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

The South America hydropower market is expected to grow at a CAGR of more than 3.8% over the forecast period of 2020-2025. Factors, such as growing energy demand on account of the growing population coupled with the need to reduce reliance on fossil-fuel power generation is driving the hydropower market in South America. However, the high capital investment required to construct hydropower projects due to remaining economical sites being limited and to extra expenditures to address social and environmental impacts is expected to hinder the market growth over the forecast period.

Key Highlights

• Large hydropower segment is expected to dominate in the South America hydropower market during the forecast period.
• South America has a goal of reaching at least 70% of renewable energy, which includes small hydro, in electricity by 2030, which in turn is expected to provide an opportunity in the South America hydropower market in the future.
• Brazil is expected to dominate in the South America hydropower market over the forecast period.

Key Market Trends

Large Hydropower Segment is Expected to Dominate in the Market

• South America is home to four of the 10 largest hydropower plants in the world. In South America, it is the main source of power generation, accounting for around 53% of all electricity generated in 2019. Altogether, South America’s installed hydropower capacity totaled 176.7 GW at the end of 2019.
• Rising electricity prices and the participation of the private sector in hydro developments make hydropower an attractive option to meet growing demand in South America.
• According to the installed capacities, the major countries in the region include Brazil, Chile, Venezuela, and Columbia. Brazil possesses the largest power system in South America, generating 63.8% of all electricity from hydropower in 2019.
• Brazil, Paraguay, Venezuela, Colombia, and Argentina are the top hydroelectric generators in the region. With 14,000 MW, the Itaipú plant, located on the Paraná River, on the border between Brazil and Paraguay, is the second-largest hydroelectric plant in the world.
• Furthermore, Venezuela owns the world’s third largest operating hydroelectric plant, the 10,200 MW Guri Hydroelectric Plant on the Caroni River. The plant provides approximately 50000GW/h of energy to the country annually.
• Therefore, factors, such as upcoming large hydropower projects, along with plans to modernize the existing hydropower infrastructure are expected to create an impetus demand for the target market.

Brazil is Expected to Dominate the Market

• With 109.09 GW of installed hydropower capacity, Brazil is the top hydropower producer in South America as of 2019. Also, electricity generated from hydropower accounted for 399.3 TWh in 2019.
• Belo Monte hydropower project is an 11.2 GW run-of-the-river hydroelectric power plant located on the lower reach of the Xingu River, in northern Brazil. Fully commissioned in November 2019, it became the second biggest hydroelectric plant in Brazil after the Itaipu dam, and also the world’s fourth-biggest power plant.
• Apart from the Belo Monte hydropower project, Brazil is also home to the second-largest hydropower plant in the world, the 14 GW Itaipu hydroelectric project it jointly owns with Paraguay. The Itaipu hydropower project, which was opened in 1984, is located on the border between the two countries, along the Paraná River.
• Hence, with the largest installed capacity and owning the largest hydropower plants in the region, Brazil is expected to dominate in the market during the forecast period.

Competitive Landscape

The South America hydropower market is moderately fragmented. Some of the major key players in the market include Voith GmbH & Co KGaA, Norte Energia S.A., ContourGlobal plc, Centrais Eletricas Brasileiras SA, and Andritz AG.

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