/Strategic_Study_for_Development_of_SHP_in_E by Info Esha

This brochure has been developed under SHERPA project Small Hydro Energy Efficient Promotion Campaign Action. SHERPA is a European Funded Project in the framework of the Intelligent Energy for Europe Programme (IEE). SHERPA aims to make a significant contribution in reducing the barriers that are currently hindering the development of SHP, addressing the challenges and contributing to the uptake of SHP in the new enlarged European Union. The result of SHERPA will not only increase the awareness of politicians and decision makers on SHP as a key renewable energy source, but will also create favourable framework conditions for the further uptake of SHP within the European Union. The project specifically addresses the issue of environmental performance of SHP plants, as well as a comprehensive territorial planning approach at the level of water bodies. ESHA, the European Small Hydropower Association, is the European coordinator of this project, which includes eight additional partners: Slovenian Small Hydropower Association (SSHA), Lithuanian Hydropower Association (LHA), Association for Renewable Energy (APER, Italy), Swedish Renewable Energies Association (SERO), Inovation-EnergyDevelopment (IED, France), Institute for Water Management, Hydrology and Hydraulic Engineering (IWHW, Austria), EC Baltic Renewable Energy Centre (EC BREC, Poland) and French Environment and Energy Management Agency (ADEME, France). This brochure has been prepared by the SHP Policy Framework and Market Development Group of the SHERPA project, coordinated by ESHA, together with Swedish Renewable Energy Association (SERO) and the Lithuanian Hydropower Association (LHA).

For further information please contact: ESHA European Small Hydropower Association Renewable Energy House Rue d'Arlon 63-65, 1040 Brussels - Belgium Telephone: 32 2 546.19.45 Fax : 32 2 546.19.47 E-mail Secretariat: info@esha.be

Contents INTRODUCTION

1. STATE OF THE ART

2. SHP POTENTIAL IN THE EU

3. EU DIRECTIVES AND THEIR IMPACT ON SHP

3.1 Directive 2001/77/EC

3.2 Directive 2000/60/EC

3.3 Proposed Directive: EU Energy and Climate Change Package 2020

4. SUPPORT SYSTEMS

5 SHP GENERAL POLICY FRAMEWORK

5.1 Barriers Related to Hydropower Development

5.1.1 Administrative Barriers

5.1.2 Environmental Barriers

5.2 Possible strategies for improvement

6. ECONOMICS

7. SHP AND THE ENVIRONMENT

8. SHP TECHNOLOGY

9. SHP MARKET FOR MANUFACTURERS

10. CONSTRAINTS

11. CONCLUSIONS AND RECOMMENDATIONS

12. REFERENCES

13. ACRONYMS

Introduction This study develops six main subject-areas pertaining to the possible exploitation of SHP energy in Europe. The situation of Small Hydropower (SHP) in the EU has changed. The enlargement of the EU along with increasing interest in renewable energies has led to a new and growing focus on SHP. As a result, more complex questions have arisen that require increased knowledge in order to be resolved. This study, which is part of the SHERPA-project (Small Hydropower Energy Efficiency Campaign Action), aims to provide a better understanding of SHP in the EU. It is intended for decision makers and politicians at EU, national, regional as well as local level in order to facilitate the achievement of the various targets set out in EU legislation (RES White Paper targets and the RES-E Directive) but may also be of general interest. On the basis of the data collection and analysis, new initiatives at EU level will be developed by the European Small Hydropower Association (ESHA) in close collaboration with the EU Commission. The definition of SHP used by the European Commission, i.e. SHP plants up to 10 MW, has also been employed in this study. The following issues have been dealt with: (i) Current Status and potential of SHP technology within the 27 EU member states (EU-27) and recent technological and market development of small hydropower and (ii) review of policy framework conditions for SHP within the EU-27 and Candidate Countries (Croatia, the former Yugoslav Republic of Macedonia and Turkey). An overview of current policy initiatives within the European Union has been prepared, taking all levels of decision making (EU, national, regional and local) into account.

1. Gathering data on the actual state-of-theart of SHP development in most European countries. 2. Assessing the potential for future SHP development, both in terms of upgrading existing plants and building at new sites. 3. Analysing the economics of SHP sources in order to understand how competitive SHP is today with respect to the other principal electricity generation technologies. 4. Analysing the policy framework in each country, with emphasis on the constraints that are hindering the development of SHP plants. 5. Analysing the situation and competitiveness of the EU manufacturing industry in the SHP sector. 6. Providing some concrete recommendations for promoting SHP development in the short and medium term, as well as suggesting some good policies and â&#x20AC;&#x153;best practicesâ&#x20AC;? to achieve this goal.

Since the start of the project in 2006 Bulgaria and Romania have joined the EU, which means that EU-25 became EU-27. For comparison with previous reports an additional division into EU-15 and EU-12 has sometimes been made. In many cases the report also includes Candidate countries (CC). Finally, some comparison has been made with Norway, Switzerland, Bosnia & Herzegovina and Montenegro.

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

The SHERPA project and the work on this report started in September 2006 and finished in September 2008. The project was financed by the EU Commission and by the participants. Intelligent Energy Europe (IEE) commissioned this project to the European Small Hydropower Association (ESHA). ESHA then co-ordinated the project, which was subsequently divided into different sub-projects, of which the present one was performed by the Lithuanian Hydropower Association (LHA) and the Swedish Renewable Energy Association (SERO). This study is based on a questionnaire that was sent to main SHP actors in different EU countries as well as Norway, Switzerland, Bosnia & Herzegovina and Montenegro. Information from official databases and existing studies

Figure 1. Outline of the questionnaire

was used when no other data were available. The most comprehensive information was gathered through SHP national associations, as well as by individual contacts with SHP consultants, project developers and producers. Information from the questionnaires, which mainly related to SHP potential and historic statistics (number of SHP plants, installed capacity and electricity generation) was checked for consistency with other relevant data sources from the hydropower and renewable sectors, notably: Eurostat, the International Energy Agency (IEA), the International Journal on Hydropower & Dams, the World Energy Council etc. The questionnaire comprised a total of 69 questions grouped into 6 main sections (Fig. 1).

1 State of the Art The era of hydropower by means of turbines started in France in 1832. However, the real development of hydropower began around 1900 with the invention of three-phase electricity, although from the 1950s until about 1980, SHP had a negative development in some EU member states (MS). Many SHP plants were shut down because of age and competition from newer, larger plants. When some EU countries decided to reduce their dependence on imported energy, SHP was given economic support and the number of SHP plants gradually started to increase again. In 2006 there were nearly 21,000 SHP plants (SHPPs) in the EU-27 and if CCs as well as Norway, Switzerland and other countries are included, the number of SHPPs increases to a total of nearly 23,000 (Table 4). The installed capacity of EU-27 was more than 13,000 MW, or more than 15,000 MW if CCs, Norway, Switzerland and other countries are included. In 2006 the total electricity generation from SHP in EU-27 was more than 41,000 GWh and if including CCs, Norway, Switzerland and other countriesnearly 52,000 GWh.

This means that in 2006 about 1.2 % of the total electricity generated as well as 9 % of the RES-E in EU-27 came from SHP (Fig. 2). On average, a SHPP in the EU-27 had a capacity of 0.6 MW and produced about 2.0 GWh in 2006. A large proportion of this capacity (nearly 12,000 MW or nearly 38,000 GWh annually) comes from EU-15. More than 90 % is concentrated in the following 6 countries; Austria, France, Germany, Italy, Spain and Sweden. In addition, Switzerland and Norway have a high SHP capacity, while Bulgaria, the Czech Republic, Poland and Romania account for nearly 80 % of the total capacity of EU-12. Many of the SHPPs in the EU are old. Only 45 % are less than 60 years old and only 32 % are less 40 years old. The eastern European countries have the highest share of young plants (about 38 % are less then 20 years old). The two nonEU western countries (Norway and Switzerland) are in an intermediate position, with a slightly lower percentage of young plants (34 % less than 20 years old) but the highest percentage of plants less than 40 years old (about 59 %).

Figure 2. The proportion of RES-E in the EU

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

2 SHP Potential in the EU In this chapter Potential is defined as additional or remaining economically feasible potential (Potential of upgrading and of new SHP plants) with environmental constraints taken into account environmental constraints. The Total potential includes existing plants and Potential. The SHP potential in the EU from upgrading and building of new SHPPs is considerable, 10,000 MW or 38,000 GWh annually. The Total potential of EU-27 is therefore 23,000 MW or nearly 79,000 GWh annually (Figures 3, 4 and Table 2). It is important to note that the Potential takes

economic and environmental constraints into consideration. It is therefore very realistic and can be exploited. The largest potential among the MS is not surprisingly in countries such as Austria, France, Italy, Poland and Romania that already have high electricity generation from SHPs. It is also worth noting that Norway, Switzerland and Turkey have large potentials. Scotland and Norway have made great efforts to evaluate their potential. In Norway, the Norwegian Water Resources and Energy Directorate (NVE) has made a detailed study of the potential for SHP. The study that used GIS to identify

Figure 3. Capacity 2006 and potentials in EU-27

Figure 4. Electricity generation 2006 and potentials in the EU-27

6 the economic potential indicated an increase from the previously assumed 10,000 GWh to 20,000 GWh annually, while still taking account of economic and environmental constraints. However, developing potential into real electricity generation takes time. According to this study, the realistic SHP forecast for EU-15 in 2010 is about 13,400 MW with electricity generation of nearly 47,400 GWh annually. This

is less than the 14,000 MW and 55,000 GWh estimated for 2010 by the EU Commission in the White Paper. Electricity generation can of course vary from year to year due to hydrological conditions (precipitation). The reduction in capacity and electricity generation in 2003 (Figures 5 and 6) mainly refers to France and to Austria.1.

Figure 5. SHP Capacity 2000-2006 and forecast to 2010 for SHP in EU-15, EU-12 and EU-27

Figure 6. Electricity generation 2000-2006 and forecast to 2010 for SHP in EU-15, EU-12 and EU-27

There seems to be some discrepancy in the input to Eurostat.

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

According to the present study, the 2010 estimations for SHP stated in the White Paper will not be reached for EU-15, but are likely to be achieved if EU-12 is included. In order to reach the White Paper target better conditions such as less administrative barriers for SHP are required. It is difficult to make forecast after 2010 due to the many uncertainties. However by making some assumptions it is possible to set up scenarios. In this study two scenarios have been developed: 1. Scenario existing conditions, assuming the economical situation, license procedure etc is as today. 2. Scenario improved conditions, optimal conditions for developing SHP (barriers are not an obstacle, the support system are well designed for SHP etc) which means that the growth is depending on how fast the manufacturing industry can deliver equipment for new SHPs.

Scenario existing conditions. The development of SHP will expand more slowly after year 2010 due to that the most suitable places for SHPP already have been used. In this study it has been estimated that 1/3 of the potential (i.e. potential still not developed in year 2006) in EU-27 can be developed with existing conditions until year 2020. Which means a total capacity for SHP in the EU-27 of more than 16000 MW. Scenario improved conditions. The yearly growth is quite the same after year 2010 until year 2020. In this study it has been estimated that 2/3 (i.e. potential still not developed in year 2006) of the potential in EU-27 can be developed with existing conditions until year 2020. Which means a total capacity for SHP in the EU27 of nearly 20,000 MW. The differences between the two scenarios are 3,300 MW or about 13,000 GWh annually. (Fig. 7).

Figure 7. SHP Capacity 2000-2006 and forecast to 2010 for SHP in EU-27.

Data for this report have been collected from different sources and in some cases there are significant differences. Capacity and production data have to a great extent been derived from Eurostat, but they appear to contain some discrepancies. For instance there is a reduction in capacity in the year 2003, while in 2004 there is a return to the 2002 level. It is unlikely that a capacity of almost 500 MW would have been shut down for one year and taken into operation again the year after. In the chapter Conclusions and Recommendations we suggest how more accurate data can be obtained from MS.

3 EU Directives and their Impact on SHP 3.1 Directive 2001/77/EC The main purpose of Directive 2001/77/EC is

to promote an increase in the contribution of renewable energy sources for electricity generation in the internal electricity market. Renewable energy sources are defined as renewable, non-fossil and non nuclear sources such as electricity generation from wind, solar, geothermal, wave, tidal, hydro, biomass, landfill gas, sewage treatment plant gas and biogas. Article 6 presents guidelines to simplify the administrative procedures for promoting renewable energy sources in the EU. The MS or competent bodies appointed by the MS should evaluate the existing legislative and regulatory framework pertaining to authorisation procedures in terms of: â&#x20AC;˘ reducing the regulatory and non-regulatory barriers to the increase in electricity generation from renewable energy sources

â&#x20AC;˘ streamlining and accelerating procedures at the appropriate administrative levels and â&#x20AC;˘ ensuring that the rules are objective, transparent and non-discriminatory, and fully take into account the particularities of the various renewable energy source technologies. RES-E targets for each country to be achieved by the year 2010 as well as their status in 2004 and in some cases 2005 can be found in Figure 8. As can be seen, countries such as Austria, France and Italy have developed slowly and will have difficulties reaching their targets, despite their great SHP potential.

3.2 Directive 2000/60/EC By means of this Water Framework Directive (WFD), the EU provides for the management of inland surface waters, groundwater, transitional waters and coastal waters in order to prevent and reduce pollution, promote sustainable water use, protect the aquatic environment, im-

Figure 8. RES-E share in gross electricity consumption. Observed data in 2006 from Eurostat

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

prove the status of aquatic ecosystems and mitigate the effects of floods and droughts. The fear that SHP plant owners and investors have about this framework is that the residual flow may increase and thus investment costs may also increase. Several MS associations have reported that they can already feel the effect of the WFD. In some countries environmental groups have a very negative attitude towards hydropower. This is mainly due to the fact that they are unfamiliar with the new technologies that benefit the environment and that large and small-scale hydropower plants are often put in the same box. Although the construction of new plants is not prevented by the WFD, all new licenses and new or amended restrictions on existing plants are dealt with by means of the water regulation laws. The main impacts are likely to be new or higher residual flows and stricter regulations on the use of reservoirs. However, this framework is a great opportunity for environmentalists and hydro engineers to work together to create sustainable solutions where the environment is protected at the same time as the country produces clean renewable energy.

3.3. Proposed Directive: EU Energy and Climate Change Package 2020 This is a proposed directive from the EU Commission on the promotion of the use of renewable energy sources. The proposal encompasses a legally binding target for the entire EU by 2020, namely that 20 % of gross energy consumption should be covered by renewable energy, compared to 8.5 % of gross energy consumption in 2005. The package has an indicative target for the transport sector, 10 % of the fuel used should be biofuels. The package also has binding targets aimed at reducing greenhouse gases by at least 20 % by the year 2020. This target is likely to change to 30 % as soon as a new global climate change agreement has been reached. Not only is the 20 % target binding for the EU, but the proposal also contains binding targets for each of the Member States. There are also interim targets for each country every second year from 2011 to 2018, which represent a percentage share of their targets. Member States will have to adopt a National

Action Plan that sets targets for the proportion of energy from renewable sources in transport, electricity, heating and cooling in 2020 and adequate measures must be taken to achieve these targets. The National Action Plans for each of the Member States shall be presented to the EU Commission by 31st March 2010. The proposal states that MS shall furnish a Guarantees of Origin (GoO), certifying that electricity is generated from renewable sources. When generated in combined heat and power plants (CHPP) the capacity shall be at least 5 MWth. The guarantees of origin shall be issued electronically in a standard unit of 1 MWh. This new political framework will boost the production of electricity from RES and therefore SHP. According to the proposal, Member States shall submit a report to the Commission on progress in the promotion and use of energy from renewable sources by 30th June 2011, and every second year thereafter. In the first report, Member States shall outline whether they intend to: • Establish a single administrative body responsible for processing authorization, certification and licensing applications for renewable energy installations • Provide for automatic approval of planning and permit applications for renewable energy installations where the authorizing body has not responded within the set time limits • Indicate geographical locations suitable for exploitation of energy from renewable sources in land-use planning. The fact that SHP is a renewable energy source that prevents pollution and deployment of fossil fuels in the production of electricity, demonstrates that by definition SHP can be considered clean and sustainable, placing the sector - together with other RES - at the core of current economic and political developments in the EU. Some countries have already started designing their national plans and in many EU countries hydropower is being reconsidered a suitable RES source for achieving the national targets set by the EU. It is of significant importance that the contradictions between Directive 2001/77/EC and Directive 2000/60/EC will be made obvious to all policy makers at national and regional level, so that they can adopt the right approach to overcoming possible conflicts. Commission is advised also make recommendations how to avoid conflicts.

4 Support Systems As the choice of promotion instruments has not been prescribed or harmonised within the EU, each country has adopted its own unique set. The main drivers for the specific choices are often the national goals in relation to renewable energy. The survey reveals that the most widely adopted support mechanism within the analysed countries is feed-in tariffs, sometimes accompanied by a variety of incentives. Some MS prefer the Quota obligation system, which is usually based on Tradable Green Certificates (TGC). Feed-in tariffs are generation based, price driven incentives, usually in the form of either a fixed amount of money paid for RES-E generation, or an additional premium on top of the electricity market price paid to every producer. It should be noted that fixed feed-in tariffs are currently used in 18 of the EU-27 MS and Quota obligations in 7 (Belgium, Italy, Latvia, Poland, Romania, Sweden and the UK) (Fig. 9). The biggest advantage of the feed-in system is the long-term certainty about receiving support, which considerably lowers investment risks. This fixed and relatively stable system is much preferred by SHP electricity producers in EU-27 and even in the candidate countries.

Figure 9 Overview of primary renewable electricity support systems in EU-27 in November 2008. Source: OPTRES and updated with actual status

Investment grants were ranked second, with a slightly higher score than that attributed to the quota obligation tariff system based on TGC. Tax incentives were only ranked fourth, while the lowest preference was given to the tender system. It is very surprising that SHP producers are reluctant to use the tendering system and is contrary to the findings of the Re-Xpansion Project, which considered support instruments for all RES through consultation with stakeholders via a web-based survey (Morthorst et al. 2005). In a recent web and interview based survey launched for RES-E producers all over the EU (EU-15 and EU-12 ) by the OPTRES project (Ragwitz et al., 2007), many stakeholders, especially from the new MS where feed-in tariffs are the dominant instrument, pointed out that they considered the introduction of more market based instruments similar to a quota obligation, premature. The vast majority of recommendations from the new MS such as Lithuania and the Czech Republic suggested that maintaining and improving the feed-in tariff system and providing additional investment grants would be best. Another key element is to provide a long-term framework in order to attract investment in SHP projects. The advantages and disadvantages of different support systems are summarised in Table 1.

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

Table 1. Advantages and disadvantages of different support systems. Source: Council of the European Union â&#x20AC;&#x153;The support for electricity from renewable energy sources Impact Assessmentâ&#x20AC;? 2005, {COM(2005) 627 final} Advantages

Disadvantages

REFIT (Feed-in tariffs)

Highly effective. Highly efficient due to the low risk for investors. Permits strategic support for technology innovation.

Poor compatibility with the internal market. Requires regular adjustment.

Premium

Highly effective. Efficient due to the medium risk for investors. Good compatibility with the internal market.

Risk of over-compensation in the case of high electricity prices without appropriate adjustment.

TGCs (Green certificates)

Good compatibility with the internal market. Competition between generators. Supports the lowest-cost technologies.

Currently less efficient due to higher risks and administrative costs. Not very appropriate for developing medium- to long-term technologies.

Tendering

Rapid development in the presence of political will.

Stop-and-go nature leads to instability. Development is blocked if competition is too great.

Investment subsidy

Good complement for some technologies.

Inefficient as a main instrument.

Fiscal measures

Good secondary instrument.

Good results only in countries with high taxation and for the most competitive technologies.

Local conditions combined with the goals for each country must be considered when discussing support systems. Feed-in tariffs is the most common in the EU. It is also preferred by producers, since it results in a long period with a certain income.

5 SHP General Policy Framework Exploitation of SHP resources is subject to governmental regulations and administrative procedures, which at present, vary from one country to another despite the fact that MS must comply with the directive on RES-E in force. In order to develop a SHP site, a potential hydropower producer must fulfil these administrative procedures, which constitute a kind of barrier or burden. The barriers that SHP developers and producers reported to encounter when installing new SHP capacities can be of an administrative, grid, financial, environmental and social nature. (Fig. 10). The administrative and regulatory barriers can be grouped into the following main categories:

• Large number of authorities involved (no “one–stop shop” for SHP developers); • lack of co-ordination between different authorities; • long lead-times and high costs involved in obtaining permits or licenses; • Insufficient account taken of SHP in spatial planning. In most cases the administrative and regulatory barriers seem more severe compared to the other types, with the exception of environmental regulations in some countries. The latter, which is also a part of administrative procedures, will be considered later on.

Figure 10. Classification of barriers.

5.1. Barriers Related to Hydropower Development 5.1.1 Administrative Barriers The main non-technical problem that constitutes an obstacle to the development of small hydropower is the difficulty in obtaining the necessary authorisations to build a new site. Apart from the very long time required to process them, procedures vary strongly from one country to another. A survey co-ordinated by ESHA and sent to SHP associations in Europe revealed that the average length of administrative procedures varies from 12 months in the best-case scenario in Austria

(where few new projects are being developed) to 12 years in Portugal. In most new EU MS the average time required to obtain all licences is considerably shorter than in the old MS. However, more significant is the fact that in most MS only a few dozen licenses have been granted in recent years. Different types of licences are normally required for Electricity generation, Impact on water quality, river flora and fauna, and all environmental aspects, Construction, Connection to the grid and Ownership of land or site rights.

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

These issues are normally under the responsibility of different authorities. In this context, the procedures not only vary from one country to another, but also within a country from one region to another and even in the same region, from one project to another. Co-ordination between different administrative authorities does not function successfully with regard to deadlines, reception and treatment of applications for authorizations. Time limits for responses from the Administration are usually not respected. Developers have to undergo successive public consultations on the same project. There are no real “fast track” procedures, especially for smaller projects. These procedures - that are far from being transparent, objective and non discriminatory - are in some cases supervised by several local administrations that are very sensitive to pressure and lobby groups, which multiply the number of interlocutors and extend the time required for making decisions (up to 58 permits from different administrations are necessary in some Italian locations). In addition, the project has to be made public so that people can react. As a result, the process in some MS can last up to 10 years (for new developments), which discourages the potential investor who will switch to another more attractive RES project or other locations outside the EU. For the refurbishment and upgrading of plants the situation is generally easier (but not always2) although various permits are still required. Sometimes project developers are requested to conduct an Environmental Impact Assessment (EIA) of existing infrastructures. The cost of permits includes hydrological and environmental assessment, preliminary designs, permits and approvals for water and land use as well as construction, interconnection studies, power purchase agreements (PPA), and varies from country to country with an average of between 10,000 to 30,000 € per application. This amount is lost if authorisation is refused. It seems that MS have not implemented Directive 2001/77/EC to the extent necessary for achieving SHP targets.

5.1.2 Environmental Barriers Non-consistent implementation of the WFD can lead to a significant reduction of SHP production combined with higher costs. In some MS (Germany, Austria, Eastern Baltic States), the implementation of the WFD is considered the main barrier to further SHP development. Solutions may be found in a more precise definition of some of the terms used in the WFD to make its transposition clear and predictable in terms of consequences for society. The implementation of the WFD and the RES-E directive must be consistent. To ensure better integration between the different policies, an increase in transparency in the area of decision-making is necessary. Significant progress in policy integration can be made by enhancing the recognition of different interests, fostering co-operation between the various authorities and stakeholders, and promoting more integrated development strategies. Integration of water and energy policies is beneficial since it will create synergies and avoid potential inconsistencies as well as mitigating possible conflicts between water users. Moreover, some countries even have forbidden rivers, where no hydropower development can be carried out or even investigated. Hydropower is very site specific because rivers are individual and, as such, any general approach would be inappropriate. Here, there is a need to re-discuss the classification of sites where hydropower

Hagerums Kvarn SHP plant in Sweden. The original SHP plant was shut down in 1996. The new owner wanted to increase the capacity to 170 kW (an increase of about 40 percent) and a new licence was needed. The procedure took 6 years and cost 45,000 €. The main reason was understaffing at the environmental court and that an association opposing the project was given too many chances to request investigations that proved to be irrelevant. The final permission was granted in 2005. Ljunga SHP plant in Sweden. The plant is now under construction and will have a capacity of 1,200 kW. It took over 13 years to obtain a license. The final permit was granted/issued in 2006. The site contained a smaller plant that had been shut down about 40 years ago. The main reasons have been very strong resistance from the regional authority coupled with a lack of professionalism on the part of the project team. 2

14 is forbidden and the criteria used for such classification in a transparent process involving all stakeholders. The small hydropower situation clearly highlights how a good support system in terms of economic revenues or the setting of ambitious targets is not sufficient to overcome the administrative and environmental barriers that prevent small hydro power from developing its untapped potential. Without authorizations no development is possible and therefore support schemes are useless, not only for promoting SHP but also for achieving the 2010 objectives. It is not easy to state the approval rates for SHP projects in Europe, and the situation differs a great deal from one country to another. The reason for the difficulty is a lack of transparency and information, as most public authorities rarely publish this kind of information; the majority of installations have to wait for a very long period before obtaining a response (as the authorisation has neither been refused nor granted it is difficult to establish a rejection rate).

5.2 Possible strategies for improvement There is a need to investigate the possibilities for a simplification and harmonisation of administrative procedures: Set up a single reception point for licenses applications, ensure co-ordination between the different administrative bodies involved and establish reasonable deadlines. Establish a “fast-track” planning procedure for small hydropower and for refurbishment - nowadays the same procedures are normally applied for a 50 MW and for a 100 kW plant. Sometimes it is even more difficult to refurbish an old mill than to build a new 30 MW gas power plant. Where applicable, create the possibility of establishing mechanisms under which the absence of a decision by the competent bodies on an application for authorisation within a certain period of time automatically results in an authorisation. Towards the end of the concession period many producers will not invest in refurbishment, since they do not know if the concession will be renewed in the future.

Faster licensing procedure: • prepare best practice guidelines for administrative procedures, • establish a “fast-track” planning procedure for SHP developments, especially for smaller projects and for refurbishment and upgrading and • increasing the competence and capacity of the licensing authorities. Public information and monitoring: • requesting the MS and regional authorities are to publish data and information about SHP targets, approval rates and duration of the licensing procedure, • they should periodically monitor the administrative procedures in order to prevent unjustified requirements and prepare best practice guidelines for administrative procedures, • identify suitable sites at national, regional and local level for establishing new capacity for the generation of SHP electricity and for refurbishment and upgrading. Where a river basin plan has been approved: • the local authorities should not be permitted to introduce other environmental restrictions (e.g. a higher reserved flow) without the support of scientific research or a study, • allow the possibility of increasing the installed capacity of existing power stations by 20 % without the need to reconsider the licenses • allow the possibility of exploiting the hydraulic power on existing weirs without the need for a formal procedure. Brief information to the authorities and if the latter do not react within a certain time approval is deemed to have been granted and • at the end of the concession period the previous owner of the concession should be given special rights of preference to promote upgrading and refurbishment. Finally is it important to mention that if the administrative/concession delays and barriers are not overcome no support scheme will improve the expansion of SHP even if the incentives increase in monetary terms.

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

6. Economics Compared to other RES-E, SHP is competitive, assuming equal conditions. However, compared to large-scale hydropower and other forms of large-scale conventional electricity production, SHP and other RES-E technologies need supports in order to compete on a deregulated power market. If subsidies for conventional electrical production were eliminated and the sector obliged to cover all its external costs, SHP would most likely be very competitive compared to all other technologies. For instance according to the UNEP-report “Reforming Energy Subsidies”, there are considerable subsidies available for fossil energy. When making an investment in SHP there are at least two items that are of major importance; the size of investment and the risk. The economics of running a SHP plant can be roughly divided into revenues and costs (Table 2). The revenues from generated electricity vary between the markets in the EU. On a deregulated market the price differs a great deal between years (Fig. 11). As revenues are very dependent on the agreements with the purchaser they do not only vary between countries, but also from one plant to another. As the support systems in

the EU vary greatly from one country to another, the conditions also differ to a large degree between countries. Grid compensation exists in some countries such as Sweden, where the SHP plant owner participates by generating power in such a way that it stabilizes the grid and minimizes transport losses. Labeled RES-E environmental value has recently become tradable in some countries such as Sweden, and means that suppliers can use the “extra” value from the SHP plants from which they buy their electricity. Capital cost can be divided into Licensing process, Building process and Long-term financing. The latter replaces the other two when the plant is in operation. The capital required for SHPPs depends on the size, head, flow rate, geographical location, equipment, (turbines, generators etc.) civil engineering work and flow variations throughout the year. Making use of existing weirs, dams, storage reservoirs and ponds can significantly reduce both the environmental impact and costs. Sites with low heads and high flows require more capital investment because greater civil engineer works and bigger turbine machinery will be needed to handle the larger flow of water. If, however, the system can have dual purpose - electricity generation as well as flood control, electricity generation and irrigation and electricity generation and drinking water supply, the payback period can be reduced. Operation and maintenance costs. The op-

Table 2. Examples on how revenues and costs combined with volatility affect the uncertainty and the willingness to invest in SHP. The higher the uncertainty and risk the less interest in investing Revenues

Volatility

Uncertainty

High – but also dependent on agreements.

High – varies a great deal in deregulated markets, which results in uncertainty.

Sales of generated power

Medium to high.

Support system

Medium – in most EU Low to medium countries.

Low to medium – depending on the system and political decisions.

Grid compensation

Low – if available.

Low

Fee for Eco-labeling electricial production

Low – if available.

Low

Costs

Volatility

Uncertainty

Capital costs

High

Medium

High

Operation and Maintenance

Medium

Low to medium

Administrative costs

Low

Figure 11. The spot prices for the largest exchange electricity markets in Europe since 2003, Nord Pool (Nordic countries), EEX (Germany) and PWX (France). Source: Nordpool Monthly report August 2007.

eration cost can vary a great deal between countries due to the fact that there are different types and sizes of fees. Special attention must be paid to the cost of using water (water charges and/or concession fees). Operation and maintenance costs vary in line with the quality and design of a plant and the availability of specialist maintenance resources in the different MS.

The administrative costs include insurances, tax, accountancy etc. At European level, the latest economic indicators (Table 3) show an electricity generation cost for small hydropower in average about 1.5-2.5 â&#x201A;Źcents/kWh, typical turnkey investment costs in average about 2,000-5,000 â&#x201A;Ź/kW, a typical payback time on investments of between

Table 3. Investment and production costs. Some countries has very high average SHP production costs which may be explained by that they have included the capital cost. Range of invest- Average SHP ment costs production costs

Country

Euro/kW

Eurocent/ kWh

Bulgaria

1000 - 1500

0.4 - 0.8

Cyprus

n/ap

Czech Republic CZ

1000 - 6000

Estonia

1000 - 4000

2-5

Hungary

n/a

3.8 - 4.6

Latvia

1800 - 2000

Lithuania

2200 - 2500

2.5 - 3

Malta

n/ap

Poland

2200 - 2500

3-4

RO SK SI HR MK TR

1250 2000 1500 - 3000 1300 - 2500 1200 - 3000 500 - 1100

4 0.6 - 0.8 n/a 1.5 n/a 0.2

Austria

3000 - 5500

8 - 30.9

Belgium

1000 - 8000

6-8

Denmark

n/a

Finland

1750 - 10000

3 - 3.5

France

1850 - 4000

0.5 - 1.8

Germany

5000 - 12000

0.7 - 1.1

Greece

1500

Ireland

1600 - 5000

0.87 - 6.34

Italy

2150 - 4500

10.5 - 17.4

Luxemburg

6000 - 3000

10 - 15

Netherlands

3000 - 6000

10 - 15

Romania Slovakia Slovenia Croatia Macedonia Turkey

Portugal

1800 - 2500

0.56 - 0.6

Norway

1000 - 1500

1.5 - 2

Spain

1000 - 1500

3.5 - 7

4000 - 10000

3 - 15

Sweden United Kingdom

2150 - 3500

2.0 - 2.5

1300 - 1600

1.5

2200 - 6000

5.0 - 15.0

Switzerland Bosnia & Herzegovina Montenegro

n/a

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

10 and 25 years (based on a 5% discount rate over 20 years). As can be seen in Figure 12, the revenue (income from selling electricity plus support system minus production costs) varies between the MS. A large part of production costs consists of the capital cost (interest and depreciation) during the period of depreciation, which is normally around 25 years for SHP. When referring to production costs, it is important to know whether or not capital costs are included. In both cases SHP is competitive when compared to other RES-E technologies of a similar capacity.

13). In Figure 13 large hydropower has nearly the same costs as SHP, but according to this study the Long Range Marginal Cost (LRMC) for SHP is higher than for large scale Hydropower in almost all cases. Also worth mentioning is that biomass and biogas are often paid for handling their fuels.

Figure 13. Compared to other RES-E technologies, electricity generation from SHP is competitive for comparable investments. Source: OPTRES 2007.

Figure 12. Compared to other RES-E technologies, electricity generation from SHP is competitive for comparable investments. Source: OPTRES 2007.

Due to scale effects, SHP is not normally competitive compared to large scale electricity generation plants unless external costs have been internalised. Our own findings and those of other studies (Optres 2007) demonstrate that SHP is very competitive compared to other RES-E. (Fig.

Current and Future Operational and Development Costs. SHP operational costs will probably not increase in the future. The amount of man-hours will decrease with technical development. The development of manufacturing processes will also reduce costs, although higher steel prices and labour costs will tend to have the opposite effect. Environmental restrictions can increase the cost of electricity generation. The specific capital cost of small hydropower installed capacity depends on the size and head of the plant; the cost per installed kW is highest where heads are lowest, but it decreases rapidly as heads increase. This effect is reduced at heads of around 25 metres and eventually, the specific cost stabilises. Two potential areas for improvement therefore exist; the first concerning cost reductions for low heads, the second for developments supplying less than 250 kW. As a large proportion of the potential in Europe involves low-head plants, the benefits of concentrating development efforts in this area, and particularly for low capacity plants, are obvious. Capital costs are a crucial factor when considering the costs and uncertainties of SHP. Government guarantees for investments, investment grants or other ways of decreasing the financial risks involved in SHP projects would be desirable.

7 SHP and the Environment The SHP relation to the environment is twofold. On the one hand there are many positive effects resulting from SHP operations such as the replacement of fossil electricity generation, which produces harmful emissions, and the reduced risk of river flooding. In some cases SHP can also increase biological diversity. SHP production in EU-27 amounts to 41,400 GWh (2006). It replaces fossil production and protects nature and society from many harmful emissions such as greenhouse gases and sulphur dioxide, which have the worst environmental impact. SHP production reduces greenhouse gases such as CO2 by 29,000,000 tons annually (41,400 GWh/ year x 700 tonnes/GWh) and sulphur dioxide by 108,000 tons annually (41,400 GWh/year x 2.6 tonnes/GWh). A positive feature of hydropower is its ranking in Life Cycle analyses (LCA) where it has the highest ranking of all electricity production technologies. On the other hand, environmental groups that oppose SHP point to its negative impact on the local environment. Most of these arguments are, however, based more on theories than on scientific research. Some arguments are related to specific cases and may be relevant, but they do not generally apply to SHP. At times the criticism seems to be emotionally charged. New technology and improved SHP operating methods show that it is possible to reduce the local environmental impact. (Fig. 14).

Therefore, the positive impact of SHP on the environment outweighs the negative effects. Further information can be found in the SHERPA environmental report. A study “The application of the ISO 14001 Environmental Management System to Small Hydropower Plants”, which is a part of the SHERPA project, discussed how ISO 14001 can be used among other things as a tool when working to reduce the impact of SHP on the environment. In the study the negative impact of SHP on the environment is also dealt with. The ISO 14000 environmental management standards exist to help organisations minimise the negative affect of SHP operations on the environment and to comply with applicable laws and regulations. An individual example “in the spirit of ISO 14001” is that of a small hydropower plant in Sweden, called the Forsa plant in Rolfsan, situated in the southwest of the country. A project was launched to retrieve migratory fish in the Rolfsan’s water system. For further information see www.rolfsan.se. Compared to conventional generation, SHP is better for the environment. More research is needed if and how SHP affects the environment. There are interesting projects indicating that SHP operators, environmentalist and researchers can co-operate to find broad solutions acceptable to all parties.

Figure 14. Environmental Integration – Resistance to SHP development EU-27 & CC.

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

8 SHP Technology During recent years hydropower development has focused on the adoption of new technology from other sectors. Only a few decades ago, a person responsible for operating a SHP plant had to live nearby in order to control the operation. Such a system would be impossible today with the current ratio between income from electricity generation and the cost of labour. The scene has dramatically changed with the development of electronics. The following describes some areas where this development has made SHP operation more efficient.

Automation Thanks to modern electronics SHP plants nowadays operate automatically and new IT technology has made it possible to introduce remote monitoring and control. This constitutes a big step forward and results in less visits to a plant, more efficient regulation, safer operation and reduced operating costs. This development is still in progress.

Frequency conversion Many SHP turbines are forced to run at a speed for which they were not designed, due to the fact that it is too expensive to design and build a turbine that exactly suits the conditions at a specific site. Although mechanical gears have been used in order to overcome this problem, correct frequency is still not achieved. Electronic frequency converters have been too expensive, but technical development and mass production has reduced the price to a level where they are economically viable for SHP use.

Efficient Low Head Turbines Up to a few years ago turbine development concentrated more on medium and high heads than low heads, as it is more economical to use higher heads. In Europe and the rest of the world there are many abandoned power plants and numerous of millponds that have not been used since the milling era. These sites are normally low head, and putting them back into operation would enable Europe to make a good contribution to clean energy. Low head turbine technology has recently started in France, Germany and Switzerland.

Fish Friendly Turbines

Running a turbine at the correct speed can in many cases improve turbine efficiency by over 10 percent.

The growing interest in fishing migrating fish and the fact that the population of such fish is decreasing has led to a requirement to improve fish passage at SHP plants. Many turbine manufacturers and research institutes are engaged in on-going research how to design turbines that enable fish to pass through.

Permanent Magneto Generators

New Material

There are many advantages in using permanent magneto generators, but up to now they have normally been too expensive for SHP to compete with standard generators. Development has now led to price reductions and these generators are becoming economically interesting for installation in new SHP plants.

This is an area with many possibilities. Steel alloys more resistant to cavitations in turbines and their development is in progress. Finding new applications for fibreglass and special plastics is another ongoing development, while aluminium is replacing steel in water structures such

20 as trash racks and stop logs in spillways. Aluminium is not as corrosive as steel, which reduces maintenance costs and the time to stop operations during maintenance. An aluminium trash rack is also easier to clean. The fisheriesâ&#x20AC;&#x2122; requirement for a shorter distance between the bars in SHP trash racks can result in loss of head. Aluminium bars can be manufactured with streamlined profiles to reduce head losses. Aluminium stop logs are almost maintenance free and easier to handle as they weigh far less than traditional wooden stop logs.

Environmental Requirements The increased environmental requirements on SHP plants have led to technical development to adapt the plants to these regulations. Reducing amplitudes in dams is one requirement that has been fulfilled by means of automatic water level regulation to keep the amplitude within acceptable levels.

Increasing the passage of migratory fish at power plants is not a new issue, has been an issue for more than 50 years. However, few fish pass designs work well in practice, thus a great deal of research remains in order to develop more efficient fish passes specifically adapted to the migrating fish in the river in question, as well as to develop methods how to operate SHP plants during periods of fish migration.

Turbine Development Although water turbine technology is considered to be a mature technology, there is still interesting development taking place to improve efficiency and dynamic characteristics. During the last two decades the top efficiency of small turbines has increased from around 88 to 93 percent and the efficiency curve has been considerably improved. New research on and development of special turbines for very low heads has become an interesting area. The development of SHP technology is far from complete and new techniques not only bring down the cost but also emphasise environmental issues. Some areas that deserve mention are the development of automation, more environmental friendly solutions and more efficient turbines.

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

9 SHP Market for Manufacturers In EU-15 there are more than 40 manufacturers of small water turbines. Not surprisingly most of them are located in countries with highly developed SHP such as Germany, France, Spain, Austria and Italy and they offer a high technological level. During recent years many larger turbine manufacturers have incorporated smaller manufacturers, but this does not seem to have led to any reduction in manufacturing capacity. Some manufacturers have efficient development departments to improve their products, whereas other seem to rely on proven technology. A survey of Eastern Europe revealed that some 24 small-scale water turbine manufacturers exist in EU-12 and CC. The Czech Republic and Slovenia have the largest turbine manufacturing industry, while Hungary, Poland, Croatia and Romania have some limited turbine manufacturing capacity. Internationally recognized manufacturers exist in all of the above mentioned countries. No SHP turbine industry was reported in Denmark, Cyprus Greece, Netherlands, Estonia, Macedonia, Montenegro and Slovakia. (Fig. 15).

Figure 15. Turbine manufactures in EU-27.

The European SHP equipment manufacturers are market leaders. They have successfully developed hydropower technology and they have become the main exporters of equipment worldwide. Indeed, it can be said that Europe gave light to the world. Although EU equipment manufacturers are still world leaders, this position is under threat as MS have shown little interest in stimulating investments in new SHP and maintaining existing plants. This situation is due to decreasing profits for energy producers in the deregulated electricity market and the increasing obstacles created by environmental and legal constraints. The introduction of support systems has improved this situation. The margins for producers are still good in a few countries such as Germany and Spain and consequently the markets for manufactures in these countries are better, but have recently been reduced because of the rising cost of materials, which has not been possible to transfer to customers. The non-EU market is still promising and offers good prospects for

EU manufacturers, although financing hydroprojects is a serious problem as is differences in business culture. Small companies are finding it difficult to deal with such problems. The world is strongly in favour of electricity from renewable energy sources and the small-scale format is well suited not only for developing countries. However, there still appear to be too many obstacles to SHP within the EU giving the European manufacturers difficulties in demonstrate their competitiveness. European SHP manufacturers have been in a negative spiral and many have chosen to leave the SHP market. This negative spiral has now stopped and the EU have a better chance to maintain their industrial position as well as the competence that has been built up over the years. Such competence, if lost, is hard to recover because of the special technology related to hydropower. In some countries, for example Sweden, an ambitious programme has been launched to supply competence to the industry.

Turbine manufactures, other SHP equipment manufacturers and consulting companies will only stay in business as long as the market provides them with enough work. It would be wise for European manufacturers to make arrangements with export offices and export credit institutions in order to successfully penetrate the non-EU market. It would also be advisable to initiate a study on ways to strengthen the manufacturers in the short term so that they will be well prepared when both the EU and non-EU markets become stronger. In 2003 approximately 20,000 persons directly earned their living from SHP in EU-27. The SHP industry in the EU was seen as multi-disciplinary, highly skilled industry offering range of products and services for the sector. Following the EREC (European Renewable Energy Council) projections for 2020, the number of direct and indirect jobs could reach 28,000. In the questionnaires many EU SHP manufactures stated that they are competitive. Most competition within the EU comes from manufactures in MS. Competition from Asian manufactures has become harder during recent years. Manufactures of SHP technology in the EU have a long history. They have developed a highly competitive industry that employees many thousands of people. In order to maintain the competitiveness of the European manufacturing industry it is of vital importance to have an increasing home market and to stimulate technical development. It is an old truth that you are only successful on an export market if you can qualify your skill on your home market.

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

10 Constraints From the data collected it appears that the environmental constraints affecting SHP are mainly related to fishing and water regulations. In almost all countries the fishermenâ&#x20AC;&#x2122;s lobby has the power to influence the decisions of the regional and national authorities. Moreover, in many European countries, environmental groups are trying to prevent local river areas from being used by companies for industrial purposes (mainly electricity generation), claiming it would negatively impact on the river environment (this is particularly a problem in northern countries). Another constraint is that in many countries the long water licensing procedure is a real burden. This is mainly caused by the complicated and time-consuming public administration procedures and the number of subjects involved who can refuse authorisation, which makes it difficult

to set up new SHP plants as well as finding proper financing schemes (this problem is common in many southern European countries). (Fig. 16). A report on Realising Hydro Projects by Involving Stakeholders, carried out by the SHERPA project, discusses how Social Engineering can be used as a tool to implement a SHP-project where there are objections from different groups. Social Engineering means combining technical and economic aspects with a great variety of social aspects. It can be seen as methodical approach to overcoming opposition to a project. In the report some tools are described as Conceptual strategies, Operational approaches, Involvement, Ownership and identity and presented together with examples of successful use of the methods.

Figure 16. Social acceptance - Resistance to SHP development EU-27 & CC.

11 Conclusions and Recommendations Current policies pertaining to SHP include many mechanisms that could, if well implemented, increase SHP production. In the medium term, these improvements may lead to substantial growth of this energy source. In the current economic framework, which is converging towards a common European market, the European Commission can play a fundamental role in spurring economic forces to support Small Hydro Power. However, these benefits can only be achieved if there is a synergy at European, national and local level. These three levels must work together, since efforts at only one level are doomed to failure. The challenge for the European authorities involved in the development of Small Hydro Power and other renewable energy sources is to placate the market by reducing uncertainty. Although this is not an easy task, some measures can be taken to promote the interest of European citizens in the sustainability of the energy sector. The present study, SHERPA, will indicate specific areas and make recommendations as follows.

Gathering data Statistics for this study were gathered from official sources such as Eurostat, reports, from experts and associations as well as other sources, e.g. the Internet. The result demonstrates that there is a great deal of variation between different suppliers and that official sources do not present an accurate description of SHP. The Commission should provide MS with more detailed guidelines for how to report statistics. The most reliable method is to gather information on capacity and production from those organisations responsible for measuring the electricity generation to the grid from SHP plants (and other plants). In most MS this is the responsibility of grid owners. This is the only reliable way to an accurate information on capacity and electricity generation. Reliable statistics are important to precisely follow the development of capacity and production towards targets, for example the Commissions 2020 targets.

Potentials and Forecasts Very few MS have made serious and deep analysis of different potentials combined with technical, economic and environmental restrictions. Potentials are often based on assumptions in-

stead of a scientific approach. The same goes for forecasts. This means that calculations for future contributions from SHP are uncertain, which makes it difficult to follow the development towards the 2020 targets. The Commission should issue detailed guidelines to MS on the calculation of potentials and forecasts and require these calculations to be updated every second year. Norway has demonstrated a method to calculate potentials using the GIS-system. Similar systems should be introduced in all member countries.

Economics SHP represents a major investment over an extremely long production period, normally 30-40 years. Other industrial investments have a payback time of around five years. This means that the SHP sector has a need for a long-term stable income. SHP also has a higher cost per produced kWh than large hydro and other large scale electricity generation plants, but offers social advantages such as higher rates of employment, reduced energy losses and stimulation of Small and Medium-sized Enterprises (SMEs) to support the sector. Building a SHP plant implies heavy investment and the capital cost is high, until the loans have been completely amortized within 15-20 years. The Commission should require MS to introduce long sighted rules including a support mechanism for the SHP sector taking into account the capital cost over a period of 15-20 years. A differentiated system should be considered. The smaller the plant, the higher the production cost, but also the higher the benefit to society. Rules on how to calculate production and investment costs should be issued by the Commission in order to harmonize the way of calculating such costs, as the method employed seems to differ between member states. This will create an accurate way to compare different electricity generation sources.

Policy framework Many SHP actors report complicated procedures for obtaining a license, uncertainty as to whether an application will result in a license, high costs, an abnormally long waiting period and too many authorities involved. The expensive, complicated and time consuming process reduces the number of applications as well as the number of applica-

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

tions approved. Directive 2001/77/EC does not seem to have produced the expected result. Even if MS introduce good economic incentives for SHP, the resulting production will not reach the expected targets because of administrative barriers. The EU should require MS to reduce administrative barriers in accordance with Directive 2001/ 77/EC and make a recommendation how to deal with Directives that appear to be contradictory, for example the RES-e Directive and WFD Directive. Directives 2001/77/EC and 2000/60/EC seem contradictory. The 2001/77/EC promotes the use of electricity from renewable energy sources and calls for a reduction of barriers in order to stimulate further development, while the not yet fully implemented 2000/60/EC, the Water Framework Directive (WFD), has raised new barriers to the further development of SHP. The coming directive related to the Energy Package of 2020 is supposed to call for more RES-electricity, thus there is a clear risk of conflict with the WFD. It is of vital importance that the contradictions between Directive 2001/77/EC and Directive 2000/ 60 are made clear to all policy makers at national and regional level, so that they can adopt the right approach to overcoming possible conflicts

Manufacturing industry

The Commission should issue rules on how to evaluate and balance the arguments for and against the impact of SHP on the environment, both locally and globally, and maintain a neutral stance in the face of arguments from specific interest groups.

Summary of recommendations To summarise what is said above about promoting SHP development in the short and medium term, as well as good policies and “best practices” for SHP the following is suggested. Concrete recommendations and policies for promoting SHP in the short term: • Assure higher quality of the data that is being reported for SHP to Eurostat. Using data from the measuring of production delivered to the grid is the most reliable method. • Evaluate different methods and recommend the MS a “state of the art” of how to calculate a more precise potential for SHP in different MS. Good examples can be found from Scotland and Norway. • Evaluate different methods and recommend the MS a “state of the art” of how to calculate the costs for SHP investments and production as well as other sources of electricity generation.

The manufacturing industry in the EU has been built up during a long period and is today most competitive from an international perspective. However the international competition from outside the EU is increasing and the industry is now facing a leap forward in development with very high demands from producers on efficiency and cost combined with very high environmental demands from different associations and citizens.

• Follow up to what extent the Directive 2001/ 77/EC has been implemented to reduce the obstacles to increasing production and to rationalise and speed up administrative procedures. According to this study there are still many obstacles and not much have changed.

EU is recommended to support an increasing research of SHP and hydropower in general to be able to develop SHPP that will meet future demands and be international competitive. This is a great possibility for the EU to keep the manufacturing industry in the EU supporting the SHPP inside and outside the EU.

Concrete recommendations for promoting SHP in the long term:

Environment SHP has both local and global benefits, but is also the object of criticism from some organizations, mainly fishery associations, for the negative impact on the local environment. It is often difficult to evaluate the different arguments, thus making the debate more emotional than factual.

• Give clear recommendations on how to interpret Directive 2001/77/EC and the WFD Directive that appear to be contradictory.

• Decrease the barriers for developing SHPP by setting up clear rules and timeframes in the licensing process. • Support the manufacturing industry by increasing the research of finding new, more efficient and more environmental friendly ways to generate electricity from hydropower. This in order to secure that the SHP manufacturing industry will still be international competitive in the future. Finally it is of vital importance that the Commission gives concrete guidelines in order to follow the development towards the renewable targets of year 2020.

Norway & Switerzland

Candidate Countries

EU-12

EU-15

2 9 9 13 0 155 0 0 127 682 10574 38 46 152 236 10810

EE HU LV LT MT PO RO SK SI

18 7933 51795

1712

12522

3290

747

4551

5 0 25 27 0 720 0 0 340 2050 43500 0 18 344 362 43862

503

4401 255 29 1612 6723 7999 166 123 9239 120 4 878 4436 5251 214 41450 430 0

Switerzland Bosnia & Herzegovina Montenegro Associated Countries EU-27, CC, Associated Countries

945

142

BG CY

HR MK TR

843 60 10 357 1833 1421 56 34 2197 39 2 307 1567 1100 66 9892 225 0

AT BE DK FI FR DE GR IE IT LU NL PG ES SE UK

[GWh]

[MW]

Norway

Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxemburg Netherlands Portugal Spain Sweden UK EU-15 Bulgaria Cyprus Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Romania Slovakia Slovenia EU-12 EU-27 Croatia Macedonia Turkey CC EU-27 + CC

Energy

Capacity

2000

13297

1748

755

973

2 9 12 13 0 182 0 0 147 750 11264 38 46 201 285 11549

160

843 60 11 342 2221 1421 60 37 2233 40 2 317 1618 1120 189 10514 225 0

[MW]

Capacity

2001

51826

7344

3310

3944

7 33 37 41 0 771 0 0 371 2231 43965 91 15 411 517 44482

691

4259 242 28 1412 6887 7634 135 93 9396 133 3 982 4914 5406 210 41734 280 0

[GWh]

Energy

14782

1789

763

1006

3 9 18 13 0 210 346 0 156 1218 12749 38 48 158 244 12993

238

1547 60 11 342 2313 1527 62 16 2291 40 2 344 1652 1130 194 11531 225 0

[MW]

Capacity

2002

52511

8077

3330

4656

6 28 32 36 0 847 436 0 327 2814 43813 96 16 509 621 44434

749

4632 198 49 1070 6751 8594 150 55 9594 113 3 917 4028 4642 203 40999 353 0

[GWh]

Energy

14315

1840

771

1049

4 9 26 19 0 227 348 67 151 1327 12236 34 48 157 239 12475

251

1205 59 11 341 1981 1544 69 34 2330 40 2 330 1704 1140 119 10909 225 0

[MW]

Capacity

2003

46429

6835

3350

3393

13 24 57 41 0 674 470 250 266 2943 39036 72 17 469 558 39594

660

2681 147 21 971 6381 7967 245 83 7187 77 3 1026 5407 3754 143 36093 488 0

[GWh]

Energy

14947

1912

777

1113

4 12 25 20 0 261 319 67 143 1327 12780 32 48 175 255 13035

251

1190 60 11 341 2384 1564 82 38 2364 40 2 335 1749 1150 143 11453 225 0

[MW]

Capacity

2004

53068

8189

3372

4709

22 43 69 61 0 890 774 250 437 3960 44186 124 24 545 693 44879

903

3792 185 27 1562 6710 8378 303 100 8859 100 3 716 5040 4169 282 40226 511 0

[GWh]

Energy

15203

1988

794

1164

5 12 25 27 0 246 325 67 143 1352 12959 33 48 175 256 13215

277

1062 62 11 324 2419 1714 89 38 2405 40 2 335 1788 1160 158 11607 225 0

[MW]

Capacity

51176

9461

119

3439

5880

22 49 62 66 0 860 752 250 383 4214 41083 107 23 502 632 41715

1071

3593 166 22 1102 5899 7959 324 103 7616 90 3 395 3977 5177 443 36869 699 0

[GWh]

Energy

2005

Table 4. Observed SHP data in EU-27, CC as well as Norway, Switzerland and other countries

22698

1616

1043

547

41 34 140 78 0 676 221 202 478 3361 20949 32 25 76 133 21082

1389

2485 80 34 152 1717 8000 61 44 1799 24 10 68 1119 1869 126 17588 102 0

Number

2006

15164

1729

757

941

5 12 25 27 0 253 325 68 144 1359 13169 33 48 185 266 13435

275

1099 57 9 317 2473 1714 116 32 2468 40 2 340 1819 1171 153 11810 225 0

[MW]

Capacity

51849

9244

125

3300

5800

850 1082 250 283 3646 41384 165 146 910 1221 42605

23 47 54 54

680

3731 209 24 910 6383 7996 388 120 7875 111 3 1048 4006 4457 477 37738 323

[GWh]

Energy

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

Table 5 Forecast and Potential of SHP in EU-27, CC as well as Norway, Switzerland and other countries Potential with Economic & Environmental Constraints 2010 Country

Forecast

Capacity [MW]

EU-15

EU-12

Candidate Countries

Norway Switzerland and Associated Countries

Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembourg Netherlands Portugal Spain Sweden UK EU-15 Bulgaria Cyprus Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Romania Slovakia Slovenia EU-12 EU-27 Croatia Macedonia Turkey CC EU-27 + CC Norway Switzerland Bosnia & Herzegovina Montenegro Norway & Switzerland EU-27, CC and Associated Countries

Energy

Upgrading Capacity

[GWh]

New SHP

Energy

GWh

Capacity

Energy

Capacity

Total Energy

GWh

740 26 0 238 750 350 100 30 500 19 12 330 000 375 615 085 290 20 387 24 50 95 57 0 520 900 258 194 795 880 123 363 485 971 851 750 650

3 700 156 0 1 200 3 000 2 000 600 100 1 850 67 30 943 3 224 1 500 2 550 20 920 1 000 71 1 300 95 16 334 203 0 2 410 3 193 965 585 10 172 31 092 435 1 090 19 520 21 045 52 137 19 000 2 300

1 015 31 0 288 1 368 450 102 35 640 29 12 350 1 100 675 653 6 748 346 20 467 27 62 101 62 0 588 981 275 230 3 159 9 907 131 375 6 565 7 071 16 978 5 000 848

4 633 192 0 1 413 4 595 2 500 605 120 2 350 94 30 1 000 3 574 2 700 2 669 26 475 1 158 71 1 650 106 19 348 218 0 2 613 3 366 1 029 689 11 267 37 742 463 1 126 19 870 21 459 59 201 20 000 3 160

425

1 330

432

1 360

220

600

222

606

457

1 896

6 045

23 230

6 502

25 126

2 584

8 960

20 896

75 367

23 480

84 327

1 449 60 9 360 2 590 1 795 117 32 3 000 42 0 400 2 199 1 200 160 13 413 255 0 300 7 15 32 28 0 305 400 70 160 1 572 14 985 38 80 250 368 15 353 1 700 1 300

5 481 245 24 1 360 7 487 9 379 495 120 9 237 130 0 1 200 6 692 5 000 559 47 410 810 0 970 31 57 70 96 0 924 900 260 452 4 570 51 980 120 240 750 1 110 53 090 8 000 5 000

275 5 0 50 618 100 2 5 140 10 0 20 100 300 38 1 663 56 0 80 3 12 6 5 0 68 81 17 36 364 2 027 8 12 80 100 2 127 250 198

150

500

3 000

13 000

18 353

66 090

1 5

1 6

7 1

Total

933 36 0 213 595 500 5 20 500 27 0 57 350 200 119 555 158 0 350 11 3 14 15 0 203 173 64 104 095 650 28 36 350 414 064 000 860

2 7

6 6 14 4

References

Acronyms

World Wide Web

APER

1. http://epp.eurostat.ec.europa.eu 2. http://www.esha.be 3. http://eur-lex.europa.eu/ 4. http://ec.europa.eu/energy/res/publications/doc/2007_02_optres_en.pdf 5. www.rolfsan.se 6. http://www.nordpool.com/Docuents/Communications/Publications/Monthlyreports/ 2007Aug.pdf

CC EIA EREC ESHA EU-12 EU-15 EU-27

Literature 1. 2008 World Atlas & Industry Guide. The Intern. Journal on Hydropower & Dams. 2. EUROSTAT. Energy - Yearly statistics 2006, ISSN 1830-7833. 3. Laguna M., Administrative barriers for small Hydropower development in Europe, 2007, Brussels, ESHA 4. ESHA, Lithuanian Hydropower Association. Small hydropower situation in the new EU Member States and Candidate countries. Thematic Network on Small Hydropower (TNSHP), 2004, ESHA. (Available from http:// www.esha.be/). 5. OPTRES final report. Assessment and optimisation of renewable energy support schemes in European electricity market, Intelligent Energy Europe, 2007. 6. San Bruno G., Developing small hydro to its full economic potential: a European perspective, (2008), Belgium, ESHA 7. Strategic Study for the development of Small Hydro Power in the European Union, Blue Energy for a Green Energy (BlueAge), 2000, ESHA. (Available from http://www.esha.be/)

GoO GW GWh Head

IEA IEE kW kWh LHA LRMC MS MW MWh N/A N/Ap O&M PPA SERO SHP SHPP SME UNEP WFD

Associazione Produttori di energia da fonti Rinnovabili Candidate Countries Environmental Impact Assessment European Renewable Energy Council European Small Hydropower Association EU member states from 1 May 2004 EU member states before 1 May 2004 All EU member states from 1 January 2007 Guaranties of Origin GigaWatt = 1000 MW GigaWatt hours = 1000 MWh The difference between upper surface and lower surface at the hydropower plant International Energy Agency The Intelligent Energy Europe kiloWatt kiloWatt hours Lithuanian Hydropower Association Long Range Marginal Cost Member States MegaWatt = 1000 kW MegaWatt hours = 1000 kWh Not Available Not Applicable Operation and Maintenance Power Purchase Agreements Swedish Renewable Energy Association Small HydroPower Small HydroPower Plant Small and Medium-sized Enterprise United Nations Environment Programme Water Framework Directive

This brochure has been prepared by: Christer Sööderberg (SERO) Tomas Sööderlund (SERO) Annicka Wäänn (SERO) Petras Punys (LHA)

soderberg.sero@telia.com tsem.se tomas@ tomas@tsem.se annicka.wann@gmail.com punys@hidro.lzuu.lt

Acknowledgements The authors wish to thank ESHA staff for the revision and other SHERPA partners for their contributions. We are grateful to the experts for providing data. The following experts/organisations have answered the questionnaire or supplied data: EU-15: Dipl. Ing. Martina Prechtl of the Austrian Small Hydropower Association, Ms Noémie Laumont of Belgium Federation of Renewable and Alternative Energy, Mr Jöörgen Krogsgaard of Denmark, Mr Peter Reiter of Finnish Small Hydropower Association, Dr Anne Penalba of France Hydro and Mr Geoffroy du Crest of Inovation-Energy-Develop Inovation-Energy-Develop-ment (France), Mr Gerhard Eckert of RENERTEC GmbH (Germany), Mr George Babalis of Greece, Mr Fiacc O'Brolchain of Irish Hydropower Association, Ms Sara Gollessi of the Association for Renewable Energy (APER, Italy), Mr Dirk Snikkers of Nuon Energy Sourcing (Nether (Nether-lands), Dr Antonio Sa Da Costa of Portugal, Mr Manuel de Delas of the Spanish Renewable Energy Association, MSc (Eng) Christer Sööderberg of Swedish Renewable Energy Association, Tomas Sööderlund of TS Energi & Marknad and Peter Danielsson of P&C AB (Sweden), Mr Bill MacGregor of Npower Renewables and Dr Drona Upadhyay of IT Power (UK) (UK).. EU-12 and CCs: MSc (Eng.) Anton Tzenkov of EnergoprojectHydropower Ltd (Bulgaria), MM. Libor Samanek, Mirsolav Bartusek and Jiri Venos of ELZACO s.r.o. (the Czech Republic), Prof Dr Peeter Raesaar of Tallinn Technical University (Estonia), Mr Csaba Kovacs of Sinergy Energiaszolgaltato Kft, (Hungary), Prof Karlis Silke of Latvia University of Agriculture (Latvia), Mr Algis Jonas Jakucionis and MSc (Eng.) Dainius Tirunas of the Lithuanian Hydro Hydro-power Association (Lithuania), Dr Janusz Steller of the Institute of Fluid-Flow Machinery of the Polish Academy of Sciences (Poland), Mr Marko Gospodjinacki of the Asso Asso-ciation of Small Hydropower Plants Societies (Slovenia), Eng. Peter Breza of ROTOR Ltd, Slovakia, Prof Dr Bogdan Popa, University Politehnica of Bucharest (Romania), Mr Almir Ajanovic of Intrade Energija d.o.o (Bosnia and Herzegovina), Dr Eng. Kristijan Horvat of KONCAR - Electrical Engineering Institute, Inc (Croatia), Mr Igor Nikolov of JSC ELEM Macedonian Power Plants, Macedonia, Prof Dr Sretren Skuletic of the University of Montenegro, Montenegro, Ms Ayla Tutus of Ickale Group Company (Turkey).

ESHA - European Small Hydropower Association Renewable Energy House Rue d'Arlon 63 - 65, 1040 Brussels - Belgium T: +32 2 546 1945 F: 32 2 546 1947 E : info@esha.be I : www. Esha.be ESHA is founding member of EREC, the European Renewable Energy Council

LHA - Lithuanian Hydropower Association (Lietuvos hidroenergetikų asociacija) Universiteto 10, Water & Land Management Faculty, LZUU, Akademija, Kaunas r. LT-53361, Lithuania T: +370 37 752 337 F: +370 37 752392 E: punys@hidro.lzuu.lt I: www.hidro.lt

SERO - Sveriges Energiföreningars RiksOrganisation SERO, Box 57, S - 731 22 Köping, Sweden T: +46 (0)221 824 22 E: info@sero.se I: www.sero.se

The sole responsibility for the content of this publication lies with the authors. It does not necessarily reflect the opinion of the European Communities. The European Commission is not responsible for any use that may be made of the information contained therein.