MONETISING HYDROPOWER SYSTEMS

Abstract

The world is shifting its focus from conventional energy sources to renewable energy sources such as hydro, solar, wind etc, so it is the need of the hour for us to shift according to the global requirement. Hydropower can be considered as one of the oldest methods to generate electricity using renewable source of energy and is being used till current time. Hydro power has many benefits including flexibility in generation and low carbon emission source of energy. Hydropower services can be broadly classified into two services -Energy Management Services comprises energy generation, ancillary services etc. and Water management services incorporates services like irrigation, water distribution and greenhouse gas emission etc. These services,if monetised will provide a more robust approach for analysis in terms of finance. Literature survey for this study shows hydropower services have not been estimated as per actual benefits for the services hydropower provided. There are different methods to monetize these services viz Price based method, contingent value method etc. However, these methods do not present the holistic approach as some of the services only were taken into consideration for analysis. This dissertation work has been made focusing on monetising these services. The Tehri Multipurpose Project has been taken into the study. To monetise energy management services, Linear Optimization Technique has been applied on GAMS software and the value obtained for these services are found INR 4.20 per kWh. After this, water management services are also been monetised To monetise these services contingent valuation method has been used. In this method of valuation a questionnaire has been formed and responses are been recorded and with the help of LOGIT and Linear regression models the value of these services are been found out. To calculate the irrigation benefits, water has been divided into three canals i.e. East Ganga, West Yamuna and Agra canals has been considered. Apart from this greenhouse gas emission has also been calculated. To monetise these benefits, avoided cost method has been used. The overall value of water management services are found out INR 5.58 per kWh and contingent valuation method has also been considered to monetise water management services and this comes out to be INR 3.40/kWh but due to subjectivity in nature it has not been included in actual benefits. Thus, the overall monetised value for the Tehri Hydropower project is assessed to be INR 9.78 per kWh out of which major portion of the benefits comprises of water management services.