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WHAT IS THE POTENTIAL OF AN INVESTMENT IN SMALL HYDRO POWER PLANTS IN REPUBLIC OF MACEDONIA Sotir PANOVSKI Gordana JANEVSKA Faculty of Technical Sciences, Bitola, R. Macedonia

What is the Potential of an Investment in Small Hydro Power Plants in Republic of Macedonia

CONTENTS 1.

SHORT OVERVIEW ON HYDROENERGETIC SITUATION AND POSSIBILITIES FOR BUILDING SHPP

2.

ACTUAL SITUATION – GIVING CONCESSIONS FOR BUILDING OF SHPP

3.

TENDER DOCUMENTATION

4.

SOME ADVANTAGES OF AN INVESTMENT IN SHPP

5.

EXAMPLE OF AN INVESTMENT

6.

CONCLUSION

What is the Potential of an Investment in Small Hydro Power Plants in Republic of Macedonia

SHORT OVERVIEW ON HYDROENERGETIC SITUATION AND POSSIBILITIES FOR BUILDING SHPP  Republic of Macedonia, as a mountain country with

continental climate, has a beneficial hydro stage Present situation 8 large HPP - 495 MW 20 SHPP (up to 5MW) - 30 MW

 Study about possible small and mini HPP in the

Republic of Macedonia, 1982 406 SHPP

-

258 MW

What is the Potential of an Investment in Small Hydro Power Plants in Republic of Macedonia

ACTUAL SITUATION – GIVING CONCESSIONS FOR BUILDING SHPP

1. Public tenders I - February 2007 II - July 2007

60 SHPP 28 SHPP

About 40 firms with more than 160 bids applied on these tenders: • • •

domestic companies foreign companies (Austria, Germany, Slovenia, Luxembourg etc .) consortium (domestic and foreign companies )

Till now, Concessions for 41 locations were given

What is the Potential of an Investment in Small Hydro Power Plants in Republic of Macedonia

ACTUAL SITUATION – GIVING CONCESSIONS FOR BUILDING SHPP

Some of the tender characteristics model

DBOT (Design, Build, Operate and Transfer ) Design 1 year Build 3 years Operate (Transfer ) 20 years Deadline for collecting tender documentation Deadline for submission of bids

30 days 90 days

What is the Potential of an Investment in Small Hydro Power Plants in Republic of Macedonia

TENDER DOCUMENTATION

 Tendering procedure  Financial and economic capabilities of Bidder  Composition of the offer  Needed documents  Freedom of the technical solution

(technical data for the locations were given)

What is the Potential of an Investment in Small Hydro Power Plants in Republic of Macedonia

TENDER DOCUMENTATION

 Needed Guarantees :  Tender Security  Bank Guarantee for the upfront fee  Performance Security

What is the Potential of an Investment in Small Hydro Power Plants in Republic of Macedonia

PAYMENT OBLIGATIONS Upfront concession fee EN: 1.

EN = MED + U

Minimal upfront fee MED MED [MKD] = 4.500 [MKD/kW] x Pi [kW] for SHPP with Pi up to 1000 kW (61,3 MKD = 1 EUR)

MED [MKD] = 2.700 [MKD/kW] x Pi [kW] for SHPP with Pi > 1000 kW

2.

U =? mark-up on the minimum upfront fee as offered by the Bidder (significant factor into the formula: ranking criterion )

Annual concession fee 2% of the annual production

What is the Potential of an Investment in Small Hydro Power Plants in Republic of Macedonia

EXAMPLE

Pi = 277 kW MED= 4.500 x Pi = 4.500 x 277= =1.246.000 MKD = 20.334 EUR EN = MED + U = 20.334 EUR + U (?)

Present experience U = 500 - 20.000 EUR

What is the Potential of an Investment in Small Hydro Power Plants in Republic of Macedonia

RANKING CRITERION

C = 12.500 x Pi + U [MKD] Pi

[kW]

- declared, in the Bid, value for the

electricity generation capacity at the border of the HPP U [MKD] - mark-up on the minimum upfront fee EXAMPLE: C = 12.500 x Pi + U = = 12.500 x 277+ 81.529 = 3.544.029

What is the Potential of an Investment in Small Hydro Power Plants in Republic of Macedonia

PURCHASE OF PRODUCED ELECTRICAL ENERGY

 Feed in tariffs  Market Operator guarantees the purchase of

produced electrical energy

Table 1

Unit Monthly furnished Annual furnished Feed in tariffs [€ cents/kWh] electricity [kWh] electricity [kWh] I

1-85000

1-1020000

12,00

II

85001-170000

1-2040000

8,00

III

170001-350000

2040001-4200000

6,00

IV

350001-700000

4200001-8400000

5,00

V

above 700001

above 8400001

4,50

What is the Potential of an Investment in Small Hydro Power Plants in Republic of Macedonia

EXAMPLE OF AN INVESTMENT IN SHPP

H n = 45 m Q i = 0,583 m3/s P i = 277 kW E god = 932.963 kWh

L k = 1.050 m D k = 800 mm L c = 187 m D c = 560 mm

IVR = 353.163 EUR - Investment value

What is the Potential of an Investment in Small Hydro Power Plants in Republic of Macedonia

EXAMPLE OF AN INVESTMENT IN SHPP

Annual gross income (feed in tariffs) 94.605 € Annual costs

18.921 €

Net income

75.684 €

Unity price

1.275 €/kW

Average price of generated electricity

0,10 €/kWh

What is the Potential of an Investment in Small Hydro Power Plants in Republic of Macedonia

CONCLUSION In RM the first Concessionaires just have been chosen.

According with the Development Programme, it is expected that every 6 months the Government of RM will announce calls for tender applications for 30-40 SHPPs

Some advantages of an investment in SHPP in RM :  There is guarantee purchase of produced electrical energy (feed in tariffs)

 In RM, there are qualify engineers capable for efficient projecting,

supervision and building SHPPs  The civil works can be completely covered by the domestic resources.

There is one factory for production of steel pipes and also there are two factories for production of plastic pipes in RM.  The prices of the civil works are relatively low.

Our hope is that till next Hidroenergija 2010, i.e. in the next 2 years , the firs concessionaire SHPPs will be build, so then we will be able to present the firs experiences.