needs. Replacing or refurbishing turbines and generators can be a complex and costly process.

Environmental Compliance and Regulatory Updates

As environmental regulations evolve to address ecological concerns associated with hydropower, older facilities may need to undergo retrofits to meet modern environmental standards. This can involve implementing fish passage systems, improving water quality management, and enhancing sediment control measures.

Balancing Retrofit Costs with Energy Production

One of the financial challenges is balancing the costs of retrofitting with the expected increase in energy production and revenue. Retrofit projects can require substantial investments, and it may take several years to recoup these costs through increased energy generation and efficiency gains.

Infrastructure Resilience and Climate Adaptation

In the face of changing climate conditions, hydropower facilities must be made more resilient to extreme weather events, including floods and droughts. Retrofitting to improve resilience can add additional costs and engineering complexity.

To address the challenges of aging infrastructure and retrofitting in the global hydropower market, governments, utility companies, and project developers are increasingly investing in modernization efforts. These efforts include the adoption of advanced technologies, improved maintenance practices, and compliance with evolving environmental regulations. Retrofit projects are essential for extending the lifespan of existing hydropower assets and ensuring their continued contribution to clean energy generation.

Segmental Insights

Above 100 MW Insights

The Above 100 MW segment had the largest market share in 2022 & expected to maintain it in the forecast period. Large hydropower plants benefit from economies of scale, which means that as the capacity of a plant increases, the cost per unit of electricity generated tends to decrease. This makes larger projects financially attractive. The significant upfront investment required for dam construction and other infrastructure can be justified by the substantial energy output and revenue potential of large-scale projects.

Hydropower plants with capacities above 100 MW typically provide a stable and reliable energy supply. They are well-suited for baseload power generation, meaning they can run continuously to meet the minimum energy demand of a region. This reliability is essential for supporting the grid and ensuring a consistent power supply, which is especially valuable in regions with high energy demand.

Large hydropower plants play a crucial role in grid stability. They can quickly respond to changes in electricity demand, providing grid operators with a valuable tool to balance supply and demand. The ability to ramp up or down power production swiftly helps stabilize the grid during fluctuations in renewable energy sources like wind and solar.

Some large-scale hydropower plants, such as pumped storage hydroelectric plants, offer energy storage capabilities. They can store excess energy during periods of low demand and release it when demand is high, acting as virtual batteries for the grid. Energy storage is increasingly important as the grid incorporates more intermittent renewable energy sources.

Large hydropower plants have the potential to generate a significant amount of electricity, which translates into higher revenue for project developers and utilities. The substantial energy output can offset the initial capital investment and operational costs over the long term.

Some regions with favorable topography and water resources are well-suited for the development of large hydropower projects. These projects can utilize the natural flow of rivers and create substantial reservoirs to store water for energy generation. While the construction of large dams and reservoirs can have environmental impacts, they are often considered more manageable when compared to numerous smaller-scale projects.

Utility Insights

The Utility segment had the largest market share in 2022 and is projected to experience rapid growth during the forecast period. Utilities are responsible for meeting the electricity needs of a large and diverse customer base, including residential, commercial, and industrial consumers. To serve such a significant demand, utilities require power sources with substantial generating capacity. Large-scale hydropower plants, often exceeding 100 MW, provide the necessary scale to meet the electricity demand of utilities efficiently. Many hydropower plants, particularly those with higher capacities, are capable of providing baseload power. Baseload power sources are essential for utilities because they can operate continuously to meet the minimum electricity demand, ensuring a stable and reliable power supply. Hydropower's ability to function as baseload power complements other intermittent renewable sources like wind and solar. Large hydropower plants contribute significantly to grid stability and reliability. They can quickly respond to fluctuations in electricity demand, helping utilities balance supply and demand on the grid. This capability is vital for maintaining a stable and resilient electrical infrastructure, particularly in regions with variable renewable energy sources. The development and maintenance of hydropower infrastructure, including dams, reservoirs, and transmission lines, often require substantial capital investment. Utilities, with their financial resources and long-term planning capabilities, are well-suited to undertake such investments. These investments ensure the reliable operation of hydropower facilities and the delivery of electricity to consumers. Many utilities are actively working to diversify their energy portfolios and increase the share of renewable energy sources. Hydropower is considered a reliable and established renewable energy source that aligns with sustainability goals and regulatory requirements. Its consistent generation capacity makes it an attractive option for utilities aiming to reduce their carbon footprint. In various regions, governments and regulatory authorities often incentivize utilities to invest in renewable energy sources like hydropower through favorable policies, subsidies, and renewable energy targets. These policies encourage utilities to prioritize the development and expansion of hydropower projects. Hydropower has been a primary source of electricity generation for many decades, and utilities have historically played a central role in its development. The long-standing presence of hydropower in utility portfolios has solidified its position as a dominant energy source in this sector.

Regional Insights

Asia Pacific

Asia Pacific is the largest market for hydropower, accounting for over 40% of the global market share. China is the largest hydropower producer in the world, followed by India and Brazil.

The growth of the hydropower market in Asia Pacific is being driven by a number of factors, including

Rapid economic growthThe Asia Pacific region is experiencing rapid economic growth, which is leading to an increase in energy demand. Hydropower is well-suited to meet this growing demand, as it is a large-scale and reliable source of energy.

Government supportGovernments in the Asia Pacific region are providing financial and regulatory support to promote the development of renewable energy, including hydropower. This support is helping to reduce the cost of hydropower projects and making them more attractive to investors.

Abundant hydropower resourcesThe Asia Pacific region has abundant hydropower resources. This is due to the region's mountainous regions and large rivers.

North America

North America is the second-largest market for hydropower. The United States is the largest hydropower producer in the region, followed by Canada.

The growth of the hydropower market in North America is being driven by a number of factors, including

Increasing demand for renewable energyThere is a growing demand for renewable energy in North America, due to concerns about climate change and the need to reduce greenhouse gas emissions. Hydropower is a clean and reliable source of renewable energy.

Government supportGovernments in North America are providing financial and regulatory support to promote the development of renewable energy, including hydropower. This support is helping to reduce the cost of hydropower projects and making them more attractive to investors.

Aging hydropower infrastructureMuch of the hydropower infrastructure in North America is aging and needs to be replaced or upgraded. This is creating opportunities for new hydropower projects.

Recent Developments

In February 2021, Isagen SA, a Colombian electricity provider, secured a contract to acquire two smaller-scale hydropower plants with a combined capacity of 19.9 MW in the Antioquia region. Through this project, the company has successfully boosted its production of renewable energy, involving an investment of approximately USD 194.8 million.

Key Market Players

China Three Gorges Corporation
Statkraft AS.
GE Renewable Energy
Voith Group
Andritz AG
Siemens Energy AG
ALSTOM Holdings
ABB Ltd
Hitachi Ltd
Toshiba Corporation

By Type	By Capacity	By Component	By End-User	By Region
Mini Hydropower Micro Hydropower	Above 100 MW Under 10 MW Others	Civil Construction Electromechanical Equipment Electric Power Infrastructure Others	Industrial Utility Others	North America Europe Asia Pacific South America Middle East & Africa