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Tapping small hydro potential

Small hydro power is a clean, sustainable, efficient and secure renewable energy source, combining the advantages of hydro power with those of decentralized power generation, but without the disadvantages of large-scale installations.

Christine Lins and Maria Laguna make the case for SHP.

pproximately 70% of the earth’s surface is covered with water, a resource that has been exploited for many centuries. The exploitation of hydro power has been characterized by continuous technical development, making it the leading renewable energy source in the EU. Hydro power now accounts for around 84% of electricity generated from renewable sources in the EU-15, and 13% of total electricity production.

This article is limited to small hydro power (SHP).There is no consensus on the definition of SHP, but here it will be defined as any small scheme with an installed capacity up to 10 MW. This is the definition adopted by the European Small Hydropower Association (ESHA), the European Commission and the International Union of Producers and Distributors of Electricity (UNIPEDE).

A

SHP has a huge untapped potential, offering a very good alternative to conventional generation in Europe and the developing world SHP has a huge, as yet largely untapped, potential that should enable it to make a significant contribution to future energy needs, offering a very good alternative to conventional sources of electricity, not only in Europe but also in developing countries.

INTEREST GROWING SHP has a key role to play in the development of Europe’s renewable energy resources, and an even greater role in developing countries. In the face of increasing electricity Hidronorte plant in Galicia, Spain: small hydro is vital to the development of EU renewable energy sources

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Tapping small hydro potential SHP can make headway

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Tapping small hydro potential

ABOVE The 500 kW Taojinping SHP project in China’s Zhejiang Province. China is set to become a small hydro leader ABOVE RIGHT SHP in Austria; the country ranks third in EU small hydro capacity ÖSTERREICHISCHER VEREIN FÜR KLEINKRAFT

demand, international agreements to reduce greenhouse gases (such as the Kyoto Protocol), environmental degradation from fossil fuel extraction and use, and the fact that, in many European countries, large hydro power sites have been mostly exploited, there is an increasing interest in developing SHP. This trend has been enhanced by the European Commission’s White Paper on renewable energy1 and by the EU Renewable Energy Directive2 (RES-e Directive), both of which give a clear signal that the use of renewable energies must increase in order to reduce environmental impacts and create a sustainable energy system. The Directive sets quantified national targets for consumption of electricity from renewable energy sources, promotes national support schemes (plus, if necessary, a harmonized support system), simplifies national administrative procedures for authorization, and guarantees access to transmission and distribution of electricity from renewable energy sources. The White Paper calls for 12% of energy to come from renewables, while the Directive sets specific goals to reach 22% of electricity use from renewables in the EU by 2010. For SHP, this means achieving an ambitious target of 14 GW of installed capacity by 2010 (14 GW, generating 55 TWh of electricity – see Table 1).

As well as setting out a Community strategy and action plan to double the share of renewable energy from 6% to 12% by 2010, the White Paper establishes sub-targets for various sectors, preserves flexibility in how these targets are to be met in view of Community enlargement, and introduces a tri-annual review process. The action plan includes internal market measures, reinforcement of EU policies, and improved co-ordination between Member States.

TABLE 1. White Paper SHP scenario for 2010 Feature 2010 scenario Installed capacity > 4500 MW Electricity generation 55 TWh Gross energy consumption 4.75 Mtoe

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 the economic and environmental point of view, is exploiting the high potential for upgrading and refurbishing existing plants.

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TABLE 2. SHP financing schemes in individual Member States. Source: ESHA, 20013 Country Financing scheme Ownership Austria Corporate finance Small and large utilities Germany Private finance Private Participation finance Limited partnership (GmbH) Municipalities (Stadtwerke) Spain Third-party finance Through governmental organizations Italy Corporate finance Private investors Third-party finance Local utilities The Netherlands Private finance Private Corporate finance Utilities Sweden Private finance Partnerships Corporate finance Private (farmers) Corporations

As well as the incentives introduced by the Directive, some financial options favouring SHP have been introduced in certain Member States.Table 2 shows some of these financing schemes.

MARKET DEVELOPMENT WITHIN AND OUTSIDE THE EU Tables 3 and 4 show SHP in the EU-15, the new Member States (the so-called EU-10) and the three candidate countries. In 2000, there were 14,488 SHP plants in the EU-15, mostly located in Germany (42.8%), France (11.9%), Austria (11.7%), Sweden (11.1%) and Italy (10.4%).Almost 45% of these plants are over 60 years old and 68% are over 40 years old. The average capacity of an SHP plant in the EU was about 0.7 MW in 2000, while SHP installed capacity was about 10 GW. This accounted for 9% of the total installed hydro capacity, and about 2% of all installed electricity capacity.

Electricity production from SHP was about 40 TWh in the year 2000, accounting for 12% of total electricity produced from hydro, around 10% of all electricity generated from renewable energy, and about 2% of total electricity generation in the EU. SHP electricity production has risen by 8% since 1995 (when it was 37 TWh) and is expected to grow by about 38% by 2010 (55 TWh), according to the White Paper.

FUTURE MARKET DEVELOPMENT This century will witness a major increase in energy consumption, going hand-in-hand with greater concern about

Tapping small hydro potential

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TABLE 3. SHP installed capacity and electricity generation in the EU-15. Sources: Cordis, 2002;4 ESHA sources (national associations); ESHA, 20013 Member State No. of units SHP installed SHP contribution SHP Contribution SHP electricity SHP contribution capacity (MW) to EU installed to total hydro generation (GWh) to EU electricity capacity (%) capacity (%) generation (%) Belgium 82 96 0.61 6.86 385 0.46 Denmark 40 11 0.09 100.00 30 0.08 Germany 6200 1500 1.27 16.67 6500 1.14 Greece 40 69 0.63 2.30 350 0.65 Spain 1106 1607 3.06 9.08 4825 2.14 France 1730 2000 1.73 7.81 7500 1.39 Ireland 45 23 0.48 4.51 96 0.40 Italy 1510 2229 3.12 10.98 8320 3.01 Luxembourg 29 39 3.25 3.55 195 0.22 The Netherlands 3 2 0.01 2.22 1 8.47 Austria 1700 866 4.89 7.53 4246 6.87 Portugal 74 286 2.62 6.36 1100 2.51 Finland 204 320 1.96 11.03 1280 1.83 Sweden 1615 1050 3.20 6.40 4600 3.15 UK 110 162 0.21 3.77 840 0.22 Total 14,488 10,260 1.77 8.67 40,268 1.55

environmental issues. In this context, SHP has a huge potential to meet energy demand with negligible impact on the environment. Europe has a leading position in the SHP sector with the best state-of-the-art technology, and is the largest contributor to installed world capacity and electricity generation. Nevertheless, there are further technical and economic challenges to be met.

Outside Europe, there are new opportunities for export and technology transfer that offer good prospects for EU

manufacturers. Asia, especially China and India, is set to become a hydro power leader. Present developments in Australia and New Zealand are focusing on SHP plants. Canada, a country with a long tradition of using hydro power, is developing SHP as a replacement for expensive diesel generation in remote, off-grid communities. Markets such as South America and Africa also have a wide potential. Table 5 shows a shortlist of target countries with conditions favourable for SHP exports.

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TABLE 4. SHP in the EU-10 and candidate countries. Sources: ESHA, 2001;3 2002 World Atlas & Industry Guide;5 The Hydropower and Dams;6 ESHA internal sources, 2003 Country No. of Installed Electricity Contribution Contribution Potential capacity plants capacity generation to total hydro to total (MW) (MW) (GWh) electricity electricity production (%) production (%) Upgrading New plant Cyprus 1 0.5 – 0 0 – 1 Czech 1136 250 677 32.3 1.0 10 200 Republic Estonia 13 3.0 10 100 0.1 2 2 Hungary 35 8.6 38 25.4 0.1 2 22 Latvia 57 1.7 14 0.5 0.3 36 60 Lithuania 29 9.3 30 3.6 0.2 3 40 Malta 0 0 0 0 0 0 0 Poland Slovakia Slovenia Bulgaria Romania Turkey

472 180 413 64 9 67

127 31 77 141 44 138

705 175 270 412 287 500

31.0 3.8 7.6 22.3 1.8 1.7

0.5 0.7 2.3 1.0 0.5 0.4

The greatest impetus for small hydro development is currently coming from Asia, including China and India (see Figure 1).This region has the best resources and a major need for power – and is the recipient of large amounts of financial support for rural electrification, backed by government initiatives. Latin America also has good potential for hydro development,but several countries have significant oil reserves that are keeping small hydro lower down the political agenda.

Eastern Europe, including the former Soviet nations, is also now becoming a strong potential market.

Looking to the future there are good reasons to support small hydro power: • the depletion of oil and natural gas deposits will lead to higher generation costs for thermal plants

320 37 180 – – –

Potential annual generation (GWh)

Upgrading New plant – 0.002 50 1148 6 9 90 11 0

6 90 150 186 0

120 50 – – –

1600 178 780 – – –

Forecast 2015 (GWh)

0.002 1000 50 106 152 100 No forecast 1300 350 900 1000 300 2800

TABLE 5. Target countries with favourable conditions for SHP exports.

Source: ESHA, 20037 Region Time frame Countries for consideration Latin America Short to medium Brazil, Peru, Argentina, Ecuador, term Colombia Africa Immediate Uganda Central and Short to medium Slovakia, Czech Republic, Eastern Europe term Ukraine, most independent former USSR states Asia (excluding Short to medium Nepal, Thailand, Sri Lanka, India and China) term Philippines, Indonesia, Laos, Vietnam Other Immediate India, China, Russia, Caribbean, Cuba

• by offsetting thermal generation, small hydro power is a leading technology in efforts to reduce greenhouse gases – with the introduction of carbon trading, thermal plant will become more expensive • high-voltage direct current transmission over long

8000 7000 Output (TWh/year)

23 10 – – –

International Journal on

6000 5000 4000

The greatest impetus for small hydro development is currently coming from Asia, including China and India

3000 2000 1000

Technical potential

Am Sou er th ic a

Eu ro pe No rth Am & er Cen ic tr a al

Au s Oc tra ea las ni ia a /

As ia

Af ri

ca

0

Economic potential

Exploited potential FIGURE 1. Total hydro power potential by continent. Source: ESHA, 20028

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distances is becoming cheaper and electricity networks are getting interconnected and growing • the growth of the world’s population, especially in developing countries, will require the appropriate infrastructure for irrigation and water supply; the addition of a hydro power component to such a project is economic and has no major environmental or social impacts

Tapping small hydro potential

14,000

Capacity (MW)

13,000

12,000

12,000 11,000

10,212

10,319

2000

2001

10,718

10,000 9000 8000 7000 6000 2003

2010

Year Current trend

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At the same time, pressure from environmental groups – which can oppose SHP for its negative local environmental impacts on river ecosystems – hinders progress in many developed countries. Sometimes no distinction is made between the impact of large hydro and that of small hydro schemes. Such opposition is often related to specific cases and should not be applied to SHP across the board. However, new technology and improved methods of operating SHP are steadily reducing its adverse environmental impacts, while involving local communities in the planning, design and management process is helping to change negative perceptions of SHP.

White paper

FIGURE 2. Comparison of the current trend with the White Paper objectives. Source: EurObserv’ER 20039

• it is widely believed that, as part of the long-term changes in the energy sector, hydrogen is the fuel of the future; remote hydro can also become one of the major carbonfree, financially viable producers of hydrogen.

TARGETS FOR FUTURE MARKET DEVELOPMENT Following the current trend, Figure 2 shows that the SHP sector will not completely reach the targets set in the White Paper. This is mainly due to long and complicated licensing procedures for new installations. Increased political support for SHP, as well as an emphasis on exploiting the high level of potential for upgrading and refurbishing existing plants, is needed in order to achieve the targets.

At present, numerous institutional barriers still stand in the way, mainly resulting from the difficulties inherent in gaining permission to abstract water from rivers, but also due to the perception that hydro plant adversely affect fishing. Difficulties in gaining affordable connections to the grid are also common, although this situation is tending to improve.

BELOW An SHP facility in Sweden, a country in the European small hydro ‘top five’ SERO BELOW RIGHT Fish-friendly turbine in Versoix, Switzerland MHYLAB

Small hydro power offers one of the most practical and immediately realizable routes to expanding use of renewable energy sources The SHP industry has been affected by exaggerated criticisms of negative environmental impacts which ignore its important environmental and social benefits. These benefits include the replacement of fossil fuels – thus reducing greenhouse gas emissions, air pollution and resource depletion – and boosting the local economy of isolated populations.

Since SHP provides autonomous and reliable energy, it is suitable for co-operative or communal ownership, and combined with irrigation systems, it is an appropriate solution in developing countries. In the last few years, much emphasis has been put on the environmental integration of SHP plants into river systems in order to minimize impacts to the ecosystem and enhance the quality of the aquatic environment.

The EU’s clear commitment to renewables and climate protection, which is reflected, for instance, in the RES-e Directive and the bloc’s ratification of the Kyoto Protocol, is expected to provide further stimulus for the SHP sector within the Member States. Based on this strong domestic market, EU turbine manufacturers should have a sound policy framework for promoting their products on the global market.

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Tapping small hydro potential

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•

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Small hydro in France, second only to Germany amongst the EU nations in terms of installed SHP ADEME

FRAMEWORK CONDITIONS FOR SUSTAINABLE MARKET DEVELOPMENT Small hydro power offers one of the most practical and immediately realizable routes to expanding the use of renewable energy sources in Europe, at the same time boosting exports by strengthening the technically advanced European small hydro manufacturing industry. However, SHP does not have a very favourable regulatory framework, and official support for the technology is generally limited. Awareness of small hydro’s benefits and the need to develop a more objective view of its true environmental impact are therefore both essential components in future strategies to develop its use.

Hydro represents a long-established technology – but that does not mean there is no more room for technical development Effective and realistic standards for meeting requirements to minimize any environmental problems are needed, whilst tariff rates on offer to SHP owners and developers for the purchase of electricity should reflect the technology’s low environmental impact and high potential performance.

The initial strategic requirements are for small hydro to feature more prominently in national and EU energy planning, with a view to its stronger encouragement.The regulatory and financial framework for SHP needs to be improved and, wherever possible, harmonized across the EU. Contrary to popular mythology, the fact that hydro represents a longestablished technology does not mean there is no further room for technical development.A resurgence of small hydro power development in Europe needs to be backed by technical improvements.

A sustainable market for SHP requires a number of conditions: • Energy policy framework – Member States should

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develop energy policies that clearly set out objectives regarding the development of power generation options, including small hydro power.

Decision-making process – governments should establish an equitable, credible and effective environmental assessment process that takes into account both environmental and social concerns, with a predictable and reasonable schedule.

Comparison of small hydro power project alternatives – project designers should apply environmental and social criteria when comparing project alternatives in order to eliminate unacceptable schemes early in the planning process.

Improving environmental management of plants – project design and operation should be optimized by ensuring the proper management of environmental and social issues through the project cycle.

Sharing benefits with local communities – communities should benefit from local SHP projects, both in the short and the long term.

Small hydro power represents a clean alternative to fossil fuel electricity generation. However, developing the remaining hydro power potential offers many challenges, and pressure from some environmental action groups over the impact of SHP schemes has tended to increase over time. Moreover, in the context of the restructuring of the electricity sector, markets may favour more polluting and less costly options.

Christine Lins is Secretary General of the European Small Hydropower Association in Brussels, Belgium, and Maria Laguna is the Project Manager at ESHA. Fax: +32 2546 1947 e-mail: esha@arcadis.be maria.laguna@esha.be website: www.esha.be

REFERENCES 1.

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European Commission. Energy for the future: Renewable sources of energy.

White Paper for a Community Strategy and Action Plan. COM(97)599 final.

Brussels. 1997.

Directive 2001/77/EC on the promotion of electricity produced from renewable energy sources in the internal electricity market. OJ L 283, 27.1.2001 ESHA. BlueAGE: Blue Energy for A Green Europe. Strategic Study for the Development of Small Hydro Power in the European Union. 2001.

Cordis – www.cordis/lu/eesd/src/indicators.htm 2002 World Atlas and Industry Guide International Journal on Hydropower & Dams. Sutton: Aqua~Media International Ltd. 2003.

The International Journal on Hydropower and Dams (www.hydropowerdams.com) Target countries with favourable conditions form small hydropower exports.

ESHA. 2003.

ESHA. Discussion Paper on the Comparison of Compensation Systems for Electricity for Renewables. 2002 Observ’ER. EurObserv’ER: European Barometer 2001. Renewable Energy Overview. 2002.

FURTHER READING Renewable Energy in Europe. Building Markets and Capacity. EREC. 2004.