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GUIDELINESFORMICRO HYDROPOWERDEVELOPMENT ... .

Spatial Plans and Local Arrangement for Small Hydro

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GUIDELINESFORMICRO HYDROPOWERDEVELOPMENT ... .

Spatial Plans and Local Arrangement for Small Hydro

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ABBREVIATIONS AND ACRONYMS

$ _ Dolar � _ Euro ADEME _ Agence pour l’Environement et la Maitrise de L’Énergie CC _ Candidate Countries CFD _ Computational Fluid Dynamics CO2 _ Carbon dioxide DGTREN _ Directorate General for Energy and Transport EC _ European Commission ESHA _ European Small Hydro Association EU _ European Union FAO _ Food and Agriculture Organisation GIS _ Geographic Information System IEC _ International Electrotechnical Commission kPa _ Kilo Pascal kV _ kilovolt kW _ Kilowatt kWh _ Kilowatt hour l/s _ litre per second m _ meter m3 _ cubic meter m3/s _ cubic meter per second MHP _ Micro hydropower MHPP _ Micro-hydropower plants mm _ millimetres MW _ Megawatt MWh _ Megawatt hour O&M _ Operation and Maintenance OMS _ Operation, Maintenance and Surveillance PPA _ Power Purchase Agreement RES _ Renewable Energy Sources SHP _ Small Hydropower Projects SO2 _ Sulphur dioxide SPLASH _ Spatial Plans and Local Arrangements for Small Hydro UK _ United Kingdom USA _ United States of America WFD _ Water Framework Directive


TABLE OF CONTENTS (1)EXECUTIVE SUMMARY _ 4 (2)HYDROPOWER AND RENEWABLE ENERGY SOURCES IN EUROPE _ 6 2.1European Union Policies towards the development of renewable energy sources _ 6 2.2Electricity Production in EU member states _ 8 2.3Hydropower in Europe _ 8 (3)INTRODUCTION TO MICRO HYDROPOWER _ 10 (4)MAIN TECHNICAL ISSUES TO CONSIDER IN MICRO HYDROPOWER _ 14 (5)INNOVATIONS IN TECHNOLOGY _ 18 (6)ENVIRONMENTAL ISSUES _ 24 (7)GUIDELINES FOR PLANNING AN MHPP _ 30 (8)ECONOMIC ANALYSIS OF AN MHPP _ 34 (I)APPENDIX I _ 40 (II)APPENDIX II _ 41 (III)APPENDIX II _ 42 (R)REFERENCES _ 43

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EXECUTIVE SUMMARY ... .

This guide to Micro Hydropower Projects (MHPP), developed in the framework of the SPLASH project, is designed to present the main concepts and stages in MHPP development in a comprehensive form and simple language. It provides updates on recent developments in technology and relevant procedures. The text underlines the most frequent difficulties experienced in the development of small and micro hydropower projects, and the methodology described is intended to help developers avoid or overcome these difficulties. To fully understand the goals and scope of this guide, one must also take into account the aims of the SPLASH project, which are as follows: > to provide support to local developers (public and private), particularly by helping bridge the gap between them and the new policy framework. Indeed, developers often face obstacles caused by the complexity of regulations governing the development of micro hydropower; > to identify in a comprehensive manner both the acceptable locations and the environmental and social considerations that must be met if a proposal is to be presented. Such an approach may be facilitated by the use of GIS-based multicriteria analysis as a means of promoting participation of all the people involved in decision making; > to review the latest developments in this field in order to obtain an accurate idea of the available hydro resource. Spatial development plans for chosen regions in each partner country (Ireland, Poland, Portugal, France and Greece) are one of the main deliverables of the project. These local plans are examples of integrated studies, conducted with the aim of promoting MHP projects and with the total involvement of local authorities. Thus, the identified obstacles can be overcome, and the full economic potential available can be brought into play.

4_(1)EXECUTIVE SUMMARY


Courtesy of IED


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HYDROPOWER AND RENEWABLE ENERGY SOURCES IN EUROPE . .. 1

(2.1) EUROPEAN UNION POLICIES PROMOTING THE DEVELOPMENT OF RENEWABLE ENERGY SOURCES 1 Renewable energy is defined as the energy from non fossil sources of energy like solar, wind, hydro, biomass, biogas, geothermal, waves and tides, waste water treatment plant gas and landfill gas, according to the EU Parliament and Council Directive 2001/77/CE, from September 27th 2001, on the promotion of electricity produced from renewable energy sources in the internal energy market.

The Green Paper on Security of Energy Supply (2000) pointed out the main priorities for the European Union energy supply for the coming decades, which consist of reducing the dependence on imported fossil fuels and complying with greenhouse gas emissions targets. Promotion of renewable energy sources is among the objectives of EU policy. The commitment is to reach a 12% share of renewable energy sources in gross inland consumption in 2010, up from an initial level of 6% in 2001. To achieve this aim, targets for electricity production from renewable energy sources (RES) have been defined in Directive 2001/77/EC both at European Union and national levels. For the EU15 the proportion of electricity production from renewable sources should reach 22% in 2010, compared to 14% in 2000. According to a recent communication from the Commission to the Council and the European Parliament, the targets agreed will not be reached unless more active policies for the promotion of RES are adopted in the different EU countries, covering the following four areas (Directive 2001/77/CE): a) definition of attractive support schemes; b) removal of administrative barriers; c) access to the grid; and d) guarantee of origin for green electricity. An overview of the policies adopted in the different countries shows that barriers to the development of renewable energy sources still exist, and calls for additional measures and incentives from the Commission and from Governments. A classification of the different policy instruments used in EU Member States is presented in Fig.1 (ECN, 2003).

Generation based (kWh)

Supply side

Figure 1 Classification of the different Policy Instruments used in EU Member States

Feed-in triffs Fiscal measures Bidding systems (Subsidies)

Quota obligations / green certificates (Fiscal measures)

Investment subsidies (Fiscal measures)

(Quota obligations)

Demand side

Capacity based (kW)

6_(2)HYDROPOWER AND RENEWABLE ENERGY SOURCES IN EUROPE


The most frequently encountered schemes in the policies of member states are: feed-in tariffs, quota obligations in combination with a green certificate system, and tendering/bidding schemes. These instruments are frequently complemented by investment subsidies and fiscal measures. Fig. 2 (ECN, 2003) shows the main policy instruments used by the different EU15 countries and Norway to promote the production of electricity from RES. Investment subsidies, fiscal measures and feed-in-tariffs are instruments already in place in the majority of the EU Member States with only a few countries implementing a quota obligation/ green certificate system (Austria, Belgium, Italy, Sweden and the United Kingdom). Only Ireland and France are still operating bidding/tendering systems. We shall come back in more detail to support schemes in chapter 8, when we look at the economic analysis of a MHPP.

Country / Policy Instrument

Investment subsides

Fiscal measures

Feed-in tariffs

Quota obligations / Green certificates

Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembourg The Netherlands Norway Portugal Spain Swedwn United Kingdom

* * * * * * *

* * *

* * * * * * *

* (2002, hydro) *

* * *

*

*

*

* * * * * * * * *

* * * * * *

Bidding systems

*

* * * *

Figure 2 Policy Instruments in the EU Member States and Norway (ECN, 2003) Note Some instruments might not be shown in some countries given their specificity towards only a few forms of renewable energies or its temporary nature.

Courtesy of IED

HYDROPOWER AND RENEWABLE ENERGY SOURCES IN EUROPE(2)_5


(2.2) ELECTRICITY PRODUCTION IN EU MEMBER STATES This section provides a brief review of the energy sources used for electricity production in the EU, along with the targets set for 2010 in terms of electricity production from renewable energy sources (RES) for the EU15. Appendix II shows the main differences between EU Member States and Norway regarding the primary energy resources used by each country for electricity generation in 1999. From this data, it is apparent that Denmark has been investing heavily in wind power, due to the wind conditions present in the country, especially in coastal areas. Germany and Spain are also strong investors and developers of wind power technology. Similarly, a significant proportion of electricity production in Finland is already derived from renewable sources. Norway has always given priority to hydropower energy and is continuing with this policy, taking advantage of the ideal conditions created by its mountainous, glaciated landscape. The policies of Austria, Luxembourg and Sweden follow a similar pattern. France, in spite of continuing support for nuclear energy as the main source of electricity production, has also adopted policies aiming at increasing hydropower production (investing in new hydropower schemes, both large and small, and optimising older ones) and wind power. Belgium is following suit. The energy mix of the Iberian Peninsula (Portugal and Spain) is still based on conventional fuels such as coal and petroleum and –increasingly- natural gas. However, strong efforts to diversify supply towards renewable energy sources can be observed, in particular hydropower and wind power. Spain is already one of the major world players in wind power. The United Kingdom and the Netherlands essentially base their national energy mix on natural gas and coal. Ireland has a similar energy mix but also has a significant share of energy production from petroleum. Another country that depends largely on petroleum in terms of energy production is Italy. In Greece, the main fuel in terms of production is currently coal, but there is strong pressure at local level to promote renewable energy because of the environmental problems stemming from coal power plants, for instance heavy smog. (2.3) HYDROPOWER IN EUROPE Hydropower, large and small, contributes nearly 17% of electricity production in Europe. The disparities between countries are enormous, with hydropower ranging from 99% in Norway to almost 0% in Denmark, depending of course on the availability and quality of hydro resources suitable for power generation. It is estimated that small hydropower accounts for about 7% of total hydroelectric generation. Because of growing criticism towards large hydropower plants and of the little remaining number of adequate sites for such big infrastructure, small and micro-hydro presents the greatest potential for future development of hydroelectricity. The average installed capacity per plant varies from country to country. 700 kW is the average installed capacity for a SHP plant in EU-15. 300kW is the average installed capacity for a SHP plant in new member states and 1,6 MW is the average installed capacity for a SHP plant in Romania and Turkey (Source: ESHA). The table in Appendix I, from Eurostat and ESHA (2002) presents the installed capacity, production and number of plants for 28 countries.

8_(2)HYDROPOWER AND RENEWABLE ENERGY SOURCES IN EUROPE


Courtesy of IED


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INTRODUCTION TO MICRO HYDROPOWER .. . .

. .

How does a hydropower scheme work? A hydroelectric plant converts the potential energy of water into electricity by the use of flowing water. This water flows in water streams with different slopes giving rise to different potential for creating heads (size of fall), varying from river to river. The capacity (power) of a plant depends on the head (change in level) and flow as a result of the hydrology in the catchment area of a river.

Settling Basin

Channel

Forebay Tank

Intake Weir Penstock Figure 3 General layout of a hydropower plant

Power House

Type

Fall (meters)

High head

> or = 100

Medium head

30 – 100

Low head

2 – 30

Figure 4 Categories of heads of the streams

10_(3)INTRODUCTION TO MICRO HYDROPOWER


Medium and high head schemes: This type of plant typically uses weirs to divert water to the intake. From there it is led to the turbines via a pressure pipe or penstock. An alternative to penstocks, which in many cases is more economic, relies on a canal with reduced gradient running alongside the river. The canal carries the water to the pressure intake, and then, in a short penstock, to the

turbines.2

2 However, these solutions depend on the characteristics of the sites.

Low head schemes: This kind of project is appropriate to river valleys, particularly in the lower reaches. Either the water is diverted to a power intake with a short penstock, or the head is created by a small dam, complete with integrated intake, powerhouse and fish ladder.

What are the main types of hydro schemes? There are three main categories of hydroschemes, as described bellow by IEC (International Electrotechnical Commission)3: > Run-of-river hydro plants use the river flow as it occurs, the filling period of its reservoir being

3 EUROPEAN COMMISSION, Small hydroelectric plants – Guide to the environmental approach and impact assessment. New Solutions in Energy Supply, EC, ENERGIE Programme.

practically negligible. The majority of small hydropower plants are run-of-river plants because of the high construction cost of a reservoir. > Pondage hydro plants are plants in which the reservoir permits the storage of water over a period of a few weeks at most. In particular, a pondage hydro plant permits water to be stored during periods of low load to enable the turbine to operate during periods of high load on the same or following days. Some small hydropower plants fall into this type, especially high head ones with high installed capacities (> 1.000 kW). > Reservoir hydro plants are plants in which the filling period of the reservoir is longer than several weeks. It generally permits water to be stored during high water periods to enable the turbine to operate during later high load periods. As the operation of these plants requires the construction of very large basins, practically no small or micro hydropower plant is of this type.

What are the typical characteristics of small-sized hydro schemes? Plants can be classified as follows according to installed power capacity: Micro hydropower plants up to 100 kW * Definition of small hydropower supported by the European Commission and ESHA

Mini hydropower plants up to 500 kW Small hydropower plants up to 10,000 kW* Micro-hydro power schemes normally only support investment in large reservoirs if these are built for other purposes in addition to hydropower (e.g. water abstraction systems, flood control, irrigation networks, recreation areas). Nevertheless, there are ingenious solutions for linking and fitting the turbine in waterways designed for other purposes, e.g. schemes integrated with an irrigation canal or a water abstraction system. Below are a few examples of several possible applications of small, mini and micro hydropower plants.

INTRODUCTION TO MICRO HYDROPOWER(3)_11


Courtesy of IED


Example 1

The canal is enlarged to the extent required to accommodate the intake, the power station, the tailrace and the lateral bypass. The scheme should include a lateral bypass to ensure an adequate water supply for irrigation, should the turbine be shut down. This kind of scheme should be designed at the same time as the canal, because the widening of the canal in full operation is an expensive option.

Example 2

Schemes integrated with an irrigation canal

The canal is slightly enlarged to include the intake and spillway. To reduce the width of the intake to minimum, an elongated spillway should be installed. From the intake, a penstock running along the canal brings the water under pressure to the turbine. The water, once through the turbine, is returned to the river via a short tailrace. As fish are generally not present in canals, fish passes are usually unnecessary. In ESHA (1998) Layman’s handbook on how to develop a small hydro site.

Schemes integrated in a water supply system Drinking water is supplied to a city by conveying the water from a headwater reservoir via a pressure pipe. Usually in this type of installation, the dissipation of energy at the lower end of the pipe at the entrance to the Water Treatment Plant is achieved through the use of special valves. The fitting of a turbine at the end of the pipe, to convert this otherwise lost energy to electricity, is an attractive option, provided that waterhammer, which would endanger the pipe, is avoided. Waterhammer overpressures are especially critical when the turbine is fitted on an old pressure pipe. In ESHA (1998) Layman’s handbook on how to develop a small hydro site.

Micro hydropower plants at sluice systems 4 The installation of a small hydropower plant in a sluice system along large rivers can be an interesting multi-purpose use of existing structures dedicated to other purposes. The exploitation for hydroelectric purposes of the head created by a sluice system allows the production of energy by a renewable energy source without further significant environmental impacts. An interesting and recent example of this application is given by a pilot project where a 26 kW turbine unit of four parallel 6.5kW propeller turbines has been inserted in an old sluice constructed for agricultural purposes at Niemieryczow in Poland.

Micro hydropower plants on river stabilization ramps 5

4 EUROPEAN COMMISSION, Small hydroelectric plants – Guide to the environmental approach and impact assessment. New Solutions in Energy Supply, EC ENERGIE Programme.

5 idem

This rather unusual application is very interesting from an environmental point of view. Ramps are often constructed to stabilize the river course, particularly on fast flowing mountain rivers. The artificial head created by the ramps or by a series of check dams can be exploited for hydroelectric production. Installed power is however generally small since the flows and heads are generally low. Nevertheless this application represents an opportunity to meet the twin objectives of river protection and the use of a renewable energy source for energy production at the same time.

6 idem

Micro hydropower plants at bed load barriers 6 Bed load barriers create an artificial head in the watercourse which can be exploited for energy production.

INTRODUCTION TO MICRO HYDROPOWER(3)_13


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MAIN TECHNICAL ISSUES TO CONSIDER IN MICRO HYDROPOWER . .. .

How to choose a site from a technical point of view? Apart from the environmental issues, which will be discussed in detail in later chapters, a MHPP should consider the following three main issues if it is to be economically feasible:

WATER

>

HEAD

>

The larger the stream the more water is available for a hydro development.

The greatest fall over the shortest distance is preferable when choosing a hydro site.

However not all the water can be diverted from a river for use in power production, as water must remain in the river for environmental reasons.

More head is usually preferable since power is the product of head and flow. So, less flow is required at a higher head to generate similar amounts of power.

Nevertheless, other solutions are possible where no water is diverted.

With a higher head, the turbine is able to run at a higher speed. If a high head is available, a smaller turbine and generator might be necessary for the same flow and the water conveyance system can also be smaller and thus less costly.

DISTANCE TO ELECTRIC GRID

>

The closer a site is to distribution lines, or the load centre in the case of an off-grid plant, the less costly it will be to transmit electricity. For grid connection it is normally only economically feasible to connect a micro hydro plant to the 12 or 25 kV distribution system.

Figure 5 Relevant aspects for site evaluation

Connecting to the higher voltage transmission system greatly increases the connection costs.

What does the power of an MHPP depend on? The amount of electricity generated is the result of the head and the flow rate at a specific site. The power generated also depends on the turbine generator efficiency and pressure losses at the intake and penstock. Moreover, other constraints, such as environmental issues and fisheries, may oblige the developer to leave a minimum flow in the watercourse. It should also not be forgotten that the available energy depends on the day-to-day and year-to-year variations of the flow. The impact of these variations could be very significant, so careful measurements should be made.

P=QxHx8

Figure 6 How to estimate the power availability in a site

P _ Power (KW) Q _ Water Flow (m3/s) H _ Net Head (m)

Formula to convert the water flow and the head into power Source: ESHA (1998), Layman’s handbook on how to develop a small hydro site.

14_(4)MAIN TECHNICAL ISSUES TO CONSIDER IN MICRO HYDROPOWER


Courtesy of ESHA


What parameters are used in selecting a hydro turbine? Head, flow and power are the three main technical aspects in selecting a turbine. There are five main turbine types and each might be appropriate to certain physical conditions at each site. Turbines can be grouped in two main categories: Action turbines (or impulse turbines) These only use the speed of the water, i.e. only use kinetic energy. This type of turbine is appropriate for high heads (75 meters to >1000 meters) and small flows. The most popular such turbines are Pelton Wheels, which have a circular disc or runner with assembled vanes or double-hollow spoons. There are also other models like the Turgo side injection turbine, and the Ossberger or Banki Mitchell double propulsion turbines (these are further described in the text as “crossflow on Banki Mitchel turbine”). Reaction turbines This kind of turbine takes advantage of the water speed, and the pressure maintains the flow when contact takes place. The most frequently used are Francis and Kaplan turbines. Usually they have four basic elements: the casing or shell, a distributor, a pad, and the air intake tube. There are two distinct groups: radial turbines (Francis type) are suitable for operating on sites with a medium head and flow and axial turbines (Kaplan and Propeller type) are appropriate for operation with low heads and high and low flows. Both action and reaction turbines may be used in MHPP.

What are the differences between the turbines? Pelton turbine: is a typical high head turbine, which can also be used for medium heads, with power ranging from 5 kW to large sizes. This is an easy to use action-type turbine with a high efficiency curve and it has a good response to variations in flow. Cross Flow or Banki Mitchell turbines: are mainly used at sites where there is low installed power. In general their overall efficiency (around 75-80%) is lower than conventional turbines. They have a good response to variations in flow, which makes them appropriate for work where there is a wide range of flows. They have the advantage of simplicity and ease of maintenance and repair. They are a tried and proven technology which can exploit sites that cannot otherwise be used economically and where, therefore, their limited efficiency is not relevant. They are suitable for low to high head sites from 1 m to 200 m head with flows over 100 l/s. Francis Turbines: are single regulated turbines more appropriate to use with higher heads given their efficiency. Propeller turbines: have the advantage of running at high speeds even at low heads. Kaplan Turbine are high efficiency propeller-type turbines, very advanced and consequently quite expensive in investment and maintenance. Their response to different ranges of flow conditions is very good. More is said about propeller turbines in the next chapter.

16_(4)MAIN TECHNICAL ISSUES TO CONSIDER IN MICRO HYDROPOWER


Pelton turbine

Cross Flow or Banki Mitchell turbines

Francis Turbines

Propeller turbines (Kaplan Turbine)

MAIN TECHNICAL ISSUES TO CONSIDER IN MICRO-HYDRO POWER PLANTS_17


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INNOVATIONS IN TECHNOLOGY . ..

.

Advances in technology and automation have been making micro hydropower more attractive. Fully automated plants, as well as a reduction in manufacturing costs of the turbines and generators have led to significant changes in this type of energy project. Technical developments, have also brought operational cost reductions, for instance through the use of computerized systems, and consequently a decrease in the need for onsite personnel. The latest trends in micro hydropower technology have mainly been the following: > Optimization and standardization of the units turbine, generator and civil works; > Use of Siphon-type machines leading to a reduction in excavation costs, eliminating the need for intake gates and simplifying civil works and turbine construction; > Research on Francis machines to cover a wider operating range and flatter efficiency characteristics; > Development of computer-based systems instead of conventional electronic governors. Despite ongoing development, MHPP technology is generally quite mature. Future research will concentrate on new materials such as composite materials. For small heads, development is concentrated on small units in multiple arrangements, using techniques for variable speed and frequency conversion. The power performer generator, which can already be used for small hydro in the 5-10 MW range, might in the future also be adapted for use in micro plants.

18_(5)INNOVATIONS IN TECHNOLOGY


Courtesy of CEEETA


What technology has been developed for low and ultra low head sites?

The major potential for these sites lies in weirs, sluices and mills. These sites are plentiful in Europe. However in most locations the return on development cost is not sufficient. A long-term view is necessary, with repayment over a longer term than is usual – say 10-20 years. Interestingly the largest number of sites developed in Europe is found in Germany, where interest rates have been low and there has been a long cultural tradition of accepting long term investment: for instance, energy performance contracting in Germany regularly accepts payback times of 10-15 years. To promote a wider acceptance, the payback time has to reach the 4-8 year range (or even less if possible). Thus, reducing capital costs is a vital consideration. Investment costs should be kept below �3000 per kW at a normal capacity of 40-50%. (Capacities of 60% can be achieved on some sites low down the river profile). The major technological developments in this field have been designed to reduce cost. The main technologies that have been developed for low head sites are summarized below:

Waterwheels There are two types of wheel – undershot and overshot. Undershot wheels have a low efficiency (25%) and are used on sites where there is not enough head for an overshot wheel. Overshot wheels can have relatively high efficiency (60-75%). They are relatively expensive to produce, but still may be relevant where visual or historic considerations are important. For instance, The National Trust installed an overshot waterwheel in the original emplacement to generate electricity at the historic Aberdulais Falls near Neath in the UK. A new design is claimed to be able to produce hydro turbines moving paddle wheels and a multiplier mechanism enabling capacities of 20 to 100kW. The inventor claims that this system is both environmentally friendly and affordable, but no independent economic data is available.

Propeller turbines These are reaction turbines similar to a ship’s propeller. They usually depend on the head rather than the flow and are very cheap to construct. At low head sites small parallel propeller turbines with a variable speed drive can adapt to the flow by opening and closing individual turbine intakes to match river flow. The key is that the head is fixed and constant and the speed of the propeller therefore depends on the head. This can be calculated to a required degree of accuracy. They can operate on heads greater than 0.5 m and on very small flow rates, but the efficiency is reduced on heads below 1m. The manufacturer of this type of technology has developed sites with propeller turbines in existing sluices for as little as $500 per kW which are potentially very profitable. Other developers have produced a similar small variable speed modular design using a siphon. This has a capacity of 10 kW and is ideal for use on old mills and lock gates.

20_(5)INNOVATIONS IN TECHNOLOGY


Recently, this concept of the simple modular fixed flow turbine had been taken further. Small modular ‘back-to-back’ reaction turbines have been developed for use in pico hydro sites where the key factor is cheap and simple design. A model designed by a British firm is constructed in moulded plastic and is planned to be attached to a variable speed synchronous generator. It is available in standard diameters ranging from 200 to 600mm, for heads from 2 to 10 m, with power outputs from 1.6 to 58 kW and for flow rates from 0.095 to 1.7 m3/sec.

Wicon stem pressure turbine This is a new design rather like a water wheel that operates on heads from virtually zero to several meters with significant flow rates. It is intended primarily for fitting into existing weirs, barrages and sluices. It is still in the development stage. The inventor claims high efficiency and very low capital cost and it is claimed that it can also make use of the flow of the river as well as the head of the site, however these have not been verified by independent sources to date. In addition, it operates at a relatively low revolution rate and allows fish to pass up through the turbine unharmed. This does not appear suitable for very small sites since a significant flow rate is required (examples given are from 2m3/s upwards and the prototype is for 12m3/s).

Archimedes Screw A German firm has adapted the traditional Archimedes screw to generate energy and this has the advantage of letting fish pass through the screw without problems. A number of examples have been installed in Germany and Switzerland with heads in the range 1-5m, and in principle they can use water flows of 0.1-5m3/sec and heads up to 10m, with power capacities from 3 kW to 300 kW. Little information is available about costs, but this could operate on a very low head and is relatively simple, and so should be competitive.

Hydromatrix ® Turbine This new idea in turbine design is intended to cope with sites where the flow rate changes through an operation. It uses hydro surpluses from large flows – the minimum design flow is 100 m3/s and the required head is from 330m. Each turbine produces between 200 and 700 kW. Pilot projects include large canal lock gates on the Danube, water intake towers for water supply (USA) and upgraded small hydro plants (Austria). These turbines can utilize the flow in the varying head when a lock chamber fills up. Many small turbines are placed in parallel in a matrix designed to use all the generation potential of such an operation. These turbines are now in production, but are still primarily large hydro in nature (with installed plant size varying from 3MW to 85MW). However a more refined design, the Straflowmatrix®, will cope with smaller flows.

INNOVATIONS IN TECHNOLOGY(5)_21


Bulb turbines These are traditional modular propeller turbines with an integrated servo-generator. It would be possible to use ultra low head sites by placing such turbines across a river and using them to drive high pressure pumps that operate an impulse turbine on the river bank.

Mini Aqua Standardised Range Alstom has developed a standardised range of products called Mini Aqua, which integrate a turbine, generator and a control system in a single equipment set. It is at present only available for mini rather that micro hydro (from 300 kW), but it covers a wide range of heads and could theoretically be extended to smaller capacities. The interest of this concept is that it reduces delivery times, investment and maintenance costs by providing tested and compatible machinery. It remains to be seen whether the micro-market manages to attract similar offers from a manufacturer. Overview It is clear that a number of potential techniques are being developed that can provide economically viable solutions. Each site is speciďŹ c and so it is impossible to specify appropriate equipment without close attention to the site under consideration. However, it is clear that technological solutions can usually be found from the choice available and the key problems relate to the associated civil engineering structures. The Wicon and Archimedes screw solutions seem particularly promising since they do not obstruct the passage of ďŹ sh, but these are still at a very early stage of development.

22_(5)INNOVATIONS IN TECHNOLOGY


Turbine system

Head range

Capacity range

Types of site

Cost

Advantages

WaterwheelOvershot

Up to 5 m

Up to 500kW

Old mills

High

Visual attraction – compatible with historic features. Acceptable efficiency

WaterwheelUndershot

Up to 2 m

Low

Old mills with very low head

High

Visual attraction – compatible with historic features.

Kaplan

0.5-10m

wide

Dams in rivers

High

Matrix

3-30m

200kW+ units in banks (usually in MW sites)

Dams, locks, intakes

Rel high

Bulb plus impulse turbine on riverbank

0-5m?

Unknown – primarily small sites

Structures in rivers, free running rivers

Probably rel. High

Archimedes

0.5-10m

3-300kW

Weirs and dams, mill sites

Unknown – possibly rel. low

Fish friendly, Novelty

Parallel or modular propeller turbines

0.5-10m

1.5kW – MW scale (by modular increase)

Weirs, dams, mill sites, sluices, etc.

Low – but civils depend on site

Can have higher capacity than Kaplan

Stempressure turbine

0.5-5m

20kW upwards (perhaps to several MW)

Weirs, dams, etc.

Unknown, but claimed low

Fish friendly, Picturesque

Crossflow

1-200m

Wide

Varied – dams, new construction, leats, penstocks, pipework etc.

Low

Easy to maintain

Easy access for maintenance (removable)

Figure 7 Evaluation Grid - Low Head

INNOVATIONS IN TECHNOLOGY(5)_23


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ENVIRONMENTAL ISSUES . ..

.

Hydropower plants have considerable environmental advantages (positive externalities) that have to be considered in the evaluation process, both from the collective and individual point of view. Hydro power plants are free from gas emissions. The prime environmental advantage is the displacement of electricity production from fossil fuels. Considering a coal fired plant as the reference plant, the production of a MWh of hydroelectricity avoids the emission of 0,7 tonnes of CO2 and of 0,045 tonnes of SO2. However a hydro power project can cause negative impacts on the environment if precautions are not taken. Negative impacts affect fisheries and river ecology in the by-passed stretch of the watercourse and relate to the impact of pipeline and grid connection works on the terrestrial environment. The main environmental impacts of micro-hydropower plants are the blocking of natural fish migration and insufficient reserved flow. Thereby the main problem is that measures to mitigate these impacts are in many cases decisive for the economies of a micro-hydropower plant, because building a fish pass is very costly compared to the overall investment cost and increasing the reserved flow in a small river significantly reduces possible energy production. What is expected from a modern micro hydro scheme from the environmental point of view? The answer in brief is as follows: small structures built of local natural materials specifically designed to blend into the landscape and with the use wherever possible of buried penstocks, underground power cables and limited access tracks to reduce visual impact. But most of all, a micro hydro plant has to be as respectful as possible of the river ecosystem. Some technological developments can help mitigate the damage done to river life: What examples are there of developments in environment friendly design? OIL-FREE KAPLAN TURBINES Focus is put on the prevention of oil pollution as large quantities of oil are found in hydro stations, particularly in Kaplan machines. Large Kaplan turbine runner hubs have generally been oil filled since they were introduced in 1920. As a test case, GE Hydro installed an oil-less runner at Porjus power station, Sweden, in 1998. In this design, the blade operating mechanism space was filled with water and the servomotor was located in the upstream end of the hub. The bearings of the mechanism were provided with five different, permanently lubricated bearing materials. Surface pressures on bearings were also relatively high. Hub part materials were chosen for their non-corrosive properties and the Hub body was made of bronze. Links, cross heads, levers, blade trunnions, piston rod and piston were made of stainless steel. After four years of operation, there were no significant signs of wear in the bearing and the units are operating successfully. It has been shown that a Kaplan runner can reliably operate with permanently lubricated commercial bearings and with hubs filled with water.

24_(6)ENVIRONMENTAL ISSUES


FISH-FRIENDLY TURBINES Mechanical and hydraulic mechanisms damage fish as they pass hydro turbines and to spare them, fish-friendly turbines are required. The main mechanisms which cause injury to fish are abrasion, grinding and strike, on the one hand. On the other hand, turbines are responsible for submitting fish to rapid pressure changes as they pass through the system. Fish are more sensitive to pressure decrease than pressure increase. For example, fish experience depressurisation from as high as 607 kPa on the upstream side of runner to about 48 kPa on the discharge side. Cavitation is the rapid vaporization and condensation process of liquid. It normally occurs when the local pressure in the liquid drops to or below vapour pressure. Cavitation is also believed to cause damage to fish. Finally, fish are believed to sustain injuries, sometimes lethal, when they encounter zones of “damaging” shear stress within the turbine system. H3E Watermill turbines referred to in chapter 5 represent another radical approach to fish protection.

KAPLAN TURBINES Kaplan turbines should be operated at high efficiency with no cavitation. This reduces the risk of fish injury and decreases runner replacement costs. The gaps removed near the hub, as well as on the blades and discharge ring, eliminate the increased risk of fish injury and enhance turbine efficiency. The use of hydraulically smooth stay vanes, properly placed in relation to the guide vanes, minimizes the potential for fish injury as a result of strike and promotes an efficient operation of the turbine. Flow visualization tools such as CFD (Computational Fluid Dynamics) can help optimise the placement of these two important components and reduce fluid disturbance; The use of biodegradable lubricating fluids and greases, fluid in the hub, and greaseless guide vane bushes keeps harmful pollutants out of the water; All surface welds should be polished to reduce abrasion injury to fish.

FRANCIS TURBINES A smaller number of blades reduces the probability of fish strike and abrasion and maximizes the size of flow passages. A smaller number of blades results in longer blades to maintain the same capacity and power production, and minimize cavitation. A thicker blade entrance edge produces a runner with fairly flat efficiency performance characteristics related to the head. This means entrance edges will not cavitate at high heads, and flow separation is less likely to occur, and thus passage conditions will be safer. The reduced guide vane overhang eliminates the gaps that cause damaging vortices. Increasing the distance between the edge of the guide vane and the runner can be achieved by enlarging the pin circle diameter. This also reduces the probability of the fish grinding between the training edge of the guide vane and the runner. Smooth surfaces on stay vanes, guide vanes and upper draft tube cone should be provided, in order to reduce potential abrasion and decaling damage to fish.

Apart from these technological developments, other mitigation measures are to be considered and evaluated in the environmental impact studies. Some basic measures designed to take account of environmental issues are described below (based on EUROPEAN COMMISSION, Small hydroelectric plants – Guide to the environmental approach and impact assessment. New Solu7 General layout of an hydropower plant

tions in Energy Supply, EC ENERGIE Programme7).

ENVIRONMENTAL ISSUES(6)_25


IMPACT ON THE RIVER ECOSYSTEM As we have already stressed, the main ecological impact of a MHP is on river life and especially fish population and migrations. Even with state-of-the-art technology, the impact of a power plant cannot be zero, which is why ESHA has expressed concerns about the EU WFD (Water Framework Directive) adapted in 2000. Indeed, the WFD requires that the “ecological quality” of rivers may not be negatively affected by any modifications done to the water body or river bed. A strict application could mean that no new hydro plants could be built, and that existing plants would see their profitability fall due to the rise in the legal reserved flow and to other “ecological investment”. A compromise might be found, as this would clearly endanger another EU Directive, namely the Renewable Energy Sources (RES) Directive. Clear and predictable transposition terms and compensation schemes for small hydro producers could be a step in that direction. However, the requirement to maintain a high ecological quality in European rivers will always mean that impacts on river life must be minimized as much as is technically and economically possible. DIVERSION WORKS The diversion works cause stress for an ecosystem subject to periodic variation in flow rates characterized by a very wide range of water levels, velocity and transport of bed load. National and EU regulation require a reserved flow to be protected whatever the operating conditions of the plant. The WFD of 2000 imposes a reserved flow of 15%. For more details on reserved flow, see European Commission (2000), SHP – Guide to environmental approach. In addition to ordinary diversion works, flow rate regulation refers to the specific situation in plants which divert water continuously and release it only at certain hours of the day, days of the week or periods of the year: this case, as previously noted, is extremely rare in micro hydropower plants, except for plants in multipurpose schemes where the hydroelectric energy production is secondary and where the environmental problems are not specifically created by the hydroelectric plant. Regulation of the rate of flow as a result of the construction of a plant introduces new impacts which can be negative or positive. The negative impacts relate to the modification of the flow regime downstream of the water restitution which can be incompatible with other downstream water uses. FISH RESTOCKING AND PASSES In many countries fish restocking is one of the duties of hydroelectric plant operators, both large and small. This duty is imposed because of the belief that a hydroelectric plant is harmful to fish, and indeed a negative impact on fish has always been observed. Nowadays all national laws require, where pertinent, the construction of fish passes at the diversion works of hydropower plants. Nevertheless fish can suffer serious injuries or even die in the passage through the turbine if they cannot find the fish pass to go downstream to the weir or dam. For some years turbine manufacturers have been designing new “fish friendly” turbine blade profiles in order to reduce the percentage of fish killed passing through the turbine. These blades have produced interesting results. Many studies have been published on the specific issue of Fish Passes; see for example FAO (2002) - Fish Passes: Design, dimensions and monitoring. VISUAL IMPACT ON THE LANSCAPE Despite the limited size of MHP projects, they nevertheless have a visual impact on their surroundings, which must also be mitigated.

26_(6)ENVIRONMENTAL ISSUES


WALLS & EMBANKMENTS The aim of these structures is to consolidate the banks, especially in fast flowing rivers. Depending on the type of scheme, embankments may be constructed instead of or complementary to rock armour, and levees must be constructed. This can include both the construction of new embankments and increasing the height of existing ones, necessary to allow the plant to operate in different hydraulic conditions. This is typically the situation in the case of the construction of a small hydropower plant on a river flood plain: the water diversion is usually obtained by a weir of limited height. Retaining walls are needed for waterways, built across slopes that are already unstable or slopes whose stability could worsen as a result of carrying out the works. In the past many large and small hydroelectric plants were seriously damaged by landslides which destroyed waterways - canals and penstocks – cut into an unstable mountainside. Walls for consolidating slopes have generally a significant visual impact, even if current – and by now reliable - techniques of natural engineering can greatly reduce the visual impact. These may even substitute the traditional rigid or semi-rigid structures with new ones with negligible impact and a comparable efficiency. The possibility of utilizing these techniques can’t be unconditional, but must be considered case by case as a function of the characteristics of the slopes to be consolidated, of the loads on the structures and of the time required for the naturalistic engineering protection to become effective. PENSTOCKS The penstock should be placed underground whenever possible. Pipe and coating technologies are now very reliable and so an underground penstock requires practically no maintenance for decades. On the other hand, the impact on the environment, in particular the visual impact, is greatly reduced. However, particular care must be taken on slopes. Because of the larger zone excavated to install the pipe, the risk of landslides can be greater when there is an underground penstock than when there is one placed above ground. In addition, the use of plastic pipes (glass reinforced plastics or HDPE) is desirable in order to avoid corrosion problems in steel pipes resulting from eddy currents in the ground, and to reduce maintenance. Where a penstock cannot be placed underground for any reason, it is preferable to build it without expansion joints since this avoids maintenance and any related access tracks or roads to the penstock, with a consequent reduction in environmental impact. The impact of an outdoor penstock can be further reduced if the anchoring blocks do not cover the penstock. Instead the penstock is connected to the blocks by steel beams. This reduces the visual impact and eases the inspection of the whole pipe, thus simplifying construction and increasing operational reliability. In order to reduce the negative impacts of MHPP further, the following measures can be of great help whenever applicable, having in mind that the size of this type of project will mean that it is unlikely to generate enough financial return to carry out very onerous mitigation actions: > facing the building with local stone; > construction of underground powerhouses; > creation of tourist infrastructure at storage basins; > creation of a low water river-bed; > creation of inundation areas.

ENVIRONMENTAL ISSUES(6)_27


OUTER WORKS (FENCING, YARDS) It is preferable that those works, especially open channels, which can represent a danger of accidents, are fenced in. This also applies to the intake and powerhouse areas where electrical equipment or moving parts (gates, trash rack cleaners and so on) are installed and where access must only be allowed to personnel. Fencing, when not constructed with walls or not very high, generally has a low visual impact and in any case solutions can be adopted which permit the optimal integration into the surrounding environment. One or more areas of hard standing are needed to permit access to the building and to allow manoeuvring of cars and trucks of the operational personnel. The area covered by hardstanding is always small and only large enough for the necessary vehicle movements, so that the area occupied and the associated visual impact is low. CLEARING OF EXISTING VEGETATION It is almost always necessary to clear existing vegetation in order to build a micro hydropower plant. This action is especially relevant for high head schemes with long outdoor or buried penstocks. The impact is generally relevant both due to the impact on the natural environment and to the disďŹ gurement of the landscape caused by the visual impact of a bare strip cutting across the slope. ARCHAEOLOGICAL AND GEOLOGICAL SURVEYS Archaeological and geological surveys are not usualy relevant for MHPP because of the dimension of the site. However when dealing with ancient structures, like old mills, the history and traditions of the place must be respected, if the promoter and/or the local authorities want to take into account these values for tourism or heritage.

28_(6)ENVIRONMENTAL ISSUES


Courtesy of IED


(7)

GUIDELINES FOR PLANNING AN MHPP . . .

According to national legislation and rules, the studies and steps necessary for the development of an MHPP do not differ fundamentally from those for a larger project. Whatever the size , similar steps are needed (and often required by many administrations) for small and large hydro. A site has to be found and assessed from different points of view: the potential for electricity production, environmental impacts, conflict with the interests of third parties (fishermen, farmers)... What will mostly differentiate an MHPP from a larger scheme will be the degree of detail at which this different steps most be conducted.

Building an MHPP is, despite the limited size of the plant itself, a complex and specialised procedure that must involve engineers, spatial planners and economists in joint work with the promoters, the equipment manufacturers, the local agents, the electricity utility, the public bodies involved and the financial institutions. Providing a detailed guide on how to proceed with the evaluation of this type of project is not an easy task as it depends on the site and on the type of promoter. However a list of topics (tasks) and steps valid for most situations can be proposed.

MAIN TOPICS (TASKS) > Related to the site _ Topography and geomorphology of the site _ Evaluation of water resources _ Estimation of the generation potential (kW and kWh) _ Basic layout > Related to the technology _ Hydraulic turbines, generators and control equipment _ Plan for grid connection (including transformer if necessary) > Related to the environment _ Environmental impact assessment and mitigation measures > Related to the economic feasibility study _ Pre-feasibility study _ Feasibility study _ Application for financing

30_(7)GUIDELINES FOR PLANNING AN MHPP


MAIN STEPS IN PLANNING AN MHPP Since the key aspects of every micro hydropower plant development are similar, the components that follow can act as a rough guide to areas that need be addressed when planning to implement a project. > Site Selection – choosing a suitable site is one of the most important steps in developing a micro hydro project. It provides a starting point for the analysis and determines the feasibility of developing that site. > Choice of Technology – according to the configuration of the site, an appropriate type of turbine - and manufacturer - has to be selected. The complete design of the MHP has to be planned. > Plan Development – a business plan should be developed prior to purchasing supplies, hiring staff, starting construction, or simply spending too much money. It will provide guidance on selecting the appropriate type of project. > Costs and Financing – it is important to consider project costs when developing a project. The cost of a project is largely dependent on facility size, penstock length, length of transmission lines, site conditions and accessibility. A reasonable cost estimate including development, construction and operating costs, is required to determine project feasibility. The scale of a hydro project, even micro, means that most developers have to rely on external financing for a large portion of their project costs. There are a host of requirements for obtaining financing. > Permit Granting Process – there are many different processes involved in obtaining the necessary licences, all of which should be carefully addressed and scheduled in order to conduct a successful project. In parallel, it is imperative to make sure that the situation concerning land use rights is clear, as well as securing the right to use the river.

The licensing process varies greatly from one country to the other, but it generally involves three main branches : Environmental licensing: this process generally involves at least one environmental impact assessment (sometimes a preliminary assessment is followed by a more in-depth report of planned compensatory measures, and according to the country separate impact assessments might be required for the river itself and for civil works, depending on the relevant administrative authorities). The final license is sometimes given only after the actual implementation has been verified by the environmental agency. In some countries, this process enables the projects to be declared “of public interest”, which offers better guarantees to the developer. Building licence: this may be attributed at the municipal or regional level, but it nearly systematically requires an agreement with the municipal authorities, and of course requires that the land rights have been secured. This process often includes a public consultation, in case the environmental licensing doesn’t. Electrical licence: in the case of a grid-connected project, even if the generation is exclusively for on-site use, the approval of the national electricity regulator is generally required, though simplified provisions might apply for small-sized projects such as MHPPs. It is only at the end of the complete process that the final operating licence is delivered to projects which have complied with all the different administrative requirements.

> Grid Interconnection and Power Sales – grid interconnection studies as well as the relevant contracts for interconnection, transmission of energy through the power grid, and power sales themselves (PPA) are of course fundamental for the success of a grid connected plant.

GUIDELINES FOR PLANNING AN MHPP(7)_31


> Construction – construction considerations include permits, timing, material supply, environmental management plans and construction contracts. Before entering into the final design and building stage of the project, most of the components discussed previously need to be finalized. Before starting construction it is important to consider how the project will be completed and who will coordinate the work. > Operation, Maintenance and Surveillance (OMS) – it is essential for an MHPP project to implement correct procedures related to Operation, Maintenance and Surveillance. Who will be responsible for the day-to-day operation of the plant? Is the maintenance guaranteed by the manufacturer? By another specialized firm? Under which type of contract? OMS considerations during the design phase of development should be detailed, and ideas on how to manage OMS during the lifetime of the facility should be presented and analysed. > Local Plan for MHP development – The SPLASH project proposes an innovative approach to planning micro hydropower through the development of local plans. SPLASH local plans help to identify major factors within the decision-making process and show the following advantages: _ Easy identification of the excluded areas for micro hydro power development due to administrative or technical reasons, which will lead to a decrease in risks and in project costs. _ Better evaluation of the environmental impacts, by the broader scale analysis of the burdens and the potential interactions with the projects. _ Improvement of the dialogue between stakeholders and the public participation process and coordination with other river uses. The main feature of the plan is the use of Geographic Information Systems (GIS). It allows one to consider constraints on the area being studied, in order to better understand the issues affecting decision making. It takes into account all the relevant parameters of a territory rather than making an analysis of a point in space. A more detailed description of the local plan is available on the Guidelines and Lessons learned on local planning, another deliverable elaborated during the SPLASH project.

32_(7)GUIDELINES FOR PLANNING AN MHPP


Courtesy of ADEME


(8)

ECONOMIC ANALYSIS OF AN MHPP . ..

As with any other investment project, the economic feasibility of micro hydro projects must be proven to attract the interest of investors. It is also of key importance in enabling financial institutions to supply the funds necessary to finance the project in addition to the promoter’s own funds. This will be possible if the project is “bankable”.

Questions a promoter has to answer prior to the decision to invest is taken include the following: _ What are the costs incurred by the project? _ What will be the revenues? _ Does the project generate a reasonable rate of return to their own investment funds? _ What are the financial sources?

COSTS The cost of an MHPP is site-specific. It depends on the necessary civil works, the generating equipment and the electrical transmission/distribution lines. While the cost of the generating equipment is almost a linear function of power size (in kW), the cost of civil works depends on the physical characteristics of the site. Similarly, the cost of the electrical lines depends on the type of grid and on the distance to the connection point. The terms for connecting to the grid differ widely in the EU with some countries deliberately leaving only part of the cost to developers, while in other Member States (eg Spain, Germany) all the costs are born by the investor. Other development costs have to be taken into account: engineering studies, environmental impact studies and the legal fees to submit the project for approval to the different public bodies involved. Besides the investment costs, which have to be paid off during the initial life of the project in the form of depreciation, operation and maintenance costs (O&M) have also to be estimated and depend mainly on the permanent personnel involved, on the insurance costs and on repair and maintenance contracts concluded with specialized firms. Certain expenses which will not be encountered every year, like major repair/maintenance of machinery and replacement of brushes, will also have to be taken into account. Payment of the debt and interest on bank loans will also need to be estimated. Usually the whole calculation is made in current costs in order to avoid making estimates of inflation.

34_(8)ECONOMIC ANALYSIS OF AN MHPP

.


The following graph correlates the investment cost in Euro/kW installed capacity for different power ranges and heads. SpeciďŹ c cost of installed capacity Euro/kW 4000 3500 3000 2500 2000 1500 1000 500 0 0

20,00

40,00

60,00

80,00

100,00

120,00

Head (m)

< 250 kW ďŹ gure 8 Investment costs for MHPP (source: European Commission, Directorate-General for Energy and transport, Brussels, 2001.)

250 to 1000 kW > 1000 kW

Cost evaluation must be conducted carefully because such projects are capital intensive and costs depend very much on the characteristics of the site. In brief, the following typology of costs applies to micro hydro projects: Initial costs Feasibility studies and project development are typical items of MHP projects. They include hydrological and environmental assessment, preliminary designs, permits and approvals (for water, land use and construction), land rights, interconnection studies, power purchase agreements (PPA), project management and ďŹ nancing fees. One of the aims of the SPLASH Project, through its methodology of the implementation of local plans is to minimising the development costs of the micro hydropower projects. > As several constraints are analysed simultaneously, over a large area within the plans, several sites could be potentially developed. Therefore, cost analysis and the economical risks could then be assessed in an easier manner and comparisons done. In this order, the support to decision makers and stakeholders could become a handy tool for micro hydropower development. > Construction costs This type of costs is incurred after the decision to go ahead with the project is taken. Such costs include engineering, insurance premiums, civil works and equipment. > Operation and Maintenance These are regular costs that occur on a yearly basis and include transmission line maintenance, general administration, repairs and contingencies. Operation and maintenance cost most importantly include maintenance of the civil works and the equipment of the microhydropower plant.

ECONOMIC ANALYSIS OF AN MHPP(8)_35


REVENUES Revenues come from specific purchase contracts signed with the electric utilities. Depending on the legislation, electric utilities are usually obliged to buy the electricity generated from renewable energy resources on a priority basis. In some countries there are specific incentives given to investment in electricity production using RES. According to these special schemes, hydro, wind power and photovoltaic projects can apply for special loans with low or even zero interest rates, or receive other types of investment subsidies. Prices paid to MHP producers vary considerably among European countries. In the tariff structure different components can be found, according to the country: a market price, an avoided carbon price, a green certificate price or other forms of promotional elements. Figure 9 illustrates some of the differences between countries. The different support schemes can affect greatly the development of micro-hydro plants. Whereas a fixed feed-in tariff reduces uncertainty and guarantees cash flow for a determined duration, market-based schemes can sometimes reveal themselves too uncertain and therefore unattractive to developers. Even if price alone is not the only factor to take into account for an investment decision, the detailed summary of individual countries’ situation found in Appendix III might prove helpful. To estimate his revenues, the promoter of an MHPP has to estimate the production and sales during the different periods defined in the tariff legislation. Usually the tariffs have an hourly and seasonal structure to take into account the shape of the load demand curve and the marginal costs of electricity production during every period. €/MWh 160

140

120

100

Average price - 73 €/MWh

80

60

40

20

0 It.

Bel.

Holl.

UK

Port.

Ger.

Sp.

Irl.

Gree.

Lux.

Fran.

Aus.

Swe.

Fin.

Bonus/GC

100

90

68

66

-

-

30

-

-

25

-

-

23

4

Elec. Market

46

33

33

20

-

-

35

-

-

31

-

-

26

26

total

146

123

101

86

72

68

65

64

63

56

55

52

49

30

figure 9 Differences in tariff structure amongEuropean Union countries (source: http://www.appa.es/dch/min_en.htm)

36_(8)ECONOMIC ANALYSIS OF AN MHPP


PROJECT FINANCING Project financing is a key element for decision - making in capital - intensive projects and it is a common rule that developers rely on capital markets and other types of lending to obtain the required funding. The appropriate structure for funding depends much on the promoter and on the specific financing sources available (e.g. loans through government incentive programs, government grants). Also, if a PPA is signed, it can be of great help in a project finance scheme, because it provides a guarantee of revenues. The main sources of equity funding are private capital (from the promoter), shares issued to the public, loans and grants from the government. Debt funding is associated with loans given by banks, lease companies and government agencies. The share of debt on total funding depends on the guarantees offered by investors and on the expected profitability of the project.

ASSESSING THE PROFITABILITY OF AN MHPP PROJECT Different summary measures are usually considered for the economic and financial appraisal of investment projects. Among the most frequently used measures we can identify the following: the pay-back method, the rate of return on equity (ROE), the net present value (NPV) or the internal rate of return (IRR).

Definitions Payback period: number of years necessary to recover the investment. Usually we encounter payback periods from 5 to 10 years when assessing profitable MHPP projects, which themselves can have a life span of 25 years or more. This varies according to the investment needed, tariffs applied and O&M expenditure. ROE: percentage annual average return (net of depreciation) on the initial investment. It is used as a proxy for the average profit rate, which must be compared with the opportunity cost for capital or with the remuneration of an alternative investment. NPV: sum of the discounted cash flows over the life time of the project assuming a discount rate. IRR: discount rate that equals the inflows (receipts) and the outflows (costs). It is a proxy for the project’s expected rate of return.

To calculate these indicators a cash-flow table for the life time of the project has to be generated. Figure 10 gives an example of a cash flow table and of the value calculated for the above listed indicators.

ECONOMIC ANALYSIS OF AN MHPP(8)_37


THE ECONOMIC EVALUATION The following table presents a typical cash-flow assessment of a project, adequate to run simple feasibility studies. No assumption is made concerning the way the project is to be financed. If the values estimated for IRR and/or NPV are acceptable for the decision maker, a deeper analysis must be conducted in order to submit the project for final decision and to the banking institutions. In this example all the figures are in constant prices and according to the estimated IRR, it appears that the project is bankable and will give the investors a profit rate higher than 7,29% if the project can be successfully financed by the banking system at an interest rate lower than 10%. This project is a refurbished old mill and represents a 50 KW installation, run-of-river and is considered to take advantage of a feed-in-tariff.

2005

TOTAL INVESTMENT

2006

2007

2008

...

2025

19,000

144,000

INCOME Electricity sold

0

19,000

19,000

19,000

19,000

Other income

0

0

0

0

0

0

TOTAL INCOME

0

19,000

19,000

19,000

19,000

19,000

COSTS Management

0

600

600

600

600

600

O&M

0

2,500

2,500

2,500

2,500

2,500

Land rents

0

1,500

1,500

1,500

1,500

1,500

Municipal taxes

0

500

500

500

500

500

TOTAL COSTS

0

5,100

5,100

5,100

5,100

5,100

-144,000

13,900

13,900

13,900

13,900

13,900

PROJECT CASH-FLOW

INTERNAL RATE OF RETURN NET PRESENT VALUE PAY BACK PERIOD

7.29% � 32.801 10.4 years Unit: Euro

figure 10 Project Cash-flow (an example)

We have not taken the value of externalities associated with an MHPP into account. These externalities may either be positive or negative and are sometimes decisive for the approval of the project by public bodies. Environmental burdens, tourist upgrading of a region, job creation at a local level, income generation by municipalities are some examples of externalities to consider during the assessment.

38_(8)ECONOMIC ANALYSIS OF AN MHPP


Courtesy of ESHA


(I)

APPENDIX I

Installed capacity and production of SHP plants (up to 10 MW) in 28 countries (Eurostat and ESHA, 2002)

SHP insatlled capacity in MW (2002)

Country

SHP Electricity generation GWh (2002)

Belgium

192

60

Denmark

32

11

Germany

8594

1442

Greece

150

61

Spain

3129

1669

France

6621

1737

55

16

Italy

8048

2200

Luxembourg

113

38

0

0

Austria

4632

761

Portugal

917

344

Finland

753

309

Sweden

3270

972

Ireland

The Netherlands

204

68

36661

9797

749

238

0

0

Estonia

6

3

Hungary

28

8

Latvia

30

19

Lithuania

37

15

UK EU-15 Czech Republic Cyprus

Malta

0

0

Poland

874

210

Slovakia

29

7

Slovenia

471

156

EU-10

2224

656

EU-25

38885

10453

Bulgaria

17

133

Romania

436

346

Turkey

411

201

EU-CC

864

680

39749

20906

EU25+CC

40_( I ) APPENDIX I


APPENDIX II

(II)

Electricity from Renewable Sources

2010 TARGET

2002 Total Share

Hydro*

Wind

Biomass

Geothermal

Share in gross consumption of electricity - 2002 (in %)

EU25

21.0

12.9

9.9

1.2

1.6

0.2

EU15

22.0

13.7

10.4

1.3

1.8

0.2

BE

6.0

2.3

0.4

0.1

1.9

-

CZ

8.0

4.6

3.9

-

0.8

-

DK

29.0

19.8

0.1

13.1

6.6

-

DE

12.5

8.1

4.0

2.7

1.3

-

EE

5.1

0.5

0.1

-

0.4

-

EL

20.1

6.1

4.9

1.1

-

-

ES

29.4

14.6

9.3

3.5

1.8

-

FR

21.0

13.6

12.8

0.1

0.7

-

IE

13.2

5.5

3.6

1.5

0.3

-

IT

25.0

14.7

12.1

0.4

0.7

1.4

CY

6.0

0.0

-

-

-

-

LV

49.3

39.3

39.0

0.2

0.2

-

LT

7.0

3.3

3.3

-

0.0

-

LU

5.7

3.2

1.8

0,4

1.0

-

HU

3.6

0.7

0.5

-

0.2

-

MT

5.0

0.0

-

-

-

-

NL

9.0

3.6

0.1

0.8

2.7

-

AT

78.1

68.3

65.4

0.3

2.6

-

PL

7.5

2.1

1.7

0.0

0.4

-

PT

39.0

21.0

16.4

0.8

3.6

0.2

SI

33.6

25.9

25.1

-

0.8

-

SK

31.0

18.8

18.8

-

-

-

FI

31.5

23.7

12.4

0.1

11.2

-

SE

60.0

47.0

44.0

0.4

2.6

-

UK

10.0

2.9

1.2

0.3

1.3

-

* does not include pumped storage

Source: DGTREN - European Commission ; EU Energy and transport in ďŹ gures. Statistical pocketbook 2004. European Communities, 2004.

APPENDIX II(II)_41


(III)

APPENDIX III

Prices for SHP generation in the European Union Member States

Country

Compensation Scheme

Price for sale to the grid (�cents/kWh)

Belgium

Wallonia: Green certificates since 1st October 2002 Flanders: Green certificates since 1st January 2003

Wallonia: 12.3 = 3.3 (market price) + 9 (green certificate) Flanders: 12.8 = 3.3 (market price) + 9.5 (green certificate)

Denmark

Transition period from fixed price to green certificates.

8.48

Germany

Feed-in tariff

7.67 (< 500 kW)

Greece

Feed-in tariff

Interconnected system - 6.29 + 113/month Non-interconnected islands - 7.78

Spain

Fixed price (feed-in tariff) and premium payment adjusted annually by government.

6.49 = 3.54 (pool price) + 2.95 (premium)

France

Feed-in tariffs applicable only to renewable plants up to 12 MW. Price paid to SHP plants depends on their construction date. Winter tariff for SHP plants commissioned after 2001 is guaranteed for 20 years.

Operating before 2001: 7.32 + bonus for regularity of 0.75 (winter) and 2.94 (summer) Commissioned after 2001 SHP < 500 kW: 8.55 + regulatory premium up to 1.52 (winter) and 4.52 (summer) SHP > 500 kW: 7.69 + + regulatory premium up to 1.52 (winter) and 4.07 (summer)

Ireland

Public tender: Alternative Energy Requirement (AER) competitions. The Irish Government launched in February 2003 the AER VI.

6.41 (weighted average price)

Italy

Quota + tradable green certificates: The quota should increase by 0.3% each year starting from 2005. The grid authority fixes a cap (upper) price for green certificates every year. Certificates are issued only for the first eight years of operation.

4.6 (spot electricity price) + 10.0 (green certificates)

Luxembourg

Feed-in tariff. Premium is guaranteed for 10 years.

3.1 (electricity price) + 2.5 (premium only for plants under 3 MW)

Netherlands

New support system as from 1st July 2003. Wholesale electricity market and feed-in premium. Hydropower does not receive green certificates.

3.3 (market price) + 6.8 (premium)

Austria

Feed-in tariff: a) Old plants: Plants which obtained planning permission before January 1st 2003, including all those currently operating, are entitled to receive the guaranteed feed-in tariff for the first 10 years of operation. b) New plants: Plants obtaining all planning permissions between January 1st 2003 and December 31st 2005 and which start generating by the end of 2006 are entitled to receive the feed-in tariff for the first 13 years of operation.

Old plants 1st GWh: 5.68 1 – 4 GWh : 4.36 4- 14 GWh: 3.63 14-24 GWh: 3.28 + 24 GWh : 3.15 New plants Rebuilt plants with a production increase per year> 15% 1st GWh: 5.96 1 – 4 GWh : 4.58 4- 14 GWh: 3.81 14-24 GWh: 3.44 + 24 GWh : 3.31 New plants or Rebuilt plants with a production increase per year> 50% 1st GWh: 6.25 1 – 4 GWh : 5.01 4- 14 GWh: 4.17 14-24 GWh: 3.94 + 24 GWh : 3.78

Portugal

Feed-in tariff

7.2

Finland

Nordpool market plus premium

2.6 (market price) + 0.42 premium if < 1 MW + subsidy covering 30% of the investment cost

Sweden

Green certificates: This system was started May 1 2003.

4.9 = 2.3 (certificate level) + 2.6 (Nordpool price)

United Kingdom Quota + green certificates (Renewable Obligation Certificates)

Source: “2003 RES-E prices” EREF, second edition 2003 (July).

42_( I I I ) APPENDIX III

6.65 (500 kW - 5 MW)

2.0 (market price) + 6.6 (green certificates)


REFERENCES

(R)

BC HYDRO (2002), Handbook for Developing Micro Hydro in British Columbia (Draft) ESHA(1998), Layman´s Handbook on how to develop a small hydro site ESHA, BLUE AGE (2001), Strategic Study for the development of small hydro power in the European Union

(Altener project) EUROPEAN COMMISSION (2000), Small hydroelectric plants – Guide to the environmental approach and

impact assessment. New Solutions in Energy Supply, EC ENERGIE Programme FAO (2002), Fish Passes: Design, dimensions and monotoring FRAENKEL, P. & al., “Hydrosoft (1997): A software tool for the evaluation of low-head hydropower resources”, HIDROENERGIA97 Conference Proceedings, p. 380 INTERNATIONAL HYDROPOWER ASSOCIATION, INTERNATIONAL COMMISSION ON LARGE DAMS, IMPLEMENTING AGREEMENT ON HYDROPOWER TECHNOLOGIES AND PROGRAMMES, INTERNATIONAL ENERGY AGENCY, CANADIAN HYDROPOWER ASSOCIATION (2000), Hydropower and the World’s Energy Future - The

role of hydropower in bringing clean, renewable, energy to the world. LECKSCHEIDT, J. & TJAROKO, T. (2002), Overview of mini and small hydropower in Europe PAUWELS, H. (1997), Communication to Hidroenergia’97 on the THERMIE programme of DG XVII Technical University of Lisbon, IST (2004), Energias renováveis e produção descentralizada – Introdução à

energia mini-hídrica VRIES, H & al., ECN (2003), Renewable Electricity Policy in Europe

> GENERAL INFORMATION ON MHP Innovative MHP Suppliers Internet sites: www.standruckmaschine.de www.ritz-atro.de www.hydromatrix.at www.hydrogeneration.co.uk www.zaber.com.pl preso.wanadoo.fr/michel.fonfrede/63cf/rouerm.htm www.esha.be www.europa.eu.int www.microhydropower.net: the micro hydro web portal www.microhydropower.net/link.php - a great selection of links Other Energy alternatives - www.energyalternatives.ca/systemdesign/hydro1.htm Micro hydro in the 1990’s - www.elements.nb.ca/theme/energy/micro/micro.htm

(R)APPENDIX I_43


)

EDIÇÃO_SPLASH PROJECT, ALTENER PROGRAMME - European Commission DESIGN_2&3 D, Design e Produção, Lda IMPRESSÃO_Taligraf IMAGEM DA CAPA_Imageone Setembro_05


ADEME (Agence de l’Énvironnement et la Maîtrise de l’Energie) ALPHA MENTOR CEEETA (Centro de Estudos em Economia da Energia, dos Transportes e do Ambiente) CORK COUNTY ENERGY AGENCY ENTEC ESHA (European Small Hydro Association Renewable Energy Association) IED (Innovation Energie Développement) MAES (Malopolska Agencja Energii i Srodowiska)

/brochura_Splash  

http://www.esha.be/fileadmin/esha_files/documents/SPLASH/brochura_Splash.pdf

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