HYDROPOWER MARKET ANALYSIS

Hydropower, also known as water power, is an energy source that utilizes fast-running, falling water to generate electricity. It uses two types of energy - gravitational potential and kinetic energy. Hydropower is a sustainable form of energy production. It works by harnessing the force of moving water. Moving water is part of nature's cycle. Waterfalls and rises and condenses into clouds in the atmosphere. Flowing water through these clouds causes the turbine blades to spin, turning a generator. Power is then transferred from the generator through a transmission line to homes and businesses. As long as the water is flowing, hydropower is a renewable source of energy. Compared to wind and solar energy, hydropower is clean and renewable.

Market Statistics:

The global hydropower market was valued at US$ 201.4 Bn in 2021 and is forecast to reach a value of US$ 337.7 Bn by 2030 at a CAGR of 5.9% between 2022 and 2030.

Asia Pacific held dominant position in the global hydropower market in 2021, accounting for 38.78% share in terms of volume, followed by North America and Europe, respectively.

Figure 1. Global Hydropower Market Value Share (%), By Region, 2021

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Recent Developments:

1. In February 2021, GE Renewable Energy completes a new 500 MW Lower Kaleköy Hydropower plant in Turkey. The project includes 3 x 155 MW Francis turbines and related equipment for the Lower Kaleköy project
2. In October 2019, Siemens announced the name of the new independent energy company – Siemens Energy AG, which combines the oil and gas, power generation, and power transmission segments
3. In February 2021, ANDRITZ announced that they had received an order from TIWAG-Tiroler Wasserkraft AG to supply two motor-generators for the new Kühtai 2 pumped storage power plant in Austria.

Market Drivers:

Growing government initiatives to increase the number of hydropower is projected to drive growth of the hydropower market. For instance, in March 2019, the Indian government announced that the large hydropower projects to be declared as renewable energy. Previously, only projects under 25 MW were declared renewable, but now all hydropower comes under this description. The Union Cabinet, chaired by Prime Minister Narendra Modi, also declared large hydropower projects as part of non-solar Renewable Purchase Obligation. In addition to this, in January 2021, the government cleared eight hydropower projects of 144 MW on the Indus River and its tributaries in Ladakh.

Rise in demand for reliable source of electricity is again expected to boost the market growth. For instance, hydropower is a proven renewable energy resource generated and used in all regions for over a century. Hydropower facilities can quickly go from zero power to maximum output, making them exceptionally good at meeting rapidly changing demands for electricity throughout the day.

By size, global hydropower market is segmented into Large Hydropower ( >100 MW), Small Hydropower ( <10 MW) and Other Sizes (10-100 MW) segments. Among all of these segment Large Hydropower ( >100 MW) held highest market share of 60.34% in 2021 and is expected to keep its dominance during forecast period.

Figure 2. Global Hydropower Market Value Share (%), By Size, 2021

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Market Restraints:

Negative environmental impact of hydropower is expected to restrict the market growth. Most hydroelectric power plants have a dam and a reservoir. These structures may obstruct fish migration and affect their populations. Operating a hydroelectric power plant may also change the water temperature and the river's flow. These changes are likely to harm native plants and animals in the river and on land. Moreover, flooding land for a hydroelectric reservoir has an extreme environmental impact; it destroys the forest, agricultural land, and scenic lands.

High initial cost of hydroelectric infrastructure is another key factor projected to hamper the market growth.

Market Opportunities:

Recent innovation in hydropower such as hydropower flexibility, digitalization, storage, variable speed turbines, generators with current-controlled rotors, and novel small-scale and fish-friendly technologies is projected to serve major market growth opportunities over the forecast period.

Growing demand for renewable source of energy is again expected to play significant role in the overall development of market. According to the Center for Climate and Energy Solutions, globally, renewables made up 29 percent of electricity generation in 2020, much of it from hydropower (16.8 percent).

Market Trends/Key Takeaways:

Rapid urbanization and industrialization across developing region has led to surge in demand for electricity. Government worldwide are looking for alternative to reduce the dependency on fossil fuel for power generation. This is boosting installation of hydropower across developing region. Thus, fostering market growth.

Countries such as Japan, Vietnam, and South Korea have been investing heavily in hydropower sector, which is further projected to accelerate growth of the market. For instance, in October 2018, Japan International Cooperation Agency (JICA) signed an agreement with the Government of India to provide Official Development Assistance (ODA) loan of 5,497 Bn Japanese yen (approximately INR 315 Crore) for the ‘Project for Renovation and Modernisation of Umiam-Umtru Stage III Hydroelectric Power Station" in Meghalaya.

Competitive Landscape:

General Electric Company, Siemens AG, Andritz AG, Voith GmbH & Co. KGaA, China Yangtze Power Co. Ltd, PJSC RusHydro, Électricité de France SA (EDF), and Iberdrola SA.

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