Hydropower Generation Market Size & Outlook, 2024-2032

Market Overview

The global hydropower generation market size was valued at USD 226.92 billion in 2023. It is expected to reach USD 414.35 billion in 2032, growing at a CAGR of 6.91% over the forecast period (2024-32). There is a global shift towards renewable energy sources to reduce greenhouse gas emissions and combat climate change. Hydropower is a reliable and established renewable energy source that contributes significantly to global electricity generation.

Hydroelectric power is a form of renewable energy production that generates electricity by harnessing the flow of water in rivers and the water stored behind dams. Dam construction is a common component of large-scale hydropower projects. The potential energy in a water reservoir behind a hydropower dam is converted into mechanical energy, also known as kinetic energy. The kinetic energy of the water released from the dam is converted to mechanical energy using a turbine. The mechanical energy generated by the turbine is transferred to the generator, which is converted into electrical energy. After that, the electric energy goes through several transmission processes before being delivered to the consumer.

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Market Dynamics

Global Hydropower Generation Market Drivers

Intense Growth in the Need for Electricity in Emerging Markets to Boost Market Progress

The surge in demand for electricity across developing countries is the primary driver behind the market's growth for hydropower generation. The expansion is made possible by increased demand for heating and cooling systems in particular regions. Increased consumption of petroleum products ensured the continuation of global energy production. Renewable energy sources are responsible for approximately one-quarter of the expansion of global energy production. The rising proportion of global energy consumption comprised of electric power led to increased power demand. The most significant amount of renewable power is produced by hydroelectric plants worldwide. It is anticipated that the electricity demand will increase significantly due to the rise in the global population.

Rising Popularity of Clean Energy Worldwide to Favor Market Growth

Energy generation through renewable sources is being actively encouraged by establishing several regulations. The market for hydropower generation is favorably impacted due to these regulations. For example, the India National Renewable Energy Act 2015 encourages the design of energy systems powered by renewable energy sources, intending to eliminate reliance on fossil fuels. These regulations are being laid in place to guarantee the energy supply's safety and reduce pollutants locally and globally. The demand for clean energy is anticipated to fuel the market's growth during the forecasted period.

Global Hydropower Generation Market Restraint

High Cost and Operational Expenditures to Hinder Market Growth

Unlike a conventional power station, installing a new hydropower plant requires a significant financial investment and a more extended development time. In addition, its operational expenditures are very high because its operational sites are located in remote areas, and regular maintenance is required. On the other hand, high capital investment and operational expenditure levels are expected to restrict the market expansion.

Global Hydropower Generation Market Opportunities

Growing Demand for Renewable Energy and Significant Increase in Hydropower to Spur Market Opportunities

The primary factor driving the increase in electricity demand is the rapid urbanization and industrialization of developing countries like China and India. The demand for power generation from renewable energy sources has been fueled by efforts to lessen reliance on fossil fuels in that sector. Governments have undertaken these efforts in several countries, including the United States, Germany, India, Japan, and China, to reduce their overall carbon footprints. As a result, numerous hydropower generation projects have been established worldwide, particularly in Asia-Pacific, to meet the growing demand for power generated from renewable sources. In addition, stringent emission policy targets and increasing demand for cleaner technologies for power generation are expected to fuel the growth of the hydropower generation market.

Regional Analysis

The global hydropower generation market is segmented into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.

Asia-Pacific is the highest revenue contributor to the global hydropower generation market and is estimated to reach USD 191.55 billion by 2030, growing at a CAGR of 6.2% during the forecast period. The Asia-Pacific Energy Research Center (APERC) forecasts that the demand for electricity in the Asia-Pacific region will rise shortly. It is anticipated that China and Southeast Asia will be the driving force behind this increased interest. These regions have expanding economies, rising per-capita pay, and expanding transport use, all of which will lead to higher power utilization. A maximum of more than 3,200 gigawatts (M.W.) of new power plant capacity is required to keep up with the expansion. As a result, hydropower generation will play an essential part in electricity production. In addition, there is an anticipated rise in the number of new power plants being built, which is also expected to drive demand for hydropower generation.

LAMEA is the second dominating region in the global hydropower generation market. Saudi Arabia, Brazil, South Africa, and the other regions of LAMEA are the driving forces behind the market for hydropower generation in LAMEA. Several significant players are assisting Brazil's growth in the market for hydropower generation. As an illustration, WEG India recently announced its intention to expand its operations in Brazil by acquiring TGM. This Brazilian company specializes in the generation and transmission of hydroelectric power. It is also anticipated that the rapidly expanding oil and gas sector will significantly expand the market.

Brazil has the largest ultra-profound (pre-salt) oil field of any country globally, and it is also the largest oil producer in South America. The electricity production in the oil and gas industry frequently uses hydropower generation. It is anticipated that as the oil and gas industry grows, there will also be a rise in the demand for hydropower generation, which will help the market grow.

Segmental Analysis

The global hydropower generation market is segmented by capacity.

Based on capacity, the global hydropower generation market is fragmented into Small Hydro Power Plant (Up to 10MW), Medium Hydro Power Plant (1MW - 10MW), and Large Hydro Power Plant (Above 10MW).

The large hydropower plant segment is the highest contributor to the market, growing at a CAGR of 5.9% during the forecast period. The term "large hydropower plant" refers to any facility that can generate more than 30 megawatts of electricity (M.W.). A large hydropower plant is used to generate renewable energy by driving large water turbines with flowing water. Lakes, reservoirs, and dams must store and regulate water for later release for power generation, irrigation, and domestic, or industrial use. This is necessary for cities to generate large amounts of hydroelectricity. Hydropower is more dependable than most other energy sources when it comes to meeting the peak demands for electricity throughout the day because it is simple to turn on and off extensive hydropower facilities.

The second dominating segment is the medium hydropower plant (1MW - 10MW) during the forecast period. The electricity production at a medium hydropower plant, a subcategory of hydroelectric power facilities, can reach up to 100 MW by utilizing either a steam or a water flow. The electricity generated by such systems is sometimes connected to the public power grid and is used to provide power to communities or homes in remote areas. Additionally, the construction of crucial hydropower projects is expected to fuel the future growth of this market. It is anticipated that a regulatory framework that supports sustainable energy in the United States and the European Union will positively impact the market demand. The implementation of supportive government regulations like the Hydropower Regulatory Efficiency Act and Small Conduit Hydropower Development and Rural Jobs in the United States, as well as an increasing number of funding programs for the renewable energy sector in developed nations like Italy and Canada, are some of the factors that are anticipated to present future growth opportunities.

Small hydro refers to hydroelectric power production on a scale sufficient to serve a small community or industrial facility. The generation capacity of a small hydroelectric plant is up to 25 megawatts (M.W.). In hydroelectric power plants, the potential energy of water is converted into electrical energy. The total power generation capacity of hydroelectric power plants depends on the flow rate and height of water toward the water turbine. Demand for small hydropower plants has increased due to increased investments in off-grid energy generation and rural electrification in developing nations such as India, China, Brazil, and Vietnam. Additionally, programs like the Rajiv Gandhi Grameen Vidyutikaran Yojana and the Small Hydropower Programme by the Ministry of New and Renewable Energy aim to electrify rural areas and promote the use of small hydropower energy for off-grid and mini-grid systems, which are anticipated to propel market growth.

List of key players in Hydropower Generation Market

1. Andritz Hydro USA Inc.
2. E. Energy
3. China Hydroelectric Corporation
4. Sinohydro Corporation
5. IHI Corporation
6. Alstom Hydro
7. CPFL Energia S.A.
8. ABB Ltd
9. China Three Gorges Corporation
10. Gerdau S.A.

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Recent Developments

• April 2024 - The government of Telangana announced its intentions to establish a hydroelectric power plant in Himachal Pradesh, a state with vast potential for this industry. In order to satisfy the rising demand and obtain power at a lower cost, the government wishes to invest in it.
• February 2024 - With the aim of improving the efficiency of current hydropower facilities, the DOE selected 46 hydroelectric power projects spanning 19 states to receive incentive payments of up to USD 71.5 million. This is the greatest investment in hydroelectricity facilities made by the DOE and is managed by the Grid Deployment Office with funding from the Bipartisan Infrastructure Law.