TECHNO-ECONOMIC ANALYSIS OF SMALL HYDRO POWER PROJECT

Abstract

Energy is essential for the life of every living being. It is considered as an important factor which affects the growth of a nation. It is prudent to use renewable energy resources as fossil fuel reserves are fast depleting and also use of renewable energy resources ensures sustainable development. Hydro energy is one of the key renewable energy resources which is economical and pollution free. Small Hydro Power, has emerged as a potential energy producing resource. It is particularly more suitable for the energy generation in remote and isolated areas. If the potential of small hydro power can be fully utilised, dependence on the fossil fuels can be reduced significantly. The techno-economic analysis of a project is very essential as it systematically investigates the viability of the project. A number of factors comes into consideration while technically and economically analysing a project like mean flow rate, number of turbines installed, capacity factor, rated power of the turbines, inflation rates of different items, rate of return, etc. This work presents a methodology for assessing the technical and economic potential of small hydro power project. An energy model evaluates the rated power and the annual electricity production of installable small hydro power plants based on the flow duration curve and the number of hydraulic turbine. The economic analysis estimates the unit cost of electricity produced and the profitability of the initial investment assuming two scenarios based on different fixed- and variable-cost models. The study is concluded by an analysis report properly adapted for the local market financial situation, in order to enlighten the investors on the expected profitability of the capital to be invested. According to the results obtained, the predicted internal rate of return (IRR) value was greater than 18% for SHP case analysed. Finally, as per the analysis carried out, the installation capacity factor, the local market electricity price annual escalation rate are found to be the parameters that mostly affect the viability of similar ventures.