Hydroelectric Energy

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Hydropower

Small Hydropower – Over view of the European Sector a report by

Maria Laguna Project Manager, European Small Hydropower Association (ESHA)

Around 70% of the earth’s surface is covered with water, a resource that has been exploited for many centuries. Throughout the world, hydropower provides 17% of the electricity from an installed capacity of some 720 gigawatts (GW), making hydropower by far the most important renewable energy for electrical power production. The contribution of small hydropower (SHP) to the worldwide electrical capacity is of a similar scale to the other renewable energy sources (1–2% of total capacity), amounting to approximately 61GW. With approximately 13GW of installed capacity, Europe has the second biggest contribution to the world’s installed capacity, just behind Asia. Indeed, hydropower now accounts for approximately 84% of electricity generated from renewable sources in EU15 and 19% of total electricity production in Europe. Electricity generation from SHP contributed approximately 2% to the total electricity generation in EU15. There is no international consensus on the definition of SHP. In China it can refer to capacities of up to 25MW, in India up to 15MW and in Sweden ‘small’ means up to 1.5MW. However, defining it as a capacity of up to 10MW in total is becoming generally accepted by European Small Hydropower Association (ESHA) of the European Commission (EC). Small-scale hydropower systems capture the power in flowing water and convert it to usable energy. The potential for SHP obviously depends on the availability of suitable water flow, but where the resource exists, it can provide clean, reliable electricity. A well-designed SHP system can blend in with its surroundings and have a minimal negative environmental impact. SHP schemes are mainly run at rivers, with little or no reservoir impoundment. SHP plants combine the advantages of hydropower with those of decentralised power generation, without the disadvantages of large-scale installations. SHP is a clean, sustainable, efficient and secure renewable energy source. It has a huge, as yet largely untapped, potential, which should enable it to make a significant contribution to future energy needs, offering a very good alternative to conventional sources of electricity, EUROPEAN RENEWABLE ENERGY REVIEW 2006

in both industrialised and developing countries. Asia, especially China, is set to become a leader in hydroelectric generation. Present developments in Australia and New Zealand are focusing on small hydropower plants. Canada, a country with a long tradition in using hydropower, is developing SHP as a replacement for expensive diesel generation in remote off-grid communities. Markets such as South America, the former Soviet Union and Africa also possess great untapped potential (see Figure 1). SHP in Europe Renewable Electricity Directive Targets

Maria Laguna is Project Manager at the European Small Hydropower Association (ESHA). She has several years of experience in environmental and energy policy analysis and in management of EU-funded projects in the field of renewable energy and climate change. Ms Laguna has an MSc in environmental management and policy from Lund University, Sweden.

The trend towards SHP has been enhanced by the EC’s White Paper on renewable energy and by the EU Directive on renewable energy sources used to generate electricity (RES-e). Both give a clear signal that greater use of renewable energy is necessary to reduce society’s environmental impact, ensure security of supply and create a sustainable energy system. In 1997, the EC’s paper on renewable energy sources COM (97) 599, 26.11.97 set the goal of doubling the share of renewable energy sources in the EU energy sector from 6% to 12% by 2010. Projections for each renewable energy technology were made. For SHP, this means the ambitious target of reaching 14GW of installed capacity in the EU by 2010, generating 55 terawatt hours (TWh) of electricity. Targets for SHP

The EU Directive for the promotion of RES-e in the Internal Market Directive 2001/77/EC follows up the White Paper on renewable sources of energy. It also constitutes an essential part of the package of measures needed to comply with the commitments made by the EU under the 1997 Kyoto Protocol on the reduction of greenhouse gas emissions. According to the RES-e Directive, renewable generators should provide 22.1% of electricity by 2010 in EU15 and 11.1% in EU10, the New Member States (see Table 1). 51

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Figure 1: Different Regions’ Contribution to the World’s Installed SHP Capacity

Contribution 80% 70%

68%

60% 50% 40% 30%

never be reached in matters of SHP if there is no harmonisation between the two directives.The solution is in a more precise terminology, which makes the transposition of the WFD clear and predictable. Depending on how the WFD is implemented, SHP production losses could be approximately 15–20%, preventing the European targets on renewable energy and the Kyoto commitments on carbon dioxide (CO2) reduction from being reached. SHP Plants in Operation

22.3%

20% 6.1%

10% 0.5% 0

Asia

Africa

2.7% South America

0.4% North America

Europe

Australasia/ Oceania

World Regions Table 1: RES-e Directive Targets

EU15 EU10 EU25

RES-e, 1999

RES-e, 2010

13.9% 5.4% 12.9%

22.1% 11.1% 21.0%

The RES-e Directive gives Member States a reason to look at SHP, because it is the best proven of all renewable energy technologies. Of special interest for Europe – from both an economic and environmental point of view – is the high potential for upgrading and refurbishing of existing plants, as approximately 70% of the current installations are more than 40 years old.

According to a recent report produced by the ESHA’s Thematic Network on Small Hydropower, in the former EU15, approximately 14,000 SHP plants are in operation, with an average size of 0.7MW. There are approximately 2,800 and 400 SHP plants installed in EU10 and EU Candidate Countries (CC), respectively. The average plant size of these categories is 0.3MW in EU10 and 1.6MW in EU-CC. The total installed capacity of SHP plants in 2004 in New Member States (820MW) and CC (680MW) is at least 10 times less than that of the former EU15 (10,828MW). Electricity generation by SHP plants in the former EU15 (40,000GWh/year) is considerably higher than in EU10 (2,329GWh/year) and the CC (1,407GWh/year). SHP production shows the real economic value that the SHP sector provides in each group of countries, and these figures show the high potential for increasing the electricity generation for power plants in the New Member States and CC by improving their efficiency in their operation and maintenance (O&M).

Hydropower now accounts for approximately 84% of electricity generated from renewable sources in EU15 and 19% of total electricity production in Europe.

SHP and the Water Framework Directive

The European Water Framework Directive (WFD) is an environmental directive being currently implemented at national level. Together with the Network Natura 2000, it aims to encourage national environmental legislation on nature protection. This rigorous environmental framework guarantees the adequate integration of SHP into the natural environment. However, some inconsistencies in WFD terminology and its implementation may contradict the RES-e Directive and may lead to loss of production at SHP plants. The targets of the RES-e Directive can 52

According to Eurostat figures for 2004, Italy accounted for approximately 21% of the total SHP installed capacity in EU25, followed by France (17%) and Spain (16%). Poland and the Czech Republic – both with 2% of the total EU25 SHP capacity – are the lions of the New EU Member States. From the Accession Countries, Romania and Turkey represent approximately 25% and 15%, respectively, of the total SHP installed capacity in 2002 in EU10 plus CC. At present, hydropower is a dominant source of energy in RES-e production in almost all countries. SHP accounts for approximately 4.6% of total hydro EUROPEAN RENEWABLE ENERGY REVIEW 2006

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Small Hydropower – Over view of the European Sector generation in the New EU Member States and CC. None of the other renewable energy sources (wind, biomass, PV, etc.) is able to compete with SHP in these countries.

Table 2: Investment and Production Costs of SHP Plants in Some Member States of the EU (2003) Country

Average SHP Production Costs

Investment Costs

Remaining SHP Potential

Spain Austria Sweden Czech Republic Lithuania Poland

3.5–7€cents/kWh 3.6–14.5€cents/kWh 4–5€cents/kWh 2–3€cents/kWh 2.5–3€cents/kWh 3€cents/kWh

€1,500/kW €2,500/kW €1,800–2,200/kW €660–2,000/kW €2,200–2,500/kW €500–1,200/kW

Among the renewables, SHP has a key role to play, being a long-established technology that still has room for technological development and with high untapped potential, especially as a cheap and clean solution in developing countries. Thus far, more than 82% of all economically feasible potential has been exploited in the former EU15. The SHP resource exploitation rate in EU10 is less than half of that in EU15 and very low in the CC (5.8%). The remaining economically feasible potential of new plants amounts to some 20TWh/year in EU15, 26TWh/year in the New Member States and CC (4TWh/year in EU10). The majority of this potential (roughly 80% or 19,300GWh/year) is located in Turkey. Poland and Romania rank second, having indicated a potential six to 10 times lower than that of Turkey. The third group is composed by the Czech Republic, Slovenia, Bulgaria and Slovakia. The largest proportion of the potential in Europe involves low-head plants and some extra potential can also be developed by the refurbishing of existing sites.

Range of

Average O&M Costs

0.9€cents/kWh 0.4€cents/kWh 1.4€cents/kWh – – –

O&M = operations and management, SHP = small hydropower.

the low-head ones – can normally only compete where allowances are made for the external costs associated with fossil fuels and nuclear power. The capital required for small hydro plants depends on the effective head, flow rate, geological and geographical features, continuity of water flow, equipment (such as turbines or generators) and civil engineering works. Making use of existing weirs, dams, storage reservoirs and ponds can significantly reduce both environmental impact and costs. Sites with low heads and high flows require a greater capital outlay, as larger civil engineering works and turbine machinery will be needed to handle the larger flow of water. If, however, the system can have a dual purpose – such as power gene-ration and

Small hydro will also serve to enhance economic development and living standards, especially in remote areas with limited or no electricity.

SHP in the Renewable Energy Mix

Hydropower is the largest RES in terms of electricity generation, accounting for approximately 84% of the RES electricity generation in 2002. Nevertheless, SHP only represented 9% of the RES electricity generation in EU15 in 2002. However, in almost all New Member States and CC, hydropower is the dominant source of energy in RES-e production. The RES-e share in EU10 is hydro 99.7% (large 87.5%, small 11.2%) and other RES 1.3%.

flood control, power generation and irrigation or power generation and drinking water production – the pay-back period can be shortened. Apart from the investment and production costs, the other principal cost element is O&M, including repairs and insurance, which can account for 1.5–5.0% of investment costs. Both the production and investment costs differ considerably depending on the plant’s head height. Industry Status

SHP Economics and Costs

In general, large hydro electric plants have little difficulty in competing with conventional generation, but small hydro plants – especially the very small and EUROPEAN RENEWABLE ENERGY REVIEW 2006

The EU has a multi-disciplinary and highly skilled small hydro industry that offers the full range of products and services required to develop small hydro projects, from initial feasibility and design to 53

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SHP in Figures EU15

• 33% – the renewable energy industry EU15 target for the contribution of renewable energy to electricity production by 2020. • 22.1% – the renewable electricity target set up by EU Directive RES-e by 2010. • 14GW – the amount of energy that SHP should need to meet this target; this would generate 55TWh of electricity per year. • 19,600GWh/year – the potential of new plants in EU15. • 5–15€cents/kWh – average SHP electricity production costs. • €1,200–3,500/kW – average SHP investment costs. • 14,488 – the number of SHP plants. • 10.8GW – the installed capacity of the 14,488 plants, equivalent to about 1.77% of the total EU capacity. • 8.6% – the contribution of small hydro to total hydro capacity, producing 40,300GWh; this means that SHP contributes to 2% of total electricity generation. • 700kW – the average installed capacity for an SHP plant. • 20,000 – SHP jobs (direct and indirect) in 2004. EU10

• 2,770 – the number of SHP plants in EU10. • 820MW – the installed capacity from the 2,770 plants, producing 2,300GWh of electricity per year; this would contribute to 0.6% of total electricity generation and 12.8% of the total hydropower in EU10. • 2.4–3.2€cents/kWh – average SHP electricity production costs. • €1,200–2 200/kW – average SHP investment costs. • 300kW – the average installed capacity for an SHP plant. • 4,000GWh/year – the potential of new plants in EU10. CO2 Reduction Through SHP

• 1GWh supplies electricity to approximately 220 European households, avoiding the emission of 480 tonnes of CO2. • Average output of a 1MW SHP plant in Austria is 5GWh/year, providing electricity to 1,100 households. • 5GWh/year supplies 2,200 households in a developing country. Source: The Thematic Network on Small Hydropower.

manufacturing, financing and operation. The EU SHP industry generates an annual turnover of approximately €150–180 million, and it has maintained a leading position in the field of hydropower manufacturing since the development of the technology started 150 years ago. Very little nonEuropean equipment has been installed in European 54

hydropower plants. One important reason for European dominance has been the strong home market. By developing technology and production methods in a fast-growing home market, European manufacturers have, with few exceptions, kept a leading edge compared with manufacturers from other parts of the world. EUROPEAN RENEWABLE ENERGY REVIEW 2006

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Small Hydropower – Over view of the European Sector Several hydro manufacturers are active in small hydro in the EU. Four major multinational companies dominate the market for larger tur-bines, but the market between 0.5MW/site and 5MW/site is primarily open to smaller companies. European companies have pioneered much of the technical development and have dominated international contracts for SHP equipment and installations in recent years. Of the New EU Member States, the Czech Republic and Slovenia are the countries with the highest levels of turbine manufacturing industry.

Figure 2: Inside a Refurbished SHP Plant in Sweden

Employment

The EU SHP industry employs approximately 20,000 people and offers a full range of products and services for the sector. Following the projections from the European Renewable Energy Council (EREC) developed for 2020, the number can reach 28,000 for direct and indirect jobs. Research and Development

EU-funded research and development (R&D) programmes have made considerable inputs to the SHP industry over recent years. The results of such programmes include the development of environmentally friendly turbines, fish ladders, trash rack cleaning machines and low-noise gearboxes. A principal objective of future R&D is to promote further SHP market penetration by financing research into: • further cost reductions, especially in very lowhead schemes; • minimised environmental impacts; • increased efficiency and reliability; • tidal and wave energy use; and • sewage waters use. Contrary to the generally accepted idea that hydropower is an old technology that has reached such a high level of development that it cannot be improved, small hydro still has scope to evolve, especially in equipment and design practices. Indeed, R&D is essential in this field in order to develop efficient, economical and environmentally friendly equipment and construction methods. Key areas for future research projects include: • policy and market issues; • environmental and social impacts (development of specific bioengineering techniques in the field of SHP and awareness campaigns to assist in understanding the technology and promote better acceptance of small hydro); • turbine and design issues (improvement of EUROPEAN RENEWABLE ENERGY REVIEW 2006

hydrological assessment methods, development of standardised/systemised hydraulic structures, new construction materials and flexible turbines); and • grid integration. Benefits Worldwide

Looking to the future, there are good reasons to support SHP in Europe and the rest of the world. Firstly, it is a source of renewable energy that, if used on a small scale and handled sensitively, has few environmental risks. Increased use will help to reduce CO2 emissions and help countries to achieve their Kyoto obligations and stave off global warming. Moreover, the depletion of oil and natural gas deposits will lead to higher generation costs for thermal plants, helping to improve the economics of SHP. Small hydro will also serve to enhance economic development and living standards, especially in remote areas with limited or no electricity. Rural communities have been able to attract new industries – mostly related to agriculture – owing to their ability to draw power from SHP stations. In countries such as South Africa, China and Nepal, rapid SHP development has boosted the development of local manufacturers to support these hydro power plants. In addition, the ability of SHP to be combined with water infrastructure projects will allow it to become a regular feature in developing countries as they overhaul their irrigation, water supply and sewerage systems. Another advantage of SHP is that it would enable countries to reduce their dependence on imported fuel, thus reducing costs and improving security. Finally, from a European point of view, continuing expansion of this industry can only be good, as other parts of the world invest in European expertise and equipment. ■ 55