The Southeast Asia Hydropower market is expected to rise at a CAGR of more than 3% during 2020 - 2025. Factors such as increasing investments in hydropower plants and increasing demand for renewable energy are likely to drive the market. However, the high initial cost is expected to restrain the growth of the market.
- Large hydropower is the largest segment in 2019 and is expected to remain the most important sector in the forecast period. The region heavily depends on the use of large hydropower plants for energy demand.
- The technological advancements in efficiency and decrease in the production cost of hydropower projects are expected to create ample opportunity for market players in Southeast Asia.
- Vietnam is expected to be the largest market for the region's hydropower market due to increasing investment in the sector and the highest installed capacity of hydropower energy in the region.
Key Market Trends
Large Hydropower to Dominate the Market
- The region has vast rivers like the Mekong that provide for the large quantity of water. However, hydropower is not very developed in the region, and therefore, many governments are pushing for an increase in the installed capacity.
- In Indonesia, the government has announced plans to build the country's largest hydro project, the 1,350 MW Mentarang Hydroelectric Power Plant in North Kalimantan in 2020, with total costs of USD 2 billion. Large construction projects related to the large hydropower sector are on the rise and are expected to aid the market's growth.
- Policymakers in the region are scaling-up renewable energy development. Over the past years, the region has led the world in renewable energy capacity installations. In 2019, there has been strong momentum for hybrid renewable energy projects as governments encourage the deployment of floating solar PV at hydropower facilities. This enables hydropower and solar power to work in synergy while also making good use of existing infrastructure. Further plans for cross-border interconnection will also help integrate a greater share of renewable energy into the power system, thereby aiding the market's growth.
- The Electricity Generating Authority of Thailand (EGAT) aims to develop around 16 floating solar farms with a combined capacity of over 2.7 GW at nine of its hydropower reservoirs by 2037. Thailand is expected to expand its power transmission network and has agreements to source hydropower from Laos and export to Malaysia, Cambodia, and Myanmar. Using solar power projects in collaboration with the hydropower projects may increase the sector's profitability and aid the growth of the market.
- Large hydropower installed capacity increased in the Southeast Asia region, by 0.5% to 43.568 gigawatts, in 2018 from 43.35 gigawatts, in 2017. The installed capacity is expected to further increase in the forecast period due to further investments in the sector.
- Hence, the large hydropower is expected to dominate the market in the forecast period due to rising investments and new technological advances in the field.
Vietnam to Dominate the Market
- The country is the largest user of hydropower in the region and also a considerable user of modern water energy storage systems like the pumped hydro storage. The government is pushing to increase the installed hydro capacity of the country.
- The installed hydropower capacity in the country increased by 0.44%, to 18,069 Megawatt, in 2019 from 17,989 Megawatt, in 2018. New hydro projects are being installed in the country, which is expected to boost the hydropower market.
- In Vietnam, the Asian Development Bank (ADB) has provided a USD 37 million loan to the Da Mi Hydropower Joint Stock Company, a division of national electric utility Vietnam Electricity (EVN). This is for retrofitting 47 MW of floating solar panels on its hydropower plant. Two pilot auctions 400 MW floating PV on hydropower plants will also be held in 2020. Changing the business model of the hydropower sector, where solar power can be used to increase profit, is expected to boost the market's growth.
- The government is expected to prioritize development of hydropower sources, especially multi-purpose projects (for flood control, water supply, electricity production); carrying out research studies on putting pumped-storage hydropower plants into operation in conformity with the development of national electricity system, aiming to improve the operational efficiency of the system. Governmental push in the hydropower sector is expected to aid the growth of the market.
- According to the Vietnam National Power Development Plan- The total installed capacity of hydropower sources is expected to increase from approximately 21,600 MW in 2020, nearly 24,600 MW in 2025 (1,200 MW for pumped-storage hydropower). The electricity produced from hydropower sources is expected to account for approximately 29.5% in 2020, and around 20.5% in 2025. Governmental push of increasing the hydropower is expected to aid the growth of the market.
- Hence, Vietnam is expected to dominate the Southeast Asia hydropower market due to significant scale investments, new business models, and governmental push.
The Southeast Asia hydropower market is moderately consolidated. Some of the key players in this market include Vietnam Electricity Construction JSC, Electricity Generating Authority of Thailand, PT Perusahaan Listrik Negara, Tenaga Nasional Berhad, Andrtiz AG
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