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Report Overview

The global small hydropower market reached a value of nearly USD 2.53 Billion in 2024. The market is assessed to grow at a CAGR of 2.90% during the forecast period of 2025-2034 to attain a value of around USD 3.37 Billion by 2034. The market is being driven by the rising production of renewable energy, the growing demand for decentralised energy solutions, the increasing focus on sustainability, the surging interest in modular and compact hydropower solutions, and technological advancements and innovations.

2024

Base Year

2018-2024

Historical Year

2025-2034

Forecast Year

  • Small hydropower offers a potential solution for regions seeking decentralised energy solutions. The growing demand for sustainable and localised energy systems is prompting governments and stakeholders to explore the untapped potential for small-scale hydropower systems, particularly in rural or off-grid areas. As per the World Small Hydropower Development Report 2022, the global installed small hydropower capacity (≤10 MW) is 79 GW, with a total potential of 221.7 GW, indicating significant untapped capacity. This gap between installed and potential capacity suggests that regions with favourable hydropower conditions but low current development, especially in Latin America, Asia, and Africa, are expected to witness increased interest from investors and developers.
  • Hydropower is one of the largest renewable sources of electricity, generating more than all other renewable technologies combined. This is pushing governments worldwide to invest in hydropower projects, including small-scale ones, through incentives, favourable policies, and subsidies. Moreover, the dominance of hydropower in global renewable energy generation is surging green financing initiatives, such as sustainable energy funds and green bonds, for both small and large hydropower projects. In the forecast period, small hydropower plants are expected to complement larger hydropower plants by providing energy to remote or off-grid areas.
  • In 2022, hydroelectricity generation increased by almost 70 TWh (up close to 2%), reaching 4,300 TWh. The growth in hydroelectricity generation encourages innovations aimed at driving cost reductions and efficiency improvements in the small hydropower market. Operators are expected to actively adopt digital technologies, like AI and real-time monitoring, to optimise small hydropower operations and improve efficiency in the coming years.
Global Small Hydropower Market Report Summary Description Value
Base Year USD Billion 2024
Historical Period USD Billion 2018-2024
Forecast Period USD Billion 2025-2034
Market Size 2024 USD Billion 2.53
Market Size 2034 USD Billion 3.37
CAGR 2018-2024 Percentage XX%
CAGR 2025-2034 Percentage 2.9%
CAGR 2025-2034 - Market by Region Asia Pacific 3.5%
CAGR 2025-2034 - Market by Country India 4.0%
CAGR 2025-2034 - Market by Country China 3.3%
CAGR 2025-2034 - Market by Capacity Above 1 MW 3.0%
CAGR 2025-2034 - Market by Component Electromechanical Equipment 3.0%
Market Share by Country 2024 USA XX%

Global Small Hydropower Market Overview

The rising interest in modular and compact hydropower solutions that can be scaled to meet specific energy needs is also evident. These solutions are easier to maintain, install, and adapt to various locations, such as remote and rural areas. Modular solutions can be tailored for different uses such as remote communities, off-grid applications, or small industrial setups, thereby being more versatile in meeting diverse energy needs.
 
Small hydropower plants are increasingly integrated into smart grids, allowing for real-time communication between power generation and consumers. Utilities can better manage power demand through demand response systems, improve energy management, and ensure efficient distribution of electricity by integrating small hydropower with smart grids, thus driving the growth of small hydropower market.

The increasing significance of floating hydropower technology areas that have limited land for the infrastructure of traditional hydropower is driving small hydropower market revenue. Floating hydropower projects can be installed in lakes and reservoirs, with a combination of solar panels that can be used as hybrid renewable energy platforms.

Compound Annual Growth Rate

Value in USD Billion

2.9%

2025-2034


Small Hydropower Market Outlook

*this image is indicative*

Global Small Hydropower Market Growth

Traditionally, the market for small hydropower faced hurdles like high capital costs, very complex regulatory processes, and limited awareness in rural areas, thus impeding the small hydropower demand. Market players eventually overcame these issues by obtaining government subsidies and incentives that reduced the initial investment burden. Technological changes in turbine efficiency and automation were other factors that reduced the cost of running the power plants. Involvement of local governments and communities facilitated smooth approvals of projects. Also, a greater emphasis on environmental sustainability and eco-friendly designs also helped reduce regulatory hurdles, thus spreading it more extensively into disadvantaged areas.

A significant driver of the small hydropower market is off-grid and decentralised power solutions, mostly in remote and rural areas, thereby propelling the growth of small hydropower market. Small hydropower systems are particularly suited for such areas in which extension of traditional power grids is usually not economically feasible. Many developing country governments, such as those of BRIC countries, are focusing on rural electrification and industrialization. This has resulted in an increase in the adoption of the small hydropower technologies: these provide a reliable, sustainable, and cost-effective source of energy to the regions that lack access to centralised electricity infrastructure.

Key Trends and Developments

Small Hydropower Market Trends

Legislative reforms, public acceptance, and investment are the key market trends.

  • Technological changes in turbines and generators that can provide efficiency improvement and cost reduction for the project, thus leading to new trends in the small hydropower market.
  • The government should ensure that more funds are available by increasing its support toward the small hydropower projects through policies and incentives.
  • Integration of digital technologies using AI and real-time monitoring that enhances performance and enables grid integration.

Opportunities in the Global Small Hydropower Market

  • Governments from various developing and underdeveloped countries are initiating more and more programmes to improve rural electrification, which is boosting the small hydropower market growth.
  • To efficiently supply electricity in remote locations, governments in the BRIC countries are focusing on increasing industrialisation. The need for small hydropower generators is projected to rise as a result of the absence of grids in such locations. This will have an additional effect on market demand for small hydropower. Small hydropower facilities are also best suited in regions with weak grid access.

Market Restraints

  • Small hydropower projects require high capital investment for site development, infrastructure, regulatory compliance, and equipment, making it challenging for new entrants or startups to enter the market.
  • Environmental concerns related to ecosystem disruption and water resource management may hinder the small hydropower market development. Such concerns can create regulatory barriers and surge project complexity, leading to permit delays and lengthy environmental impact assessments.
  • Regulatory hurdles and complex permitting processes in certain regions can challenge the market expansion by surging costs, creating delays, and adding uncertainty for developers.
  • There is a limited availability of suitable sites for small hydropower installations in some areas due to topographical limitations, competition with other water usage needs, or environmental protections.

Small Hydropower Industry Segmentation

“Global Small Hydropower Market Report and Forecast 2025-2034” offers a detailed analysis of the market based on the following segments:

On the basis of capacity, the market can be divided into the following:

  • Up to 1 MW
  • 2- 10 MW
  • Others

On the basis of type, the market can be divided into the following:

  • Micro Hydropower
  • Mini Hydropower

On the basis of component, the market can be divided into the following:

  • Electromechanical Equipment
  • Electric infrastructure
  • Civil Works

Based on region, the market can be segregated into:

  • North America
  • Europe
  • Asia Pacific
  • Latin America
  • Middle East and Africa
CAGR 2025-2034 - Market by Capacity
Above 1 MW 3.0%
Up to 1 MW 2.4%
CAGR 2025-2034 - Market by Component
Electromechanical Equipment 3.0%
Electric Infrastructure 2.8%
Civil Works 2.6%
CAGR 2025-2034 - Market by Region
Asia Pacific 3.5%
Middle East and Africa 2.9%
Latin America 2.6%
North America 2.2%
Europe 2.1%

Small Hydropower Market Share

By Capacity Analysis

Small hydropower growth is driven by demand for clean energy, efficiency, and government support.

Rising demand for clean, renewable energy and incentives from the government for sustainable power generation to support more hydropower systems. As per small hydropower market analysis, projects with capacities up to 1 MW are attractive for off-grid or remote applications, posing economically viable solutions for rural electrification. Economies of scale and efficient energy production characterise the 2-10 MW range. These include improvements in turbine technology, environmental impact, increased focus on energy security, and decarbonization, which are leading to growth in the market.

Market Analysis by Type

Micro hydropower is gaining traction for decentralised, off-grid energy solutions in remote areas.

The micro hydropower market is on an uptrend, and technology is well poised as a decentralised, off-grid energy solution- ideal for isolated and rural areas. Such systems are typically sized under 100 kW, cheap, environmentally friendly, and relatively simple to install with minimal civil works. They will provide reliable small-scale energy production that will benefit particularly communities outside the reach of the central grid. There is increasing demand for mini hydropower (100 kW-2 MW), ensuring greater demand for medium-scale, affordable renewable energy solutions both for local industries and agricultural applications.

Component Insights

Small hydropower growth is driven by advances in electromechanical equipment, infrastructure, and civil works.

The small hydropower ecosystem is driven by three key components: electromechanical equipment, electric infrastructure, and civil works. As per the small hydropower industry analysis, electromechanical equipment, including generators, turbines, and control systems, play a crucial role in converting water flow into electricity. 

Electric infrastructure, encompassing transformers, grid connections, and transmission systems, ensure efficient energy distribution. Meanwhile, civil works refer the construction of dams, weirs, and powerhouses. Advances in each component, including the development of more efficient turbines and improved grid integration, are expected to drive the market expansion.

small hydropower market by region

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Small Hydropower Market Regional Insights

North America Small Hydropower Market Opportunities

The North America small hydropower demand forecast is being driven by increasing demand for clean energy and favourable government policies. In the U.S., small hydropower projects contribute around 3% of the country’s total hydroelectric capacity, with the Department of Energy actively promoting their development. Canada also boasts significant untapped potential for small hydropower, particularly in remote areas. The growing focus on renewable energy and energy storage solutions, alongside incentives and funding for green projects, is expected to accelerate the small hydropower market growth across North America.

CAGR 2025-2034 - Market by Country
India 4.0%
China 3.3%
Saudi Arabia 3.1%
Brazil 3.0%
Canada 2.5%
Mexico 2.5%
UK 2.5%
Australia 2.4%
USA 2.2%
Japan 2.1%
Germany 2.0%
France 1.9%
Italy 1.7%

Europe Small Hydropower Market Dynamics

The Europe small hydropower market expansion is being driven by the region’s strong renewable energy policies and ambitious sustainability goals. As per the European Small Hydropower Association (ESHA), small hydropower represents about 10% of Europe’s total renewable electricity production. Countries like Norway, Austria, and France are leaders, with thousands of small hydropower plants in operation. The European Union’s Green Deal and incentives for green energy technologies are further fuelling the market growth, promoting sustainable and decentralised energy solutions across the region.

Asia Pacific Small Hydropower Market Trends

The Asia Pacific small hydropower industry is expanding due to rising energy demands and strong government support for renewable energy. Countries like China, India, and Nepal are investing in small hydropower projects to harness their abundant water resources. China, in particular, leads the region, with thousands of small hydropower plants already operational. According to the International Energy Agency (IEA), small hydropower contributes significantly to the region’s renewable energy goals, supported by favourable policies, subsidies, and infrastructure development.

Latin America Small Hydropower Market Insights

The Latin America market for small hydropower is gaining momentum due to increasing demand for renewable energy and government support. Countries like Brazil, Chile, and Argentina are tapping into their vast river systems to develop small hydropower projects. According to the Latin American Energy Organisation (OLADE), small hydropower contributes significantly to the region's renewable energy capacity, with over 15,000 MW of potential identified. Governments are offering incentives, tax breaks, and financing to accelerate project development, supporting energy security and sustainability.

Middle East and Africa Small Hydropower Market Drivers

The Middle East and Africa (MEA) small hydropower market is driven by increasing energy demand, the need for sustainable power solutions, and government initiatives promoting renewable energy. Many countries in the region, such as Ethiopia, are focusing on harnessing their untapped hydroelectric potential. With abundant river systems and ongoing infrastructure development, small hydropower offers a cost-effective, environmentally friendly energy source. 

Competitive Landscape

Global small hydropower market players are attempting to enhance the efficiency of energy use, sustainability, and the utilisation of untapped hydro potential. Further, they are emphasising the optimisation of technologies used in small hydro systems, combined with upgraded infrastructure. The efforts of small hydropower companies are directed towards reducing costs, increasing project feasibility, and supporting renewable energy goals, making small hydropower a viable solution for both developing and developed markets.

Voith GmbH & Co. KGaA

Voith GmbH & Co. KGaA is one of the world's leading mechanical engineering companies which was founded back in 1867 and based in Germany. It offers solutions within the areas of robotics, hydraulics, pneumatics, cooling, hydropower components, brake systems, motors, and transmissions. The segments that the company caters to include raw materials, energy, transport, automotive, and paper. In the markets for raw materials, energy, transportation and automotive, paper, Voith establishes standards with its extensive spectrum of systems, products, services, and digital applications.

ANDRITZ AG

ANDRITZ AG, an Austrian based company founded in 1852, is one of the prime suppliers of equipment, m...

Siemens AG

Siemens AG is a technology firm with its headquarters in Germany, established in 1847. It deals prim...

*Please note that this is only a partial list; the complete list of key players is available in the full report. Additionally, the list of key players can be customized to better suit your needs.*

Other major players in the global small hydropower market report are Toshiba Energy Systems & Solutions Corporation ("ESS") and Canyon Hydro, among others.

*While we strive to always give you current and accurate information, the numbers depicted on the website are indicative and may differ from the actual numbers in the main report. At Expert Market Research, we aim to bring you the latest insights and trends in the market. Using our analyses and forecasts, stakeholders can understand the market dynamics, navigate challenges, and capitalize on opportunities to make data-driven strategic decisions.*

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Key Questions Answered in the Report

The market is projected to grow at a CAGR of 2.90% between 2025 and 2034.

The major drivers of the market include the expanding financial incentives, various governments initiatives, increasing investments in off-grid energy generation, and growing concerns about greenhouse gas (GHG) emissions.

An increase in the production of energy from renewable sources and integration of Internet of Things (IoT) with SHP components are the key industry trends propelling the growth of the market.

The major players in the industry are Voith GmbH & Co. KGaA, ANDRITZ AG., Siemens AG, Toshiba Energy Systems & Solutions Corporation ("ESS"), and Canyon Hydro, among others.

The microhydro turbine transforms the mechanical energy of flowing water into electrical energy by turning a generator and a shaft. Turbines exist in a variety of shapes and sizes, and they are matched based on requirements, energy goals, stream characteristics, and budget.

Small hydropower systems can offer clean, sustainable, and relatively inexpensive energy. They can be built anywhere there is sufficient water flow and head to support electricity generation, even in remote or undeveloped areas.

In 2024, the market reached an approximate value of USD 2.53 Billion.

The market is estimated to witness healthy growth in the forecast period of 2025-2034 to reach a value of around USD 3.37 Billion by 2034.

Report Summary

Explore our key highlights of the report and gain a concise overview of key findings, trends, and actionable insights that will empower your strategic decisions.

Key Highlights of the Report

Please note that the figures mentioned in the description serve as estimates and may vary from the actual figures presented in the final report.

REPORT FEATURES DETAILS
Base Year 2024
Historical Period 2018-2024
Forecast Period 2025-2034
Scope of the Report

Historical and Forecast Trends, Industry Drivers and Constraints, Historical and Forecast Market Analysis by Segment:

  • Capacity
  • Type
  • Component
  • Region
Breakup by Capacity
  • Up to 1 MW
  • 2- 10 MW
  • Others
Breakup by Type
  • Micro Hydropower
  • Mini Hydropower
Breakup by Component
  • Electromechanical Equipment
  • Electric infrastructure
  • Civil Works
Breakup by Region
  • North America
    • United States of America 
    • Canada
  • Europe
    • United Kingdom
    • Germany
    • France
    • Italy
    • Others
  • Asia Pacific
    • China
    • Japan
    • India
    • ASEAN
    • Australia
    • Others
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Others
  • Middle East and Africa
    • Saudi Arabia
    • United Arab Emirates
    • Nigeria
    • South Africa
    • Others
Market Dynamics
  • SWOT Analysis
  • Porter's Five Forces Analysis
  • Key Indicators for Demand
  • Key Indicators for Price
Competitive Landscape
  • Market Structure
  • Company Profiles
    • Company Overview
    • Product Portfolio
    • Demographic Reach and Achievements
    • Certifications
Companies Covered
  • Voith GmbH & Co. KGaA
  • ANDRITZ AG.
  • Siemens AG
  • Toshiba Energy Systems & Solutions Corporation ("ESS")
  • Canyon Hydro
  • Others

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