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BlueAGE

Blue Energy for A Green Europe Strategic study for the development of Small Hydro Power in the European Union

ESHA European Small Hydropwer Association Renewable Energy House, Rue du Trne 26, B - 1000 Bruxelles, Belgium Tel: +32.2.546.19.45 Fax: +32.2.546.19.47, e-mail: esha@arcadis.be

This Report has been prepared on behalf of the European Small Hydropower Association by:

Istituto di Economia delle Fonti di Energia IEFE


Universit Commerciale Luigi Bocconi Viale Filippetti 9, I-20122 Milano Italy Phone Fax: +39 025836 3820 +39 025836 3890 arturo.lorenzoni@uni-bocconi.it franco.pecchio@uni-bocconi.it michele.fontana@uni-bocconi.it

Arturo Lorenzoni Franco Pecchio Michele Fontana

SERO - Sveriges Energifreningars RiksOrganisation


Vretlundavgen 36, S-731 33 Kping Sweden Phone Fax +46 221 197 65 +46 221 197 65 olof.karlsson.koping@telia.com

Christer Sderberg Tommy Hoberg Bo Bergander Owe Olsson

soderberg.sero@telia.com t.hoberg@telia.com bo.bergander@sweco.se

For further information please contact:

ESHA European Small Hydropower Association Renewable Energy House 26, rue du Trne B-1000 Brussels, Belgium T : +32 2 546 1945 F : +32 2 546 1947 E : esha@arcadis.be I: www.esha.be

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

Executive Summary
This study develops six main subject-areas concerning the possible exploitation of SHP energy in Europe. Firstly, it gathers data on the actual state-of-theart of the SHP development in the European continent, assessing the total amount of capacity installed, the contribution to the annual electricity demand and the main characteristics (average size, age) of the existing plants. Secondly, it assesses the potential for future SHP development, both in terms of upgrading the oldest existing plants and building new sites. In doing so the study has tried to point out the difference between the so-called technical potential i.e. the capacity and the corresponding SHP production that could theoretically be developed given the current available technology and water resource availability and the realistic potential, that is, what could be exploited given the existing economic, administrative and environmental constraints. Thirdly, the report analyses the economics of SHP sources in order to understand how competitive SHP is today with respect to the other principal power generation technologies, why SHP deserved to be developed, and how it can be promoted by the decision-makers. Fourthly, the analysis focuses on the main constraints which the countries analysed put on the development of SHP plants. In particular, it examines the length and average cost of the administrative procedures in several countries, trying to point out the main obstacles to the future SHP exploitation. Fifthly, the study analyses the situation and competitiveness of the EU manufacturing industry in the SHP sector. Finally, the report aims to give some concrete recommendations concerning the role that local, national and European decision-makers can have in promoting SHP development in the short and medium term, suggesting some good policies and best practices to achieve this goal. This study is based on data from more than 95 % of the total electricity produced in the EU and from over 90 % of the total electricity production in other European countries that are not yet EU member states. Data from more than 17 400 different SHP power plants in Europe which contribute 1.7% to the annual European electricity supply are included in the study. Their share of the total hydro power production is currently just below 10 %.

State of the art


The fifteen EU countries and the fifteen other European countries have been asked to fill in a questionnaire concerning SHP data. Of these 30 countries, 26 have answered the questionnaire in a more o less detailed form (see Annex 2). There are slightly more than 17 400 SHP plants installed in the 26 countries surveyed, corresponding to a capacity of about 12.5 GW of SHP. The average size of a SHP plant is 0.7 MW in western Europe, and 0.3 MW in the Eastern European countries. Based on the questionnaire data (the data given normally refer to an average year), the countries in the study have an average total production of 50.1 TWh per year. This corresponds to around 1.7 % of the total electricity production in the same countries and to about 9.7% of the total hydropower production. A large share of this capacity (11.8 GW) comes from Western European countries: roughly 86% is concentrated in 8 countries, namely Austria, France, Germany, Italy, Spain, Sweden, Switzerland and Norway. As for the Eastern European countries, the Czech Republic alone with 250 MW - accounts for almost 34% of the total capacity.
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union The SHP plants situated in the EU countries are also the oldest; almost 45% are over 60 years old and 68% over 40. The eastern European countries have the highest share of young plants (38% are less then 20 years old). The three non-EU western countries (Iceland, Norway and Switzerland) are in an intermediate position, with a slightly lower percentage of young plants (34% are less than 20 years old ) but the highest percentage of plants that are less than 40 (about 59%).

SHP potential in the EU


The small hydropower potential in the EU is considerable. Since around 1950, SHP has had a negative development in some EU member countries. Many SHP plants have been shut down because of age and competition from new, larger plants. The potential from reinstalling these plants and upgrading existing, underdeveloped SHP plants is estimated at an annual electricity production of approximately 4 500 GWh. Based on the questionnaire answers furnished by the EU member states, the potential of new plants, reduced when economic and environmental constraints have been taken into account, is calculated to be about 19 600 GWh per year. According to this study, the remaining potential from SHP will be some 2 700 MW and 11.5 TWh annually at 2015, which is rather less than the 18 TWh in the year 2010 that was estimated by the EU Commission in the White Paper issued in 1997. Based on the present annual production of 40 TWh, we have estimated the possible total production from SHP in the EU at 51.5 TWh at 2015 with a capacity of some 12 850 MW, while the. EU White Paper foresees 55 TWh from 14 000 MW at 2010. If the economic situation for producers improves, and the environmental constraints decrease, the total contribution from SHP in the EU 15 member countries could probably reach 60 TWh at 2020 - 2030.

SHP and the environment


The SHP relation to the environment is twofold. Environmental groups which oppose SHP point to the negative local environmental impact of SHP. Most of these arguments are, however, based more on theories than or scientific research. Some arguments are related to specific cases and may be relevant, but they do not generally apply to SHP. In some cases, the criticism seems to be emotionally charged. New technology and improved methods of operating SHP shows how it is possible to reduce the local environmental impact. There are, however, many positive effects resulting from SHP operations such as replacing fossil power production which produces harmful emissions, and reducing the risks of river flooding. In some cases SHP can also increase biological diversity. The current SHP production in Europe amounts to 40 TWh. It replaces fossil production and protects nature and society from many harmful emissions such as the greenhouse gases and sulphur dioxide which have the worst environmental impact. SHP production reduces greenhouse gases, CO2, by 32 000 000 tons annually and sulphur dioxide by 105 000 tons annually. Therefore, the positive impact of SHP on the environment outweighs the negative effects. The study on SHP and the environmental aspects has led to several proposals such as modifying authorisation procedures, establishing an institutional body that will permanently
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union monitor national targets etc.. These proposals are explained in greater detail in chapters 3, 4, 6 of this report. Another positive feature of hydropower is that the energy factor, produced energy in relation to energy consumed for construction, operation and disposal along the plant life is the best of any electricity production technology.

SHP technology
The SHP-technique is well developed. The ongoing development research will concentrate on new materials such as composite materials. For small heads development is concentrated on small units in multiple arrangements, using technique for variable speed and frequency conversion. The powerformer generator, which can already be used for small hydro between 5-10 MW, might, in the future, even be adapted for use in the smaller plants. Depending on various technical developments, cost reductions are primarily related to operational costs such as computerised systems, and this decreases the need for personnel resources. Minor cost reductions can be related to other technical developments such as higher efficiency, variable speed etc. because new developments usually depend on long manufacturing series in order to give full economic benefit.

SHP market for manufacturers


The invention of the water turbine in France in 1827 led to the early development of modern hydropower in Europe. Subsequently, the European SHP equipment manufacturers became the market leaders. They successfully developed hydro technology and became the main exporters of equipment in the world. Indeed, it can be rightfully said that Europe gave light to the world. Although EU equipment manufacturers still hold a leading position in the world, this position is being threatened since member countries are not very motivated to invest in new SHP and to keep up existing SHPP. This situation is caused by a decreasing economy for energy producers in the deregulated electricity market and the increasing obstacles created by environmental and legal constraints. The margins for producers are still good in a few countries like Germany and Spain and consequently the markets in these countries are better. The non-EU market is still promising and offers good prospects for EU manufacturers but financing the hydro-projects is a serious problem as well as 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 and not just for developing countries. But there still seem to be too many obstacles for this to happen and for European manufacturers to show their competitiveness. The European SHP manufacturers seem to be in a negative spiral and many of them are choosing to leave the SHP market. If this negative spiral cannot be stopped, the EU might lose its dominant industrial position as well as the competence it has built up over the years. Such competence is hard to recover because of the special technology related to hydro power. The producers might no longer have a competent industry should investments and refurbishing start up again.
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union The turbine companies, other SHP equipment manufacturers and consulting companies will only stay in business as long as the market gives them enough work. It would be wise for European manufacturers to make arrangements with export offices and export credit institutions so they can successfully penetrate the non-EU market. It is also 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.

Constraints
From the data collected it appears that the environmental constraints that affect the SHP, are mainly related to fishing and water regulations. In almost all the countries the fishermens lobby has the power to influence the decisions of the regional authority. Moreover, in many European countries, environmental groups are trying to prevent local river areas from being used by companies for industrial purposes, (mainly power production) since it would negatively impact the river environment (this is particularly a problem in northern countries). On the other hand, in many countries the lengthy water licensing process mainly caused by the complicated and time-consuming procedures of the public administration and by the number of subjects involved that can refuse authorisation makes it difficult to set up new SHP plants and find proper financing schemes (this problem is common in many southern European countries).

Principal recommendations
The current policies regarding SHP include many improvements that could be implemented. In the medium term, these improvements might lead to a 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. The BlueAGE study has shown the benefits that can be achieved by developing SHP at the economic and environmental level. However, these benefits can be achieved only if there is a synergy at the European, national and local level. These three levels must work together since the efforts at only one level are doomed to fail. The challenge for 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. These measures are summarised in the following table.

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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

Issue

Recommended Measures

Potential Benefit
Reduces ineffective bureaucratic procedures and cuts administrative costs Prevents the unjustified rejection of requests for new water rights justified; makes the environmental assessment uniform Allows opposition to emerge during the initial development phase and initiates a democratic discussion on water use Makes a strong commitment to develop new sites

Authorisation procedure Establishing the single window for driving the licensing process and collecting all permits Authorisation procedure Establishing an environmental analysis on a standardised list of indicators provided by the administrative authority Authorisation procedure Introducing an opportunity for discussion between interested parties during the authorisation process Regulation Setting quantitative targets for new capacity at the national level

Regulation

Promoting the creation of green prices and green certification systems

Allows demand for environmental friendly electricity promotes new opportunities for SHP Helps the financial world finance SHP investments Makes SHP competitive with fossil sources on the electricity market Facilitates the dialogue of investors with administrators and with the financial world Certify that EU targets are fulfilled

Regulation

Reducing uncertainty by longterm regulations Implement the internalisation of external costs

Price setting

Information

Disseminate competent and precise information on small hydro power Annual following up

Organising settings

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

Table of contents
EXECUTIVE SUMMARY ..................................................................................................... I State of the art .................................................................................................................. I SHP potential in the EU ................................................................................................... II SHP and the environment................................................................................................ II SHP technology .............................................................................................................. III SHP market for manufacturers ....................................................................................... III Constraints...................................................................................................................... IV Principal recommendations............................................................................................. IV TABLE OF CONTENTS .................................................................................................... VI LIST OF ABBREVIATIONS................................................................................................ X 1. INTRODUCTION ........................................................................................................ 11 1.1. Aims of the study .................................................................................................... 2 1.2. Methodology of analysis ......................................................................................... 2 1.3. The national questionnaire ..................................................................................... 3
1.3.1. Structure........................................................................................................................3 1.3.2 Main results ...................................................................................................................4

1.4. Review of the existing literature in the sector of Small Hydropower in Europe....... 4 2. STATE OF THE ART: PRESENT SITUATION OF SHP IN EUROPEAN COUNTRIES 8 2.1. 2.2. 2.3. 2.4. Hydropower and total electricity production............................................................ 8 The contribution of SHP to the electricity demand.................................................. 9 A view outside Europe.......................................................................................... 10 Summary .............................................................................................................. 12

3. POTENTIAL OF SHP AND ENVIRONMENTAL ASPECTS OF ENERGY PRODUCTION............................................................................................................ 13 3.1. Upgrading existing SHP plants, recovery and increase in efficiency of plants that are underdeveloped or have been shut down ...................................................... 13 3.2. Technical potential of new SHP............................................................................ 14 3.3. Constrained potential for realisation of new SHP capacity ................................... 14 3.4. Environmental and legal aspects.......................................................................... 21
3.4.1. 3.4.2. 3.4.3. 3.4.4. 3.4.5. 3.4.6. General........................................................................................................................21 Reported problems ......................................................................................................21 Effects of building hydro power ....................................................................................22 Methods for solving conflicts........................................................................................24 Balancing different interests.........................................................................................24 Considerations and proposals .....................................................................................25

3. 5. A forecast for the Year 2015................................................................................. 28 3.6. SHP possibility to reduce environmental impact from other sources.................... 29
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

3.7. Summary .............................................................................................................. 35 4. ANALYSIS OF THE PRESENT TECHNOLOGY, TECHNICAL IMPROVEMENTS AND COST REDUCTIONS ........................................................................................ 37 4.1. 4.2. 4.3 4.4 Background .......................................................................................................... 37 General trends in water power plant designs ....................................................... 37 Building structures................................................................................................ 38 Mechanical equipment.......................................................................................... 38
Turbines ......................................................................................................................38 Gear boxes..................................................................................................................40 Headrace penstocks....................................................................................................41 Gates, trash racks .......................................................................................................41 Generators ..................................................................................................................41 Power and control equipment ......................................................................................42 Variable speed installations .........................................................................................42 Summary .....................................................................................................................42

4.4.1 4.4.2 4.4.3 4.4.4

4.5

Electrical equipment ............................................................................................. 41

4.5.1 4.5.2. 4.5.3. 4.5.4.

5. THE EUROPEAN SMALL HYDROPOWER MANUFACTURING INDUSTRY........... 44 5.1. Historical background and manufacturing ............................................................ 44
5.1.1. Types of water turbines ...............................................................................................44 5.1.2. Market situation ...........................................................................................................45

5.2. 5.3. 5.4. 5.5.

Trends of different markets................................................................................... 47 Competition .......................................................................................................... 47 Manufacturing competence .................................................................................. 47 Barriers and access to customers ........................................................................ 48

5.5.1. Language and cultural barriers ....................................................................................48 5.5.2. Access to potential customers .....................................................................................48

5.6. 5.7. 5.8. 5.9. 5.10.

Manufacturing development ................................................................................. 49 Future markets for SHP manufacturers ................................................................ 49 Markets for new equipment .................................................................................. 50 Markets for service, refurbishing and modernisation ............................................ 50 Summary .............................................................................................................. 51

6. THE DEVELOPMENT OF SHP PLANTS : REGULATIONS AND PROCEDURES... 52 6.1. Developing a SHP plant: principal legal conditions............................................... 52 6.2 The use of water................................................................................................... 53
6.2.1. The costs of using water: water charges, concession fees ..........................................53 6.2.2. Competing uses of water: fishing, agricultural use, municipal uses, recreational uses .56

6.3. SHP exploitation ................................................................................................... 57


6.3.1. 6.3.2. 6.3.3. 6.3.4. Process to obtain new licenses....................................................................................57 Authorisations procedures including EIA......................................................................57 Duration of a licence ....................................................................................................58 Refurbishment of a SHP plant .....................................................................................60

6.4. Non technical barriers........................................................................................... 60 6.5. Developing a SHP plant: financing schemes........................................................ 61
6.5.1. Most common financing schemes................................................................................63 6.5.2. Innovative financing schemes......................................................................................64
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

7. FROM PRODUCTION TO CONSUMPTION: THE DELIVERY OF SHP ELECTRICITY 65 7.1. 7.2. 7.3. 7.4 7.5. Connecting to the grid: contracts and costs.......................................................... 65 Using the electricity grid: possibilities, priorities, and costs .................................. 67 Recognising the real value of SHP electricity ....................................................... 67 Selling SHP electricity .......................................................................................... 67 Alternative sources and requirements for a support ............................................. 69

8. SUPPORTING SHP.................................................................................................... 71 8.1 Various forms of State support for SHP electricity production .............................. 71

9. CONCLUSIONS ......................................................................................................... 74 9.1 SHP Potential ....................................................................................................... 74 9.2 A EU action plan ...................................................................................................... 75 10. REFERENCES ........................................................................................................... 77 10.1. Literature .............................................................................................................. 77 10.2. World Wide Web links .......................................................................................... 81

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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

Index of figures Figure 2-1 present situation of hydro power in the countries analysed..........................................8 Figure 2-2 - Age structure of SHP plants in different groups of countries.........................................9 Figure 2-3 - Relation between HP dependency and SHP installed capacity. .................................10 Figure 3-1 Potential upgrading and refurbish old SHP................................................................13 Figure 3-2 Potential from construction of completely new plant ..................................................15 Figure 3-3 - Potential from new plant and refurbishment ...............................................................16 Figure 6-1 Constraints of building a SHPP in Western European countries. ...............................56

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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

List of abbreviations
CFD ................................. Calculated Fluid Dynamics EIA .................................. Environmental Impact Assessment ESHA............................... European Small Hydropower Association HP ...................................Hydro Power HPP ...............................Hydro Power Plant IEA ..................................International Energy Agency LCA ................................. Life Cycle Analysis MVA.................................Mega Volt Ampere (1 MVA is approximately 0.8 MW) RES ................................. Renewable Energy Sources RES-E ............................. Renewable Energy Sources Electricity RMF................................. Reserved Minimum Flow SHP ................................. Small Hydro Power SHPP............................... Small Hydro Power Plant TWh.................................TeraWatthour (1 TWh = 1 000 GWh = 1 000 000 MWh)

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

1. INTRODUCTION
The present study is part of the Fourth Framework Programme of the European Union under the ALTENER II Project and has been co-financed by UNAPACE, the Italian association of independent electricity producers, and a pool of Swedish companies. The European Small Hydropower Association, ESHA, has spearheaded the promotion of a technical-economic study on the development of Small Hydropower in the European Union. This was mainly due to the commitment of European Countries to achieve a goal of 12% of the total energy demand covered by Renewable Energy Sources in keeping with their environmental policies. During the twentieth century, hydropower made a dramatic contribution to the development of the electricity sector in Europe and most of the best sites have been exploited for big plants. Nevertheless, an important role in achieving European renewable energy goals can still be played by small hydropower resources which are distributed on the continent and can offer all the benefits of dispersed renewable generation. This document is mainly addressed to policy makers at the EU and national level and aims to provide a detailed description of the technical and economical prospects of small hydropower in the changing European electricity sector and investigate the most suitable measures to further exploit the small hydropower potential in the EU. Section 2 shows the present situation of small hydropower (SHP) in European countries, the capacity installed, the electricity production and the share of total electricity production, giving a detailed set of data on the whole SHP sector. Section 3 looks at the potential for new SHP schemes and for the recovery of abandoned sites in each country, distinguishing between the technical potential, which is the capacity obtainable on the purely technical level, and the economic potential that takes into account the cost of generating electricity and its sustainability on the electricity market. The figure obtained is then compared to the environmental constraints which are currently curbing the development of new SHP schemes in most European countries. With all these aspects taken into account, a scenario is given at 2015 for SHP production, considering the benefits that it allows in terms of reduction of external costs. Section 4 gives an overview of the technical improvements recently achieved in the SHP sector, both in the mechanical and structural design and in the reduction of environmental impact. The cost reductions achievable in the SHP investments are also shown as an important step towards competition in the European market. In section 5 the status of the European manufacturing industry is described, paying attention to the competitive advantages of European manufacturers in the world market, the trends in industrial organisation and the evolution of market structure. The strategic role of service and refurbishing is highlighted as regards the existing SHP plants, whose average age is high in most European countries. An overview of the education in the area of SHP is also given in this section. Section 6 provides a detailed analysis of the regulation of investments in SHP and the operation of the plants and considers the administrative procedures for authorisations, the fees for the use of water and the non-technical barriers to SHP development. An overview of the most successful financing scheme is also given, with attention to the innovative financial means designed to face the new market challenges.

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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

Section 7 focuses on the relationship between the plants and the grid: the costs of connection, the use of system charges, the structure of feed in prices and the likelihood of selling directly to the final users and to make best use of the electricity generated. Finally, in section 8 the means to support SHP are presented both at the national and European level. Some policy suggestions are made as regards the proper evaluation of SHP resources in Europe and the role that the European Commission can most effectively play in the take-off campaign of the Altener programme to support the growth of this sector which has such a long tradition.

1.1.

Aims of the study

In the framework of the electricity market restructuring, new challenges are emerging for small hydropower generation and other renewable energy sources. The implementation of a fair regulation for RES is vital to increasing their contribution and achieving European and national environmental goals. The BlueAGE project aims to investigate the conditions for new small hydro electricity production in each European Union country with respect to the potential for: improving existing plants, recovering existing resources (waterworks, irrigation channels, SHPP that have been shut down), creating new schemes.

The study focuses on the small hydro power sector in all aspects. In addition to studying the sectors potential, the prospects of the European industry has also been evaluated in the broader context of the world market. The study aims to be an operational document which might prove useful in designing wise policy measures to regulate in a fair way small hydropower electricity generation at different administrative levels.

1.2.

Methodology of analysis

The rather ambitious goal has been constructed on a solid basis of information collected at the national level; different approaches have been applied to the study: technical, economic, regulatory, strategic. It is obvious that effective policy measures must now be set at the European level; in other words, no national policy can conflict with the European regulation. It therefore seemed useful to make a comprehensive analysis of the regulatory measures of different countries and their technical and economic conditions so as to identify the most successful initiatives to improve the contribution of SHP in covering the electricity demand. The collected data have been processed to extract as much information as possible and a data base has been created with the answers to the national questionnaires sent to national experts. Moreover, in different European countries various experts in the field have been contacted to carry out the analysis on an operational level. This part of the study proved to be extremely useful in understanding the trends underway in the SHP sector. This report tries to be concise and focuses on the hot topics, in order to assist decision makers and investors design effective policies for SHP development.
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

1.3.

The national questionnaire

A detailed questionnaire was prepared to obtain first-hand information regarding the current conditions for SHP development in Europe from the technical, economic and regulatory point of view. It was sent to a total of 32 qualified persons in different countries: consultants, university professors, managers, researchers in organisations involved in the energy sector: 26 answered and furnished sufficiently satisfactory figures and data regarding the present situation in their country (see Annex 2). Unfortunately, not all the country information has the same level of accuracy and the final data processing takes such biases into account. The analysis of such documents made it possible to: investigate the conditions for new small hydro electricity production in each European Union country, estimate the influence of the liberalisation of the EU electricity supply industry on the development of Small Hydro Power (SHP) and highlight the new opportunities emerging, forecast the SHP market up to 2015, paying attention to: 1) the EU, 2) the extra-EU countries (particularly the Eastern European countries, Norway, Iceland and Switzerland), 3) the rest of the world, to a lesser extent, investigate the new technical frontiers of SHP, such as very low head schemes and the environmental constraints, provide a European-wide comparison of the technical, environmental, institutional and legal conditions in order to identify technical and non-technical impediments, identify successful support mechanisms compatible with the creation of a EU wide electricity market, review the levels of small hydro energy manufacturing and service capability in each EU country and evaluate the competitiveness of the industry on the global market. Structure

1.3.1.

The questionnaire was divided into two parts: a) Technical, Environmental and Industrial issues; b) Economic and Policy issues. Each part was divided furthermore in sections in order to obtain the broadest information regarding the different sectors. Part A asks for figures about the present situation of the installed electricity power in each country and a general outlook of the potential of new hydro power: such a potential comes from the refurbishing of old abandoned plants and the installation of new ones. Technical aspects like the new techniques implemented in the last years (small heads, new design of turbines) and the technical and economic constraints put on the development of new sites have also been taken into account. The last questions in part A concern manufacturing and service capability with particular attention to the core business of the companies.

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

Part B part of the questionnaire focuses on institutional, economic and strategic issues with open questions on prices, support mechanisms, legislative framework and forthcoming measures. The first section focuses on the legal conditions of the authorisation process for small hydro power plants and on the licensing process. The second section contains questions about the structure of the price selling to the grid, the fiscal aid for the development and the environmental policy regarding hydro power. The last section concerns strategic issues as to prospects and new arrangements regarding the main obstacles to developing SHP in each country. 1.3.2 Main results

Although the information given does not cover all the European countries, the answers to the questionnaire have generally been satisfactory. The present situation shows different rates of exploitation in the countries surveyed, even though the potential has still not been fully used due to many different reasons. The obstacles to developing new plants have been mainly: environmental protection related to a reserved minimum flow and the recreational use of water in certain countries (Finland, Austria, Germany); economic, due to price uncertainty and the policy framework for renewables resources with ambiguity regarding the ongoing support for renewables following the EU parliament proposal; bureaucratic, due to the length of the licensing process and the time it takes to obtain authorisation from the different bodies.

The first observation that can be made about the answers is that there are huge differences between the countries regarding the problems of SHP. In some countries there is still potential ready to be exploited but environmental constraints due to water uses are strong and prevent a serious SHP policy from developing.

1.4.

Review of the existing literature in the sector of Small Hydropower in Europe

The study began by collecting the literature on the sector of SHP. An impressive list of references has been collected and duly filed, as reported at the end of the report. The collected papers have been filed in the references, while in Annex 3 the articles found but not read by the authors have been reported. Even if the material available on SHP is quite a lot, the studies done seem to be not very well co-ordinated at the international level and a reference institution is lacking for the collection of information. The difficulties met in carrying out the enquiry of the BlueAGE project is also a sign of the poor collaboration of the SHP operators. The fact that no one of the 8 persons contacted in France did accept to answer to the questionnaire shows the lack of interest for the international co-operation. SHP seems to be more a sector of local interests rather than an international business opportunity. A considerable number of Internet sites related to Small Hydropower have been reviewed and listed in a special section of the reference list. This part of the work has proved useful, as various overlapping works have been identified. We noticed that many studies are poorly distributed and that a programme of dissemination could support SHP to develop its relationship with the regulatory bodies.
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

Table 1.1: Small hydro power capacity (<10 MW) installed in EU countries

Country Italy France Spain Germany Sweden Austria Finland Portugal UK Belgium Ireland Greece Netherlands Luxembourg Denmark Total EU

Capacity installed 1992 (MW) 2 047 1 900 1 090 1 291 964 774 300 154 154 51 67 30 37 27 9 8 895

Capacity installed 1998 (MW) 2 200 2 000 1 548 1 380 970 820 305 245 165 60 55 44 40 35 11 9 878

Source: EurObservER (http://www.observ-er.org)

The references have been filed according to different criteria (geographic, by author, area of interest etc), in order to have easy access to this information. The organisation of this information as a database makes it possible to make it available on the Internet.
Table 1.2: Small hydro power sector in EU countries in 1998, 1 MW<SHPP<10 MW

SHP today Country


Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembourg Netherlands Portugal Spain Sweden UK NON EU COUNTRIES Switzerland Croatia and Slovenia Czech Republic Poland Romania Slovenia
Source: UCTE 1999 5

MW
A B DK FIN F D GR IRL I L NL PT E S UK CH HR+SLO CZ PL RO SLO 463 70

GWh
2 095 251

N. of plants
160 42

1 045 901 12 1 801 20 44 609

4 255 4 384 18 7 414 87 117 1 281

250 236 3 519 3 12 167

599 84 144 114 44 28

246 267 500 na na 87

168 13 na 36 9 8

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

It has been interesting to compare the data concerning the SHP installed capacity and production, finding very different values in different studies. Some tables concerning the SHP sector from different sources are reported below, demonstrating the difficulty of collecting reliable data on the capacity installed and the production of plants. The data in table 1.3 do not correspond exactly to those collected with the questionnaires, which have been taken as the basis for the BlueAGE study.
Table 1.3: Small hydro power (< 10 MW) production, 1999

Country
Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembourg Netherlands Portugal Spain Sweden UK A B DK FIN F D GR IRL I L NL PT E S UK

MW
848 59 11 304 1 997 1 418 44 55 2 210 35 2 247 1 506 936 161

GWh
4 246 204 27 1 328 7 131 6 277 146 112 8 321 154 1 566 5 231 4 448 242

Total
NON EU COUNTRIES Iceland Norway Source EUROSTAT Database ICE NO

9 833
43 1 028

38 433
235 4 566

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

GWh

9.000 8.000 7.000 6.000 5.000 4.000 3.000 2.000


1.849 1.548 1.718 1.541 4.428 5.583 6.603

EU SHP production

(1998 Eurostat data)

4.333

2.705

3.589

1.000 0

897

1.171

859

Luxembourg

Germany

Denmark

Portugal 523

Sweden

UK 204

Belgium

Espana

Netherland

Norway
142

Greece

Austria

France

Ireland

Italy

4.143

SHP < 1 MW

SHP 1 - 10 MW

Figure 1.1 Eurostat data on SHP production

MW 2.500

EU SHP installed MW (1998 Eurostat data)


2.000

1.500
1.577 1.804

1.297

1.000

882

Finland

573

500
536 420 406 209

275

228

274

0 Germany Denmark Belgium Greece

Luxembourg

Sweden

171

765

Espana

Portugal

Norway

Austria

France

Ireland

Italy

UK

905

Iceland

Netherland

SHP < 1 MW

SHP 1 - 10 MW

Figure 1.2 Eurostat data on SHP capacity

Finland

Iceland

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

2. State of the art: present situation of SHP in European countries


2.1. Hydropower and total electricity production

The results briefly presented in this section, concerning the current and potential state of development of SHP in the medium-long term are related to the 26 Countries that have answered in relatively clear terms the questionnaire sent at the beginning of the research project. 13 belong to the EU (Austria, Belgium, the United Kingdom, Finland, Germany, Greece, Ireland, Italy, Portugal, Spain, France, Denmark and Sweden); 3 are Western countries outside the EU (Switzerland, Norway, Iceland), and 10 belong to the Eastern European group (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Montenegro, Poland, Slovakia, Slovenia and Turkey).

23%

99%

30.000 25.000 20.000 30%

HP present situation

35%

51%

65%

15.000 10.000

76%

9% 0.5% 18%

60% 12% 0.5% 1% 75% 14% 76%

ICE

FIN

EST

Big Hydro Power

Small Hydro Power

% HP of total installed electrical power

Figure 2-1 present situation of hydro power in the countries analysed

As often happens with studies based on questionnaires, some of the countries mentioned could not fill in the questionnaire completely, so in a few cases there are some relevant pieces of information missing from the picture presented in report. Nevertheless, the rather good quality of the answers given, in addition to the relatively high number of countries considered, have allowed us to draw a very realistic picture of the current state of SHP exploitation and its possible future development. The answers to the questionnaires come from areas covering more than 95 % of the EUs total SHP production. For the non-member countries in Europe the figures in this report cover about 90 % of the total SHP production of the countries that are neighbours to the EU (Russia excluded).
8

SLO

DK

GR IRL I

5%

[MW]

NL PT E

UK

NO CH HZ CZ

LV LT MT PL RO SK

6% 1% 32% 34%
TR

93% 0.1%

78%

5.000

33%

50%

4%

3%

41%

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

2.2.

The contribution of SHP to the electricity demand

There are slightly more than 17 400 SHP plants installed in the 26 countries mentioned, corresponding to a capacity of about 12.5 GW of SHP. The average size of a SHP plant is 0.7 MW in Western Europe, and 0.3 MW in Eastern countries and they contribute annually to Europe electricity supply with some 50 TWh. Based on the data collected with the questionnaire (that only refer to one recent year, and therefore have to be taken just as a rough approximation of the average SHP and HP production in each country) and from the literature, SHP accounts for some 7.1% of the total hydropower production in Europe and 1.8% of the total installed capacity. The average production of the European SHP plant is some 2.9 GWh. The bulk of this capacity (11.8 GW) is located in Western Europe. Roughly 86% is concentrated in 8 countries: Austria, France, Germany, Italy, Spain, Sweden, Switzerland and Norway. As regards the Eastern European countries, the Czech Republic alone with 250 MW - accounts for almost 34% of the total production of the area.

SHP plants age distribution


27
100% 90%

45

14

11

2981

1000

15

80% 70%

380

51

77

1 0

170

10

93

60% 50%

682

12

72 3
364

13 33
20

60

120

987

1406

40% 30% 440 20% 10% 0% 16

63

11

20

90

114

22

500

563

400

60

100 15

227

41

90 0

675

LT

PT

FIN

GR

PL

LV

DK

UK

CH

IRL

0-20 years old

20-40 years old

ICE

40-60 years old

NO

> 60 years old

Figure 2-2

- Age structure of SHP plants in different groups of countries

The SHP plants situated in EU countries are also the oldest, with almost 47% over 60 years old and 68% over 40. Eastern European countries have the highest share of young plants (36.4% are less than 20 years old). The three non-EU Western countries are in an intermediate position, having a slightly lower percentage of young plants (34% are less than 20) years old) but the highest percentage of plants less than 40 (about 59%). Within each group of countries (and in particular the EU member countries) there are, in any case, quite substantial variations: for instance, in the UK, Greece, Spain and Portugal, most of the SHP plants are less than 20 years old; in Iceland 70% of the SHPP are over 40 years old.

MT

SK

TR

CZ

10

50

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

120%

% of HP over total installed capacity

100% 80% 60% 40% 20% 0% -

L ICE HZ TR FIN CZ
500

NO CH A PT S E F D
1 000 1 500 2 000 2 500

installed SHP (MW)

Figure 2-3 - Relation between HP contribution and SHP installed capacity.

As appears from the figure, there is no definite correlation between the strength of hydropower production (defined as the percentage of hydropower over total capacity ) in a given country and the amount of Small Hydropower Capacity installed. In other words, the fact that the hydro source is intensively used in a given state does not at all involve an enhanced development of Small HP plants. The figure might even suggest a negative although very weak correlation between the two factors mentioned, maybe suggesting that when a resource (hydropower capacity, hydro sources of power generation) is scarce, one is more willing to exploit even the smallest possibility of using it.

2.3.

A view outside Europe

The countries outside Europe are today the most interesting part of the market for SHP European manufacturers. Even if this study is not aimed at studying in detail such markets, a look at the status of some national cases can be of interest for the comprehension of the future development of the SHP world market. In particular, India and Canada have been monitored. India In India there is a great demand for electricity, especially in the hilly regions in the north. As the topography there is unfavourable to construct electrical grids, the request mainly covers small areas with a limited grid or stand-alone schemes. But the demand in general for electricity is growing fast and India has many areas suitable for hydropower. In order to speed up the development, the Government decided in 1992 to set up a Ministry (Ministry of Nonconventional Energy Sources, MNES) to develop small hydropower (SHP)and other renewable energy sources (RES)1. In India the definition of SHP has been schemes up to 3 MW, but in November 1999 the limit was raised to 25 MW. Present production Indian figures are given in capacity, not in annual average energy production. The present SHP total capacity is calculated to 1 327 MW. (would probably result in an annual energy production

Information collected from Mr I.M. SAHAI, international consultant in Hydropower, New Delhi, India.

10

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

of around 5 TWh) Of this capacity 223 MW is installed in schemes with a capacity of less than 3 MW. Potential The estimated SHP potential in India is 10 000 15 000 MW. This means that only about 10 % of the total SHP potential has so far been exploited. The Ministry (MNES) has a target to add another 2 000 MW of capacity from SHP until 2012, which means that the total SHP production in 2012 should be 3 200 MW. Buy-back rates There are no fixed buy-back rates covering all Indian states but a common figure is Rs. 2.25 per kWh (around 50 EURO per MWh). The market for equipment manufacturers The market for equipment manufacturers is growing in India and so far the majority of the need has been satisfied by domestic manufacturers. European manufacturers have sometimes cooperation agreements with Indian companies or daughter companies in India. Foreign investors are allowed to invest in Indian SHP schemes. Obstacles to development There are very few environmental obstacles to SHP development in India and no difficult licensing procedure. But lack of basic infrastructure in some areas and slow licensing procedures due to bureaucracy hampers a fast utilisation of Indian SHP resources. Canada Canada is a country with a long tradition in using hydropower. Most of the hydropower is large but small hydropower is developing, especially as a replacement for expensive diesel generation in remote, off-grid communities. Present production The Canadian SHP has a capacity of 1 500 MW producing 6 500 GWh annually. This production is 2.5 % of the total hydropower production in Canada. Potential There is a vast potential for SHP in Canada. A recently completed inventory of Canadian small hydro sites identified over 3 600 sites with a potential of 9 000 MW and a potential production of 40 000 GWh annually. Only about 15 %, 1 350 MW, of this potential would be economically feasible under current socio-economic conditions. If the capital costs can be reduced by 10-15 %, which should be achievable through further technical improvements, a further 1 800 MW of economically exploitable SHP capacity will be available. Apart from new plants, many Canadian stations are now at an age where maintenance and refurbishment are critical. With new technique it is now considered possible not only to restore older plants but actually to improve their performance. Technical development Canada has an ambitious technology development program to promote appropriate technology to enable a greater range of small scale and low-head hydro resources to be exploited economically. The primary effort is how to develop tools and techniques to reduce equipment and construction costs.
11

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

Micro-hydro Micro-hydro, stand alone generator systems have been successfully developed in Canada and have become popular because of the special Canadian infrastructure.

2.4.

Summary

This study is based on data from more than 95 % of the total SHP electricity produced in the EU and from 90 % of the total SHP electricity production in other European countries that are not yet members of the EU. Data from about 17 400 different SHP power plants in Europe which annually contribute to supply 1.7% of the European electricity are included in the study. Their percentage of the total hydro power production is at present just over 9.7 %. Their annual production contributes to the European electricity supply with some 50 TWh.

12

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

3. Potential of SHP and environmental aspects of energy production


3.1. Upgrading existing SHP plants, recovery and increase in efficiency of plants that are underdeveloped or have been shut down

[MW]

800 700 600 500


0,0% 50% 80%

Potential of upgrading old SHP


90% 38,9% 23,8%

400 300 200


61,5% 40,1%

40%

37,8%

33,3%

100 0
A

FIN

GR IRL

NO CH

CZ

ES

LV

LT

MT

16,7%

75%

0,0%

0,0%

50%

SK SLO

% loss due to constraints

without constraints

with constraints

Figure 3-1 Potential upgrading, refurbish and restart of old SHP

When we speak of upgrading we mean the replacement of existing equipment with more efficient one. That normally means increase in power production and/or reduced cost of maintenance. Refurbishment, instead, means a more extensive overhaul of a power plant that can include change of equipment but it is not aimed at increasing power production, only to make it sustainable for a long time. About 65% of SHP plants located in Western Europe and 50% of those installed in Eastern Europe and Turkey are more than 40 years old. Proper maintenance and refurbishment of these plants specially those in the poorest conditions and with obsolete technologies - could considerably contribute to the development of the SHP potential. There are, of course, some limits to the exploitation of this kind of potential. In some cases, refurbishment is too costly compared to what can be realistically obtained from it in terms of additional capacity and production. In other cases environmental constraints (e.g. strict regulations as regards reserved minimum flow) hinders increased plant production. From the purely technical point of view (i.e. without considering any economic, legal or environmental constraint), the estimated potential capacity increase resulting from an extensive upgrading of the existing plants and restarting abandoned plants in the EU and non-EU countries has been estimated according to the data collected in our enquiry with national experts at around 18 % of the existing installed MW. There are, however, rather considerable differences among the single countries mentioned: the Irish experts say that, technically speaking, the current capacity installed could be increased of 63%; whereas in Greece, Spain or Portugal only an additional 6 % 7% is estimated to be recovered.
13

66,7%

0,6%

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

Concerning the environmental constraints, they are estimated to reduce the recoverable capacity 2 080 MW to 1 111 MW with important differences among countries: whereas Italy and Switzerland have a reduction of the recoverable capacity of 80 % and 90 % respectively and the British say it is problematic to increase the SHP capacity by refurbishing the plants, Norway and German experts repute the reduction of the constraints to no more than 40%. Thus, when the economic and environmental constraints placed on increasing the capacity are taken into account, the potential capacity increase in Western European countries is reduced to some 10% of the installed capacity. In other terms, about 47% of the technical potential cannot be reached either because of lack of economic competitiveness, or because of environmental constraints. As regards Eastern Europe and Turkey, the analysis of the potential increase of existing SHP capacity and production is less detailed because of incomplete answers of experts. The estimated potential increase is not remarkable in any of the surveyed countries. The respondent EU-countries estimate 1 111 MW annually the capacity increase achievable, corresponding to a production of 4 500 GWh and in the non-member countries 270 MW with an annual production of 1 150 GWh. The total upgrading potential in these EU-member states and non-EU member states is 1 380 MW corresponding to an annual electricity production of more than 5 670 GWh. Without taking into account environmental and economic constraints, such increases in all the surveyed countries are 2 920 MW and 10 950 GWh.

3.2.

Technical potential of new SHP

Questions also concerned the technical potential in each country in order to estimate how much energy SHP plants can theoretically develop with current technology but without environmental and economical constraints. The method gives a hint of the impact which these different constraints have on the development of SHP in each country. Despite the difficulty in estimating this technical potential, it has been possible to calculate it for most of the countries. The figures show that without any constraints and with current technology the contribution of SHP in EUmember states could be almost doubled (9 615 MW, +95%) and in non- member states by about 190 % (+ 4 650 MW), mainly thanks to the capacity not yet exploited in Norway and Switzerland. The increase in the production is estimated 38 000 GWh (+95%) in EU countries and 17 500 GWh (+170%) in the other surveyed European countries.

3.3.

Constrained potential for realisation of new SHP capacity

As for the refurbishment and upgrade, economic and environmental constraints are quite important in reducing the feasibility of new plants. The figures given in the paragraph 3.2 are substantially reduced when such factors are taken into account. Under such realistic restrictions in the EU countries the potential for new SHP capacity is estimated to be 4 828 MW and 1880 MW in the other European countries. The production estimated of such new power plants is 19650 GWh (+ 49 %) in the EU and 9 482 GWh (+ 92 %) in extra EU countries (where data are actually less complete and not all the countries have fully reliable figures). Please note that in extra EU countries, it has not been taken into account the potential estimated for Iceland of 6000 GWh, because there is very little increase in domestic demand and in export possibilities and the potential almost certainly will not be realised.

14

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

The graph in figure 3.4 showing the reduction of the potential for the case of Sweden clearly explain how different factors contribute to reduce the feasibility of new investments in the SHP sector. Even if sometimes this fact is due to a correct preservation of the environment, in some cases these reductions are the effect of the barriers and inefficiencies often highlighted by the operators of the sector, that should be eliminated to boost the growth of SHP.

Potential of new SHP


2000
24% 33%

1500

78%

62%

59%

65% 78%

2500

23%

57%

1000

50%

100%

500
33% 32%

72%

46%

53%

62%

FIN

IRL

[MW]

% of potential loss due to constraints

without constraints

with constraints

Figure 3-2 Potential for construction of new SHP plant

SLO

GR

LT

NO

MT

UK

CH

SK

ES

CZ

LV

PT

69%

36%

0%

36 %

15

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

2500
29% 30% 66%

New and refurbished SHP potential


71% 43%

2000

1500
129% 97% 36%

1000
41% 175%

274% >1000%

128%

179%

215%

56%

86%

500
32% [MW]

613%

28%

252%

194% SK

0
A F NO E FIN GR B D S DK UK IRL CH PT ICE CZ I

LT

installed capacity

forecast potential (new & upgrading)

% of increase

Figure 3-3 - Potential from new plant and refurbishment

SLO

LV

MT

PL

248%

0%

16

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

Graph; different potentials (example Sweden) Potential 100% A A. Natural potential

65%

B. Technical potential

45%

C. Potential; economic constraints taken into account D E D. Potential; environmental constraints taken into account E. Potential; technical, environmental and economic constraints taken into account

35% 30%

Figure 3-4: Example for Sweden of the reduction of potential due to constraints

An example from Sweden showing how different constraints affect the potential in SHP is reported above: the natural potential is reduced when technical factors are considered, giving the technical potential. Taking into account environmental and economic constraints the feasible potential for SHP is calculated, which is on average some 20 % 30% of the natural potential.

17

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union
Table 3.1: Present capacity and potential of SHP in EU countries as estimated by the national experts in the BlueAGE questionnaire and used in various figures and tables of this report. Potential (technical constraints only) SHP 1999 Country MW GWh Number Upgrading MW GWh New SHP MW GWh Potential with economic and environmental constraints Upgrading MW GWh New SHP MW GWh

Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembourg (*) Netherlands (**) Portugal Spain Sweden UK
Total

848 95 11 320 1 977 1 502 48 32 2 209 39 280 1 548 1 050 160


10 118

4 246 385 30 1 280 7 100 6 253 160 120 8 320 195 1 100 5 390 4 600 840
40 019

1 110 39 38 225 1 700 5 625 17 44 1 668 29 60 1 056 1 615 126


13 352

212 13 0 42 300 350 3 20 700

1 062 100 0 150 1 200 1 300 8 90 2 500

1 272 38 0 150 1 500 1 100 200 76 1 300

6 369 229 0 600 6 000 4 000 1 300 360 4 800

127 5 32 300 210 2 5 140

637 36 130 1 200 800 5 20 500 -

967 26 100 1 000 240 100 36 500 19

4 840 156 400 4 000 900 600 165 1 850 95 1 850 3 224 1 200 365
19 645

20 100 300 20
2 080

60 350 1 200 80
8 100

610 2 419 700 250


9 615

2 400 7 800 3 000 1 200


38 058

20 100 150 20
1 111

60 350 700 80
4 518

470 1 000 300 70


4 828

(*)Data for this country does not come from the answers to BlueAGE questionnaire; Source: http://www.cegedel.lu/fr/pro/producthydro.html (**)Data for this country does not come from the answers to BlueAGE questionnaire; Source: [89]

19

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union
Table 3.2: Present capacity and potential of SHP in European extra EU countries as estimated by the national experts in the BlueAGE questionnaire and used in various figures and tables of this report. Potential with technical constraints only SHP 1999 Country MW GWh Number Upgrading MW GWh New SHP MW GWh Potential with economic and environmental constraints Upgrading MW GWh New SHP MW GWh

Iceland Norway Switzerland Croatia Hervastzka* Czech Republic Estonia Hungary Latvia Lithuania Montenegro Poland Romania ** Slovakia Slovenia Turkey
Total

43 941 757 30 250 1 9 2 9 9 127 44 31 77 138


2 467

220 4 305 3 300 na 677 5 38 14 30 21 705 na 175 270 500


10 259

20 547 1 109 13 1 136 10 35 57 29 7 472 9 180 413 67


4 104 841 2 852 4 653 17 467 270 1 158 1 884 9 482

180 500 30 6 2 36 17 3 37 30

800 1 400 100 50 3 90 58 7 174 170

2 300 1 000 370 13 22 60 130 100 320 58 280

10 000 2 000 1 148 55 68 150 585 300 1 600 261 1 300

110 50 15 5 2 36 17 3

500 250 50 30 3 90 58 7

800 220 200 5 22 60 40 320

3 500 2 000 700 20 68 150 186 300 1 600 178 780

23 10

120 50

37 180

* Data for this country does not come from the answers to BlueAGE questionnaire; Source: [90] ** Data for this country does not come from the answers to BlueAGE questionnaire; Source: [88]

20

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

3.4.
3.4.1.

Environmental and legal aspects


General

This chapter aims to identify and develop successful strategies and methods that might improve the development of Small Hydro Power Plants (SHPP) in Europe. 3.4.2. Reported problems

Most countries that have replied to the questionnaire regarding the environmental problem have indicated that conflicts with competing and opposing interests exist. The only countries that have indicated very few conflicts are Greece, Hungary, Lithuania and Iceland (for instance, it has been noticed that in Greece a few projects have been cancelled due to environmental or cultural reasons). A short summary of the replies to the questionnaire is now given. Finland, Sweden, Norway, Switzerland and Austria mention conflicts with natural scenery and fisheries. However, none of these countries mentions any problems with respect to competition, potable water supply or transportation. These countries, together with Slovenia, also indicate that environmental groups constitute a major problem in connection with the licensing process. Portugal mentions obstacles and problems arising from competing interests and from regional authorities. Spain reports conflicts regarding natural scenery and fisheries. In addition a very laborious licensing process is a hindrance. Poland reports conflicts with fisheries and also points out that it is generally difficult to obtain a license to construct hydropower plants. Even Denmark reports that the possibility of further harnessing hydropower is limited. Similar conflicts exist in Czech Republic. Other types of obstacles could include Slovakias problems as regards unclear ownership of rivers and streams. Ireland and Belgium reported problems with noise from hydropower plants situated in populated areas. Slovenia and Germany report that the requests from authorities as regards minimum flow are not based on proper information regarding the real requirements but instead on general wishes and desires with no scientific basis. Montenegro points to problems regarding sensitive cultural environments as well as ecological and seismic problems. Questionnaire answers concerning the environment indicate that resistance to the construction of SHP varies among countries. The reasons for this resistance differ from country to country and SHP projects. In many cases, it is believed that the resistance is based on strong emotional commitment as well as an awareness that earlier development of hydropower did not take into account environmental interests and opinions. The conflicts with different opposing interests and the competition with other activities differ from one country to another. However, a common feature is that, with some exceptions, the competition with potable water supply etc. seem to be greater in densely populated areas than in those that are not. On the other hand, the conflicts with other interests related to the impact on previously virgin nature, seem to be less serious. The degree of competition and conflicts is obviously linked to the actual type of plant a power plant with appurtenant reservoirs evidently implies a greater encroachment on the waterway and surrounding area than a run off the river SHP especially if only part of the flow is required. The questionnaire answers reveal that there is a resistance from various local and national environmental groups. The replies also account for problems with legislation and
21

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union regional or local authorities. The resistance to harnessing hydropower often does not seem to be based on scientific facts. In the licensing proceedings the developer is often in a weak position and is forced to be on the defensive since he has to use facts only when refuting the opposing parties often less well founded arguments. After presenting a correct and complete review of the possible consequences of the project, it is very important for the licence applicant to do his utmost from the very beginning. The developer should provide credible information to the decision-maker regarding the consequences of building a hydropower plant as well as the consequences of the doing-nothing-alternative (zero-alternative). 3.4.3. Effects of building hydro power

In order to judge the effects of building a SHP, it is necessary to perform inventories of various environmental effects etc. before construction and then asses what the consequences will be for these interests after the construction. Positive effects have to be weighed against other effects. All this information regarding the project is subsequently presented to the authorities concerned and other parties in order to make the right decisions. To obtain a high degree of credibility and reliability it is important for the analysis of the advantages and disadvantages to be as comprehensive and complete as possible. Many countries have legislation regarding Environmental Impact Assessment (EIA). Positive effects Reduced emission of substances into the atmosphere the main advantage of hydropower is no contribution of greenhouse gases and in addition no emissions of acidification substances, dust particles etc. The use of hydropower might therefore decrease the use of fossil fuel. Reduced risk of flooding the maintenance of reservoirs and dams can moderate the effects of flooding. Reservoirs and dams function as shock absorbers and thus reduce the risk of flooding. Only in case of gates out of order and no possibility to control the water level the risk of flooding is increased. In the past gates with too low capacity were constructed and this could lead to flood problems, but these gates have in most cases been modified. Experience from Sweden in July 2000 when there was a bad flood showed that 75 % of the damages occurred in non-regulated rivers. Emergency preparedness - the building of SHP can create a more diversified electricity system that can provide production of electricity in smaller distribution systems when the production system is disrupted. Furthermore, since the SHP is located close to the consumers, transmission losses will be reduced. Flexibility in the electrical power system waterpower functions as an excellent base and necessary prerequisite to exploit wind power since hydropower has extraordinary regulation qualities. Competing activities Recreation and tourism use of the watercourse for fishing, canoeing etc. Such activities may, under certain circumstances, constitute an opposing interest. Agriculture and wood industry the impacts of SHP can be positive as well as negative. The construction of a dam can put land under water but at the same time the risk of temporary overflow may be reduced. Potable water supply hydropower does not consume water but issues of water supply may have a serious impact on the construction of SHP. Studies may be required in order
22

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union to establish whether SHP construction can be performed without jeopardising a safe water supply. Transportation in many cases, waterways are used to transport goods or persons. Even if SHP often is less of a problem, competing interests may arise. Through planning it might be possible to solve the problem by keeping waterways open by, for example, using locks. Opposing interests Visual intrusion in a landscape not affected by human activities a SHP will have an impact. These effects can be minimised by planning and adapting dams, waterways and buildings. However, in rural areas, the facilities should be adapted to surrounding settlement etc. Biological diversity according to the Swedish Environmental Protection Agency, the negative impact on fauna and flora is often mentioned as an obstacle to the development of hydropower. It reports that the impact of hydropower can often be serious at a local level although at a national level there are only few or no examples that hydropower alone is responsible for the extermination of a species in Sweden [56, p 185]. There are reasons to believe that this is the case also in other countries with the same natural geographic conditions as Sweden. Biological diversity can sometimes benefit from hydropower; for example, new wetlands can be created that can be used by birds for breeding or migration purposes ([61], p. 90). Fishery A SHP can destroy fishways thus reducing or exterminating migrating fish. Fish which have been exterminated can be replaced by other fish species. The conflicts can decrease through minimum flow that keeps a certain flow in river or fish ways by passing SHP [88]. A method to mitigate the effects of hydropower on migrating fish is the fish guidance system described in the box at the end of 3.6. Noise It can cause problems in rural areas and put certain demands on the construction or design of SHP.

Table 3.3: Summary of the resistances to SHP development EU Countries

Degree of gravity, (1=no impact, 5=severe impact) 1


Visual impact Fishery Water regulation Competition with other uses of water, irrigation, recreation, ) Extra EU Countries Visual impact Fishery Water regulation

2 4 0 3 1

3 3 1 6 6

4 2 4 2 2

5 1 7 1 0

Average 2.7 4.2 2.9 2.5

2 1 1 4

4 1 3

2 2 6

3 2 1

3 5 2

0 2 0

2.4 3.4 2.2

23

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union
Competition with other uses of water, irrigation, recreation, )

1.9

3.4.4.

Methods for solving conflicts

Conflicts can be divided into two separate categories: a) conflicts that can be solved by additional communication between concerned parties, b) conflicts generally depending on more fundamental attitudes or opinions. The first category of conflicts is usually simpler to solve. The second conflict category is more complex and might sometimes be impossible to solve. With negative attitudes towards increasing the development of hydropower, potential further studies and discussions may not solve conflicts. However a planning and licensing process can solve conflicts or make the emerging conflicts clearer by determining the motive behind the conflicts. This can help the decision-maker understand the conflicts and create a balance between different interests. There are various ways to solve conflicts or make adjustments to satisfy different interests. Apparently it is very important to design a project in such a way as to avoid conflicts (location of power stations, dams, transmission lines etc). The introduction of tunnels or tubes may reduce the need for damming in order to create the necessary head. The avoidance of conflicts in early planning phase are also a cost effective means if it is considered when a specific localisation is not settled. When the specific site is selected, conflicts can be minimised through fish-passes, minimum flow and environmental adaptation of the facility through weirs or dams. The IEA project [62] contains a systematic compilation of such efforts. Compensation can be used to manage more fundamental conflicts. Compensation means to replace harmed interests with money or renewed natural or cultural values as a substitute for those values which was spoiled by construction of a hydro power plant. Other examples of compensation are fish release to replace fish affected or wiped out by SHP. If it proves difficult to solve or mitigate the consequences by avoiding, minimising or compensating, the best solution could be to abandon the project or try other alternatives. It is important to show the consequences by not implementing a project zero alternative or doing nothing alternative. It contains a description of what happens on the site in the future when not building a SHP and how the electricity from the planned plant is replaced. It is important to mention that the choice of method to avoid, minimise or compensate conflicts should be judged from case to case. A small run of the river SHP does not require an extended planning and licensing process whereas a large project requires more material for planning and licensing. 3.4.5. Balancing different interests

In the IEA project [59] attempts have been made to compare the environmental effects of different electricity production alternatives. It is possible to gather information that in a relevant way compare emission of carbon dioxide and acidification substances. The basic problem when comparing different options is that fossil fuel combustion facilities bring
24

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union about small conflicts of land use but major conflicts when releasing emission of greenhouse gases, acidification substances and particulate. Hydropower and Wind power, however, might bring about greater local land use conflicts but no emission into the atmosphere. How to conduct a balance between different options and interests is sometimes a question of policy. It must be emphasised that the problem of greenhouse gases and global warming seems to be connected to a more general environmental threat rather than to local environmental problems. In a Life-Cycle-Assessment (LCA) it is possible to compare products or activities during the entire life cycle from the cradle to the grave. LCA can be an important tool in comparing different electricity producing facilities. Yet, as with other tools for comparisons, the same problem still arises because there are no methods which can compile, compare and analyse the effects of combustion with effects that emerge when building and running hydropower and wind power plants. As mentioned in the IEA report, the reliability and flexibility that hydropower provides for the electricity network is often forgotten [58]. When making a comparison, it is necessary to compile and weigh together quantitative data like emissions in tonnes and kg as well as over-flooded land in km2 with qualitative judgements like the impact on biodiversity etc. It is therefore extremely important for all information to be put on the table in a structural planning and licensing process. The IEAproject [60] has studied in greater detail the different country guidelines and legislation regarding IEA regarding hydropower. 3.4.6. Considerations and proposals

Current technology as regards the use of hydropower has greatly improved over the years. Environmental awareness has also increased. This has resulted in greater consideration of different interests in connection with hydropower. Strong environmental movements in various countries have also contributed to this development. The fundamental global threat deriving from the greenhouse gases has also led to new or improved technology for power production by facilities with low or no emission of greenhouse gases. This matter has been put on the agenda of many countries and international organisations. At the same time the impact of SHP seems to create few conflicts compared to those mega hydropower projects that are being developed in Asia and South America with resettlement of a lot of people [57]. In the debate, however, seldom are any differences made between those big projects and building of SHP but all hydropower is treated in the same way. The assessment of the situation regarding SHP in Europe shows that environmental groups have created such obstacles and limitations that continued development of SHP in Europe is almost blocked. An analysis of the situation has led to proposals for future work in the following areas: National goals Planning and licensing process Simplification of the licensing process System for follow-up and evaluation etc. Implementation of demonstration projects Co-operation with other bodies

The first three areas involve recommendations with regard to planning and licence issuing in different countries. The last three touch upon various efforts within the EU primarily linked to a function for SHP that should be created within an existing or a new organisation.
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union National goals In order to exploit the undeveloped hydropower potential different countries must try to define their ambitions or goals with regard to continued building of SHP. Experiences show that it is important for countries to be able to define a measurable and quantitative goal for continued development. Such a goal should take into consideration both the proposal for the directive on the promotion of electricity from renewable sources in the domestic electricity market as well as the specific condition in different countries. Proposal 1: Within the framework of the proposed EU-directive for renewable electricity production, all countries should formulate an objective to further utilise SHP. Planning and licensing process One problem related to increased hydropower production is that in many countries legislation is so complex that many companies do not even apply for licences. The weak economy for SHP often implies that the costs of the licensing process are particularly burdensome. There are two related aspects of this problem, namely, the high cost of preparing an EIA and other documents required for the licensing process and time it takes to obtain a general legal position on the project. Thus the licensing process required is time consuming and the outcome is uncertain. The EU has drawn up a special directive for EIA which concerns the development of hydropower and other industrial activities. This directive should represent a way to settle disputes and establish prerequisites for exploitation. At present a directive for regional EIA studies has been presented to the EU parliament. The following aspects of the planning and decision-making process are particularly important for opposing interest groups and for the developer and decision-maker in order to obtain an overall picture of the project and its consequences. Timesaving and efficient the interval between the time an application is submitted and the time a decision is made should be as short as possible and, in any case, be subject to a limit. A limited time for the licence issuing process should be of great interest to both the applicant and competing or opposing interests. At an early stage being able to assess the possibility of realising the project - costly studies etc. will be limited or avoided if an early assessment shows that the prerequisites for exploitation does not exist. A comprehensive and transparent basis systematically analyse and judge all conceivable effects of the project and give all opposing groups and interested parties the possibility of participating in the process. Proposal 2: On the basis of the existing national legislation and applicable EU directives regarding EIA, all countries should review their own legislation in accordance with what is mentioned above. Simplification of the licensing process The possibility of simplifying the licensing process should be considered if it is obvious beforehand that building SHP will not imply any basic objections or conflicts. The ways and means of achieving such simplification will depend on the situation in each country. In some countries it may be possible to select a simplified process for power plants with an installed capacity below, say, 5 MW in Norway the limit for a simplified process is 1 MW. In other countries it may be possible to introduce a simplified process if a detailed plan exists for exploiting SHP in a complete water catchment area. Alternatively, a
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union simplified licensing process may be adopted for run of the river SHP since generally such plants imply less conflicts than power plants which regulate the water flow. A further possibility could be to use the comprehensive licensing process only for particularly vulnerable water catchment areas. What is preferable must be judged from one case to another. In the proposal for the directive, all countries shall review the possibility of simplifying the licensing process for those subject to directive limitations. Proposal 3: All countries should investigate the possibility of simplifying the licensing process for SHP and report the result in connection with the follow-ups and evaluations proposed in the following. System for follow-up and evaluation etc. At regular intervals, a general overview should be obtained of the rate with which renewable energy (including SHP) replaces conventional energy sources in different countries. Through the mechanisms described in the proposed EU-directive concerning renewable electric energy production, such general reviews will be performed at regular intervals. It is important that the questions mentioned in this study be subject to analysis on the basis of the general reviews. This effort is needed to follow up the trends for developing SHP in Europe. Drawing up common criteria and definitions could be an important tool to promote the further development of SHP. Proposal 4: Create a system to facilitate the exploitation of SHP linked to an existing or new institution especially created for this purpose. Such a body could be the European Small Hydro Association (ESHA). Implementation of demonstration project There is a great need to systematically demonstrate the construction of SHP in various countries and situations. This need is not only related to the actual construction but also to the planning and licensing process. Through such a demonstration project valuable experience could be obtained. Proposal 5: Implementing a number of SHP projects including planning, licensing, execution and operation. Co-operation with other bodies A large number of activities regarding SHP are in progress in different countries and international organisations. It can be noted that a special project is going on within the framework of International Energy Agency in Paris to improve the use of hydropower in an environmentally sound manner: Implementing Agreement for hydropower technologies and program. The implementing agreement also includes SHP. Proposal 6: Extend the international co-operation between EU and other institutions aiming to promote development and utilisation of hydro power.

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3. 5. A forecast for the Year 2015


In the questionnaires each country was asked to forecast the capacity and production at the year 2015, in order to understand the future development of the sector as perceived by the operators. This forecast can be substantially different from the potential wherever the uncertainty and the barriers are perceived as strong. The figures received from EUcountries show an annual SHP production of electricity of 51.5 TWh which is 11.5 TWh or 29 % more than the present annual production of SHP plants. For the non-EU member states the situation is more difficult to analyse because of unclear legislation or because important political decisions on SHP are in the pipeline. Our data give a forecast 2015 of 13.3 TWh (+ 29%) for the non EU countries surveyed. In the EU White Paper on promotion of electricity from renewable energy sources [21] the forecast for 2010 is estimated to be 55 TWh in the EU member countries. In 1995 production of SHP was 37 TWh, so the addition is estimated to be 18 TWh. According to our questionnaires the EU member Countries have estimated the production to be 51.5 TWh in the year 2015, from 40 TWh in 1999, considerably less increase despite a five year longer period. This indicates that the member countries are more pessimistic than the Commission regarding the growth of SHP. The lack of a joint position on RES promotion is probably the reason for this pessimistic view.
Table 3.4: Forecast of SHP in 2015 according to BluEAGE questionnaires for European countries

Country EU
Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembourg Netherlands* Portugal Spain Sweden UK Total

MW
1 176 112 10 325 2 750 1 700 80 42 2 550 n.a. 19 400 2 248 1 250 200 12 862

GWh
5 889 520 30 1 340 11 000 7 000 320 160 9 600 n.a. 95 1 600 7 560 5 400 1 050 51 564

Country Extra EU
Iceland Norway Switzerland Czech Republic Estonia Hungary Latvia Lithuania Montenegro Poland Slovakia Slovenia Turkey

MW
43 1 190 787 325 10 31 56 30 250 60 140 n.a.

GWh
220 5 750 3 400 1 000 50 106 152 100 1 300 350 900 n.a.

Total

2 922

13 328

* This figure is taken from [89]

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3.6.

SHP possibility to reduce environmental impact from other sources

Today the biggest environmental threat are emissions from the burning of fossil fuels, accidents with oil transport and continuous and accidental poisoning of rivers, lakes and seas. The latter comes from various types of industries and the emissions into the water can be rather low and allowed although the accumulated effect is considerable. Large emissions of poison as occurred in Romania in 2000 is not so common but has both an immediate large impact and a long-term one. The resulting damage can affect several countries. The first two threats are connected to the use of fossil fuels and can only be decreased by lower use of fossil fuels. Therefore, it is more important to start phasing out the use of fossil fuels since this energy source is also limited; some experts claim another 60 years only as regards oil. It is therefore important to start replacing these sources with others. The natural replacement is renewable energy sources including hydropower. SHP has had a long lasting development in Europe since it is the origin of most hydropower development. SHP, hydropower plants less then 10 MW according to EU-definitions, has had periods of expansion as well as periods of contraction. Many SHPPs were built during the 1920-1960 period but received competition from large-scale power plants like big hydro, nuclear power and fossil power. When the time came to renovate the small hydro plants, the choice was often to shut them down because the competition from the large, new plants was too hard. This started a considerable reduction in the number of SHPPs, as shown in graph of the Swedish situation from 1900 to 1995. In Europe, the energy demand grew rapidly after World War Two and the production from the small plants was normally replaced by fossil-fuels powered plants. During the 1970s the price of oil rose considerably and access for the western world was limited. Most European countries found that they were much too dependent on oil and the price of oil and they consequently acted in order to reduce this dependency by developing their own energy sources. This interest increased during the 1990s because the negative impact of fossil fuel burning on health and nature became obvious. Thus the interest in producing electricity from sustainable energy sources free from harmful emissions grew much stronger at the end of the 1990s. This has been demonstrated, among other things, by the 1997 Kyoto Protocol and the 1997 EU White Paper which promotes renewable energy sources. The White Paper aims to double the use of energy from renewable energy sources over a 15- year period, from 1995 to 2010. The target includes a 50 percent increase in electricity from SHP.

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In 1995 the EU production from SHP is calculated at 37 TWh (37 000 000 MWh). This production has eliminated the need to produce corresponding amount of electricity mainly from fossil power. As hydropower has no emissions at all, the amount of emissions eliminated every year by producing 37 TWh in SHP instead of fossil power is : Carbon dioxide, CO2 : ............................................ 30 000 000 tons Sulphur dioxide, SO2 .................................................. 100 000 tons Nitrogen oxides, NOX: ................................................... 85 000 tons Fly ash etc : ............................................................. 1 850 000 tons The emission figures are collected from official statistics concerning coal power issued by the Danish Energy Board. Therefore, in 1995 SHP could save nature and society a considerable amount of harmful emissions. If the EU White Paper target for SHP is fulfilled (overshooting the forecast of our enquiry), the production from SHP will be 55 TWh in the year 2010, an increase of 18 TWh in 15 years which means more than 1 TWh every year. During the first five years this rate of growth has not been achieved. If the target is fulfilled, the 18 extra TWh produced in SHP will save the environment the following emissions every year: Carbon dioxide, CO2 .............................................. 14 000 000 tons Sulphur dioxide, SO2 .................................................... 47 000 tons Nitrogen oxides, NOX: ................................................... 41 000 tons Fly ash etc : ................................................................ 900 000 tons

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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union The possibility of reaching the target of 55 TWh by 2010 and the subsequent decrease in harmful emissions depends on the willingness of EU member countries to promote electricity from renewable energy sources. If the proposal of a directive that was issued by the Commission in May 2000 is approved by the European Parliament and the council of Ministers in the nearest future and get a strong profile, it will be possible to reach this target or come close. Box 3.1: A wise example of use of the technology for environmental protection
A METHOD TO GUIDE MIGRATING FISH

Salmon type of fish migrate upstream to reach their spawning grounds. Both big salmon and smolt salmon migrates downstream and the small smolt salmon should be prevented to enter the turbine because of risk of injury. A deflection (diverting) system is therefore a desirable device in rivers with smolt migration. An interesting deflection system has been designed by Fish Guidance System in UK. This system is not based on mechanical deflection (diversion) of smolt but a combined sound-bubble barrier. In principle it consists of a perforated pipe connected to an air compressor and a sound generator. The pipe is submerged upstream of the turbine intake (intake channel) with an angle to the waterflow. At the most downstream located end of the pipe (barrier) there is an opening in the weir leading to a fishladder or other device to support the migration of the smolt. This system has been used in several power plants since 1994 and has shown an efficiency of generally 60 90 %. It has been installed in a number of European countries since its introduction. The Fish Guidance system has also been used in other applications like in water pumping stations, nuclear power stations and water treatment works. An interesting installation has been done at the Beeston hydroelectric plant near Nottingham in UK. The improvement of the water quality has made the small salmon population to start to grow in number. In order to further enhance the growth of the salmon population it was decided to install a diverting system for the migrating smolt at this 1.3 MW hydropower plant. This hydropower plant has been constructed at an existing weir and the result regarding fish migration has been good so far.

Box 3.2: An example of environmentally sound design for a SHP project in a protected area Environmental constraints for a small hydro plant in a protected area
The reference plant A reference case for the integration of new SHP power stations in the environment is the Rino hydroplant which is situated in the Adamello Regional Park in the Italian Alps (Lombardy Region). The owner of the plant is a textile local firm, Franzoni S.p.A. of Esine (BS). The project obtained a financial support from the E.U. programme Thermie 1995, which supports the implementation and diffusion of technical innovation in the renewable energies field.

The area of the Natural Park of Adamello is very rich of water. Among the factors of this richness, we have to describe: the presence, on the highest elevation of the mountain (above 3000 m a. s. l.), of the most extended glacier of 2 the Italian Alps. This glacier, with an extension of more than 15 km and a thickness of more than 100 m in certain points, represents a natural reserve of a great amount of water, and it is very important to determine the climate of the area; the rainfall, that is abundant (more than 1500 mm/year as an average of the area) and well distributed over the year, with a good presence of snow; the irrelevant urbanisation of the slopes, that are well vegetated and contribute to spread over the time the

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restitution of rainfalls to collectors. Such a situation is very favourable for the use of water for industrial and energetic purposes: today the area of the park, rivers and streams are used for power generation, and there are twenty artificial reservoirs, mainly built on the basis of pre-existent natural lakes. In an area with such a situation new opportunities of uses of water for the production of electricity have to face the following statements: the need for nature preservation in general, and for the preservation of the free-flowing water in particular; the possibility to use only small basins, due to the fact the water is already used. The Adamello natural park authority put severe constraints for the construction of the plant: use of local materials (tonalitic rock) for the external parts of walls; diversion system at the level of the stream bed, with a system for fish passing; use of naturalistic engineering techniques for the river slope restoration in the area of the diversion; study of the position of the reservoir in order to minimise tree cutting and visual impact for people approaching the area; use of the pre-existing roads for the first 1.7 km underground penstock, with restoration of the original condition of the roads when relevant for landscape; minimisation of tree cutting for the last part of the penstock; use of raw material and soil from excavation for the restoration of degraded sites of the area; realisation of a picnic area in a wooded area near the reservoir. More essential, in order to preserve the ecological quality of the area, was the determination of the DMV. This parameter is very important and very difficult to determine, because it implies both ecological and economic consequences. The river authority for the Po river valley, determined in that period a stochastic formula in order to assess DMV on the streams of Italian alpine region. The park adopted that formula to determine DMV. The formula is the following: -1 DMV (l sec ) = 1.6 x P x A x Q x N x S where: P = rain factor (from 1 to 1.8) A = height factor (temporarily equal to 1) Q = environmental quality factor (from 1 to 1.3) N = naturalist factor (temporarily equal to 1) S = drainage area The application of the formula, with a degree of uncertainty with respect to some of the correction factors, brought to a DMV equal to 70 l/s. This was one of the first practical applications of the formula, and showed that it is very difficult to use it for small basins, where the result tend to zero regardless the correction factors.

Technical information about the hydroelectric plant


The plant uses the water of Remulo river in the catchment basin of Oglio river, right tributary of Po river. The 2 2 2 drainage area is 35 km , of which 18 km are utilised by another plant belonging to ENEL, while 17 km are at Rino plant full disposal. The plant characteristics are the following: Average altitude of the drainage area 1,830 m a. s. l. Geodetic head 446 m Maximum flow rate 780 l/s Average utilised flow rate 415 l/s Installed capacity 3,700 kVA Expected energy production 12 GWh/year Building start up 31 August 1995 First kWh produced 24 October 1996 The plant uses the water for different purposes: first of all to produce energy, but also to irrigate and even for tourist aims.

Intake structures
The intake is of the trap (sub-channel) type with the following characteristics: Altitude above the sea level Total width Catchment width Fish passage width Grid length Grid slope River maximum flow rate Maximum diverted flow rate
Accumulation basin

1,127 15.20 13.00 2.00 1.00 17 220 1.2

m m m m m m /s 3 m /s
3

A small accumulation basin has been built to transfer part of daily production from the night hours (21.30 6.30) to

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the peak hours (6.30 21.30) in order to maximise the valorisation of the sold electricity.

Power station
The power station building is very small and is composed of three parts: the generators hall, the control room and the room for the operators during the maintenance periods. Moreover, close to the building the electric power station with three transformers (6/15 kV) is located.

Electromechanical equipment
The plant is equipped with two Pelton turbines; the solution with only one group with two jets could have been chosen, but we preferred two machines, completely independent, to make the plant more reliable.

Environmental constraints in the designing phase


The authorisation procedure started before the creation of the Adamello Park and was particularly difficult. It needed long time (13 years !) to obtain the necessary authorisations and the designing had to be completely revised in order to cope with the new laws. The original project of 1983 had been made on the basis of a "classical" concept of the plant, i.e. intake, basin, open channel, high pressure penstock, power station, in order to make the best of economic performance. The new project was made thinking that it was necessary to make the plant compatible with the existing natural and anthropic environment, believing that it was impossible and expensive too to solve the environmental problem only in the erection phase.

Intake structures
The intake structures which were already in the first project of the "trap" type, were the best solution with the least impact on the river morphology and so on its hydraulic and on its look. So the problem of visual impact could be left to the phase erection. An important variation to the project of 1983 was the creation of a "fish passage" to be used also to guarantee the reserved flow. The type of this fish passage was decided together with the technical staff of Lombardy Region and consists of small basins at different levels.

Basin
Unlike the intake structures, the visual impact of the basin was a relevant problem, because it is situated in an area important from the touristic point of view as it is the starting point to climb Adamello mountains. The place chosen seemed suitable to the aim: in fact the area near the intake structures was characterised by a light slope, just like the river. That has allowed to reduce the earthwork in an area which is quite delicate from the hydro-geological point of view. The visible surfaces of the works had to be entirely covered with the local stone reminding the slopes of the river which had been covered with stones after the ruinous flood which in 1987 had hit a great part of North Lombardy. In any case the basin could not be a relevant modification of the background: as it could not be made invisible, it was transformed into something pleasing and useful. The tourist use of the basin has been improved by the construction of a recreation area nearby. For that reason a small wood has been kept near the basin and in it 5 picnic sites have been placed with wood tables, stone barbecues, fountains, a brook with little bridges, a car parking and toilettes block. People seem to greatly appreciate this area.
Low pressure penstock The open supply channel was substituted by an underground penstock at low pressure. As the designers were no more obliged to follow a precise altimetric line, they choose a plot that could avoid a fen area of relevant environmental interest. The new plot follows the existing secondary road and so they did not have to occupy non urbanised areas and they had to cut only a few trees. This fact obliged to make a part of the penstock in reverse gradient and this of course complicate the mechanic aspect. In the lowest part of the reverse gradient, the penstock has been equipped with discharge valve, while in the upper part of the penstock an automatic vent valve had been placed. High pressure penstock During the designing phase the designers thought to put all the penstock underground. But apart the very high costs, the result, on the environmental impact, was an unattractive one. The big earthwork required by the digging in are not advisable on mountain slopes of great gradient, because of the instability of the embankment. Moreover the erection phase has usually a great impact on the environment. For security reasons, because of the high pressure, the penstock should be checkable as easy and as soon as possible. That's why it was decided to maintain open air the part of the penstock at high pressure and to dig in the low pressure one. To attenuate environmental impact they tried to reduce deforestation and to use materials and colours belonging to the natural mountain landscape. The visual impact was lessened by using anchoring blocks uncovered pipe" shaped which are usually more expensive than the "covered pipe" ones. In these last ones the penstock is completely wrapped in the concrete, while in the first ones the concrete structure stops 50 cm under the penstock and can be usually put underground. To get the best results the upper parts of the blocks have been completely covered with the local stone. Another aspect that was taken into consideration during the designing phase was the possibility for men and wild animals to cross the penstock so that it didn't become an obstacle line in the Park. For that reason some parts of

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the penstock have been raised in order to make underpasses while, on the parts close to the ground, small wood and stone bridges have been built.
Power station and tail race

The original project has been modified in the course of the works also on the basis of the indications of the different institutions involved: Town Council, Mountain Council, Adamello Park, Lombardy Region. The change which had the worst consequences on the production was the moving of the power station upriver from Rino di Sonico village with a loss of about 60 m of head.

Environmental constraints in the erection phase


In the erection phase the designers took in great consideration the impact of the permanent works, but also the temporary ones, which are usually neglected, have been particularly minded.
Intake structures The original project has been modified and the river banks near the intake structures and the basin have been rearranged with stones, among which soil and willow trees have been put. Concrete has been used only for the parts exposed to the violence of water flow.

Low pressure penstock


When digging the penstock in, great care was devoted to the environmental restoration in the area. It has still an aspect of rural mountain village, even if nowadays it lives mostly on an eco-compatible tourism. The penstock has been placed only for small parts in private grounds and the track has followed, mostly, the small existing footpath. For paths restoration, only local material and traditional technologies have been used, in particular the sustaining walls have been made of dry stone.

High pressure penstock


The open air penstock was the work with the greatest impact because it couldn't be dug in without consequences on the slope stability because of the gradient of the side it had to be placed on. To reduce also the visual impact they tried to avoid big external works and also deforestation which depends on the way the placement is made as well as on the maintenance needs. Just to grant the access also in the future, some permanent facilities are used for the erection, like inclined plane and cableway. Recently also the helicopter is being used, but it requires the deforestation of a large strip close to the penstock. The concrete piers have been made with a plan top and steel support over-structures, saddle shaped, which are quicker to erect, less bulky and less visible.

Comments
A small hydro plant in a Park or, anyway in an area of great environmental value, implies having to cope with some constraints which can surely be overcome by means of suitable technologies. These technologies can be not exactly absolutely new, but they became innovative in that specific field. Actually, the problem is not a technical one, but an economic one because the costs to protect the environment can nullify the project revenue. Referring to Rino plant, it was calculated the higher costs between the first project, made when the Park was not created yet, and the final one, after the creation of the Park. It was not so easy to update the 1983 costs to 1996 ones, but the approximate results are the following. Intake structures variation: fish passage; stone facing; increase: 30 MLit. Basin variation: stone facing; increase: 120 MLit. Penstock variation: open canal substitution; dug in blocks; stone facing; increase: 170 MLit. Power station variation: landslide consolidation; stone facing; increase: 260 MLit. Environment restoration works variation: recreation zone; exchange chamber with the irrigation pipeline, trees, dry stone walls, roads for the local communities; increase: 220 MLit. Designing variation: environmental re-designing; increase: 70 MLit. Total cost of the plant 7 900 MLit "Environmental" costs

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970 MLit equal to 12% of total amount The cost increase because of the environmental protection is not excessive, while the "environment" effect on the plant performance is heavier. In particular Production loss because of reserved flow: 1 250 000 kWh/year (about 10%) equal to about 200 MLit/year. Production decrease because of the head lowering 1,600,000 kWh/year equal to about 280 MLit. The annual production loss implies a loss of income of 480 MLit/year, that capitalised on 30 years with a rate of 10% leads to 4,500 MLit, 1,900 MLit of which for the reserved flow and 2,600 MLit for accidental cause, related only to the plant taken into consideration.
Vittorio Ducoli Director of Parco Nazionale delle Colline Casentinesi Via Guido Brocchi, 7 52015 PRATOVECCHIO (AR) ITALY Nino Frosio Technical Director of Studio Frosio Via P.F. Calvi, 9 25125 BRESCIA ITALY

3.7.

Summary

The small hydropower potential in the EU is considerable and bigger than the potential of large hydropower in relative terms, but not in absolute. Since around 1950, SHP had a negative development in some EU member countries, many SHP plants have been shut down because of age and competition from new, larger plants. The potential from reinstallation of these plants and upgrading of existing, underdeveloped SHP plants is calculated at an annual electricity production of approximately 4 500 GWh. The potential in new plants, reduced when economic and environmental constraints have been taken into account, is calculated at more than 19 000 GWh per year based on answers to the questionnaire given by the EU member countries. The possible remaining potential from SHP would be some 24 TWh annually, even if the forecast at 2015 made by the experts interviewed is of an increase of 11.5 TWh respect to the 40 TWh produced in 1999, remaining below the goal of 55 TWh in 2010 of the White Paper of the EU Commission in 1997. If the economic situation of producers improves and the environmental constraints decrease, the total contribution from SHP in the EU could probably reach the 64 TWh of the estimated potential. The potential of the other surveyed European countries outside the EU is of 1.1 TWh from upgrading and refurbishment and 15.5 TWh from new SHP plants. The SHP relation to the environment is twofold. Environmental groups opposing SHP point to negative local environmental impact of SHP. Most of these arguments are, however, based more on theories than scientific research. The same arguments are related to singular cases, where they are relevant, but they do not cover SHP in general. The criticism in some cases seems to be an emotional reaction. New technology and changed methods of operating SHP demonstrate that it is possible to reduce environmental impact.

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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union There are, however, many positive effects resulting from SHP operations, such as replacing fossil power production, which saves harmful emissions, and a reduction in risks of river flooding. In some cases SHP can also increase biological diversity. The present SHP production in the EU, 40 TWh, replacing fossil production, saves nature and society from many harmful emissions including greenhouse gases and sulphur dioxide which have the most severe environmental impact. The SHP production reduces greenhouse gases, CO2, annually with 32 000 000 tons and sulphur oxide annually with 105 000 tons. Therefore, the positive impact of SHP on the environment seems to outweigh the negative.

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4. Analysis of the present technology, technical improvements and cost reductions


4.1. Background

The BlueAGE Study aims to review the new technical improvements related to SHP. The questionnaire sent out included a number of specific points to answer, if any new technique had been used in construction and design and whether any progress had been made as regards utilising low heads. From the replies received it is apparent that no revolutionary technical advances have been made during the last few years. In most cases, old, well-known techniques are generally used as regards main components such as turbines and generators. During the twentieth century, the exploitation of water power was characterised by continuous technical development. Turbine efficiencies of some 95 to 96 per cent were achieved. As regards generators, the efficiency figures reached 98 to 99 per cent. This implies that only marginal improvements may be anticipated with respect to efficiency. According to Huttons and Moodys law the efficiency of smaller turbines is lower than that of bigger ones and the efficiency figures have to be reduced due to scale effects. For mid size turbines some 1,5 % could be a suitable reduction figure and for small turbines 3-4 %. The peak efficiency point of the efficiency curve is seldom to be found at max capacity but is for Francis turbines normally at 80 % of maximum flow capacity and for Kaplan turbines at 60-70 %. The efficiency curve of the Kaplan and Pelton turbines is flat and nice but for the Francis turbine, with simpler design, it is difficult to obtain a similar curve, unless at high heads. At heads above 200 m the Francis curve is similar to the Kaplan curve. Therefore, development work has, to a great extent, been aimed at improving the design and construction of SHP in order to reduce the costs of manufacturing of essential parts and also to simplify the operation and maintenance of SHP. Operation and monitoring equipment has been simplified by using computer techniques. In order to illustrate the current technical development the questionnaire replies have been evaluated and manufacturers and other technical experts have also been contacted. A technical seminar was held in Stockholm in June 2000 to review current and new techniques; participants were mainly consultants and a leading manufacturer. A review of current techniques will be illustrated below. Current development work that should be of significance for hydropower in general, including SHP, is also highlighted.

4.2.

General trends in water power plant designs

With respect to general trends, a common feature in the design of water power plants is that environmental and safety issues have been given a more important role. This, in turn, implies that they influence the design from the very beginning. When considering the environment, in particular fishing, it is generally required that a certain amount of water be discharged in water courses which would otherwise be left dry. The optimal design and layout of a water power plant may therefore be influenced by such a demand. Other nontechnical parameters also require particular consideration at an early stage of the design and planning work. Safety issues with regard to operations as well as. dam safety play an increasingly important role. Remote control and monitoring of water power plants have become
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union increasingly common and this, in turn, requires the safe functioning of the plants in all respects. In addition to the demand regarding delivery safety for the power consumer, the safety for third parties must always be provided for. Usually SHP plants do not require big or high dams. However, some accidents related to dams of moderate heights show that issues regarding dam layout and operations have to be given high priority also as regards SHP. Small SHP plants are often located close to, or in the vicinity of, existing dams. It is therefore important that such dams be upgraded and refurbished to meet modern safety demands. Remote control and monitoring imply that it will even be possible to carry out water discharge automatically. Such facilities may require relatively high investments which could be very burdensome for SHP plants. Attempts are increasingly being made to design SHP with overflow dams with sufficient capacity to discharge the maximum turbine design flow in all circumstances. When utilising an overflow dam for discharge, one is not dependent on moving mechanical parts whose function, moreover, depends on a reliable electrical power supply. However, the use of an overflow dam always requires obtaining permission to raise the upper retention level. Such permission may sometimes be difficult to obtain especially as regards an existing dam with an upper retention level established long before.

4.3

Building structures

As regards the building structures, traditional materials and methods are completely predominating. Because it is strong, heavy and easily moulded, concrete is still unbeatable as the main material for the most common SHP structures. Obviously, development work focuses on techniques using concrete with the aim of improving the use of concrete with respect to strength and water tightness. However, no break-through of any significance have been made or are expected to be made in the near future. With respect to very small SHP plants, attempts have been made to pre-fabricate major parts or even the entire power station but such endeavours have not been crowned with much success. In order to influence the economy to any appreciable extent prefabrication of a series of power stations with approximately the same layout is required. Such conditions are rarely at hand. Furthermore, the location of dam and power stations, as well as the head and flow is almost always unique implying that the layout and design has to be specifically adapted to the location. Tunnelling methods for full-face boring have been developed but have not resulted in any noticeable economic gains. Full-face boring implies certain environmental advantages as long tunnels can be excavated from one point only. The construction time may, in many cases, be shortened by using this technique. However, the technique is seldom applicable to SHP projects as other types of waterways are more economical when considering the discharges normally related to SHP.

4.4
4.4.1

Mechanical equipment
Turbines

As for all water power plants, turbine equipment for SHP plants is dominated by turbines of Kaplan or Francis types. In countries with topographical conditions implying high heads, the Pelton turbines have their place. New types of turbines of any importance have not been developed. Instead, technical development has been concentrated on the abovementioned three main types. By means of advanced computer techniques (Calculated Fluid Dynamic, CFD) the flow stream lines upstream, through and downstream of the turbine can now be calculated and illustrated with a great degree of certainty. However,
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union the efficiency improvements foreseen for the future are, in any case, relatively small as the efficiencies for big turbines have already reached about 96 per cent. Therefore, development now aims to use new materials and possibly utilise low heads. As regards the material sector, tests are being made to introduce new composite materials which, apart from having sufficient strength and durability can also compete with traditional materials with respect to costs. Low heads Low heads are difficult to exploit economically as the physical dimension of the turbine increases when the head is reduced. Therefore, heads below 2.5 to 3 m are rarely exploited on the basis of the conventional turbine technique. There are developments underway related to fast running propeller/semi Kaplan turbines with the aim to eliminate the need for gear boxes between turbine and generator. This development project is being carried out jointly by an Irish-Swedish group based at Galway University. Prototypes are already in operation and the results are promising (so far 8 units of the Swedish-Irish Polyturbine concept have been delivered). The technique, continuously improved since the beginning 15 years ago, aims at increasing the rpm when the head is low at the expense of efficiency. In this way, it will be possible to use standard generators and a lower overall cost solution could be obtained. The concept still represents new technique since during this period no similar design is known and the concept low head and direct driven generator is unique so far. The aim has been to construct small modules, duplicated depending on available flow. Figure 4.1 shows a unit designed for a head of 2 m and a capacity of 32 kW. The water way is manufactured from fibre glass that has been cast in concrete. Runner and stay vanes are manufactured in aluminium bronze, the shaft in stainless steel. A development project aiming to introduce modules for SHP plants with small heads is also underway. The general aim of this project is to standardise components which result in longer manufacturing series and thereby reduce costs. A Danish-Swedish-German group is currently involved in another project which concerns harnessing wave energy. The technique aims to utilize kinetic energy in waves. Applicable wave heights are in the order of 1 to 5 m. The project is already at an advanced stage and ready for full-scale testing. The general concept for the equipment being developed is applicable to units with variable rpm and frequency conversion ( see 4.5.3 below) (EU JOR3-CT98-7027). There are also other wave power projects supported by EC for example in UK and Portugal. The project Wave Dragon (EU: JOR3-CT98 -7027) is a multi-country project lead by Denmark. Although it is not specifically SHP, the results obtained in these projects can influence the development in the sector low head/variable head of SHP.

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4.4.2

Gear boxes

Gear boxes are not appreciated by hydropower owners because of noise and short life time. In the older days almost all plants were constructed with direct driven low speed, high cost generators. Due to economical reasons the low speed generators have been replaced by the concept high speed generator/gearbox, because this is quite cheaper. The difference in efficiency is negligible as the high speed generator has approximately 1.5 % higher efficiency which is as much as you loose in the gearbox. For many SHP projects with heads lower than, say 10 m an increase of the turbine speed is often necessary in order to use available standard generators. Standard generators/motors are used in other industrial activities and are therefore manufactured in large series meaning lower prices. Gear boxes are also manufactured for other activities and can be obtained at reasonable prices. The gear boxes are almost entirely of the toothed wheel gearing type, which often means a sound emission that is difficult to accept in the power station as well as in the immediate surroundings. Introduction of a gear box will result in an efficiency loss in the order of 1 to 1.5 per cent. Moreover, gear boxes have a more limited service life compared to other equipment and although there does not seem to be any development in this sphere of activity, important work still needs to be done. Two German wind power manufacturers have gone for direct driven generators. There is no low cost-low speed generator on the market, but there is a promising development with permanent magneto rotors that could be an answer to this requirement. The future will show if the cost for this type of generator can be competitive to the present common concept.
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4.4.3

Headrace penstocks

Topographical conditions often lead to solutions implying that the headrace waterway will be designed as a penstock. Penstocks are manufactured from various materials; steel and wood and, to a certain extent, concrete are the more traditional materials. During the last two decades penstocks manufactured from various types of plastic materials have also been put on the market. Glass fibre reinforced plastic penstocks which, on the whole, are just as strong as steel have been developed. The technique as well as manufacturing methods are relatively well developed implying that further development is not expected in a near future. Because of environmental considerations, the penstocks have been placed underground whenever possible and this influences the choice of material, joint design, etc. 4.4.4 Gates, trash racks

Gate structures for dams, intakes, etc have not undergone any major technical changes in recent years. For low dams various types of rubber gates have been introduced with, however, little impact on the market. Intake trash racks wholly or partially manufactured from composite material, have also been tested but also with low market impact.

4.5
4.5.1

Electrical equipment
Generators

In SHP- power plants up to 2-3 MW, asynchronous generators are normally used if the grid conditions do not require the plant to operate on its own grid. For SHP-plants in the range of 3-10 MW, synchronous generators are normally used. The generator technique is well developed and tested during the last century and there is not much more to gain with regard to efficiency. Development projects therefore aim to use new materials and existing materials in new ways. In this connection, one of the developments is the powerformer, which is a new type of generator developed in Sweden by ABB-ALSTOM. By adopting the powerformertechnique the use of a step-up transformer is not required thus reducing the costs for both equipment and building. This generator produces electric power with the same voltage as the connected grid. The construction uses high-voltage cables in the stator winding. A prototype unit was built at Porjus Power Plant in 1997-1998 and has been operating for two years. The unit has an output of 11 MVA and delivers the power directly into the grid at a voltage of 45 kV. The running speed is 600 rpm. The concept has been incorporated by three other generators which have been put on the market. The first is a turbogenerator in a combined heat and power plant in Eskilstuna Sweden. The unit output is 42 MVA and the voltage 136 kV. The speed is 3000 rpm. The running tests began in June 2000. The second is a hydropower generator for Porsi Power Plant in northern Sweden. The unit output is 75 MVA and the voltage 135 kV. The running speed is 125 rpm. The generator is under construction on site and has been commissioned for March 2001. The third commercial powerformer generator was contracted in May 2000 and will be delivered to Hljebro Power Plant in the middle of Sweden. The output is 25 MVA and the voltage is 78 kV. The powerformer has some 0.5 % higher efficiency and the operation and maintenance costs are lower than for a conventional generator and transformer installation. So far any powerformer below 11 MVA has not been developed, but the technique is expected to be used for generators down to 5 MVA.
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union For smaller generators the use of permanent magnet rotors is an interesting development trend, as for the wind power industry [84]. 4.5.2. Power and control equipment

The power equipment for SHP is normally of the standardised type and there are no changes foreseen for the future. Almost all questionnaire replies point to the computerbased control equipment as an important new technical development. For SHP-plants one of the major costs will still be related to operation and maintenance. Thus attempts will be made to avoid or reduce lengthy visits to the plants. This will be achieved by using standard industrial components, standardised modular equipment and cubicles, modern monitoring technology via the Internet, highly automated monitoring devices, analysing the cause of an error and reporting via the Internet. One interesting, cost-effective way to monitor plants is to install one or several so-called web-cameras which will send frequent pictures to a home page on the Internet. Thus the operator can check the situation wherever he is, and also via a microphone listen to unusual or disturbing sounds. On the home page other figures can also be shown like output, water levels, operating hours etc. Remote control via the same system is a possible extension of the function. 4.5.3. Variable speed installations

Over the last decades the development of variable speed equipment for hydro power plants has been carried out especially in Japan, the USA and China. According to a report, presented at a Small Hydro conference in Portugal in May 2000, 14 power plants equipped with variable speed turbines and generators are now in operation. The plants have outputs in the range of 18,5-500 MW and are designed in groups of units. The technique allows the turbine to operate at a speed, which gives the best revenue as regards efficiency, cavitation etc. The variable speed creates an electric power with variable frequency, which has to be converted to the desired fix frequency. The conversion is performed by HVDC technique or cyclo- converter. With regard to the turbine the advantages are greater if the head varies. The advantages by variations of the flow are limited. The variable speed makes a gear- box unnecessary and this is an advantage as regards operation, maintenance and costs. Equipment for frequency conversion is complicated and expensive and this makes it necessary to connect several units to one converter station. That is not likely to be true for SHP as the locations normally are spread out with relatively long distances between the plants. Certain developments are now underway in this area. As an example, reference [85] contains valuable information concerning this technique but also points out that the technique has to be further developed especially as regards SHP. The report also concludes that cost reductions for e.g. frequency converters are needed in order to make this technique commercial. The development of permanent magnet synchronous generators in combination with frequency converters is also mentioned in the report. The technique will probably be of importance for SHP, but the reduce of costs for this kind of equipment is essential. Another example, in Sweden ABB is developing a technique for wind power with a variable speed technique as well as the powerformer-technique. The concept called Windformer, is mainly aimed at wind power but, in the future, might also be of importance for small SHP. A recent study gives a more detailed view on this subject [85]. 4.5.4. Summary

The SHP-technique is well developed. Developments now underway will concentrate on new materials such as composite materials. For small heads development is are
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union concentrated on small units in multiple arrangements, using technique for variable speed and frequency conversion. The powerformer generator, which can already be used for small hydro in the range of 510 MW, in the future, might also be adapted for use in smaller plants. Depending on various technical developments, cost reductions are primarily related to operational costs such as computerised systems which decrease the need for personnel resources. Minor cost reductions can be related to other technical developments such as higher efficiency, variable speed etc. because new developments normally depend on long manufacturing series in order to give full economic benefit.

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5. The European small hydropower manufacturing industry


This section deals with the European manufacturers, the development of water turbines in Europe, the EU manufacturers position on the world market, their relations with the EU and non-EU market and their prospects of expanding to new markets outside the EU.

5.1.

Historical background and manufacturing

During the early development of European industry, between 1800 and 1850, the need for power rapidly increased. This need was mainly covered by coal-fired steam engines since the steam engine had been invented by the Englishman James Watt. Since France had more hydropower potential, it tried to cover its power needs by using waterwheels extensively. But since waterwheels were slow runners and could not use higher heads, the French decided to develop a faster and more efficient one. Thus a prize competition was launched in the early 1820s and in 1827 the competition was won by Forneyron who designed the first water turbine. In France the water turbine rapidly developed and by exploiting the new technology, the country soon became a leading industrial nation. The other European countries quickly adopted the new idea of using hydropower. The Forneyron turbine was developed further into what became known as the Francis turbine. Francis was an Englishman who lived most of his life in North America. The Francis turbine is still one of the most commonly used turbines, known for its simplicity and durability. Other types of turbines invented in Europe are the cross-flow turbine invented by the Hungarian Banki at the turn of the century and the double regulated propeller turbine invented by the Austrian Kaplan between 1915 to 1920. Today there are four main types of water turbines: Francis, cross-flow, propeller and the Pelton type. The very common Kaplan and semi- Kaplan turbine is a further development of the propeller turbine. The Pelton turbine was invented by the American Lester Pelton and is the only type which was not invented by a European. Thanks to these inventions and the rapid growth of the energy demand, Europe became the world leader in the manufacture and development of water turbines which gradually replaced the steam engine as the most important power source. In Europe development was strongest in Great Britain, the central European countries and Scandinavia. Having good natural resources for hydropower, Sweden came on track very early and started commercial use of water turbines in the early 1840s. Since they first appeared, turbines manufactured in Europe have spread all over the world and it is not wrong to state that it was Europe that gave light to the world. 5.1.1. Types of water turbines

As mentioned earlier, there are four main types of turbines regardless of size. Most were invented more than one hundred years ago and have developed over a long period of time. At the beginning the efficiency was around 50 percent, today there are turbines with efficiencies up to 95 percent.
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union The Francis turbine. This turbine is used at heads from 3 to 500 metres and is a relatively simple, single-regulated (guide vanes only) turbine. The efficiency curve at various flow situations is flat and good at higher heads but not so good at lower heads. This type is still one of the most commonly manufactured turbines. The Pelton turbine. This is an action- type turbine (all the others are reaction types) used at higher heads from 75 to more than 1000 metres. It is common in mountainous areas where you can find high heads. It is a sturdy turbine, relatively simple to use, has high efficiency with a flat efficiency curve even at variations in flow. The cross-flow turbine. This is the simplest turbine type and the one that is cheapest to manufacture. It has become popular in developing countries and is suitable for local production in non-specialised factories. The cross-flow turbine can be used at heads from 3 to 300 metres. The efficiency is lower than that of other turbine types and what can be gained at the initial investment can be lost during the production lifetime, especially in countries with high electricity prices. The Kaplan and the propeller turbine. The propeller turbine is divided into three categories: Fixed propeller turbine Semi-regulated propeller turbine Double-regulated propeller turbine

The propeller turbine is used at lower heads from 2 to 50 metres and has the advantage of running at high revolutions even at low heads. This type of turbine has become popular, very often as replacement for worn-out Francis turbines at low heads. The fixed propeller turbine has no regulation of the guide vanes nor of the runner blades (propeller blades) and is suited for steady flow situations where the turbine can run at or close to its optimum efficiency point. The semi-regulated propeller turbine normally regulates the runner (propeller) blade angle but the guide vanes are fixed. It can be used in conditions with limited water flow variation where it has similar efficiency characteristics as the Francis turbine. The double-regulated propeller turbine is often called the Kaplan turbine after its inventor Viktor Kaplan from Austria. In 1918 Viktor Kaplan patented a double-regulated propeller turbine with a vertical shaft. The Kaplan turbine was the starting point for many variations of the double-regulated propeller turbine. Both guide vanes and runner blades are adjustable according to flow variations and also variations in head. This type of turbine is the most advanced of all turbine types and is thus the most expensive to manufacture and maintain. It has, however, become popular because of high efficiency over a wide range of flow conditions and its ability to produce more energy than other types at variations in flow. Because it is so complex, not all turbine companies manufacture the double-regulated propeller turbine. 5.1.2. Market situation

The EU hydropower manufacturing industry is experiencing some problems because of the present market situation.
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union The changes in the EU electricity market is a threat to the competence and leading position of the EU hydropower industry. Traditionally, the European industry has kept a leading position in the field of hydropower technology and manufacturing. This has been the situation since hydropower started developing 150 years ago. Very little non-European equipment has been installed in European hydropower plants. The opposite has instead been the rule. One important reason for European dominance has been the strong home market. By developing technology and production methods in a fast- growing home market, European manufacturers have, with few exceptions, kept a leading edge compared to manufacturers from other parts of the world. This underlines the importance of a strong and stable home market. The liberalisation of the European electricity market (directive 96/92 EC, the single electricity market of the EU) gradually began in early 1999 but some European countries like the UK, Sweden and Norway, started to deregulate their markets many years before. Norway has a strong influence on the Swedish and Finnish markets because of a cooperation agreement that has existed for a long time. Opening up the electricity market revealed an excessive power production capacity that had built up during the electricity monopoly which in many case had lasted almost 100 years. Due to this excessive power production, electricity prices have rapidly fallen and naturally also buy-back rates to small hydropower. As a consequence, there is little motivation to build new power plants and, when possible, planned activities on refurbishing and modernisation are being postponed. Thus orders to hydropower equipment manufacturers from the EU market are decreasing and resulting in the need to decrease the number of employees since other markets have not correspondingly increased. A January 1998 report [12] estimated that in 1997 the European hydropower manufacturing industry had employed 10.000 people (including sub contracting companies) and that there were approximately 80 small-scale water turbine manufacturers in the EU with a capacity to export equipment. As a comparison only 7 Danish companies operating in the wind power sector employ some 12.000 workers. Since then more than 15 manufacturers have left the scene and very few have entered. Over a period as brief as four years, 15 % of the small turbine manufacturers have shut down water turbine manufacturing. This has been most significant in countries where deregulation started early. UK and Ireland have lost 6 manufacturers and Sweden 3. The only countries with a small increase in the number of manufacturers have been those having a stable buy-back rate system like the feed-in type and long- sighted systems which give the producers good economy and stability to motivate them to build new plants, refurbish or reinstall into service older plants. Examples of such countries are Germany and Spain. France, with one of the biggest manufacturing capacities in Europe, has now only five major manufacturers remaining. Their turnover is approximately 25 million EURO per year and 80 % of their production is for the export market. The French market represents presently only 10 to 20 installations per year.

If the decrease in manufacturing capacity continues at the same rate as has recently been experienced, the dominant position of the European industry will be greatly endangered.
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union Contacts with some EU manufacturers have given similar responses as shown in 5.2 below. Moreover, in order to face competition it is today common practice among the EU well known manufacturing companies to use subcontractors to a much greater extent, becoming almost only an assembly workshop. This reduces the risk in periods of scarcity of orders. Nevertheless, giving out the work to small workshops lacking the knowledge of turbine design and function makes it almost impossible to maintain the quality leadership at the world level. Some operators experienced bad quality and mis-organised relationships in recent supply2.

5.2.

Trends of different markets

Home country market ........................ stagnation Other EU countries ............................ stagnation Outside EU markets........................... increase in some regions, stagnation in others

5.3.

Competition

Competition between turbine manufacturers has increased despite the fact that some manufacturers have left the scene. The reason for this is obviously that the market has shrunk quicker than the manufacturing capacity. Another reason is that some developers try to reduce initial costs in order to get investments to correspond to the decreasing electricity prices. This means importing simple and cheap equipment from non-EU manufacturers instead of identifying suitable suppliers and project co-ordinators from the EU. This has sometimes given the project-leaders many problems regarding quality, compatibility, delays in delivery, efficiency and reliability. It has caused project delays, interruptions in energy production and less energy than estimated so that the economic fall-out has not been the expected one.

5.4.

Manufacturing competence

Water turbine manufacturing is far from standardised mass-production. Most turbines are individually designed and manufactured in order to optimise the energy that can be extracted from the falling water. The variables are head, the water-flow to be used by the turbine or turbines and the flow variations during the year. There are usually one or two turbines in a SHPP, sometimes three or even more. This means that since, in most cases, the turbines are individually designed and manufactured, competent and skilled personnel are needed to match the manufacturing requirements. Special requirements must be fulfilled by the designers of water turbines. They need comprehensive theoretical training combined with in-depth experience and knowledge of the environment where the turbines operate.

Personal communication of leading operator in Italy, October 2000. 47

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union It is a well known fact that it takes a long time to become a good turbine designer and a mentor is of utmost importance. Without a skilled and experienced mentor the designer has to get his experience the hard way and that will most probably ruin the manufacturing company. Both categories of personnel are scarce and not easy to find, especially designers and systems engineers. Manufacturers of other kinds of equipment related to hydropower do not have the same problems because they are also connected to other markets that do not necessarily experience the same problems as the hydropower market. Examples are manufacturers of generators, gear boxes, electrical control equipment and hydraulic equipment. The products of these manufacturers are normally standard products and therefore, unlike water turbines, they can be mass-produced. Because of the smaller economic margins of turbine companies, they often have to pay salaries that are lower than in other industries like shipbuilding and aerospace. This makes it more difficult to recruit skilled personnel.

5.5.
5.5.1.

Barriers and access to customers


Language and cultural barriers

European small turbine manufacturers do not report serious problems communicating with customers or potential customers in Europe. English is the most common language and can normally be used even outside the EU. Communicating in German and French is also common. The only area that creates language problems seems to be the language of contracts since they are written in legal language that often needs to be interpreted by a specialist. Even though there are no serious language problems, producers tend to prefer purchasing equipment from a manufacturer who speaks the same language. This tendency is stronger in the French- speaking world. In the EU differences in business culture seem to be small and not a big problem. However, the further you go from the EU the greater the differences except in areas like North America, Australia and New Zealand. 5.5.2. Access to potential customers

Since the size of European market decreased the number of enquires were also expected to drop. This is not the case because a lot of enquiries can be found on the Internet and very often they are sent by e-mail directly to the manufacturers. When the European market went down some other markets, like those in the Balkans, India or Southeast Asia expanded. The manufacturers report that even though the requests of quotations have increased rather than decreased, the type of quotation seems to have changed during the last years. The requests often indicate that certain conditions must be met for the project to be obtain the go-ahead; for example, financing must be guaranteed and legal permission must be obtained. A lot of inquires are presented as feasibility studies. This means that the probability of a project being implemented is smaller today than it was in the past and that the manufacturers have to do a lot of work with no returns.

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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union A manufacturer will have to carefully assess each inquiry. Is it a serious request with good chances of being approved in a reasonable amount of time or not? To prepare a quotation costs effort and money and a small manufacturer cannot afford unnecessary costs. Today it is also more frequent for the enquiry to contain a request of financing by the manufacturer.

5.6.

Manufacturing development

Although European turbine manufacturers have small margins, they have still managed to develop their manufacturing processes. This development, however, has mainly taken place in other parts of the manufacturing industry and the results obtained have been adopted by the turbine manufacturers. Developments worth mentioning include using numerical machines, adopting new advanced alloys and using self-lubricating materials. Not all new methods from other industries can be adopted because of the typical single unit manufacturing of the turbine industry. Using self-lubricating materials in a water-turbine deletes the risk of oil-leakage to the water and is thus considered an environmental improvement. On the design side the use of CAD CAM systems have been very common and have led to increased design capacity. The ongoing development of CFD-programs (CFD or calculated fluid dynamics) has reduced the needs for expensive model testing in hydraulic laboratories. CFD is especially beneficial when upgrading existing designs. New prospects related to the rapidly developing IT communication systems must also be mentioned. This enables a designer to work far from the design office or to immediately transfer his drawings from a design office to a HPP under construction.

5.7.

Future markets for SHP manufacturers

As mentioned above, the market situation for SHP turbine manufacturers is in a critical stage. Environmental and legal obstacles together with falling European electricity prices, caused by deregulation of the electricity market, have decreased the capital invested in new schemes and in refurbishing existing plants. In the short term the European market will not allow European manufacturers to keep up their competence and capacity. A change in the European situation might occur if the proposal of the EU commission to issue a directive promoting electricity from renewable energy sources is approved by the European Parliament and if the commitments of the Kyoto Protocol lead to the adoption of concrete measures by the member states. The best markets for European SHP manufacturers can be divided into the following: the market for new equipment the market for service, renovation and modernisation.

In some cases the latter activity includes a considerable amount of new equipment.

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5.8.

Markets for new equipment

These are the markets where the demand for electricity is rapidly growing or where a change of the electricity production system is necessary due to environmental reasons or to fulfil the requirements of the Kyoto Protocol. In the EU, Germany, Spain and Greece are examples of such countries. Their electricity production system is still heavily based on fossil fuels but they are spurring the production of electricity from renewable energy sources. Systems to guarantee buy-back rates have been introduced in the form of feed-in systems that motivates investors to enter this sector. In these countries the SHP electricity production is growing more rapidly than in the other EU member countries. But there are still legal and environmental obstacles preventing the SHP from expanding. Outside the EU, the following areas are the most promising: The Baltic countries Poland The former Yugoslavia and Turkey Southeast Asia South America Some African countries

The limitations to European expansion in these areas include financing, lack of stable framework and to finding a reliable local company to co-operate with.

5.9.

Markets for service, refurbishing and modernisation

The best market for the EU manufacturers concerning work on existing plants is still the EU home market. A high percentage of this kind of work consists of human labour and work at the customer plant. Thus travel costs and living expenses represent a substantial part of the total cost and such costs rise according to the distance. Therefore a manufacturer or service and repair industry has a considerable advantage working in a home-market, especially in his own country. This kind of work will most probably increase in the EU where today there are more than 13 000 SHP plants. Most are over 40 years old and a considerable number are in need of refurbishing and modernisation. Currently producers are reluctant to enter this kind of work because of low buy-back rates and uncertainty of future regulations. Therefore, the decision to go ahead with refurbishing is often postponed. This tendency is more evident in countries such as the UK Norway and Sweden which were the first to deregulate the electricity market. The low activity of EU producers may cause further turbine companies to leave the scene and when they can no longer put off renovating and modernising their plant there will be very little remaining capacity in the industry and many plants might be forced to shut down. This negative development is a threat to SHP production and should be given thorough consideration.
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union Because of the reasons described above, non-EU manufacturers find it difficult to compete with the European manufacturers on the EU market of refurbishing and modernisation of SHP.

5.10. Summary
The invention of the water turbine in France in 1827 led to the early development of modern hydropower in Europe. Subsequently, the European SHP equipment manufacturers became the market leaders. They successfully, developed hydro technology and became the main exporters of equipment in the world. Indeed, can be rightfully said that Europe gave light to the world. Although EU equipment manufacturers still hold a leading position in the world, this position is being threatened since member countries are not very motivated to invest in new SHP and keep up existing SHPP. This situation is caused by a decreasing economy for energy producers in the deregulated electricity market and the increasing obstacles created by environmental and legal constraints. The margins for producers are still good in a few countries like Germany and Spain and consequently the markets in these countries are better. The non-EU market is still promising and offers good prospects for EU manufacturers but financing the hydro-projects is a serious problem as well as 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 and not just for developing countries. But there still seem to be too many obstacles for this to happen and for European manufacturers to show their competitiveness. The European SHP manufacturers seem to be in a negative spiral and many are choosing to leave the SHP market. If this negative spiral cannot be stopped, the EU might lose its dominant industrial position as well as the competence it built up over the years. Such competence is hard to recover because of the special technology related to hydro power. The producers might no longer have a competent industry its investments and refurbishing should start up again. The turbine companies, other SHP equipment manufacturers and consulting companies will only stay in business as long as the market gives them enough work. It would be wise for European manufacturers to make arrangements with export offices and export credit institutions so they can successfully penetrate the non-EU market. It is also 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 will become stronger.

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6. The development of SHP plants : regulations and procedures


6.1. Developing a SHP plant: principal legal conditions

The principal legal condition for building a new SHP plant or for recovering an old, abandoned are mainly the permits and licenses that the power producer has to get from the administrative bodies : the permits are almost similar in all the countries analysed: water use or abstraction, hydropower generation right, building permit and compliance of all the bodies involved in the process. Moreover, it should be pointed out that some lobbies can influence the licensing procedure and introduce new parts for the SHPP: usually fish-passes to comply with the fishing lobby and a bigger RMF for both fishermen and environmentalists. At the very first step of the process there is the request for the water licence that allows the producer to exploit a natural resource that is a property of the state (of all the community). Some countries have different kinds of permits (irrigation, industrial, pisciculture, hydro power uses); others, in addition to the simple use of the water, require a permit just for power production, usually issued by a different administrative body (Ministry of energy or industry). Almost all of the countries answered the questionnaire concerning the licensing process indicated that the state is the owner of the water (public resource principle) and the permits for water abstract are issued by regional or local administrations. However, in three cases, northern European countries -Iceland, Sweden and Norwaythere is no public ownership of water resource: it is sufficient to own more than 50 % of the water that will be used: this means that the SHP producer should have rights over the land where the river flows or, at the very least, be able to get the river water he needs for the SHP plant. When a SHP producer does not own more than half of the land where the river flows, it means he has no rights over the water,. He can pay for these rights or offer some benefits to the owner of the other property. For instance, if a producer owns only half of a river, (a river usually crosses through a piece of property owned by different people) he can buy part of the water rights from the neighbour by paying a suitable price or by offering him some concessions like part of the hydro power produced at a lower price. The license is usually issued by a centralised (national level) department of the Ministry of Industry, the Ministry of Energy, or the Environmental Ministry. In some cases, a specific administrative body for water management has been created. In other cases, it is the local governor or the regional administration Consideration should be given to the principle of the public ownership of water. First introduced in the legislation of the late ninth century, this principle still provides the basis for the water fees and regulations in almost all the countries: water, like other environmental goods, is owned by the whole community and by the state that supervises it. Although this principle is basically reasonable and generally accepted, there is some evidence that the entire community that uses the water can oppose the exploitation of the resource for resource private purposes: this causes much conflict regarding the use of the water, not only for water power purposes, that can impede the licensing process. Even if a license is issued, sometimes the water can not be used because of the opposition of different parties.

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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union The other legal conditions that are usually related to a SHP plant are environmental protection and energy use/production laws issued in order to promote the sustainable use of RES. Although specific national legislation for water management is usually quite old, regional administrative bodies have enacted different regulations in order to administer license requests and permits. At a national level, we usually found a general framework legislation for water abstraction and power production with different regional laws added on concerning the different permits needed in different cases:. For instance, there are two kinds of permits. Those which allow building: the central power station, the civil works for water abstraction inside the river, the line to connect the central to the national grid and those which allow the power producer to set up the plant without any environmental constraints: forestry permits to cut down trees, fishery rights, permits to build in protected areas. All this usually slows down the licensing process that in some countries has become an obstacle to new hydro power plants: in Italy, Spain, Portugal the number of permits and the interminable bureaucratic procedures can delay a licensing process for more than 3 years. Such a delay can put many potential producers out of the SHP business since they do not have the necessary resources to wait for the licence. In many countries the legislation concerning energy issues is changing as result of the EU 96/92 directive, and on the new RES directive and the pressure of RES operators so that also the national legislation for SHP and in general all RES is now going to be modified or updated. A good way to deal with the problem of disseminating the current laws and regulations regarding SHP would be to set up a special office in the regional or local administrations. However, in order to speed up the licensing process and the collecting of all licensing permits from all parties, it would be useful to set up a special window, a sort of leading office like the one in Switzerland, that is in charge of collecting all the local sublicenses and deliver them to the owner so that he could build the new plant while waiting for the water license (this is quite a normal procedure in all the countries where the licensing process is very long when submitted approval of environmental assessment of the project). The tasks assigned to the leading office would increase the efficiency of the releasing system so that the producer would have fewer parties to contact, thus speeding up the legal operations.

6.2
6.2.1.

The use of water


The costs of using water: water charges, concession fees

As the interest in the sustainability of environmental resources management began to increase in the early 1960s, water increasingly came to be considered as a public good, or a merit good, the use of which should be carefully regulated and monitored. During the last twenty years both the literature debate and with some time delay the political practice have gradually introduced the principle that the use of water should be subject to a charge reflecting its opportunity cost for society as a whole. This change of attitude can not only be explained by the growing interest in environmental resources and sustainability, but also by the increasing scarcity of water. Even in those countries where water is relatively abundant in terms of physical quantities, in fact, the rising water demand for various uses has brought about an economic scarcity of this resource, that has often lead to conflicts between different current or potential users. Among the various kinds of water utilisation, as is also shown by the questionnaire results, the group of recreational and environmental uses contribute most to the conflicts over hydropower generation: in particular, fishing and protecting the local ecosystem through
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union the implementation of a minimum reserved flow of water are the most problematic uses which currently hinder the further development of SHP generation. However, although it is now more or less recognised at least in theory that there are good grounds for imposing charges for water use, there are some reasons why the use of water by SHP may be exempt from this principle. First of all, it has to be emphasised that SHP use is normally non-consumptive, i.e. the water used to produce electricity by turbines is not dissipated, but it is almost entirely (apart from possible minor losses) sent back to the river. This considerably reduces the opportunity cost of this kind of water use. SHP use of water can only be consumptive as concerns those plants that are placed rather far from the river, or plants that do not put in the same river the water abstracted leaving the river body with only the RMF. This represents however a very small minority of the existing and the potential future plants mainly placed in the mountain regions where a lot of the potential has already been exploited. All in all, the main opportunity cost linked to SHP use of water and the main possible reason for a water charge is represented by the potential damage of SHP plants to fish and local ecosystems. However, this problem is usually strictly regulated by the adoption of reserved minimum flows that guarantee life in water streams, and by the obligation to build fish-passes that considerably decrease the risk of killing these fish when producing electricity. Finally, it is worth pointing out that charging for the use of water in SHP plants may destroy the (already weak, in many cases) economic appeal SHP has for investors. In fact, many of the benefits linked to SHP development (no atmospheric emissions, contribution to the reduction of CO2 emissions, etc.) are currently not recognised in the SHP electricity price, and therefore not considered in business planning. Charging SHP plants for the use of water can be sound in environmental terms only if other potential sources of environmental costs are also subject to charges and taxes. For all these reasons, very few countries impose charges on water uses for SHP production (by the local or the national administration or both). In the UK, small charges can be put on water use only in case of water abstraction which has been identified as a case where SHP use of water may, in fact, have a relevant opportunity cost. In Germany there are charges for the use of water for Hydropower generation, but SHP plants (with capacity lower than 5 MW) are exempt. There are also some costs imposed in Belgium, but these are a kind of contribution for the maintenance of watercourses (mostly canals because they have river flow SHP plants) all y users of water have to pay including SHP plants. There are only two possible exceptions to this general rule of not charging for SHP water use. A fee for the use of water taken from reservoirs is imposed in Hungary. In Poland there is a tax on water lifting for any HP plant that corresponds approximately to 10-20% of revenues from the sale of electricity. This has been pointed out as one of the most serious obstacles to further development of SHP. However, the costs that a SHPP has to pay, for instance, to use the neighbours water can be interpreted as a sort of fee agreed upon by the two parties. In some countries (e.g. Italy, Norway, Czech Republic) there are annual costs paid to some public authorities for the use of water in the form of administrative concessions. These costs are usually quite low, and do not represent an economic obstacle to SHP exploitation. The obstacle concerning administrative concessions is represented by the time required to obtain them rather than by the direct costs paid.

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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union
Table 6.1: Costs for the use of water and length of administrative procedures

Country

Fees for the use of water


EU EU EU EU

Length of authoritative procedures

Time to get license

Time required to start civil works

Austria Belgium Denmark UK

Finland France Germany Greece Ireland

EU EU EU EU EU

no undetermined not given not given yes negotiated not given not given n. a. n. a. n. a. n. a. no charges under 5 MW; 12 weeks for water 12 weeks if there minimum 12 weeks small charges for the issue abstraction, are no objections on and the advertising from 5 planning consent. the water to 10 MW Scotland: P>1 MW abstraction permission of the Scottish secretary of state n. a. n. a. n. a. n. a. yes fees for water reserve usage and HP supplying no n.a. n. a. n. a. not given 10-12 months n. a. not given n. a. 2-12 months; principle of positive silence at least three years

Italy Luxembourg Netherlands Portugal

EU EU EU EU

yes, yearly fee to the local authority and the state

usually more than one - two years

one year

n. a.

n. a.

6 years

possibility to get the permission to build before water concession n. a. 1-2 months

Spain Sweden Switzerland

EU EU WE

none n. a. n. a.

Norway Iceland Eastern Europe Bulgaria Czech Republic Estonia Hungary

WE WE EE EE EE EE

n. a. no

4-6 years n. a. basic time (months): 2-4 license; 1-8 planning; 1-2 realisation permits (total 4-14). Could be more if different constraints exist. n. a. n. a.

n. a. 2-4 months

n. a. n. a.

n. a. n. a.

only administrative fees water reserve usage; HP supply (fees determined by the parliament) no fees for water use 9 for plant <50 kW; 125 for plant <1 MW charges for water lifting benefit: 10 - 20 % of revenue from the electricity sale

n. a. 10-12 months minimum n. a. n. a. n. a.

14-30 days 10-12 months

? n. a.

Latvia Lithuania Poland

EE EE EE

1 month 6-12 months 6-36 months

n. a. n. a. n. a.

Romania Slovakia Slovenia

EE EE EE

only administrative fees

n. a.

6 months (max time allowed to the Ministry of Environment to answer)

n. a.

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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union 6.2.2. Competing uses of water: fishing, agricultural use, municipal uses, recreational uses

Competition with other uses of water is not the principal obstacle to the development of SHP even if in some countries it has became more serious than before. This is generally due to the increasing lack of natural resources increasing in many part of Europe. In the Alps, for instance, in addition to the traditional uses of the water (drinking water, irrigation, power production) there are other kinds of needs to respect like tourism (in ski resorts, increased amounts of water are used daily to make artificial snow ) and fishing (that is a common recreational use of the water resource).

Western Europe SHP constraints


other resistance 20% visual impact 16%

competition 14% water regulation 20%

fishing 30%

Figure 6-1 Constraints of building a SHPP in Western European countries.

In order to respect these constraints there are new limits to the exploitation of hydropower, for instance, the basin level must not have huge variations in the level, or the reserve minimum flow must be calculated with a higher flow rate in order to comply with the regulation set by the local administrative body (often enforced, in this way, by local environmental protests or by a lobby like that of the fishermen which is extremely powerful). Summing up the results of the enquiry, the most important problem that has to be taken into account is the fishery: ladder fish passes are not the only way to preserve the river life, but there are also sonar devices as well as optical ones that can keep the fish away from the abstraction pipe. The competition with other ways of using water has been pointed out. A dangerous level has been reached only in Slovakia where there are some neglected ownership related to real estate: in the past years, for instance, there have been some unauthorised operations.

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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union

6.3.
6.3.1.

SHP exploitation
Process to obtain new licenses

There are basically two licences that a SHP producer must have: water permit and building permit. The water permit gives both the right to take water from a river and return the same water to the river. The building permit is a word that should state the terms and conditions for building all the civil works and may also the other permits. The water abstraction permit is also drawn up like a permit for generating HP or, in the northern countries, like a land ownership certificate. Water has been regarded as a primary resource: only in few cases must fees be paid in order to use it; in any case, the price for the water is low and does not represent a constraint for new operators. However, in northern European countries, the relative abundance of water has led to a completely different situation where a resource is not owned by the state but by the private individual who owns the land. If a river flows through a property belonging to two different persons, each owns half of the river property. Up to now, this has meant that if a land owner wants to set up a SHP plant he has to buy part of the right to have access to the water resource from his neighbour. For instance, this right can be paid for with part of the electricity produced or by other benefits agreed upon by the two parties like a different form of river water management. However, in almost all countries a water right or a kind of permit to exploit water to generate power or for other uses, is normally requested in order to be allowed to build a new SHP plant. In some countries, water ownership is an inherited right given to a land owner or to an independent power producer. Today the usual period of concession ranges between 15 and 80 years decreasing in these years. In some of the countries analysed obtaining a licence is a time-consuming and frustrating process. For this reason it might be useful to have a sort of European guideline for SHP concession requests and authorisation processes. This would be extremely appropriate in view of a future European market and would allow operators to work in the same conditions and eliminate the huge differences which now exist between EU countries. 6.3.2. Authorisations procedures including EIA

The EIA, intended as a complete feasibility study which takes into account all the environmental constraints and opportunities of generating electricity, is never compulsory, but in almost all countries a EIA has to be done at the beginning of the project, usually at a feasibility study level. In this connection, the environmental analysis required and not an EIA, is often just a statement of environmental issues formally issued by the regional administrative body: only later can the planning authority request a complete environmental impact analysis. This fact can be regarded as a suitable way of proceeding since a complete environmental study is quite an expensive and time-consuming process since all the information regarding biology and river flow data must be collected. Although the EIA can hinder the SHP development if it is used to stop and prevent anything regarded as damaging to the environment, but it can also be used to get all the building opportunities to divers water more in conformity with the environment. Possibly the way to use an EIA would be to set few indicators at the very first step of the authorisation process just for stopping and prevention really environmental damaging projects, then to set a deep and well conduct EIA after the compliance of the administrative body in order to set the due action to reduce the impacts found.

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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union 6.3.3. Duration of a licence

The license for water abstraction or water power production is usually issued for a period of 10 years or more, basically in order to allow the owners to have time and plan an investment with an acceptable rate of return. This applies to almost all countries where the period ranges from 10 (Greece, Poland) to 80 (Switzerland, but in the last years it has been set at around 30 years) and also permanently with the obligation to use the turbine. The data collected show that the number of years differs from one country to another principally due to the history and the resolution adopted by the Parliament of each country. At the moment, it seems really difficult to justify a period of more than 30 years. Moreover, a permanent license would be almost impossible to issue considering the relative scarcity of water and the problems regarding competition that might, in the near future make it necessary to employ the permits of the producer to a different use (drinking water or industrial for instance).
Table 6.2: Age categories of SHP plant for the countries with consistent data available

SHP Country Austria Belgium Finland Greece Ireland Luxembourg Portugal Spain Sweden UK Iceland Switzerland Czech Republic Hungary Lithuania Poland Slovakia Turkey MW 848 95 320 48 32 39 280 1 548 1 050 160 43 757 250 9 9 127 31 138

Plants N. 1110 39 225 17 44 29 60 1056 1615 126 20 1109 1136 35 29 472 180 67 0-20 440 16 41 11 22 20 60 987 100 112 1 406 227 0 6 364 90 10

Age of plants (years) 20-40 120 10 63 0 0 6 0 27 15 14 5 303 114 0 7 9 72 50 40-60 170 2 77 1 2 3 0 24 500 0 12 200 682 23 15 9 13 7 >60 380 11 45 5 20 0 0 18 1 000 0 2 200 114 12 1 90 5 0

The renewal process is often a normal procedure in all those countries where the duration of the license is quite short. Moreover, this renewal can be issued depending on the environmental compliance of plant conditions. The normal procedure is just an administrative process established to periodically monitor the SHP plant operations and the make sure the conditions of the licence are respected. It would be useful to set a more appropriate renewal process for all those plants that were licensed more than 40 years ago, particularly with reference to the RMF conditions and the efficiency of the plant in relation to its use.
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Table 6.3: Presence of specific requirements for the construction of a SHP plant in European countries (Our elaboration on questionnaires data)

Country
Austria Belgium Denmark UK Finland EU EU EU EU

water use/right

site use/right

authorisation for civil works

other

France Germany Greece Ireland

yes yes yes n. a. n. a. water abstraction planning permission licence before building EU no, rights on yes, according to the waterpower, site use no list of banned water use! waterways from law EU n. a. n. a. EU yes n. a. EU yes yes EU no n. a.

yes n. a. n. a. n. a.

n. a. n. a. n. a. tech. requirements to protect the grid n. a.

Italy

EU

yes

yes

n. a. n. a. yes n. a. yes n. a. yes for the n. a. generating station yes, five permits about 58 different required before permits from different getting the authorities depending authorisation on the local site

Luxembourg Netherlands Portugal

EU EU EU

yes

no

yes

grid connection permit, authorisation to install the SHPP

Spain Sweden

EU EU

yes no

Switzerland

WE

waterpower owner is the Canton body

Norway

WE

no

Iceland Eastern Europe Bulgaria Czech Republic

WE EE EE

no

yes yes: the ISHPP must n. a. n. a. have more than 50% of the rights to the water cantons or the local river construction fishery right, forest body administrator, law (canton) is right, water power river construction law the second part license. A LEADING of the OFFICE collects all authorisation the sub-licenses and procedure delivering them to the owner of the plant so that he can build the plant. yes: the ISHPP must yes: it lasts for 5 n. a. have more than 50% years of the rights on the water yes n. a. n. a.

Hungary Latvia

EE EE

Lithuania Montenegro Poland Slovenia

EE EE EE EE

yes: issued by the licence for SHP District Environmental exploitation issued by Departments the Ministry of Industry yes yes no yes, waterpower license if the capacity is >1 MW yes yes yes yes n. a. n. a. water possession is public yes

n. a.

n. a.

yes yes

yes n.a. yes yes

0 fishery right, permits of building in protected zones n. a. water impact assessment (not EIA) n. a.

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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union 6.3.4. Refurbishment of a SHP plant The number of SHP plants that still have to be refurbished is particularly high in all those countries that have exploited SHP since the beginning of the century: there are many turbines designed years ago that can not operate and produce an economically sustainable result and have been abandoned or plants where the maintenance of all the galleries and canals is too expensive to justify the final cost of the energy produced. There are substantial variations in each group of countries (and in particular within the EU member countries) : in the UK, Greece, Spain and Portugal, for instance, most of the SHP plants are less than 20 years old; 70% of the SHPP in Iceland are over 40 years old. This situation is closely connected with the water regulation and the monopolistic energy policy in these countries where a single national power producer has always preferred nonrenewable methods of generating energy rather than setting up SHP or other RES plants. The national electricity producer in Greece has, by its nature, generally not been interested in building SHP plants with a potential under 2 MW of installed capacity. In Spain and Portugal SHP development has been hindered by the lengthy licensing process mainly due to the opposition of the national Power Producer to the development of independent producers: the extremely long licensing process has been a regulatory barrier. By now a review of the working conditions, a feasibility study of the work needed to upgrade and refurbish the shut down plants would be help increase the quantity of SHP installed in all those cases where these conditions are economically or environmentally sustainable with no major modifications; we must consider small plants that might have a good impact on river protection and regulating flow.

6.4.

Non technical barriers

Even if in some cases the high cost of SHP electricity can hinder the development of new schemes, what curbs the growth of small hydro plants most are the constraints at the administrative and financial level. Almost all the European countries find it difficult to finance new schemes and have to put up with a long and uncertain number of authorisations. The main obstacles to SHP development identified at the EU level are the following: Authorisation procedures; Regulation site specification; Financing; Grid connection; Electricity sale; Regulatory framework uncertainty; Lack of correct information; Recruitment and education.

The site specification of the regulation, a feature of the countries that give local administrations the authority over these plants, is an hidden obstacle to using elsewhere the experience gained in one place and thus reduce possible cost reductions.
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union Whenever the grid operator wants to keep power generation under control the access to the grid is difficult and the chance to invest dramatically reduced. The access to the grid is still used in some cases as a control measure by the former monopolist, even if the option to sell electricity directly to own customers is vital for some SHP schemes. The stability of the regulatory approach is a key factor for SHP investments that usually have long-term repayment schemes: without fixed contractual terms, very rarely can the plant be financed. There is a lack of correct information whenever the local administrators refuse to authorise good projects out of ignorance of the technology and its environmental impact. Making local decision makers more familiar with SHP would surely help exploit the remaining potential. Moreover, a better way to assess the feasibility of a project would help both the administrator and the producer: clear regulations will make it easier to present the request to the authorities and the probability of being accepted becomes higher. However, it would be useful to have a new organised and accurate environmental and energy statistics database so that the independent producer does not have to look for all the construction data needed to speed up operation, thus making it possible to build a less costly SHP plant with lower environmental impact. In some eastern European countries (i.e. Latvia) there are environmental constraints due to the polluted water that can be stored in the reservoir of a SHP. Moreover, during the warm season there are eutrophication problems that can also affect technical equipment. In these countries the demand for water in order to dilute the industrial waste water in the rivers seems to be a constraint: this aspect is closely connected to the RMF regulation. Another problem is the public acceptance of SHP plants due to the fact that although they have less environmental and social impact, they continue to modify the river flow and the possible future uses of the river water. Like most technical activities, operating SHP requires skilled personnel. Today it seems that most of the countries concerned are finding it difficult to recruit young people to fill the different positions in the SHP plants just at a time when the current staff is growing old. This situation underlines the fact that many EU countries should adopt special measures. In Sweden, for example, it is impossible to find enough students to fill the classes in technical education in hydropower at a time when most of the staff today is close to retirement. The competition with the IT and Telecom industry is very tough. In order to assure enough skilled personnel in the future strong recruiting activities must start. SHP plants are often situated in remote areas which makes recruiting even more difficult. Young people do not seem to prefer employment in rural areas. The manufacturing industry has similar problems as described in chapter 5.4

6.5.

Developing a SHP plant: financing schemes

Even if SHP is a proven technology, obtaining financing for small hydropower projects is often difficult due to the unforeseeable production in the short term. Very little can be done with the financial advisors of leading financial institutions who require reliable cash flow data. They are rarely interested in the hydrological data covering a period of 50 year and instead ask to see the forecast production of the first year of operation. The uncertainty about short term output is interpreted as low reliability, forgetting the very high reliability of data in the long term. The main risk of a SHP project lies in changing electricity prices. It is much easier to finance a new scheme under regulatory regimes with stable feed-in tariffs (Spain, Germany).
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union Hydropower projects, with almost no operating costs, involve large up-front investments, and are often regarded as high risk compared to thermal power projects. Obtaining good financing is fundamental to developing a SHP project, where most of the costs are related to financing the plant construction. In the energy sector many different financing schemes can be considered. They can be grouped in 5 general categories: private finance: the self-finance of individuals or small companies; corporate finance: the use of financial resources of a great industrial group with activities in different sectors; participation finance: the involvement of public money through a wide participation in the project; project finance: the creation of special company with industrial and financial partners specifically designated for the project; third party finance (also known as contracting): a third party other than the energy user develops, finances and operates the energy system for a contractually fixed time. The energy user in turn has to make periodical payments to the third party.

Accessing low cost capital is thus vital to keeping the cost of SHP low. This is possible for big utilities having large credit capacity, but rarely interested in developing small schemes, but much more difficult for small private investors without other assets. SHP development, carried on mainly by private investors, necessarily requires overcoming the sceptical attitude of the financial world by means of a well-organised information campaign. It has to be noted that financial institutions have few persons competent enough to evaluate the feasibility of energy projects. Medium- term loans Even under private financing schemes, part of the capital for the investment is obtained from financial institutions with medium-term loans. This is the traditional way to finance small-size industrial projects with the money lent for a certain period at a fixed interest rate. The disadvantage for small SHP investors is often the premium they have to pay respect to the big industrial groups. The banks often set higher rates for small investors reputing the risk higher than in projects developed by large utilities or companies. Nevertheless, the entrepreneurs are familiar with this kind of financing scheme and commonly adopt it. An interesting option for SHP is also financing through international financial institutions, like the European Investment Bank, which is often less demanding in terms of capital cost. Leasing In some countries, leasing is becoming quite common in financing small hydro projects. Financial institutions are favourably disposed towards this option, as they repute the capital invested safe and the bank remains the owner of the plant until the payment plan has been fully covered. It is important to define the method of payment and establish some parameters both technical and economic, (average production, reliability of the investor...); when this is done, the project risk is very low and even the investor with no financial resources can cover the plant costs at reasonable conditions. Project financing Project financing is a relatively new scheme for energy projects suitable for large-scale projects (an operator indicated a threshold of some 30 MEuro) that can count on secure cash flows and the activity of the project is given as guarantee. The advantages of this solution are the following: the equity investment is minimised (up to 15% of the total);

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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union non- recourse financing does not effect the balance sheet of the investors; capital cost is minimised; risk management is maximised.

What is interesting for the financial partners is the certainty of the cash flows of an electricity production plant. When a supply contract is signed with the grid operator and the technical performances are guaranteed by the equipment supplier, the recovery of the investment is almost certain. This financing scheme is appealing as it optimally allocates the risk associated to the investment, but is rather expensive for small projects and involves high transaction costs for contracts. Its application is thus restricted to large investments or when many similar projects are carried out at the same time.

6.5.1.

Most common financing schemes

Small projects are usually privately financed, with partial recourse to different kinds of loans. Bigger projects are mostly financed by corporations but there are also third party financing models. The main project risk for hydro power plants lies in varying electricity prices. Therefore in countries with stable price agreements like Germany or Spain projects are easier to be financed than in countries where energy prices oscillate. In some countries, where financing a new scheme is hard, also the Build Own Operate (BOO) and Build Operate and Transfer (BOT) options are used, whereby the investor has the right to operate the plant and sell electricity for a certain time under specific terms. At the end of the period the plant belongs to the investor (BOO) or is transferred to the local utility (BOT). These contracts are becoming more common mainly in developing countries, where the local electricity industry is unable to finance new projects and can involve foreign investors under specific contractual terms. The following table shows the main financing schemes adopted in some EU countries.
Table 6.4: Main SHP financing schemes (FIRE 1998)

Country Austria Germany Spain Italy The Netherlands Sweden

Financing scheme Corporate finance Private finance Participation finance Third party finance Corporate finance Third party finance Private finance Corporate finance Private finance Corporate finance

Ownership Small and large utilities Private Limited partnership (GmbH) Municipalities (Stadtwerke) Through governmental organisations Private investors Local utilities Private Utilities Partnerships Private (farmers) Corporations

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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union 6.5.2. Innovative financing schemes

SHP is a rather traditional world where there have been few innovations at the financial level. Nevertheless, during the 90s some interesting measures were adopted in Europe with project financing schemes aimed at reducing the need for self financing, thus allowing new investors to enter the sector. One problem of using limited recourse project financing is related to the relatively small entity of investments. The cost of the financial architecture does not make it worthwhile to invest in a single project and has rarely been applied. This obstacle can be overcome by financing groups of projects, as happens in the wind power sector. Even this possibility, however, is not common in the SHP sector where the exploitation of new sites is rarely carried out by a group due to the difficulty of co-ordinating the authorisation procedures. It is also interesting to note the participation finance that is becoming common in Germany, where groups of persons collect the money to invest in renewable energy projects, mainly because they are environmentally aware. If environmental awareness spreads in Europe as it has done in Germany, this could become a common practice even in other countries.

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7. From production to consumption: the delivery of SHP electricity


7.1. Connecting to the grid: contracts and costs

In connection with the liberalisation of the electricity sector, access to the grid is the first and most important step which allows independent producers to operate in the market and use the grid under fair conditions. When the costs to connect are unequivocally high, even attractive prices per kWh are an ineffective measure. The terms for connecting to the grid are widely different in the European countries. Together with countries which deliberately favour the connection to the grid leaving only partial costs to the SHP investors, there are countries where all the costs have to be paid by the investor (Spain, Germany, Switzerland, Norway, Czech Republic, Lithuania, Slovakia and Slovenia) and others where the cost for the connection is negotiated by the national utility and the investor (Austria, Belgium, UK, Hungary) according to capacity, distance, voltage level. The following figures show the costs per unit of distance of capacity: Belgium UK Greece Lithuania Ireland Portugal 37.18 Euro/m 224 Euro/m 18-30 Euro/m (in main land) 25 Euro/m 400 Euro/kW installed 93 Euro/kW

It is extremely important to provide transparent and fair connection terms when cross subsidies must be avoided, with a price structure that reflects the actual costs. When reputed opportune, the subsidy to SHP investors has to be clearly shown.

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Table 7.1: The terms for the connection and the use of grid in the European countries

Country
Austria Belgium Denmark UK Finland France Germany Greece

Connection charge
Lump-sum payment for connection and for grid provision Lump- sum payment: average of 300 000 BFr Lump-sum payment according to the site (often higher for HP) not stated

Use of system charge


0.82 mEuro/kWh for ancillary services no charges

Maintenance charge of 800 Euro/year; negotiation with owner of wires 0.35-1.65 Euro/MWh, of which 0.25 is given to the owner of the national grid Depending on voltage, capacity, connection time, distance no charges

The "real cost" for connection lump sum, depending on distance from the MV lines: varies from 18 000 to 30 000 Euro/km lump sum of 400 Euro/kW installed paid 1/3 by the investor and 2/3 by ENEL

Ireland Italy

no charges; only a fixed annual payment depending on capacity (MW); but when selling to a private body there is charge depending on distance, kW and kWh no charges NOT STATED no charges < 500 kW: free > 500 kW effective cost on a statistical basis Cost made up of (i) a lump sum + (ii) a sum per kW/year + (iii) a charge per kWh; (on average 0.0025 Euro/kWh) no charges negotiated not stated

Portugal Spain Sweden Switzerland

lump sum of 93 Euro/kW SHP owner has to pay the cost for building the link with the grid Actual connection cost Connection must be built by the utility with a contracted contribution of the investor (same as consumers) Investor has the right to connect to the grid, covering connection costs

Norway

Czech Republic Hungary Latvia

covered by the investor Negotiated Lump- sum payment depending on capacity (kW) and distance; on average 20 000 Euro cost covered by the investor Covered by the energy purchaser Covered by the investor Covered by the investor

Lithuania Poland Slovakia Slovenia

0.01 Euro/kWh no charge no charges to date; privatisation and liberalisation just beginning no charges

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7.2.

Using the electricity grid: possibilities, priorities, and costs

Even the use of the system is priced differently in the various European countries. In some the use of the grid is free, like Belgium, Greece, Portugal, Czech Republic, Poland, Slovakia and Slovenia. In Italy for plants accepted in a support scheme, the use of the system is based on a fixed price. In Sweden the use of the grid is also free and the local grid owner refunds the local producer for the reduction in grid costs such as reduction in transformation costs and less need of peak power. In a perfect world the cost of using the grid would vary according to the time used (peak/off-peak hours and seasons), the voltage level and the congestion of the grid. The contribution of the SHPP generation, positive or negative, to the losses into the grid should be reflected as much as possible. This would lead to the adoption of a system charge based on marginal costs varying according to time and place, with relatively high transaction costs, but clearly indicating efficient use of the grid and other system resources. For instance, the payment for auxiliary services, in a liberalised system where operators can be suppliers or consumers of the services of the grid, should by transparent. Instead, only Austria has a charge of 0.00082 Euro/kWh for auxiliary services; in Italy a charge for auxiliary services has been introduced for plants selling on the free market. Nevertheless, even the simplicity of the price system is important to facilitate the operations of small producers and a system based on average costs could suit these small plants. The table in the previous paragraph shows how access to the grid is priced in the European countries for which the information was available.

7.3.

Recognising the real value of SHP electricity

The application of the principle of marginal costs to the purchase of electricity from small plants in the distribution grid demonstrates the real value of the electricity produced. This means that the same production in two different bus of the network or at different times could have a different return. The financial world could regard this as an odd option because it becomes more difficult to forecast the cash flow of a plant; nevertheless, this is the only way to give SHP electricity production the real value from the grid point of view. Obviously, it is then possible to add a premium when some other benefits, which are not taken into account in market transactions are taken into account: minor external costs, environmental sustainability, local economic development.

7.4

Selling SHP electricity

As is clearly demonstrated in most European countries, the most effective measure to support the development of SHP is a premium price which remains constant over a suitable period of time: this is borne out by Germany and Spain. Even if the price alone can not be an indicator of the conditions for small generators, the following table gives an idea of the prices paid to SHP plants in Europe.
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Table 7.2: Buy-back rates in EU countries

Country Austria Belgium Denmark UK Finland France Germany 0.09 Euro/kWh 0.067 Euro/kWh

Price for sale to the grid 0.0487 Euro/kWh

0.05 Euro/kWh (in NFFO) 0.0117 Euro/kWh < 500 kW: 80% of to the average electricity price to consumers (7.32 cEuro/kWh in 2000) > 500 kW: 65% of to the average electricity price to consumers ( 5.95 cEuro/kWh in 2000) > 5 MW market price

Greece Ireland Italy

the price amounts to 90% of the end user tariff 0.056 Euro/kWh or less Related to the oil price; for plant < 3 000 kW decreasing with production (0.08 Euro/kWh up to 1 GWh up to 0.042 Euro/kWh over 10 GWh 0.0599 Euro/kWh 0.06365 Euro/kWh 0.03 Euro/kWh (market price plus 0.01 Euro/ kWh) 0.093 Euro/kWh 0.018 0.023 Euro/kWh or market prices not indicated High Voltage: 0.032 Euro/kWh; Low Voltage: 0.034 Euro/kWh not indicated 0.1063 Euro/kWh first 8 years; 0.05315 afterwards See next table 0.037-0.06 Euro/kWh. Problems due to monopsony. A new regulation obliging the State to purchase RE is under consideration low voltage 0.0319 Euro/kWh; high voltage 0.0295 Euro/kWh

Portugal Spain Sweden Switzerland Norway Iceland Czech Republic Hungary Latvia Lithuania Poland

Slovakia

In some countries the price is not fixed and market rules are applied to the sale of SHP production. This does not favour the development of new schemes, which are easier to exploit under a system of price that reduce uncertainty and guarantees the cash flow for a time long enough to satisfy the financial investors. An example of prices dependent on voltage level is Lithuania, as reported in the following table.

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Table 7.3: Lithuanian buy-back tariffs

Metering on the low voltage side 0.4 kV 0.068 0.6 kV 0.045 10 kV 0.045 35 kV 0.045 110 kV 0.034 Electricity price, Euro/kWh

The extra prices based on green price schemes are still not developed at the European level and therefore do not represent an opportunity for SHP producers, even if in the future these price options could be a valuable source of income, should public demand for green electricity really develop in Europe.

7.5.

Alternative sources and requirements for a support

The return on a SHP investment depends on the income it brings. This is also a function of the generation costs, which can vary from country to country according to the level of development of the sector, access to cheap operation and maintenance suppliers and the average industrial prices. The table in this paragraph shows the cost range for new plants in the European countries, highlighting considerable differences. Higher investment costs are accepted where the feed-in tariff is higher. This fact demonstrates how the potential is a function of the price of the electricity sold and the higher the price the higher the potential. Unfortunately, it was not possible to provide a price/capacity curve for the countries analysed,, even though this information is essential to understand the cost of a development programme like the one called for by the European Union for a 12% renewable energy goal by 2010. If we compare the costs shown in the table with the European market prices, what clearly emerges is the need of a support system to develop new capacity.

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Table 7.4: Investment and production costs of SHP plants in European countries

Country Austria Belgium Denmark UK Finland France Germany Greece Ireland Italy Luxembourg Netherlands Portugal Spain Sweden Switzerland Norway Iceland Czech Republic Hungary Latvia Lithuania Montenegro Poland Slovakia Slovenia

Average SHP production costs Eurocent/kWh 3.6 14.5 1.8 5-7 3 3.5 5 2.4 4.2 3.75 9.1 5 10

Range of investment costs Euro/kW 2 900 4 300 3 700 4 960 2 000 4 800 2 200 1 200 3 000 4 000 6 000 1 000 2 000 1 500 3 750 1 500 3 000

1 300 2 500 3.5 - 7 45 3 - 15 1.5 - 2 1 000 1 500 1 500 2 500 4 000 10 000 1 000 1 500 1 700 3 500 2.3 4 4.6 1.2 1 100 2 800 1 500 4 000 1 520 1 100 1 500 1 300 2 150 500 1 200 1 200 1 800 1 000 2 000

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8. Supporting SHP
8.1 Various forms of State support for SHP electricity production

It clearly emerges that a policy to support the exploitation of SHP resources is needed in order to implement at least part of the potential shown in the previous sections. The main points we want to underline are the following: Simplifying the licensing procedures by possibly creating a single window, Simplifying procedures when refurbishing abandoned sites, Creating a stable regulatory framework to reduce uncertainty, Implementing a price system that takes into account the positive externalities of this energy source compared to fossil fuels.

Without such measures very little can be done, especially in countries where the SHP sector is currently hindered as far as new initiatives are concerned, even in the presence of excellent potential (Austria, Italy, Germany). This problem is less felt in the eastern European countries, but might also become their problem when the high energy demand brought about by the restructuring, following the transition to a market economy, ends. Investment subsidies Soft loans Energy Taxes Tax credits High feed in tariffs Supported price (green tariffs, green portfolios, tenders for specific electricity sources NFFO).

Public support. Firstly, by giving financial support directly to the investment in new SHP plants and/or in the upgrading existing technologies. Secondly, as will be discussed more extensively in Chapter 9, by addressing SHP electricity sales, trying to increase the amount of kWh purchased and to guarantee that the price paid for SHP electricity covers the cost incurred by producing it - allowing the investor to pay back his effort in a reasonable time. Financial support from public authorities for SHP investments may be justified for various reasons. Firstly, at the moment SHP technology and its possibilities are not particularly well known among the main private financing institutions (e.g. banks). It is therefore more difficult to persuade them about the soundness and possible economic attractiveness of such an investment. This can make the access to private loans which is a very common way to finance investments in most industrial sectors - more difficult, and possibly more costly. The public intervention may therefore give a significant starting contribution to compensate the informational gap and the consequent market distortions of the private financing bodies. Secondly, SHP development may favour significant technological innovation, in particular as concerns new efficient turbines for low water heads and new electronic devices to control water flows. Supporting the development of new technologies is one of the possible tasks of a national and/or local government.
71

Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union Last but not least, as already mentioned, SHP production gives significant contributions to reduce the environmental impact of the power generation sector, in particular as far as the new SHP developed replaces more traditional (thermoelectric) sources of electricity production. Drawing from the ExternE (1999) studies it can be mentioned just for illustrative purposes - that the generation of one kWh from hydro sources may have an external environmental cost that ranges from 0.04 to 7x10-3 Euro, while the production of the same quantity of energy by a thermoelectric plan fuelled with oil has an external cost ranging from 29 to 109x10-3 Euro: the difference is relevant indeed. Of course the evaluation methodology (and its results) is subject to some uncertainty; moreover, the estimates presented for the hydro source are not necessarily adequately representing the small hydro power generation although we do not see reasons why this technology should have higher external costs compared to bigger HP plants. But all in all, the substantial difference shown by these numbers confirms the smaller environmental impact of SHP and the justification for a public support to this technology. As concerns direct support to the investments, there are three main tools that can be used by national and/or local governments to favour the construction or upgrading of SHP plants. The first one is a public subsidy to cover part (or the entirety) of the investment cost. The second one consists in granting loans with favourable conditions for the investors. Both the provision of a proportion of the capital needed and the reduced borrowing rates are typically subject to the achievement of given performances (satisfaction of given environmental standards, presentation of particularly innovative projects) by the investor and its project. If the administrative procedure is well framed and efficiently organised, this kind of support can be an effective tool to check that the projects developed are sound from both the technical and the economic point of view, to help the investors in improving their plans and to discourage those projects that have not been coherently planned. In order to get the public funds, in fact, the investors have usually to submit a project proposal that has to comply with some pre-set standards (established by the authority) in terms of transparency, data quality, organisation of the information etc. Obviously, in case the administrative procedure to evaluate proposals is not well framed and efficiently managed, this process can become at the opposite just an additional hindrance to the development of new plants. The third possible direct way to support the investments in SHP plants gives some kinds of tax reduction or tax exemptions for the investor during a given period. This particular tool can also be attractive for potential investors; however, it does not solve the most urgent problems of raising funds in fact, the support given consists of smaller savings spread over a longer time span and does not allow in itself the investor to overcome possible initial difficulties in gathering resources. Direct supports to the investment costs are used in variable quantities - by several of the Western Countries considered. Funds ranging most frequently from 15% to 50% of the Investment costs can be received by national or by local public bodies in Norway, Sweden, Finland, Belgium, Germany, Switzerland, Greece and Portugal. Loans with favourable conditions are slightly less used, but still offered in Norway, Germany, Switzerland and Portugal. Tax exemptions and/or tax allowances have been used to some extent as a tool to promote SHP investments in Norway, Ireland, Germany, Spain and Greece. Some Countries, however, have expressed doubts on the concrete effectiveness of this tool to promote SHP development. Public support to SHP investments is much less common in Eastern Countries, where apart from few exceptions - the lack of capitals is quite a generalised problems. Lack of capital is also reflected by the fact that many eastern respondents to the questionnaires have suggested foreign capitals as the main possible support to SHP development.
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union The Czech Republic is the only country where all the three supporting schemes briefly described above (loans with reduced interest, direct support to the investment and tax exemptions) are offered. It is also the Eastern Country with the most considerable amount of installed SHP capacity (although just 30% of the plants mentioned have been developed in the last 40 years). Favourable loans for the investors in SHP plants and State support to cover part of the investment costs are also offered in Poland where quite a substantial capacity (relatively to the other Eastern Countries) has been developed as well. Finally some support to the investments costs is also offered in Slovenia one of the Eastern Countries with the wealthiest economy.

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9. Conclusions
The BlueAGE research project, based on information collected from national experts, has shown how Small Hydro Power can play an important role in achieving the objectives set at the European level for the contribution of renewable energy to electricity production in 2010. The long tradition of the technology, together with the important innovations introduced in the recent past, can ensure a reliable and effective source of electricity for the coming years, respecting the environment and often giving important benefits to the local communities. In Europe there are no uniform regulations which apply to the SHP sector. This will probably lead to different rates of development in the coming years unless suitable measures are taken at the national and local level to implement the European Directive regarding electricity from renewable energy sources which should be approved by the EU Parliament. An uncertain contribution will come from the programs of green pricing that are now being drawn up in many European countries. However, there is not enough evidence of the public response to the possibility of choosing the electricity supplier (UK, Germany, Switzerland, The Netherlands). This is certainly a choice which should be given to all European citizens. An incentive to the development of new SHP schemes will come from the implementation of a system of international green certificates linked to the reduction of the greenhouse gas emission which is one of the objectives of the Kyoto protocol. Recognising the value of renewable energy in the reduction of CO2 emissions is a requisite for the creation of a favourable environment for SHP.

9.1

SHP Potential

The potential from the reinstallation of abandoned sites and upgrading existing underdeveloped SHP plants, is estimated at an annual electricity production of approximately 4 500 GWh in the EU countries The potential in new plants, reduced when economic and environmental constraints are taken into account, is calculated at more than 19 500 GWh per year based on the questionnaire answers from of the EU member countries. The possible remaining potential from SHP is therefore nearly 24 TWh annually. This corresponds rather closely to the estimate of 18 TWh in 2010 reported in the 1997 White Paper issued by the EU Commission. In spite of this potential available in theory, based on the present annual production of 40 TWh the forecast total production from SHP in the EU in 2015 is 51.5 TWh, with an increase of 11.5 TWh only. What must be pointed out are the effects of environmental constraints that reduce the technical potential of new SHP plants by half. A prudent environmental policy is extremely important in promoting the development of new, well-balanced schemes. In fact, the opposition to using water as a power source, might sometimes be reasonably motivated and correct and at other times be the result of a strong bias which has nothing to do with protecting the environment. Clear and transparent regulations, together with a process of open discussion of these issues between the interested parties during the authorisation processes will create favourable conditions to exploit the remaining potential while respecting the environment.

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9.2 A EU action plan


In the present economic framework which is converging towards a common European market, a fundamental role can be played by the European Commission in encouraging economic forces to support Small Hydro Power investments. The BlueAGE study shows the benefits which can be achieved by developing SHP at the economic and environmental level. These benefits can only be obtained by promoting a synergy at the European, national and local level. If the efforts at one level are not supported by efforts at the other levels the initiative is doomed to fail. The challenge for European regulators in the development of Small Hydro Power and other renewable energy sources is to reconcile the market with the reduction of uncertainty. Even if this is not a simple task, some measures must be taken to increase public awareness in Europe with regard to the sustainability of the energy sector. These measures are summed up in the following table.

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Issue

Recommended Measures

Potential Benefit
Reduces ineffective bureaucratic procedures and cuts administrative costs Prevents the unjustified rejection of requests for new water rights justified; makes the environmental assessment uniform Allows opposition to emerge during the initial development phase and initiates a democratic discussion on water use Makes a strong commitment to develop new sites Allows demand for environmental friendly electricity promotes new opportunities for SHP Helps the financial world finance SHP investments Makes SHP competitive with fossil sources on the electricity market Facilitates the dialogue of investors with administrators and with the financial world Certify that EU targets are fulfilled

Authorisation procedure Establishing the single window for driving the licensing process and collecting all permits Authorisation procedure Establishing an environmental analysis on a standardised list of indicators provided by the administrative authority Authorisation procedure Introducing an opportunity for discussion between interested parties during the authorisation process Regulation Setting quantitative targets for new capacity at the national level Promoting the creation of green prices and green certification systems Reducing uncertainty by longterm regulations Implement the internalisation of external costs Disseminate competent and precise information on small hydro power Annual following up

Regulation

Regulation Price setting

Information

Organising settings

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10.

References

10.1. Literature
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UE Commission, electricity from renewable energy sources and the internal electricity market, Internet website, 1998 ESHA, small hydropower - general framework for legislation and authorisation procedures in the European Union, UE commission DG XVII THERMIE program, small hydro power in Italy and Portugal, DG XVII, 1999 FIRE research project, FIRE - financing renewable energy system, EC Joule Thermie, 1998 A. Pessina, small hydro-electric resources in southern Italy, 1995 W. Nussli, renover au lieu d'abandonner, DIANE 10 petites centrales hydrauliques, 1994 OECD, the price of the water, trends in OECD countries, OECD, 1999. ETSU, IWuP, Analysis of Export Constraints and opportunities for European small hydro equipment manufacturers, Report no. AEAT-2295, DG XVII THERMIE program, 1998. EURELECTRIC, Promotion of harmonisation, 1999. renewables in the EU and possible

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APER, Comunicazione n. 4/99, APER, 1999. APER, Il nuovo assetto del mercato elettrico in Italia: conseguenze per il settore della minidraulica, APER, 1999. FEDERPERN, minihydro il potenziale della minidraulica in Italia e Portogallo, FEDERPERN, 1998. Autorit per lEnergia Elettrica ed il Gas, Deliberazione 8 giugno 1999 n. 82/99, 1999. ENEA, Libro bianco per la valorizzazione energetica delle fonti rinnovabili., ENEA, 1999. European Parliament, Directive 96/92/EC of 19 December 1996 Common rules for the internal market in electricity, GUCE, 1996. European Commission, DGXVII, Position of the advisory committee concerning a community directive on the conditions of access to the market for

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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union [57] [58] [59] [60] [61] [62] [63] [64] [65] [66] [67] [68] [69] [70] [71] [72] [73] [74] [75] Patric McCully: Silenced Rivers The ecology and politics of large dams, Zed books Ltd. London New Jersey 1996 . IEA, A comparison of the environmental and social impacts and the effects of mitigation measures on hydropower development, annex I. IEA, A comparison of the environmental impacts of hydropower with those of other generation technologies, annex III. IEA, Legal frameworks, licensing procedures and guidelines for environmental impact assessments of hydropower developments, annex IV. IEA, Hydropower and the Environment: Present context and guidelines for future actions, annex V. IEA, Hydropower and the Environment: Effectiveness of mitigation measures, annex VI. Directive 85/337/EEC on the assessment of the effects of certain public and private projects on the environment, changed 97/11/EG. F. Barth, Small Hydro Power in Germany, Internet website, 2000. Conference papers of small and medium hydropower projects, Berne (CH) 1013 June 1997. Office federal de l'conomie de l'eau, Petites amenagements hydrolectriques en Suisse, 1987. Ufficio federale dell'energia, I poteri pubblici e la ricerca energetica in Svizzera. Ufficio federale dell'energia, Condizioni di raccordo per produttori indipendenti. Raymond Chenal, Come valutare la fattibilit finanziaria di un piccolo impianto idroeletrico, La petite Centrale, n.43, p. 38, 1999. ISKB ADUR, Comments sur la loi sur le march de l'lectricit (LME), La petite Centrale, n.42, p. 17 , 1999. ISKB ADUR, Comments sur l'ordonnance sur l'nergie (OEn), La petite Centrale, n.41, p. 46, 1999. THERMIE program, low head small hydro-electric power: Belgium, site of Hoegarden plant, Internet website, 1999. THERMIE program refurbishment of a 90 years old hydropower plant Belgium, site of Rotselaar, Internet website, 1999. Widmer R/Arter A., Village electrification, MHPG vol. 5, 1992. ILEX ASSOCIATES, CONNECTION AND USE-OF-SYSTEM POLICIES FOR RENEWABLE GENERATORS IN EUROPEAN UNION MEMBER STATES, A Report to the European Commission Directorate-General for Energy July 1997. Eurelectric, The cost of hydroelectricity, Hydro Power and Other Renewable, Energies Study Committee, Ref : 03005Ren9713, March 1997. Eurelectric, Study on the importance of harnessing the hydropower resources of the world, Hydro Power and Other Renewable, Energies Study Committee, Ref : 03000Ren9761, April 1997.
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union [78] [79] Eurelectric, Hydroelectricity, energy vector for progress and development Energies Study Committee, Ref 03005Ren9710, March 1997. Eurelectric, Hydro Power and Other Renewable, Energies Study Committee, Minimum flow downstream hydroelectric head installations, ref. 03003Ren93/01, December 1993. Dulas ltd, Commercialisation of small hydro through community participation, ETSU K/BD/00190/REP, Crown, 1999. Fawley acquatic, Risk assessment for fish passage through small, low-head turbines, ETSU H/06/00054/REP, Crown 2000. Caledonian Energy Management, Monitoring of successful renewable obligation small hydro projects, ETSU/H/01/00049/00/REP, Crown 2000. ECOTEC, Hydro power Products and services from Britain, DTI New and renewable energy programme, February 2000. Bianchi N., Lorenzoni A., Design solutions for permanent magnet generators in wind power applications, Proceedings of the 9th EDPE International Conference, Dubrovnik, Croatia, 9-11 ottobre 1996. Bard Jochen, Status Report on Variable Speed Operation in Small Hydropower, ISET e.V. Kassel December 2000. Bard Jochen, Status Report on Variable Speed Operation in Small Hydro Power, Institut fr Solare Energieversorgungstechnik (ISET) e.V. Kassel dec 2000. Hydropower & Dams World Atlas, Annex of International journal of Hydropower, 1999. UCTE, Statistical yearbook 1999. Haas H.P.H., "Hydropower in the Netherlands", Hidroenergia 1999 conference proceedings, Vienna, 1999. Ministry of Economy, Republic of Croatia, Energy in Croatia 1995 - 1999 annual Energy Report.

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10.2. World Wide Web links


http://smallhydropower.com/links.html http://www.itc.nl/~klunne/hydro/link.html http://home1.swipnet.se/~w-19094/hyd_link.htm http://eww.bchydro.bc.ca/environment/play/start.html http://www.eeri.ee/index.html.en http://www.sec.bg/eng/ http://www.serve.com/commonpurpose/contacts.html#university
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Blue Energy for A Green Europe Strategic study for the development ofSmall Hydro Power in the European Union http://www.geocities.com/wim_klunne/hydro/link.html http://www.digiserve.com/inshp/ http://www.ceacr.cz/ Czech energy authority http://www.iskb.ch/ Swiss association of owners of small power plants http://www.smallhydro.ch/franais/franais.htm http://www.serve.com/commonpurpose/contacts.html http://www.eva.wsr.ac.at/index.htm http://www.ntnu.no/ich/ http://web.telecom.cz/hydropower/index.html http://profesionales.iies.es/minas/celpenc/ukindex.htm http://www.nve.no/english/index.html http://www.cordis.lu/opet/ http://www.T-online.de http://www.oeko-netzwerk.de/journal/ http://www.ieahydro.org http://www.observ-er.org

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