Small Hydropower Market - Growth, Trends, and Forecasts (2023-2028)

Key Highlights

• Over the medium term, factors like increasing investment in the small hydropower market and increasing demand for electricity are expected to drive the market.
• On the other hand, an unstable energy supply significantly hinders the market growth.
• Nevertheless, integrating IoT with hydropower and the positive outlook toward small hydropower dams to sustain lives in rural communities are expected to create enormous opportunities for the Small Hydropower Market.
• Asia-Pacific is expected to be the largest market in the forecast period due to the high demand for electricity in the region and rapidly developing technology in the segment. It is expected to facilitate further growth.

Small Hydropower Market Trends

The 1-10 MW Segment Expected to Dominate the Market

• During the forecast period, the 1-10 MW segment is expected to be the most abundant small hydropower market in capacity. This higher proportion of 1-10 MW plants (nearly 80%) can be attributed to small-scale decentralized projects for rural electrification deployed in developing countries, particularly in Asia.
• The Asia Pacific region dominated the 1-10 MW category of the small hydropower market, with India and China accounting for most installations. These countries' increasing investments in rural electrification increase the market for small hydropower.
• Developing economies, such as India, and China, regions in Southeast Asia and Uzbekistan, and countries in Europe, like Norway, are giving equal priority to small hydropower projects along with other renewable energy sources.
• Additionally, the installed capacity of hydropower increased by 8% between 2017 and 2021. In 2021 the installed capacity was at 1360 GW compared to 1270.8 GW in 2017. Small hydropower holds a considerable share in the before-mentioned installed capacity. This increase in growth rate is expected to continue during the forecasted period.
• For small hydropower projects (1-10 MW), the weighted average Levelized cost of energy (LCO for new projects in 2022 ranged between Brazil and China was USD 0.080/kWh, USD 0.120/kWh in Europe USD 0.040/kWh, around North America and. Smaller hydropower ventures (1-10 MW) had the weighted average LCOE for new sites extend between USD 0.130/kWh in Europe, USD 0.040/kWh in China, and 0.060/kWh in India and Brazil.
• For instance, in January 2022, Statkraft commissioned two small hydropower plants in Norway with a total installed capacity of 8.5 MW Vesle Kjela power plant and the 8.5 MW Storlia power plant. The Vesle Kjela plant is located at the top of the Tokke/Vinje regulated watercourse and uses the head from the regulated Kjelavatn Lake in the Haukelifjell mountain area. The Storlia plant uses a head of 75 m between the Bjoreio River and Sysenvatn Lake in the municipality of Eidfjord as part of the Sima regulation.
• Therefore, based on the abovementioned factors, the 1-10 MW capacity segment is expected to dominate the small global hydropower market during the forecast period.

Asia-Pacific Expected to Dominate the Market

• The Asia-Pacific region has dominated the small hydropower (SHP) market in recent years and is likely to maintain its dominance during the forecast period. As of 2021, Asia-Pacific continues to have the largest installed capacity and potential for small hydropower up to 10 MW.
• Major countries such as India and China are giving equal priority to small hydropower projects along with other renewable energy sources. For instance, India has set a national target of achieving 5 GW of small hydropower capacity by 2022, under overall targets of achieving a cumulative grid-connected renewable energy capacity of 175 GW. The country has already installed 4.8 GW of small hydropower capacity by the end of 2021.
• Furthermore, Vietnam published Power Development Plan 8 (PDP8) in 2021, which targets a share of 75% for renewable energy by 2045. The total capacity of small hydropower sources is targeted to reach 4,800 MW in 2025, 5,000 MW in 2030, and nearly 6,000 MW by 2045. The government plans to invest USD 12-13 billion in the power sector, and hydropower would account for 17.7% -19.5% of the total installed capacity. The total installed capacity for the whole power system will come to around 130,370-143,839 MW by 2030.
• For instance, in April 2022, Flovel Energy announced the signing of the contract for Nam Tang 3 HPP (2 x 8.75 MW) in Vietnam with Horizontal Francis units. Truong Thanh Investment Construction Company Limited is developing the project. Nam Tang 3 Hydro Project is located in Yen Bai Province, Vietnam, and is the company’s eighth Project in the Yen Bai province.
• Therefore, based on the above-mentioned factors, Asia-Pacific is expected to dominate the global small hydropower market during the forecast period.

Small Hydropower Market Competitor Analysis

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