PUBLISHER: The Business Research Company | PRODUCT CODE: 1880717
PUBLISHER: The Business Research Company | PRODUCT CODE: 1880717
Small hydropower refers to hydroelectric power generation systems with a capacity that generate between 100 kilowatts and 10 megawatts (MW) and used to convert the energy of flowing or falling water into electricity. These systems are typically smaller in scale compared to large hydropower plants and are commonly used in rural, off-grid, or regional settings where large-scale infrastructure is not feasible or economical.
The small hydropower market consists of sales by entities (organizations, sole traders and partnerships) of small hydropower system that are used by private commercial entities, small-scale utilities, local governments, industrial operators and rural communities, particularly in developing regions where energy access remains limited. These systems are commonly used when a reliable, clean and cost-effective source of electricity is needed, especially in areas near flowing rivers or canals.
The global small hydropower market reached a value of nearly $3,037.50 million in 2024, having grown at a compound annual growth rate (CAGR) of 3.11% since 2019. The market is expected to grow from $3,037.50 million in 2024 to $3,577.75 million in 2029 at a rate of 3.33%. The market is then expected to grow at a CAGR of 2.91% from 2029 and reach $4,129.21 million in 2034.
Subsidies and Financial Incentives for Small Hydro
During the historic period, subsidies and financial incentives for small hydro projects significantly drove the growth of the small hydropower market. Governments worldwide recognized the potential of small-scale hydropower as a reliable and renewable energy source, leading to the implementation of various support mechanisms. These incentives included capital grants, feed-in tariffs, tax rebates and concessional loans, aimed at reducing the financial burden on developers and encouraging private investment. For instance, in February 2025, the Arunachal Pradesh government is set to significantly boost its renewable energy capacity with the development of 35 small hydropower projects, collectively expected to generate 570.75 megawatts (MW) of electricity. This ambitious initiative involves an investment of approximately Rs 7,000 crore and is projected to create around 7,500 employment opportunities, contributing to both economic growth and sustainable energy goals. The state's favorable topography, characterized by abundant rainfall and numerous river basins, provides ideal conditions for hydropower development. Despite its vast potential of over 58,000 MW, Arunachal Pradesh has historically exploited only a small fraction of its hydropower capacity, making these projects pivotal in its strategy to harness clean energy and improve power supply. Therefore, subsidies and financial incentives drove small hydropower market.
Digitalization and Modular Innovation Transforming Small Hydropower
Major companies in the small hydropower market are increasingly focusing on digital & modular innovation, efficiency in low-flow / low-head settings, hybrid deployments and stronger environmental compliance. These trends aim to reduce downtime, lower costs and expand deployment into more challenging or remote locations. For example, in July 2025, Voith, a Germany-based technology company specializing in hydropower, paper, raw materials, and transport & automotive sectors, has commissioned its first Hydro Pocket solution in Japan at the Ohsawagawa hydropower station in Yamagata Prefecture, marking a major step in unlocking the digital potential for the region's hydropower fleet. The Hydro Pocket platform is a cloud-based, digital monitoring and analytics solution that enables real-time remote access to operational data, replacing the previous closed-circuit monitoring system. The deployment was completed in close cooperation with Fuji Electric, which provided technical and customer interface support throughout the project.
The global small hydropower market is fragmented, with large number of small players operating in the market. The top ten competitors in the market made up to 10.29% of the total market in 2023.
Small Hydropower Global Market Opportunities And Strategies To 2034 from The Business Research Company provides the strategists; marketers and senior management with the critical information they need to assess the global small hydropower market as it emerges from the COVID-19 shut down.
Where is the largest and fastest-growing market for small hydropower? How does the market relate to the overall economy; demography and other similar markets? What forces will shape the market going forward? The small hydropower market global report from The Business Research Company answers all these questions and many more.
The report covers market characteristics; size and growth; segmentation; regional and country breakdowns; competitive landscape; market shares; trends and strategies for this market. It traces the market's history and forecasts market growth by geography. It places the market within the context of the wider small hydropower market; and compares it with other markets.