( GUIDELINESFORMICRO

HYDROPOWERDEVELOPMENT
... . .

Spatial Plans and Local Arrangement for Small Hydro

( GUIDELINESFORMICRO
HYDROPOWERDEVELOPMENT
... . .

Spatial Plans and Local Arrangement for Small Hydro

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
)
(1) 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 com-
prehensive 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 participa-
tion 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, Portu-
gal, 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
 (2) HYDROPOWER AND RENEWABLE
ENERGY SOURCES IN EUROPE . ..
1

(2.1) EUROPEAN UNION POLICIES PROMOTING THE DEVELOPMENT

OF RENEWABLE ENERGY SOURCES

1 The Green Paper on Security of Energy Supply (2000) pointed out the main priorities for the Eu-
Renewable energy is defined as the
energy from non fossil sources of energy
ropean Union energy supply for the coming decades, which consist of reducing the dependence
like solar, wind, hydro, biomass, biogas, on imported fossil fuels and complying with greenhouse gas emissions targets.
geothermal, waves and tides, waste water
treatment plant gas and landfill gas, ac-
cording to the EU Parliament and Council Promotion of renewable energy sources is among the objectives of EU policy. The commitment
Directive 2001/77/CE, from September
is to reach a 12% share of renewable energy sources in gross inland consumption in 2010, up
27th 2001, on the promotion of electricity
produced from renewable energy sources from an initial level of 6% in 2001.
in the internal energy market.

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, com-
pared 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 promo-
tion 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)

Feed-in triffs Quota obligations /

Fiscal measures green certificates
Bidding systems (Fiscal measures)
(Subsidies)
Supply side Demand side

Investment subsidies (Quota obligations)

(Fiscal measures)

Figure 1
Classification of the different Policy Capacity based (kW)
Instruments used in EU Member States

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 eco-
nomic analysis of a MHPP.

Country / Policy Investment Fiscal Feed-in Quota obligations / Bidding

Instrument subsides measures tariffs Green certificates systems

Austria * * * * (2002, hydro)

Belgium * * * *
Denmark * * *
Finland * *
France * * * *
Germany * *
Greece * *
Ireland * *
Italy * * *
Luxembourg * * *
The Netherlands * * *
Norway * *
Portugal * * *
Spain * *
Swedwn * * * Figure 2
United Kingdom * * * 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.

HYDROPOWER AND RENEWABLE ENERGY SOURCES IN EUROPE(2)_5

Courtesy of IED
(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 pro-
duction, 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. Bel-
gium 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 pro-
duction 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 num-
ber 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 Ro-
mania and Turkey (Source: ESHA).
The table in Appendix I, from Eurostat and ESHA (2002) presents the installed capacity, produc-
tion and number of plants for 28 countries.

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

Courtesy of IED
(3) 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 de-
pends 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 tur-
bines 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 2
However, these solutions depend on the
the water to the pressure intake, and then, in a short penstock, to the turbines.2 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?

3
There are three main categories of hydroschemes, as described bellow by IEC (International
EUROPEAN COMMISSION, Small hydro-
Electrotechnical Commission)3: electric plants – Guide to the environ-
mental approach and impact assessment.
New Solutions in Energy Supply, EC,
> Run-of-river hydro plants use the river flow as it occurs, the filling period of its reservoir being 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 sever-
al 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 construc-
tion 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

*
Mini hydropower plants up to 500 kW
Definition of small hydropower supported
Small hydropower plants up to 10,000 kW* by the European Commission and ESHA

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
 Schemes integrated with an irrigation canal

The canal is enlarged to the extent required to accommodate the intake, the power station, the
Example 1

tailrace and the lateral bypass. The scheme should include a lateral bypass to ensure an ad-
equate 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.

The canal is slightly enlarged to include the intake and spillway. To reduce the width of the intake
Example 2

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 pres-
sure 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.

4
Micro hydropower plants at sluice systems 4
EUROPEAN COMMISSION, Small
hydroelectric plants – Guide to the
The installation of a small hydropower plant in a sluice system along large rivers can be an inter- environmental approach and impact
assessment. New Solutions in Energy
esting multi-purpose use of existing structures dedicated to other purposes. The exploitation for
Supply, EC ENERGIE Programme.
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 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 hy-
droelectric 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 objec-
tives of river protection and the use of a renewable energy source for energy production at the
same time.

6
Micro hydropower plants at bed load barriers 6
idem

Bed load barriers create an artificial head in the watercourse which can be exploited for energy
production.

INTRODUCTION TO MICRO HYDROPOWER(3)_13

(4) 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 > DISTANCE TO

The larger the stream the more
water is available for a hydro de-
velopment.
However not all the water can be
diverted from a river for use in
power production, as water must
remain in the river for environ-
mental reasons.
Nevertheless, other solutions
are possible where no water is
diverted.
Figure 5
Relevant aspects for site evaluation
ELECTRIC GRID >
The greatest fall over the short- The closer a site is to distribution
est distance is preferable when lines, or the load centre in the case
choosing a hydro site. of an off-grid plant, the less costly
it will be to transmit electricity.
More head is usually preferable
since power is the product of head
For grid connection it is normally
and flow. So, less flow is required
only economically feasible to con-
at a higher head to generate simi-
lar amounts of power. nect a micro hydro plant to the 12
or 25 kV distribution system.
With a higher head, the turbine is
able to run at a higher speed. If a Connecting to the higher voltage
high head is available, a smaller transmission system greatly in-
turbine and generator might be
creases the connection costs.
necessary for the same flow and
the water conveyance system can
also be smaller and thus less
costly.

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 fisher-
ies, 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 Formula to convert the water flow and the head into power

P _ Power (KW) Source:

Q _ Water Flow (m3/s)
Figure 6 ESHA (1998), Layman’s handbook on how to develop a small
How to estimate the power availability
H _ Net Head (m) hydro site.
in a 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 appro-
priate 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 as-
sembled vanes or double-hollow spoons. There are also other models like the Turgo side injec-
tion 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 suit-
able 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 Tur-
bine 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

(5) 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 gen-
erators 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 charac-
teristics;

> 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 Na-
tional 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 multi-
plier 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 in-
takes to match river flow. The key is that the head is fixed and constant and the speed of the pro-
peller 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 sup-
ply (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 pro-
duction, 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 machin-
ery. 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 economi-
cally viable solutions. Each site is specific and so it is impossible to specify appropriate equip-
ment without close attention to the site under consideration. However, it is clear that techno-
logical 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 fish, 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

Visual attraction –
Waterwheel- compatible with
Up to 5 m Up to 500kW Old mills High
Overshot historic features.
Acceptable efficiency

Visual attraction –
Waterwheel- Old mills with very
Up to 2 m Low High compatible with
Undershot low head
historic features.

Kaplan 0.5-10m wide Dams in rivers High

200kW+ units
Easy access for
in banks (usu-
Matrix 3-30m Dams, locks, intakes Rel high maintenance (re-
ally in MW
movable)
sites)

Bulb plus Unknown

Structures in rivers, Probably rel.
impulse turbine 0-5m? – primarily
free running rivers High
on riverbank small sites

Unknown
Weirs and dams, Fish friendly,
Archimedes 0.5-10m 3-300kW – possibly rel.
mill sites Novelty
low

Parallel or 1.5kW – MW Low – but

Weirs, dams, mill Can have higher ca-
modular pro- 0.5-10m scale (by mod- civils depend
sites, sluices, etc. pacity than Kaplan
peller turbines ular increase) on site

20kW upwards Unknown,

Stempressure Fish friendly,
0.5-5m (perhaps to Weirs, dams, etc. but claimed
turbine Picturesque
several MW) low

Varied – dams, new

construction, leats,
Crossflow 1-200m Wide Low Easy to maintain
penstocks, pipework
etc.

Figure 7
Evaluation Grid - Low Head

INNOVATIONS IN TECHNOLOGY(5)_23
(6) 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, be-
cause 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 sta-
tions, 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 bear-
ings of the mechanism were provided with five different, permanently lubricated bearing materi-
als. 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 opera-
tion, there were no significant signs of wear in the bearing and the units are operating success-
fully. 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 sensi-
tive 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 bio-
degradable 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 abra-
sion 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 ac-
count of environmental issues are described below (based on EUROPEAN COMMISSION, Small
hydroelectric plants – Guide to the environmental approach and impact assessment. New Solu-
7
tions in Energy Supply, EC ENERGIE Programme7).
General layout of an hydropower plant

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 Direc-
tive, 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 con-
ditions 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 environ-
mental 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 hydro-
electric 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 di-
version 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 sur-
roundings, 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 complemen-

tary 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 op-
erate in different hydraulic conditions. This is typically the situation in the case of the construc-
tion 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 effec-
tive.

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 with-
out 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 ac-
cess 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 pen-
stocks. The impact is generally relevant both due to the impact on the natural environment and
to the disfigurement 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 dimen-
sion 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 develop-
ment 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, farm-
ers)... 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 bod-
ies 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 imple-
ment a project.

> Site Selection – choosing a suitable site is one of the most important steps in developing a mi-
cro 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 se-
lecting 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, con-
struction 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 neces-
sary 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 system-
atically 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 proj-
ects 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, environ-
mental 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 im-
plement 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 adminis-
trative 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 affect-
ing 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 in-
stitutions 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 develop-
ers, 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 im-
pact 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 en-
countered 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.

Specific cost of installed capacity

Euro/kW

4000

3500

3000

2500

2000

1500

1000

500

0 20,00 40,00 60,00 80,00 100,00 120,00 Head (m)

< 250 kW

250 to 1000 kW figure 8

Investment costs for MHPP
(source: European Commission,
> 1000 kW
Directorate-General for Energy
and transport, Brussels, 2001.)

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 agree-
ments (PPA), project management and financing 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 deci-
sion 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 im-
portantly 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 renew-
able energy resources on a priority basis.

In some countries there are specific incentives given to investment in electricity production us-
ing 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 struc-
ture different components can be found, according to the country: a market price, an avoided car-
bon 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

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 financ-
ing 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 follow-
ing: 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 proj-
ects, 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 ap-
pears 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 2006 2007 2008 ... 2025

TOTAL INVESTMENT 144,000

INCOME

Electricity sold 0 19,000 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

PROJECT CASH-FLOW -144,000 13,900 13,900 13,900 13,900 13,900

INTERNAL RATE OF RETURN 7.29%

NET PRESENT VALUE � 32.801

PAY BACK PERIOD 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 ex-
ternalities 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)

Country SHP Electricity generation GWh (2002) SHP insatlled capacity in MW (2002)

Belgium 192 60

Denmark 32 11

Germany 8594 1442

Greece 150 61

Spain 3129 1669

France 6621 1737

Ireland 55 16

Italy 8048 2200

Luxembourg 113 38

The Netherlands 0 0

Austria 4632 761

Portugal 917 344

Finland 753 309

Sweden 3270 972

UK 204 68

EU-15 36661 9797

Czech Republic 749 238

Cyprus 0 0

Estonia 6 3

Hungary 28 8

Latvia 30 19

Lithuania 37 15

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

EU25+CC 39749 20906

40_( I ) APPENDIX I
 APPENDIX II (II)
Electricity from Renewable Sources
Share in gross consumption of electricity - 2002 (in %)
2002 Total Share
2010 TARGET

Geothermal
Biomass
Hydro*

Wind

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 figures. 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 Wallonia: 12.3 = 3.3 (market price) + 9 (green certificate)
Flanders: Green certificates since 1st January 2003 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) 6.65 (500 kW - 5 MW)

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 6.49 = 3.54 (pool price) + 2.95 (premium)
annually by government.

France Feed-in tariffs applicable only to renewable plants up to 12 MW.
Price paid to SHP plants depends on their construction date. Win-
ter 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) competi- 6.41 (weighted average price)
tions. The Irish Government launched in February 2003 the AER VI.

Italy Quota + tradable green certificates: The quota should increase 4.6 (spot electricity price) + 10.0 (green certificates)
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.

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 3.3 (market price) + 6.8 (premium)
market and feed-in premium. Hydropower does not receive green
certificates.

Austria Feed-in tariff: Old plants

a) Old plants: Plants which obtained planning permission before 1st GWh: 5.68
January 1st 2003, including all those currently operating, are 1 – 4 GWh : 4.36
entitled to receive the guaranteed feed-in tariff for the first 10 4- 14 GWh: 3.63
years of operation. 14-24 GWh: 3.28
b) New plants: Plants obtaining all planning permissions between + 24 GWh : 3.15
January 1st 2003 and December 31st 2005 and which start gener- New plants
ating by the end of 2006 are entitled to receive the feed-in tariff for Rebuilt plants with a production increase per year> 15%
the first 13 years of operation. 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 2.0 (market price) + 6.6 (green certificates)
(Renewable Obligation Certificates)

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

42_( I I I ) APPENDIX III

 REFERENCES

BC HYDRO (2002), Handbook for Developing Micro Hydro in British Columbia (Draft)
(R)
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, IMPLE-

MENTING 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)