Southeast Asia Hydropower Market - Growth, Trends, and Forecasts (2023 - 2028)

Southeast Asia Hydropower Market - Growth, Trends, and Forecasts (2023 - 2028)

The Southeast Asian hydropower market is expected to reach 52.722 GW by the end of the current year, and it is projected to register a CAGR of 7.9% during the forecast period.

Although the market studied was affected by the COVID-19 pandemic in 2020, it has been recovering and reached pre-pandemic levels. Factors such as increasing investments in hydropower plants and increasing demand for renewable energy are expected to drive the market's growth. However, the high initial cost of hydropower compared to other forms of renewable energies like solar and wind energy is expected to restrain the growth of the market studied. 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.

Large-scale hydropower plant uses flowing water to drive huge water turbines to generate renewable energy. To generate significant amounts of hydroelectricity, lakes, reservoirs, and dams are required to store and regulate water for later release for power generation, irrigation, domestic use, and industrial use. Large-scale hydropower plants can be classified into four types: conventional hydroelectric dams, pumped storage, run-of-the-river, and tidal. Although large hydropower plants are expensive to install, they produce electricity at a low cost, especially in large cities. According to the International Renewable Energy Agency, the global weighted average levelized cost of energy (LCOE) of newly commissioned hydropower projects in 2021 was USD 0.048/kWh.

In Southeast Asia, hydropower dominates the renewable energy industry. The region recorded a hydropower project installed capacity of 35.895 GW in 2020, which increased to 37.445 GW in 2022, registering a growth of 4%. In accordance with the Laos Power Development Plan 2020 –2030, the Laos hydropower capacity is expected to exceed 14 gigawatts by 2025. By 2025, renewable energy may represent 30% of the total energy mix, and hydropower is anticipated to be a major component of this growth.

As part of the Association of Southeast Asian Nations (ASEAN) Plan of Action for Energy Cooperation (APAEC) 2021-2025, the aim is to reach 35% renewable generation in installed power capacity by 2025, which may require the deployment of 35-40GW. In December 2021, LNT & Partners assisted Dakdrinh Hydropower JSC in obtaining USD 95 million in loan financing from the Asian Infrastructure Investment Bank (AIIB) and Natixis Bank for the 125 MW Dakdrinh Hydropower Plant Project, Vietnam. The funds are going to be used to refinance existing debt on Dakdrinh Hydropower's 125MW hydropower plant.

In March 2022, International technology Group ANDRITZ and the Electricity Generating Authority of Thailand (EGAT) signed an MoU to jointly explore and expand business opportunities for hydropower projects in Thailand and surrounding countries. Due to the above-mentioned factors, the sizeable hydropower segment is expected to drive the market's growth during the forecast period.

Vietnam is one of the largest hydropower markets in Southeast Asia. According to the Electricity Authority of Vietnam (EVN), as of 2022, Vietnam had 20.774 GW of hydropower, accounting for nearly 29.9% of the country’s total installed capacity. The consumption of hydroelectricity in the country increased from 0.55 exajoules in 2015 to 0.71 exajoules, which is a significant growth.

Hydropower has accounted for a significant share of the country’s gross electricity generation mix, accounting for nearly 30.77% of the country’s total electricity generation. The Vietnamese economy relied heavily on hydroelectricity to satiate domestic demand. However, as domestic demand increased rapidly, the share of coal-fired generation in electricity rose, along with other renewables, which have also grown at a steady pace but occupy a relatively smaller share of the total electricity generation mix.

Due to its traditional dependence on hydroelectricity, Vietnam has already developed nearly 60% of its total hydropower potential, making it a mature hydropower market. According to the Vietnam Energy Outlook 2021, the country is close to fully utilizing its potential for large-scale and medium-scale hydropower (defined as greater than 30 MW and typically with a connected reservoir). However, there is still untapped potential for run-of-river small-scale hydro of around 11 GW.

Despite this, as the government tries to deal with the growing power demand, which is projected to grow by nearly 6-7% during 2021-2030 while realizing its emission reduction targets, the Vietnam government is investing in the development of the remaining large-scale hydro potential in the country. For instance, in November 2021, the Vietnam Electricity (EVN) group and the French Development Agency (AFD) signed a loan agreement worth USD 81 million for the expansion of the Hoa Binh Hydropower Plant Project. A total of USD 406.7 million is being invested in this project, which includes two turbines with a combined capacity of 480MW. In April 2022, Flovel Energy signed the contract for Nam Tang 3 HPP (2 x 8.75 MW) in Vietnam with Horizontal Francis units. The project is being developed by Truong Thanh Investment Construction Company Limited. Nam Tang 3 Hydro Project is located in Yen Bai Province, Vietnam, and this is the company’s eighth project in Yen Bai province.

Due to the above-mentioned factors, Vietnam is expected to dominate the market studied during the forecast period.

The Southeast Asian hydropower market is moderately fragmented in nature. Some of the key players in this market (in no particular order) are Vietnam Electricity Construction JSC, Electricity Generating Authority of Thailand, PT Perusahaan Listrik Negara, Tenaga Nasional Berhad, and Andrtiz AG.

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