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

The Japan hydropower market is expected to record a CAGR of less than 2% during the forecast period, 2022 - 2027. During the Covid-19 pandemic, the hydropower market has not witnessed any significant impact, as there were no major plans to develop large hydropower plants in Japan in 2020. However, in April 2020, the government of Japan has included renewable energy in its JPY 108 trillion economic stimulus package to improve its economy during the COVID-19 crisis. Factors such as the strong government support for renewables, increasing environmental concerns, and the surging demand for clean and reliable power are expected to drive the market. However, alternative renewable power sources such as solar are anticipated to hinder the market growth during the forecast period.

Key Highlights

• The shift toward clean energy and the strong support from the government is expected to drive the hydropower market during the forecast period in Japan.
• The emerging technology trends that support and enhance hydropower generation are expected to provide a vital opportunity for the hydropower market in the coming years.
• The increasing penetration of alternative renewable power sources such as solar is anticipated to restrain and slow down the hydropower market growth during the forecast period.

Key Market Trends

Shift Towards Clean Energy and Supportive Government Initiatives to Drive the Market

• In Japan, the hydropower installed capacity has remained sluggish for several years. In 2011, Japan's total installed hydropower capacity was 27.77 GW, and it was only around 28.12 GW in 2021. However, as of 2021, hydropower was the largest renewable electricity source in Japan after solar. The total installed hydropower capacity (excluding pumped storage) was 28.12 GW, accounting for about 25% of Japan's total renewable power sources.
• Factors such as shifting towards cleaner energy sources and the government's ambitious targets to increase the share of renewable energy in the total power generation mix are expected to drive the Japanese hydropower market during the forecast period.
• For instance, in 2021, the Japanese government has set an ambitious target for renewable energy in the nation's electricity mix by 2030 to tackle climate change and achieve its 2050 carbon-neutral goal. Under the plan, Japan aims to achieve 36-38% of power supplies from renewables by 2030; of the total 38% of the renewable power target, 11% is expected to come from hydropower.
• In June 2020, the renewable power unit of Japan's largest utility, TEPCO, announced its plans to spend more than JPY 2 trillion over the next ten years to boost its green generation by about 70%. Hydropower generation and offshore wind are the unit's primary focus, which is expected to see a decent development in the large-scale hydropower segment over the forecast period.
• Moreover, according to the Renewable Energy Institute in Japan, the Levelized cost of energy (LCOE) per kilowatt-hour of hydropower in Japan in 2020 was JPY 9.1/kWh which is expected to reach JPY 8.8/kWh by 2025, and JPY 7.9/kWh by 2030. This drop in LCOE of hydropower is expected to boost the market in the country.
• Hence, with the above-mentioned factors, the hydropower market is expected to see a considerable development during the forecast period.

Increasing Penetration of Alternative Renewable Power Sources to Restrain the Market

• The rapid adoption of alternative renewable electricity sources such as solar power in Japan is expected to impact and restrain the hydropower market growth during the forecast period. Solar energy has witnessed massive growth in Japan over the past several years.
• In 2021, the total installed solar power capacity reached more than 74 GW, more than 117% compared to 2015. Likewise, wind and bioenergy have also seen a significant development of approximately 59% (wind) and 142% (bioenergy) during the same period. This is primarily due to the declining cost, steadily improving technology and better economies of scale than hydropower.
• On the other hand, the hydropower installed capacity in Japan has remained largely constant since 2015 due to an increasing focus on alternative clean energy sources, lack of significant investment in the hydropower sector, and lack of viable locations for hydropower development. This scenario in the hydropower market is expected to continue and restrain during the forecast period.
• Moreover, the country aims to increase its solar power generation target by 14 to 16% by 2030 and is investing heavily in the solar power sector. For instance, as of December 2021, a 480 MW Solar PV project is planned to be developed in Nagasaki, Japan. The solar power project is expected to generate 515,000MWh electricity and supply enough clean energy to power 173,000 households. The project cost is around USD 1,800 million and is expected to be commissioned by 2023. Such projects are likely to see significant development in the country's renewable energy sector. These developments are expected to restrain the hydropower market growth during the forecast.
• Hence, owing to the above points, the increasing penetration and developments in alternative renewable power generation sources are expected to restrain the hydropower market growth during the forecast.

Competitive Landscape

The Japan hydropower market is moderately fragmented. Some of the major players include Hitachi Mitsubishi Hydro Corporation, General Electric Company, Toshiba Corporation, Renewable Japan Co., Ltd., and J-POWER Group.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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