ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction

1. ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 19th – 23rd June 2006 Nairobi, Kenya

2. Module 6:Small Hydro Divas B. Basnyat

3. Contents • Introduction • Definition • Fundamentals and Principles • Small hydro in Africa • Applications of small hydro • Barriers to development and implementation • Design Aids • Case study - Nepal

4. Introduction • Small hydro –for isolated grid, central grid and dedicated supply • Minimum environmental impacts mainly thru run of river schemes • Widely used for: • Rural residential lighting, TV, radio and telephone • Rural small industries, agriculture and other productive use • Grid based power generation • Reliable, low operating costs, independent of energy price volatality

5. Hydro Scheme

6. Definition – size Source: http://www.microhydropower.net/size

7. Definition (flow, runner dia) • RETScreen International • Less than 5 kW - Pico

8. Fundamental and Principles • Hydropower generation process • Relationship between power, flow and head • Types of hydro projects • Main components • Power/energy calculations

9. Hydro Power Process • Potential energy of flowing water converted to kinetic energy as it travels thru the penstock • Kinetic energy of the flowing water is converted to mechanical energy as it turn the turbines • Mechanical energy of the rotating turbine is converted to electrical energy as the turbine shaft rotates the generator

10. Power = f(Q,H) • P = **g* Q*H • P = power in Watts •  = efficiency (micro – 50-60%, small > 80%) •  = density of water (1000 kg/m3) • g = acceleration due to gravity (9.81 m/s2) • Q = flow passing thru the turbine (m3/s) • H = head or drop of water (m) (difference between forebay level and turbine level or tail water level) • Considering  = 80% • P = 8*Q*H kW (approx)

11. Small Hydro - Types • Type of grid: • Central grid • Isolated or off-grid • Captive or Dedicated supply (e.g. to cement factory) • Type of Regulation: • Run of river (lower firm capacity, power varies with flow) • Run of river with pondage (some daily peaking) • Reservoir type (higher firm power, larger area inundated) • Pumped storage (utilizing off-peak energy to pump water, less likely in small scale) Sketch Source: BHA, 2005

12. Component: Civil Works • Typically account for 50-60% of initial costs • Diversion dam or weir • Low dam of simple construction for run-of-river • Concrete, wood, masonry • Water conveyance • Intake with trashrack and gate; tailrace at exit • Sediment handling structure • Excavated canal, underground tunnel and/or penstock • Valves/gates at turbine entrance/exit, for maintenance • Power house • Houses turbine, mechanical, and electrical equipment

13. Turbines • In run-of-river, flow rate is quite variable • Turbine should function well over a range of flow rates or multiple turbines should be used • Reaction: Francis, fixed pitch propeller, Kaplan • For low to medium head applications • Submerged turbine uses water pressure and kinetic energy • Impulse: Pelton, Turgo, crossflow • For high head applications • Uses kinetic energy of a high speed jet of water Source: BHA, 2005

14. Turbines Pelton Francis Kaplan

15. Electrical and other equipment • Generator • Induction – used to supply to large grid • Synchronous – stand-alone and isolated-grid applications • Other equipment • Speed increaser to match turbine to generator • Valves, electronic controls, protection devices • Transformer

16. Power/Energy Calculation • Flow Duration Curves – annual and monthly • Compensation flow • Downstream release (environmental flow) • Irrigation requirement (if any) • Leakage • Design head • Head losses – headworks, headrace, penstock • Example – Design flow = 4.58 m3/s, Gross head = 245m,  = 85%, Outage – 10%

17. Flow Duration Curve

18. Example- Calculation Power Duration Monthly Energy

19. Head Works-River Diversion

20. Settling Basin Headrace Canal

21. Tunnel Penstock

22. Fish Ladder

23. Small Hydro Utilization in Africa Source: Karekezi and Kithyoma, 2005

24. Tea and Small Hydro in East Africa • To reduce the electrical energy in the tea processing industries in countries Source: http://greeningtea.unep.org.

25. Uganda • Hydro installed capacity – 320MW (only 16.7 MW small) • 1% electrification in rural areas • Mini hydro sites (non-Nile) – 200 MW identified • Can benefit from CDM Source: Taylor and Upadhaya, 2005

26. Application- Electricity Generation • Domestic Load • Number of households • Electrical items in all households (light, TV, Radio) • Industrial/Commercial Load • Agro processing • Small enterprises • Shops • Social Load • School, Health post etc. • Others

27. Electricity Demand- Isolated Peak Demand

28. Electricity Demand- Central Grid Source: Nepal Electricity Authority

29. Application : Mechanical Power • Lift irrigation, water supply • Agro processing - grain milling • Saw milling, lathe machine

30. Water Mills Traditional Water Mills Improved Water Mill (IWM) Paddy hulling with IWM Source: AEPC

31. Barriers • High initial costs • Competition on investment from other sectors of the economy • Institutional shortcomings • Lack of coherent policy framework • Monopolistic role of national power utilities • Human Resources Requirements – local capability • Infrastructure constraints- access road, transmission line • Risks – for developer and lending agencies • Time and cost over-run

32. Design Aids

33. Nepal – Case Study

34. Nepal Case Study- Contents • Potential and status • Hydropower Development Policy • Small Hydro Project (SHP) Financing Modalities • Investment scenario • Barriers and Constraints • Reform Process • Examples: SHP Implementation

35. Potential and Status • Potential • Theoretical potential – 83,000 MW • Economical potential – 42,000 MW • 727,000 GWh/year based on average flow • 145,900 GWh/year based on 95% exceedance flow • Status • Current hydro capacity over 600 MW • About 15% below 10 MW • In addition, 14.6 MW of MH (1-100 kW, 2200 schemes upto 2003) • 25,000 traditional water mills (0.5kW each)

36. SHP Financing Modalities • Donor assisted concessional loans – presently only for large hydro • International private companies with commercial loan • National private companies with local commercial loan • National Utility (NEA) through local commercial loans – mainly between >5MW) • Government/donor support agencies like AEPC provide subsidy and technical support for micro hydro development

37. Cost Composition National Electric Utility International Private National Private Sector

38. Average Cost – Past Projects • Public sector, donor concessionary projects (60MW – 144 MW) - $3,100 – $5,600/kW • Int’l private sector with int’l commercial financing (36 MW and 60 MW) - $2,400 - $2,800/kW • Local Pvt. Sector with local currency funding (3MW project Piluwa) - $1,450/kW • Micro Hydro (<100kW) - $1,982/kW Nepali investment - showing the way to lower energy prices

39. Nepal- Investment Scenario • 7 projects (55MW) completed thru commercial credit from local banks (60m$), technical support by I/NGOs, Aid Agencies (e.g. WINROCK, USAID, GTZ) • Local banks and financial institutions (30m$/year) • Power bonds • Power development fund (30m $) • For 1-100 kW- subsidy provided by AEPC

40. Power Development Fund • Initial capital of US$ 35 million by Gov. of Nepal and the World Bank (WB) • To provide project finance “core funding” to supplement private sector • Partially finance up to 60% of < 10 MW hydropower projects and up to 40% > 10 MW

41. Barriers and Constraints Faced • Institutional Framework - unclear and overlapping roles and responsibilities of existing institutions • Inadequate internal financial resources including mechanisms for its mobilizations on account of a capital market • Inconsistencies and conflicts in various acts/policies/ regulations • Shortcomings in the compliance of acts and regulations • Political risk and the adverse situation for investment • Market risk • License holding by IPPs • Shortage of a specialized human resource in financial institutions with professional expertise to appraise, implement and monitor hydropower projects • Isolated rural communities/loads (low load factor) Source: IPPAN, 2004

42. Reform Process • Hydropower Policy (1992, 2001) • New Electricity Act - unbundling • Rural Energy Policy (2006) • Electricity supply- 12% from isolated (micro/small) hydro systems, 3% from alternate sources • Community Electricity Distribution Bye-law (2003) • Rural Electric Entities (REEs) – bulk power from NEA, CBOs/NGOs own & manage distribution • 80% grant from government, 20% community participation

43. Reform Process (cont’d) • Market risks addressed by PPA • Support for pre-investment (cost sharing) • Due diligence training to financial institutions • Public – private complementarities • Local financing of hydropower projects- local FIs, employee provident funds, army welfare funds • Public Sector – multipurpose, larger projects and transmission line

44. Hydropower Policy - 2001 • Drivers • Increase access to electricity & contribute towards energy security • Stimulate economic growth • Attract private investment • Facilitate power trade • Incentives • No license required for SHP up to 1 MW • No royalty imposed for SHP up to 1 MW • Rs 100 ($1.4)/kW & 1.75% energy royalty for 15 years and Rs 1000 ($14)/kW & 10% energy royalty thereafter • 1% royalty to village development committees • Policy/reform measures in the offing • Unbundling of national power utility (NEA) • Handing over of small hydro to communities and private sector by NEA

45. SHP Policy • Fixed buy back rate (up to 5 MW) • Rs 3.00 ($0.04) for wet seasons (mid Apr. – mid Nov.) • Rs 4.25 ($0.057) for dry seasons (mid Nov. – mid Apr.) • + 6% annual escalation for the first 5 years • + from Q90% design flow was reduced Q65% • For 5MW – 10 MW – at (competitive) negotiated price basis

46. SHP Examples

47. Improved Water Mill Turbine Mill Micro Hydro • 63% community owned • 37% privately owned • About 9.2 HH/kW Data source- AEPC (2005) Micro Hydro

48. Piluwa Khola1 • Installed Capacity : 3 MW • Plant Load Factor : 74.4 % • PPA Signed on : 2000 Jan. • Contract energy : 19.54 GWh • Dry months : 4.89 GWh (25%) • Wet months : 14.65 GWh (75%) • Production Started : 2003 Sep. • Commercial Operation : 2003 Oct • Company Established in March 1997 1 Source: Pandey, 2005

49. Piluwa Khola • Total cost – 4.6 m$ • Cost/kW – 1462 $/kW • Consortium financing • Loan from local banks - 56% • Equity – 35% • Bridge gap loan – 9%

50. Piluwa Khola • Nepal Electricity Authority pays the bill of the purchased energy every month with a time lag of 35 days. • The payment comes directly to the lead bank account. The bank deducts the principal and interest of the loan from the payment. • The company gets remaining balance if there is something left over.