The global hydropower market is projected to grow from $251.58 billion in 2023 to $356.36 billion by 2031, driven by the growing focus on renewable energy. Countries around the world are increasing investments in hydropower as part of their strategy to diversify energy sources and enhance energy security. While solar and wind power remain popular, hydropower is gaining ground, particularly in regions like China, Sweden, and Canada. The market is expected to grow at a compound annual growth rate (CAGR) of 5.1% between 2024 and 2031, with established and emerging markets contributing to this expansion.
China is currently leading the global hydropower market, particularly in the area of pumped storage hydropower (PSH). By the end of 2023, China had installed 50.94 million kW of PSH capacity, with an additional 179 million kW in the project pipeline. PSH works by using two water reservoirs at different heights to store or generate energy as water moves between them, making it a more stable renewable energy source. China approved 49 new PSH projects in 2022, and the country’s installed capacity is expected to grow further to 57 million kW by the end of 2024. The development of these projects is part of China’s broader strategy to create a demand-driven, high-quality PSH industry.
Sweden, another major player in the global hydropower market, generates around 45% of its electricity from hydropower. The country continues to expand its capacity, with London-based Downing Renewables and Infrastructure Trust Plc recently investing $6.6 million in three Swedish hydropower plants. The acquisition brings Downing’s portfolio to 37 hydropower assets with an annual production capacity of around 222 GWh. Additionally, Sweden’s largest hydroelectric company, Vattenfall, has announced plans to increase its hydropower capacity by 720 MW through several modernization projects to be completed by 2032.
In Canada, hydropower remains a cornerstone of clean electricity generation, particularly in Quebec, which hosts 61 generating stations. However, Canada’s hydropower sector is facing challenges due to widespread droughts, which reduced reservoir levels and led to a 25% decrease in exports to the U.S. in 2023. The province of British Columbia also had to import power from the U.S. to meet its energy needs. As climate change continues to impact weather patterns, the future of hydropower in Canada is uncertain, prompting concerns over the reliability of the country’s hydropower infrastructure.
To mitigate the challenges posed by droughts, smaller-scale “run-of-river” hydropower projects are becoming more popular within the global hydropower market. These projects are less dependent on large dams and use the natural flow of rivers to generate electricity, making them more sustainable and easier to implement in rural areas. While energy production can vary seasonally, these projects have a reduced impact on local ecosystems.
Digitalization is also playing a significant role in optimizing hydropower production. By collecting and analyzing data from production sites, companies can implement intelligent control systems to improve efficiency. Additionally, some firms are exploring tidal power as a complementary energy source, with a successful tidal project in New York’s East River demonstrating the potential for marine energy in the future of the global hydropower market.