Europe Hydropower Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Europe Hydropower market is expected to rise at a CAGR of more than 1% during the forecast period of 2020-2025. Factors such as increasing investments in hydropower plants and increasing demand for renewable energy are likely to drive the market. However, the high initial cost of construction is expected to restrain the growth of the market.

Key Highlights

• Pumped hydro storage is expected to witness significant growth in the segment throughout the forecast period. It is among the only commercially viable renewable storage energy mechanism and therefore is expected to play a vital role in the transition mix to renewable energy.
• Countries in the region are focusing on reducing their carbon emission under the Paris climate accord, and hydropower is considered to be among the major proponents for the transition. This is expected to provide opportunity to the market players.
• Russia is expected to be the largest market for the region's hydropower market due to increasing investment in the sector and the highest installed capacity of hydropower energy in the region.

Key Market Trends

Pumped Storage to Witness Significant Growth

• Pumped storage is an essential solution for grid reliability, providing one of the few large-scale, affordable means of storing and deploying electricity. Pumped storage projects store and generate energy by moving water between two reservoirs at different elevations. This technology may be used to provide storage of renewable energy that may be used when electricity is required.
• In the UK, in 2020, the refurbishment of the 360MW Ffestiniog pumped storage plant is moving ahead, with further pumped hydro planned in the UK and Ireland. Pumped storage is seen as a reliable source of renewable energy, which can be used as a storage mechanism to reduce the unpredictability of renewable sources like wind and solar.
• In 2019, In Switzerland, construction of the 900 MW Nant de Drance pumped storage plant is being constructed, the project is expected to generate approximately 2.5 billion kWh of energy a year. More such projects are being built with the regions like the Baltics and central Europe that are taking the lead to create more pumped hydro storage. An increase in investment is expected to aid the growth of the market.
• A relatively new approach for developing pumped storage projects is to locate the reservoirs in areas that are physically separated from existing river systems. After the initial filling of the reservoirs, the only additional water requirement is minimal operational make-up water required to offset seepage losses. By avoiding existing complex aquatic systems entirely, these types of projects have the potential to reduce significantly the most significant marine impacts associated with project development. By becoming more eco-friendly, the system is expected to shed its harmful effects and may be chosen biodiversity stressed areas, thereby aiding the growth of the market.
• Pumped storage installed capacity increased in the Europe region, remained stagnant at 29,690 megawatts in the 2018-2019 period. The installed capacity is expected to increase in the forecast period due to further investments in the sector.
• Hence, the pumped storage is expected to grow significantly in the forecast period due to rising investments and new technological advances in the field.

Russia to Dominate the Market

• Russian proposes to increase the share of renewable energy in power generation to 2.5% by 2024. A unique capacity payment mechanism for new renewable energy capacity in solar, wind, and small hydro projects have been approved, with an assured 12% return on investment. This is expected to incentivize the market players to create small hydro projects which may aid the growth of the market.
• In 2019, A 1.27 MW pilot solar power plant is expected to be installed at a hydropower plant owned and operated by PJSC RusHydro in the Russian Far East - the 320 MW Nizhny-Bureyskaya facility. The solar plant is intended to reduce the electricity cost for the power plant's own needs while unlocking additional output by the hydroelectric plant. Combined solar and hydro plants are making the hydropower projects more profitable as more energy can be generated from the same area. An increase in the profits for the market players and changing business models are expected to aid the growth of the market.
• Russia's hydropower operators are making substantial investments in their existing stations. In 2018, description EN+ group International PJSC announced significant upgrades to both the 662 MW Irkutsk and the 6,000 MW Krasnoyarsk hydropower stations as part of their new energy modernization program. Increasing modernization is expected to boost eh growth of the market.
• The installed hydropower capacity in the country remained stagnant in the 2018-2019 period at 53,935 megawatts, in 2019. However, new hydro projects are being installed in the country, which is expected to boost the hydropower market.
• Hence, Russia is expected to dominate the Europe hydropower market due to significant investments, new business models, and governmental incentives.

Competitive Landscape

The Europe Hydropower market is partially fragmented. Some of the key players in this market include Electricite de France SA, Andritz AG, PJSC RusHydro, Statkraft AS, Enel Green Power S.p.A.

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