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

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 2 Module 6: Small Hydro Divas B. Basnyat

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 3 Contents Introduction Definition Fundamentals and Principles Small hydro in Africa Applications of small hydro Barriers to development and implementation Design Aids Case study - Nepal

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 4 Introduction Small hydro –for isolated grid, central grid and dedicated supply Minimum environmental impacts mainly thru run of river schemes Widely used for:  Rural residential lighting, TV, radio and telephone  Rural small industries, agriculture and other productive use  Grid based power generation Reliable, low operating costs, independent of energy price volatality

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 5 Hydro Scheme

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 6 Definition – size Country microminismall (kW) (MW) United States< China-< USSR< France India< Brazil< Norway < Nepal*< various< 100< 1000< 10 Source:

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 7 Definition (flow, runner dia) RETScreen International Typical Power RETScreen ® Flow RETScreen ® Runner Diameter Micro < 100 kW< 0.4 m 3 /s< 0.3 m Mini 100 to 1,000 kW0.4 to 12.8 m 3 /s0.3 to 0.8 m Small 1 to 50 MW> 12.8 m 3 /s> 0.8 m Less than 5 kW - Pico

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 8 Fundamental and Principles Hydropower generation process Relationship between power, flow and head Types of hydro projects Main components Power/energy calculations

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 9 Hydro Power Process Potential energy of flowing water converted to kinetic energy as it travels thru the penstock Kinetic energy of the flowing water is converted to mechanical energy as it turn the turbines Mechanical energy of the rotating turbine is converted to electrical energy as the turbine shaft rotates the generator

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 10 Power = f(Q,H) P =  *  *g* Q*H  P = power in Watts   = efficiency (micro – 50-60%, small > 80%)   = density of water (1000 kg/m 3 )  g = acceleration due to gravity (9.81 m/s 2 )  Q = flow passing thru the turbine (m 3 /s)  H = head or drop of water (m) (difference between forebay level and turbine level or tail water level) Considering  = 80%  P = 8*Q*H kW (approx)

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

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

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 13 Turbines In run-of-river, flow rate is quite variable  Turbine should function well over a range of flow rates or multiple turbines should be used Reaction: Francis, fixed pitch propeller, Kaplan  For low to medium head applications  Submerged turbine uses water pressure and kinetic energy Impulse: Pelton, Turgo, crossflow  For high head applications  Uses kinetic energy of a high speed jet of water Source: BHA, 2005

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 14 Turbines Pelton Francis Kaplan

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 15 Electrical and other equipment Generator  Induction – used to supply to large grid  Synchronous – stand-alone and isolated-grid applications Other equipment  Speed increaser to match turbine to generator  Valves, electronic controls, protection devices  Transformer

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 16 Power/Energy Calculation Flow Duration Curves – annual and monthly Compensation flow  Downstream release (environmental flow)  Irrigation requirement (if any)  Leakage Design head Head losses – headworks, headrace, penstock Example – Design flow = 4.58 m 3 /s, Gross head = 245m,  = 85%, Outage – 10%

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 17 Flow Duration Curve

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 18 Example- Calculation Power Duration Monthly Energy

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 19 Head Works-River Diversion

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 20 Settling Basin Headrace Canal

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 21 Tunnel Penstock

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 22 Fish Ladder

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 23 Small Hydro Utilization in Africa CountryHarnessed (MW) CountryHarnessed (MW) Botswana1.00Rwanda1.00 Burundi2.93Somalia4.60 Ghana1.20South Africa0.40 Kenya13.64Swaziland0.30 Lesotho8.74Tanzania4.00 Malawi4.50Uganda8.00 Mauritius6.70Zambia4.50 Mozambique0.10 Source: Karekezi and Kithyoma, 2005

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 24 Tea and Small Hydro in East Africa To reduce the electrical energy in the tea processing industries in countries Source:

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 25 Uganda Hydro installed capacity – 320MW (only 16.7 MW small) 1% electrification in rural areas Mini hydro sites (non- Nile) – 200 MW identified Can benefit from CDM Source: Taylor and Upadhaya, 2005

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 26 Application- Electricity Generation Domestic Load  Number of households -Electrical items in all households (light, TV, Radio) Industrial/Commercial Load  Agro processing  Small enterprises  Shops Social Load  School, Health post etc. Others

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 27 Peak Demand Electricity Demand- Isolated

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 28 Electricity Demand- Central Grid Source: Nepal Electricity Authority

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 29 Application : Mechanical Power Lift irrigation, water supply Agro processing - grain milling Saw milling, lathe machine

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 30 Water Mills Traditional Water Mills Improved Water Mill (IWM) Paddy hulling with IWM Source: AEPC

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 31 Barriers High initial costs Competition on investment from other sectors of the economy Institutional shortcomings  Lack of coherent policy framework  Monopolistic role of national power utilities Human Resources Requirements – local capability Infrastructure constraints- access road, transmission line Risks – for developer and lending agencies Time and cost over-run

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 32 Design Aids

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 33 Nepal – Case Study

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 34 Nepal Case Study- Contents Potential and status Hydropower Development Policy Small Hydro Project (SHP) Financing Modalities Investment scenario Barriers and Constraints Reform Process Examples: SHP Implementation

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

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 36 SHP Financing Modalities  Donor assisted concessional loans – presently only for large hydro  International private companies with commercial loan  National private companies with local commercial loan  National Utility (NEA) through local commercial loans – mainly between >5MW)  Government/donor support agencies like AEPC provide subsidy and technical support for micro hydro development

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 37 Cost Composition National Electric Utility National Private Sector International Private

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

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 39 Nepal- Investment Scenario 7 projects (55MW) completed thru commercial credit from local banks (60m$), technical support by I/NGOs, Aid Agencies (e.g. WINROCK, USAID, GTZ) Local banks and financial institutions (30m$/year) Power bonds Power development fund (30m $) For kW- subsidy provided by AEPC

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 40 Power Development Fund Initial capital of US$ 35 million by Gov. of Nepal and the World Bank (WB) To provide project finance “core funding” to supplement private sector Partially finance up to 60% of 10 MW

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

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

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 43 Reform Process (cont’d) Market risks addressed by PPA Support for pre-investment (cost sharing) Due diligence training to financial institutions Public – private complementarities  Local financing of hydropower projects- local FIs, employee provident funds, army welfare funds  Public Sector – multipurpose, larger projects and transmission line

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

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 45 SHP Policy Fixed buy back rate (up to 5 MW)  Rs 3.00 ($0.04) for wet seasons (mid Apr. – mid Nov.)  Rs 4.25 ($0.057) for dry seasons (mid Nov. – mid Apr.)  + 6% annual escalation for the first 5 years  + from Q90% design flow was reduced Q65% For 5MW – 10 MW – at (competitive) negotiated price basis

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 46 SHP Examples

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 47 Turbine Mill Micro Hydro Improved Water Mill Micro Hydro 63% community owned 37% privately owned About 9.2 HH/kW Data source- AEPC (2005)

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 48 Piluwa Khola 1 Installed Capacity : 3 MW Plant Load Factor : 74.4 % PPA Signed on : 2000 Jan. Contract energy :19.54 GWh Dry months:4.89 GWh (25%) Wet months:14.65 GWh (75%) Production Started :2003 Sep. Commercial Operation :2003 Oct  Company Established in March Source: Pandey, 2005

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 49 Piluwa Khola Total cost – 4.6 m$ Cost/kW – 1462 $/kW Consortium financing Loan from local banks - 56% Equity – 35% Bridge gap loan – 9%

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 50 Piluwa Khola Nepal Electricity Authority pays the bill of the purchased energy every month with a time lag of 35 days. The payment comes directly to the lead bank account. The bank deducts the principal and interest of the loan from the payment. The company gets remaining balance if there is something left over.

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 51 Jhankre Mini Hydro kW plant with H= 180m Design Q=450l/s Intake shared with Farmer Managed Irrigation Project – 13 ha (conflict in operation) Owner Khimti Power developer Now being handed over to community Plant built to replace diesel generators during construction of Khimti Project (60MW) After Completion of Khimti- for rural electrification (~5000 HH supplied) 2 Source: Karki, 2004

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 52 Jhankre – Power Sharing Agreement Temporary irrigation supply during construction Hydro developer to refurbish irrigation canal Employment priority to local Existing irrigation water requirements for wheat, rice seedlings and rice prioritized

ADB FINESSE Training Course on Renewable Energy & Energy Efficiency for Poverty Reduction 53 Thank You