The viability of each hydro project is site-specific and dependent on the local characteristics. The amount of the power produced depends on the water flow, the hydraulic head and the efficiency of the device; the flow will vary through the year and the efficiency will change in response to the variation. This is covered in more detail in the ‘River Flow Availability’ and ‘Engineering Options’ sections .
Two different approaches can be used to estimate the costs of hydro plant development.
The first approach is based on the basic principles of economic analysis of investment projects. The criteria used are the following: payback period, Net Present Value (NPV) and Internal Rate of Return (IRR). This approach indicates an upper bound to a likely outlay.
The alternative approach is based on cost data analysis, using primary cost data which were recently obtained from a range of turbine manufacturers as well as secondary data. This approach is based on the idea that it is possible to establish a link between specific characteristics of a hydro site such as head and flow on one hand and the overall cost of a hydro plant development together with disaggregated costs like a cost of electro-mechanical equipment or turbine costs on the other. This approach provides an indication of a lower bound to a likely outlay.
Selling energy you generate
EDF Energy
For more information visit the EDF Energy website.
Energy Saving Trust
The Energy Saving Trust provides information on what you need to consider if you are planning to sell the energy you generate. There is a search facility for the current pay-back tariffs offered by energy suppliers.
Social Costs and Financial Support
Social Costs
The hydro power development can have a beneficial impact on the socio-economic situation in the area through
- Contribution to local employment;
- Boost of local economy (the use of local materials and local companies);
- Development of infrastructure;
- Support and development of community-based projects.
However, a range of issues related to public acceptability and engagement should be considered. The hydro project can include a renovation of an old mill or using an old building as a powerhouse. In this case the materials harmonised with environment (aesthetics) or required according to conservation guidelines are needed which can affect the costs of the hydro development. More information on these issues is available in the ‘Public Acceptability and Engagement’ chapter of this report.
In the case of social costs being considered, the social IRR can be 3-5% lower than the satisfactory IRR.
Financial Support
The Government and the Local Authorities provide financial support for those who are planning to use renewable sources to generate energy.
The Energy Saving Trust website provides information on what financial support is currently available for energy generators.
