Hydropower Generation Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Capacity (Small Hydro Power Plant, Medium Hydro Power Plant, Large Hydro Power Plant), By Application (Commercial, Industrial, Residential), By Region, By Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 439.89 Billion
CAGR (2026-2031)	6.11%
Fastest Growing Segment	Small Hydro Power Plant
Largest Market	North America
Market Size (2031)	USD 627.89 Billion

Market Overview

The Global Hydropower Generation Market is expected to grow from USD 439.89 Billion in 2025 to USD 627.89 Billion by 2031 at a 6.11% CAGR. The Global Hydropower Generation Market encompasses the development and operation of facilities that convert the kinetic energy of moving water into electricity, primarily through reservoir, diversion, and pumped storage systems. This sector is fundamentally driven by the escalating global mandate for decarbonization and the critical necessity for flexible baseload power to stabilize grids heavily reliant on intermittent renewable energy. According to the International Hydropower Association, in 2024, global hydropower generation rose by 10% to reach 4,578 TWh. This figure highlights the enduring reliance on hydropower to ensure energy security and support the broader transition toward clean energy infrastructure.

Despite these strong growth factors, the market faces a significant impediment regarding the lengthy and complex regulatory permitting processes required for new projects. Extensive environmental impact assessments and bureaucratic approval procedures often extend development timelines by several years, substantially increasing financial risk and upfront capital requirements. These regulatory bottlenecks frequently deter private investment and slow the deployment of essential capacity needed to meet ambitious international climate goals.

Key Market Drivers

The implementation of stringent decarbonization and net-zero targets is the foremost catalyst propelling the Global Hydropower Generation Market. As nations strive to phase out fossil fuels, hydropower is increasingly prioritized for its ability to provide utility-scale, low-carbon baseload electricity that intermittent renewables cannot yet fully replace. This regulatory pressure is driving substantial capacity additions across mature and emerging markets alike, as governments seek to align energy production with international climate accords. According to the International Hydropower Association, June 2025, in the '2025 World Hydropower Outlook', the global hydropower sector added 24.6 GW of new capacity in 2024 to support these sustainable energy mandates. Furthermore, the sector's long-term trajectory remains robust; according to the International Hydropower Association, in 2025, the global development pipeline for hydropower projects exceeded 1,075 GW, reflecting sustained industrial commitment.

Concurrently, the surge in investments for Pumped Hydro Energy Storage (PHES) is a critical driver, fundamentally linked to the growing necessity for grid stability and load balancing. As grid operators integrate higher shares of variable wind and solar energy, PHES facilities are becoming indispensable for their ability to store excess power and provide rapid dispatch capability during peak demand periods. This operational requirement has triggered a wave of capital allocation toward modernization and new storage infrastructure, particularly in rapidly industrializing economies. According to the China Renewable Energy Engineering Institute, June 2025, in the 'China Renewable Energy Development Report 2024', China's cumulative installed pumped hydro capacity exceeded 58 GW by the end of 2024, highlighting the massive scale of deployment in leading markets to ensure energy security.

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Key Market Challenges

The lengthy and complex regulatory permitting processes required for new projects constitute a formidable barrier to the expansion of the Global Hydropower Generation Market. Developing large-scale hydropower facilities involves navigating a labyrinth of environmental impact assessments, land rights negotiations, and multi-agency approvals that can span several years or even decades. This extended pre-construction phase introduces substantial uncertainty and escalates upfront capital costs, as developers must finance operations without generating revenue for prolonged periods. Consequently, the financial risk profile of hydropower projects becomes less attractive compared to renewable technologies with faster deployment timelines, effectively diverting private capital elsewhere.

This regulatory sluggishness directly correlates with a pace of capacity addition that lags behind global energy transition requirements. Investors are frequently deterred by the unpredictable duration of the approval cycle, leading to a stagnation in the pipeline of bankable projects. According to the International Hydropower Association, in 2025, the global hydropower sector was projected to fall approximately 60 to 70 GW short of the 2030 capacity targets set by the International Renewable Energy Agency. This specific shortfall underscores how bureaucratic bottlenecks stifle the deployment of essential flexible baseload capacity, preventing the market from meeting its full potential despite high demand.

Key Market Trends

The Retrofitting and Modernization of Aging Hydropower Infrastructure is emerging as a critical priority as the global fleet matures. Operators are increasingly deploying capital to refurbish turbines and control systems, aiming to extend asset operational lifespans while mitigating the environmental risks associated with older dams. This trend is particularly vital in regions where maintaining legacy capacity is essential for economic stability, distinct from the push for new storage. According to Andritz, July 2025, in a press release titled 'ANDRITZ receives major order for rehabilitation of Mozambique's largest hydropower plant', the company secured a contract in the mid-three-digit million-euro range to rehabilitate the Cahora Bassa facility, highlighting the significant investment directed toward restoring infrastructure.

Concurrently, the Integration of Floating Solar Photovoltaics on Hydropower Reservoirs is redefining asset utilization by creating hybrid renewable energy systems. This approach leverages existing transmission infrastructure and reservoir surfaces, significantly reducing land acquisition costs while the water’s cooling effect enhances solar panel efficiency. Such hybridization allows for firm power output by balancing solar intermittency with hydropower's dispatchability, effectively optimizing the generation profile of existing reservoirs. According to the Electricity Generating Authority of Thailand, November 2025, in the 'Hydro-Floating Solar Hybrid Projects' update, the authority is accelerating the development of three hybrid projects with a combined capacity of 348 MW to maximize this renewable synergy.

Segmental Insights

The Small Hydro Power Plant segment is rapidly emerging as the fastest-growing category within the Global Hydropower Generation Market. This expansion is predominantly driven by the increasing global demand for decentralized energy solutions and rural electrification, particularly in developing regions with limited grid access. Unlike large-scale alternatives, small hydro projects require significantly lower capital investment and involve less complex civil works, resulting in minimal ecological disruption. Consequently, institutions like the International Renewable Energy Agency favor these systems for their ability to deliver reliable clean energy while avoiding the extensive environmental permitting challenges associated with massive dam infrastructure.

Regional Insights

North America maintains a leading position in the Global Hydropower Generation Market, supported by a vast network of established hydroelectric facilities. This dominance is primarily driven by significant capital allocation toward modernizing aging infrastructure and retrofitting dams to ensure long-term operational efficiency. The United States and Canada prioritize these initiatives to secure grid stability and meet clean energy targets. Regulatory bodies like the Federal Energy Regulatory Commission facilitate market activity by managing licensing for facility upgrades and pumped storage projects. Consequently, the region’s strategic emphasis on optimizing existing capacity rather than solely pursuing new greenfield development secures its forefront status in the global sector.

Recent Developments

• In June 2025, GE Vernova commissioned the first of four 250-megawatt variable speed pumped storage units at the Tehri Hydropower Complex in the state of Uttarakhand, India. This commissioning marked a significant milestone for the project, which is being developed by THDC India Limited. The deployment of variable speed technology allows the plant to offer greater flexibility in power generation and grid stabilization compared to conventional fixed-speed units. Upon the completion of this expansion, the complex is projected to reach a total generating capacity of 2.4 gigawatts, solidifying its position as a critical asset in India's renewable energy landscape.
• In September 2024, Toshiba Energy Systems & Solutions Corporation agreed to strengthen its cooperation with the National Electricity Company of Bulgaria (NEK) to restore the Chaira Pumped Storage Hydropower Plant. During a meeting in Tokyo, executives from both organizations discussed the rehabilitation of the facility, for which Toshiba originally supplied the equipment. The partnership focuses on the rapid repair of specific hydro units and the long-term replacement of key components such as turbines and generators. This collaboration is intended to return the plant to full operation, thereby enhancing Bulgaria's energy security and balancing capabilities.
• In July 2024, SSE Renewables and Gilkes Energy announced a joint venture to accelerate the development of the Loch Fearna pumped storage hydropower project in Scotland. The proposed facility, located in the Great Glen, aims to achieve a generating capacity of up to 1.8 gigawatts and provide around 37 gigawatt-hours of stored energy. Under the collaboration, Gilkes Energy will lead the project's development, which involves constructing tunnels and a new power station to connect the existing Loch Quoich reservoir with an upper reservoir at Loch Fearna. This initiative highlights the growing focus on long-duration electricity storage to support grid stability.
• In June 2024, Andritz received a contract from the Turkish state water authority, Devlet Su İşleri (DSI), to supply electromechanical equipment for the Silvan hydropower plant. Located on the Kulp Stream in the Southeast Anatolia Region of Turkey, the project is designed to have an installed capacity of 160 megawatts. The scope of the agreement includes the delivery of four 40-megawatt turbines, generators, and associated plant equipment, along with a 154-kilovolt switchyard system. Once operational, the facility is expected to generate approximately 681 gigawatt-hours of electricity annually, contributing significantly to the country's renewable energy infrastructure.

Key Market Players

• Andritz Hydro USA Inc.
• China Hydroelectric Corporation
• Sinohydro Corporation
• IHI Corporation
• CPFL Energia S.A.
• ABB Ltd.
• China Three Gorges Corporation
• Gerdau S.A.

By Capacity	By Application	By Region
Small Hydro Power Plant Medium Hydro Power Plant Large Hydro Power Plant	Commercial Industrial Residential	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Hydropower Generation Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Hydropower Generation Market, By Capacity:

• Small Hydro Power Plant
• Medium Hydro Power Plant
• Large Hydro Power Plant

• Hydropower Generation Market, By Application:

• Commercial
• Industrial
• Residential

• Hydropower Generation Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE