The global hydropower installed capacity reached 1308 GW in 2019 and is anticipated to install approximately 1498 GW by 2026, at a CAGR of 1.98% during 2021-2026. The outbreak of COVID-19 is expected to significantly impact the global hydropower market due to disruption in the international supply chain and a reduction in investment for the upcoming projects. Although annual additions correspond to the driven market, some projects are expected to be delayed due to COVID-19 related lockdown measures. Factors such as increasing number of new hydropower projects backed by government support and the rising demand for reliable electricity is expected to drive the market during the forecast period. However, negative environmental consequences of hydropower projects are likely to hinder the market growth during the forecast period.
Key Market Trends
Large Hydropower (Greater Than 100 MW) to Dominate the Market
- Large hydropower (greater than 100 MW) is likely to be the largest segment owing to the factors such as increasing investment in large hydropower and pumped storage projects coupled with several major countriesâ€™ efforts to reach the renewable energy targets and shift towards cleaner energy sources.
- Emerging technological trends aimed at increasing hydropower generation is expected to provide significant opportunities for hydropower market in the coming years.
- Asia-Pacific is expected to be the fastest growing market during the forecast period, with majority of the demand coming from countries like China, India, and Japan etc.
Asia-Pacific to Dominate the Market
- Large-scale hydropower is a form of renewable energy generation derived from flowing water, which is used to drive large water turbines. In order to generate large amounts of hydroelectricity for cities, lakes, reservoirs and dams are needed to store and regulate water for later release for power generation, irrigation, domestic or industrial use. Since large-scale hydropower facilities can easily be turned on and off, hydropower has become more reliable than most other energy sources for meeting electricity peak demands throughout the day.
- Conventional hydroelectric dams, pumped storage, and run-of-the-river are the different types of large-scale hydropower plants across the globe.
- The levelized cost of energy (LCOE) of large-scale hydropower projects at high-performing sites can be as low as USD 0.020/kWh, while the average costs of the new capacity added in 2019 was slightly less than USD 0.050/kWh. For large-scale hydropower projects, the weighted average LCOE of new projects added over the past decade (2009-2019) in China and Brazil was USD 0.040/kWh, around USD 0.080/kWh in North America, and USD 0.120/kWh in Europe.
- China, Brazil, United States, Canada, India, and Japan are the major countries in the deployment of large-scale hydropower projects across the globe. Factors such as a shift towards cleaner energy sources and plans to increase the share of renewable energy in the total power generation mix across all the major developed and emerging economies across the globe are expected to drive the large hydropower segment during the forecast period.
- In addition to the major hydropower countries, smaller countries from the Southeast Asia region are also moving forward at a rapid pace in the large hydropower development. Increasing demand for energy to boost the Mekong economies has attracted riparian countries' keen interest in hydropower development. This is evidenced by extensive investment in hydropower projects across the region over the last few decades. For instance, in January 2019, the Lao government announced that it is planning to complete 12 hydropower dam projects in 2019 with a total capacity of 1,950 MW. So far, 20 dams have been inspected, while the rest 50 are expected to be checked by 2021. Hydropower development is a central priority to the Laos government's plan to export around 20,000 MW of electricity to its neighboring countries by 2030.
- Therefore, based on the above-mentioned factors, large hydropower (greater than 100 MW) segment is expected to dominate the global hydropower market during the forecast period.
- The Asia-Pacific region has dominated the hydropower market in recent years and is likely to maintain its dominance during the forecast period. As of 2019, China is the global leader in the hydropower market, accounting for almost 27.2% of the global hydropower installed capacity.
- Chinaâ€™s hydropower era began in the 1950s. In 2019, the countryâ€™s hydropower installed capacity reached 356.4 GW, representing a slight increase of approximately 1.2% compared to the previous yearâ€™s value.
- Although the growth in 2019 hydropower capacity is small, the country had added 4.17 GW of hydropower (the second largest addition after Brazil) in 2019. Wunonglong (900 MW), Dahuaqiao (920 MW), and Fengman Reconstruction Project (200 MW) were the major hydropower projects completed in 2019. Among all the renewable energy sources in the country, hydropower accounted for more than 43% of the installed renewable energy capacity in the country in 2019. Hydropower accounted for approximately 17% of Chinaâ€™s power generation mix in 2019.
- Moreover, in March 2019, the Indian government announced a draft of measures to support hydropower development, including the declaration of large hydropower (>25MW) as a renewable energy source. This move is expected to enable new, large projects to benefit from the non-solar Renewable Purchase Obligation, which mandates that regional utilities purchase a portion of their electricity from hydropower.
- As of Q2 2020, there are no plans to develop large hydropower plants in Japan. However, in April 2020, the Japanese government included renewable energy in its JPY 108 trillion economic stimulus package to improve the countryâ€™s economy during the COVID-19 crisis. The measure has been included under the Development of Resilient Economic Structures section, with almost USD 1 billion to support corporate PPAs to facilitate the development of onsite renewables. It may also cover part of the upfront installation costs.
- Therefore, based on the above-mentioned factors, Asia-Pacific is expected to dominate the global hydropower market during the forecast period.
The hydropower market is moderately fragmented. Some of the major players includes GE Renewable Energy, Siemens Energy AG, Andritz AG, Voith GmbH & Co. KGaA, and PJSC RusHydro.
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