Small Hydropower (SHP) Market

Global Industry Analysis (2017 – 2020) – Growth Trends and Market Forecast (2021 – 2025)

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Small Hydropower Offers More Acceptable Alternatives

A continued global effort to reduce the carbon intensity of the electricity generation industry has led to widespread adoption of renewable energy policies internationally, over the past decade. Policies that have actively encouraged the growth of the hydropower market include feed-in-tariffs, reduced tax on hydro-construction and imports, subsidies, favourable power purchase agreements (PPAs), and the reduction of electricity export/import tariffs. Hydropower is the leading renewable source for electricity generation worldwide, supplying 71% of all the renewable electricity. The global hydropower installed capacity reached 1,308 gigawatts (GW) in 2019. Clean electricity generation from hydropower achieved a record 4,306 terawatt hours (TWh), the single greatest contribution from a renewable energy source in 2019.

The global hydropower market is witnessing a major shift towards small and run-of-river hydropower projects (i.e., under 25 MW capacity) that have been two of the more significant changes in the hydropower industry over the past two decades. The small hydropower (SHP) offers alternatives that do not require large areas of land to be flooded or for the flow of the river to be entirely disrupted, making them more palatable to the public and the political system. Currently, SHP represents only approximately 1.5% of the world’s total electricity installed capacity, 4.5% of the total renewable energy capacity, and 7.5% (for < 10 MW) of the total hydropower capacity.

Government Support Towards Harnessings Renewable Electricity to Fuel Adoption of SHP

The market for hydropower projects has gone through a phase of unprecedented growth, driven by growing demand for electricity in emerging economies and a vast quantity of undeveloped hydropower potential. Deployment of small-scale hydropower facilities is driven by a bold and ambitious green recovery plan involving significant investments into renewable technologies. Lower investment costs compared to large-scale hydropower remains the key driver for setting up small hydropower facilities in small rivers, streams or in the existing water supply networks such as drinking water, or wastewater networks.

Based on current renewable energy policies formed across nations, the share of renewable energy is expected to reach 20-22% of the global energy mix by 2030. Small hydropower is expected to play a key role in maximizing renewable energy-based power generation. The COVID-19 pandemic has emphasized the hydropower sector’s flexibility and its critical role in delivering clean, reliable, and affordable energy, especially during crises. Despite the appeal and benefits of SHP solutions, much of the world’s SHP potential remains untapped (approximately 65%). Several favourable policy frameworks and process optimisation strategies are in effect to promote SHP financing; however, a lot more still needs to be done to allow the available potential to be fully exploited.

Off-grid SHP to Grow at a Rapid Pace

Small hydropower plant has comparatively low power delivering limits. These are generally appropriate for individual requirements and are mostly off-grid based. Globally, the off-grid SHP solutions have surfaced as a core option to expand access to renewable energy in a timely and environmentally sustainable manner in remote areas not connected to central grid network.

The electricity demands of rural areas urgently need to be met so that the key development needs such as reliable lighting, better information and communication means, improved security, higher productivity, and more advanced product processing can be realised. In far off remote areas, with a low thickness of energy interest, SHP is particularly reasonable in light of the fact that it tends to be sent in different sizes of plans that are adjusted and appropriate to the specific local necessities and community needs.

Asia Pacific to Lead in Terms of Yearly Installed Capacity

Asia Pacific dominated the global small hydropower market in 2020. Globally, the top five countries – China, the US, Japan, Italy, Norway, and Turkey collectively account for more than 65% of the world’s total SHP installed capacity. China continues to dominate the global SHP landscape. In 2019, India overtook Japan as the fifth largest hydropower producer with its installed capacity now standing at over 50 GW. The Asian region continues to have the largest installed capacity for small hydropower projects. Europe has the highest percentage of SHP development, with Western Europe having 85% of its potential already developed. In the Americas, most of the SHP is concentrated in the Northern America, and South American region. In 2019, the Americas reached an SHP development rate of 15%. In the Middle East & Africa, by contrast with its large untapped hydropower potential, Africa has the smallest installed capacity at 37 GW. In Africa, small hydropower can be characterized as having a relatively low level of installed capacity but with a considerable potential for development.

Global Small Hydropower Market: Competitive Landscape

Some of the key players in the small hydropower market include Voith GmbH & Co. KGaA, Velcan Energy, Marubeni Corporation, GE, Siemens AG, ANDRITZ, Toshiba Corporation, Gilbert Gilkes & Gordon Ltd, BHEL, and Natel Energy. In January 2021, Voith GmbH & Co. KGaA won a contract for 8.6MW Vallabrègues small hydro plant, France. The project is expected to get operational in the next four years, with connection to the power grid scheduled by 2024.

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