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Global Small Hydropower Market: Asia Pacific to Remain Front-runner Owing to Increasing Demand for Off-grid Electricity, finds TMR

Posted on Jan 17, 2017

The maximum shares of the global small hydropower market are captured by large players such as Andritz Hydro, Voith, and Alstom. The strong foothold of these players is creating a high degree of competition as well as high entry barriers for new players, finds Transparency Market Research (TMR) in a new study. The exit barriers in the market are also very high as it requires huge capital investments to start the operation and has a long payback period. “Market leaders are increasingly focusing on technological innovation and product differentiation to stay ahead in the market,” says TMR’s lead analyst. 

Middle East and Africa to Progress at Promising Pace Due to High Untapped Hydropower Potential 

The global small hydropower market stood at 119.35 GW in 2016 and is poised to rise to 146.65 GW by the end of 2023, expanding at a CAGR of 2.85% from 2015 to 2023. On the basis of geography, Asia Pacific will command the lion’s share throughout the forecast period, owing to the increasing demand for off-grid electricity from rural areas of India and China. The region is anticipated to account for nearly 69% of the overall market by 2023. The Middle East and Africa will rise at a CAGR of 14.49% during the same period. The growth of the region is supplemented by the high untapped hydropower potential and increasing emphasis on the use of renewable energy. 

Low Capital Investment Requirement Along With No Fuel Cost of Small Hydropower to Propel Growth Prospects 

Small hydropower offers various benefits such as no fuel cost, low operational and maintenance costs, high efficiency and capacity utilization factor, and longer life span. Due to rising awareness about its benefits, this technology is being increasingly implemented across power generation setups worldwide. “Since it can be built using existing dams or by the run of river, its implementation requires low capital investment,” says a TMR analyst. 

Hydropower includes electricity generation through water, which does not cause environmental issues such as air quality problems, acid rain, and greenhouse gasses emission. Moreover, they require lesser land as compared to large hydropower projects, thereby avoiding rehabilitation of people. Therefore, its minimum impact on the environment and human sentiments is propelling the market. 

Fluctuating River Stream Flow to Limit Widespread Adoption of Small Hydropower Technology 

Small hydropower generation is directly influenced by the stream flow of rivers. Therefore, fluctuations in the flow of river stream due to unfavorable climatic conditions and natural calamities are adversely affecting the growth of the market. For e.g. Zhengyixia station located on the banks of Heihe River has a high production from July to October as the river has a concentrated streamline flow during that period, accounting for more than 50% of the annual flow. The stream flow during May, June, and November is very low which results in very low or no generation of hydroelectric generation. However, the future of the global small hydropower market looks bright as the need for off-grid electricity is rising exponentially and rapid technological advancements. 

The above data is collated from a research report released by TMR, titled “Small Hydropower Market, by Installed Capacity - Global Industry Analysis, Size, Share, Growth Trends, and Forecast 2015 - 2023.” 

The global Small Hydropower market has been segmented as follows: 

Global Small Hydropower Market, by Region

  • North America
  • Europe
  • Asia Pacific
  • Middle East and Africa
  • South and Central America

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