The global small hydropower market size is projected to hit around USD 4.5 billion by 2030 and is anticipated to grow at a CAGR of 2.6% from 2022 to 2030.

Small hydropower plant (SHP) generates electricity by utilizing moving water. The categorization of hydropower plant differs from country to country, as there is no standard consensus among nations and regions. For instance, in the European Union, France, Norway, France, Italy, and Spain accept 10 MW as the upper limit for SHP installed capacity, while countries such as China and Canada consider 50 MW as the maximum capacity.

The small hydropower plant offers a several benefits such as eco-friendly, cost effective, reliable, and long lifespan. Moreover, setting up these plants require low capital investment, as they require minimum reservoirs and construction facilities.

According to Vision Research Report, the global small hydropower market size is projected to hit around USD 4.5 billion by 2030 and is anticipated to grow at a CAGR of 2.6% from 2022 to 2030.

Major Drivers

The consumption of electricity has been increasing significantly across the globe for the last few years due to rapid industrialization & urbanization and strong economic growth. The increase in demand for electricity and stringent norms & government regulations to minimize carbon emissions from the power sector are compelling companies to introduce highly effective and pollution-free energy generation methods. Small hydropower is a prominent alternative to fossil fuel, as these plants utilize moving water for power generation.

Small hydropower is primarily employed in isolated regions. Small hydropower is a suitable option to generate sustainable as well as inexpensive energy in developing and rural areas due to its low investment costs, versatility, and renewable nature. Thus, increase in harnessing of hydropower resources across the globe is expected to drive the global small hydropower market during the forecast period.

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Asia Pacific Leads Small Hydropower Market

Asia Pacific dominated the global small hydropower market in 2020. China held a major share of the small hydropower market in the region in 2020. The dominance of China in the small hydropower market in Asia Pacific can be ascribed to low investment and risk, long service life, consistent profit, and low operation cost of a small hydropower plant. Furthermore, abundant availability of hydropower resources, along with increase in efforts in utilization of renewable technologies to reduce carbon emissions is also a major factor attracting investment for the development of small hydropower resources across the country. The small hydropower market in North America is anticipated to expand during the forecast period, owing to ongoing investments in the development of small hydropower plants, primarily in the U.S., in order to cater to a rise in the demand for electricity. In 2019, the U.S. Department of Energy announced to invest US$ 24.9 Mn to drive innovative, industry-led technology solutions to advance the marine and hydrokinetics industry, and increase in ability of hydropower to serve as a flexible grid resource.

The small hydropower market in Europe is estimated to expand during the forecast period, owing to the introduction of several incentives to promote the adoption of renewable technologies. For instance, in December 2019, the European Commission and a consortium of 19 partners launched the four-year XFLEX HYDRO (Hydropower Extending Power System Flexibility) project at the ongoing United Nations (UN) Climate Change Conference (COP25) in Madrid, Spain. Turkey accounted for a major share of the small hydropower market in the region in 2019. Turkey held hydropower capacity potential of 6,500 MW in 2019.

Capacity Insights

Based on the capacity, the segment is segregated as up to 1 MW and 1 to 10 MW. The up to 1 MW segment dominated the global market with a share of 58% in 2020. The up to 1 MW segment is projected to be the most abundant small hydropower during the projected period. This can be ascribed to the small-scale decentralized projects being installed in emerging nations, especially in APAC, for its rural electrification.

Asia Pacific dominated the up to 1 MW segment of the market. China, India, and Australia accounted for a noteworthy share of the small hydropower project installations across the region. Hence, the demand for small hydropower is driven by growing investments in rural electrification in these economies.

The 1 - 10 MW segment is anticipated to grow at the fastest CAGR of 3% from 2021 to 2030. This is attributed to the installation of small hydropower in various countries across the world.

Application Insights

The market, by application, is segmented into electromechanical equipment, power infrastructure, civil construction, and others, including structural, engineering, project development, environmental mitigation, and management. The civil construction segment held the largest share of 32.2% in 2019 and is expected to continue its lead during the forecast period.

Civil construction accounted for a substantial share of project costs across all small hydropower projects (SHPPs). Therefore, to correctly lead the water onto the turbines and to raise the water head level, civil constructions such as weirs (dams) are being built. Hence, these simple constructions are more economical than large hydropower plant projects.

The power infrastructure application segment is supposed to exhibit the fastest CAGR of 3.5% from 2021 to 2030. There is a growing need for modernization of small hydropower projects to boost electricity generation and extend the assets life to handle the growing demand for electricity.

Type Insights

Based on the type, the market is segregated as mini-hydropower and micro hydropower. Micro hydropower dominated the market and accounted for 57.9% share in 2020 and is expected to maintain its lead in the future. Micro hydropower projects range from 5 kW - 100 kW that can provide power for a rural industry or small community in remote areas away from the grid area.

The mini-hydropower segment is supposed to register the fastest CAGR of 2.8% from 2021 to 2030. Installations of the mini-hydropower segment are certainly driven by rural electrification. In the APAC region, China led the way in installing small hydropower projects for rural electrification. In various developed countries such as Norway and the U.S., the installation capacity is expected to upsurge the renewable energy share in the countries' energy mix.

Key Players

The global small hydropower market is dominated by global players. Thus, the global small hydropower market is consolidated. Prominent players operating in the global small hydropower market include Alstom S.A., Voith GmbH, ANDRITZ HYDRO GmbH, BC Hydro, and StatKraft AS, Agder Energi AS, Ontario Power Generation Inc., Alstom, Siemens AG, BC Hydro, and Fortum Oyj. Market players adopt various strategies such as mergers & acquisitions, investments in new projects, and technological innovations in order to boost their share in the global small hydropower market.

Market Segmentation

By Capacity: Up to 1 MW, 1 to 10 MW

By Type: Mini Hydropower, Micro Hydropower

By Application: Electromechanical equipment, Power Infrastructure, Civil Construction, Others

By Region: North America, Europe, Asia Pacific, Central and South America, MEA

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