World Markets for Small Hydro and Ocean Energy Conversion Equipment

Report Highlights

• Total worldwide revenues from small hydro and OEC installations will rise at an average annual growth rate (AAGR) of 10% from $6.8 billion in 2003 to $10.9billion in 2008.
• While OEC currently makes a minuscule contribution to the overall energy supply, new capacity will climb to almost 20% of all new hydromechanical capacity in2008.
• Public and private support for OEC is increasing after successful demonstrations of a number of pilot installations.
• The U.S. has the highest potential in the small hydro modification market, with more than 70,000 water impoundment structures that can be considered.
• A multitude of small hydro renovation projects now are being started in Europe, and China continues to see small hydro as a core technique for rural electrification.

INTRODUCTION

Large wind turbines joined small hydro and biomass in the billion-dollar annual revenue realm in the late 1990s. Photovoltaics reached that level in 2000 and now megawatt- scale projects regularly occur. Geothermal power plants have become a shortlisted option wherever a sufficient resource is present. A multitude of new ocean energy conversion (OEC) technologies have been developed and demonstration projects are being deployed in the waters off four continents. Small hydroelectric plants have gone mainstream.

This BCC report pinpoints and characterizes opportunities for growth in small hydro and OEC technologies. It quantifies current and future installed capacity and places a dollar value on those shipments.

For small hydro, the report focuses on an upper bound of 10 MW capacity and a lower bound of 1 MW capcity, except in a few instances where the national definition of small hydro is different and impacts the market in that country. OEC systems, covering ocean current, ocean thermal, tidal, tidal current and wave energy facilities, are examined in their totality, including freestream hydroturbines, a newlyemerged class of hydromechanical EC device.

As with other bulk power production equipment, the economics of renewables are strongly influenced by regulatory, subsidy and taxation considerations that vary from continent-to-continent, nation-to-nation, state-to-state and utility-to-utility. The contents of this study are intended to provide clear views of the social, political and economic environments in which these technologies must come to market.

SCOPE OF STUDY

The report contains:

• Analysis of many small hydro, freestream hydroturbine and ocean energy conversion
• Current market status and market readiness for each technology
• Forecasts of market evolution through 2008 in terms of the installed and future installed capacities and annual project revenues
• Perspectives on government incentive programs, mandatory green energy purchases, and legislative and regulatory support on national, provincial and state levels
• Investigation of the separate markets for new, rebuild and improvement modification opportunities for small hydro.

METHODOLOGY

BCC analyzed the small hydro and OEC generating capacity shipped through 2003 and expected to be shipped by the end of 2008. A number of forecasts were also developed for freestream hydroturbines, a crossover technology used for both run-of-the-river and tidal current power generation. Our estimated value is the project revenue in 2003 dollars and, where appropriate, in terms of annual new projects, annual new capacity, cumulative capacity (megawatts) and annual revenue.

Market forecasts were developed according to the realm of technology and the state, province, nation, and region being discussed.

Various assumptions were made for unit capacity. The underlying rationales for the assumptions are provided with the relevant market forecasts.Forecasts were generated on the basis of unit counts by various international and national government agencies, market sector associations, and financial reports and press releases by manufacturers. Consideration was also given to funding programs by international, national and local funding agencies, as well as government policies toward the development of certain renewable energy technology sectors.

Extensive efforts were made to assess the real world support mechanisms for each of the technologies examined, as well as the developable portion of the global and local resources.

Revenues were calculated according to historical average costs in a given country. For small hydro, the predominance of new or renovation projects was taken into consideration when generating revenue forecasts.

Care was taken to understand the impacts of international agreements and national laws and subsidies that support deployment and growth in the markets for renewable energy in general and for the specific technologies examined.

INFORMATION SOURCES

BCC surveyed numerous companies, consultants, and government branches to obtain data and background information for this study. Included were manufacturers of small hydroelectric generators and total systems, plus developers of ocean current, ocean thermal, tidal current, tidal and wave energy conversion devices.

Conversations were also held with green power marketers, permitting specialists, project developers, project engineering firms, government regulators and researchers, bankers, venture capitalists and utility representatives.

In addition, data was compiled from financial and trade information, government sources and technical societies. Extensive use was made of World Wide Web sources in order to develop a comprehensive, quantitative view of world markets in as efficient a manner as possible.