HYDRO Tapping small hydro potential - ESHA

HYDRO Tapping small hydro potential
Small hydro power is a
clean, sustainable,
efficient and secure
renewable energy source,
combining the advantages of
hydro power with those of
decentralized power generation,
but without the disadvantages of
large-scale installations.
Christine Lins and Maria Laguna
make the case for SHP.
Approximately 70% of the earth’s surface is covered
with water, a resource that has been exploited for
many centuries.The exploitation of hydro power has
been characterized by continuous technical
development, making it the leading renewable energy
source in the EU. Hydro power now accounts for around 84%
of electricity generated from renewable sources in the EU-15,
and 13% of total electricity production.
This article is limited to small hydro power (SHP).There is
no consensus on the definition of SHP, but here it will be
defined as any small scheme with an installed capacity up to
10 MW. This is the definition adopted by the European Small
Hydropower Association (ESHA), the European Commission
and the International Union of Producers and Distributors of
Electricity (UNIPEDE).
SHP has a huge untapped potential, offering a
very good alternative to conventional
generation in Europe and the developing world
SHP has a huge, as yet largely untapped, potential that
should enable it to make a significant contribution to future
energy needs, offering a very good alternative to conventional
sources of electricity,not only in Europe but also in developing
countries.
INTEREST GROWING
SHP has a key role to play in the development of Europe’s
renewable energy resources, and an even greater role in
developing countries. In the face of increasing electricity
Hidronorte plant in Galicia, Spain: small hydro is vital to the
development of EU renewable energy sources
162 ● RENEWABLE ENERGY WORLD ● July–August 2004

Tapping small
hydro potential
SHP can make headway

HYDRO Tapping small hydro potential
ABOVE The 500 kW Taojinping SHP project in China’s Zhejiang Province. China is set
to become a small hydro leader ABOVE RIGHT SHP in Austria; the country ranks third
in EU small hydro capacity ÖSTERREICHISCHER VEREIN FÜR KLEINKRAFT
demand, international agreements to reduce greenhouse gases
(such as the Kyoto Protocol), environmental degradation from
fossil fuel extraction and use, and the fact that, in many
European countries, large hydro power sites have been mostly
exploited, there is an increasing interest in developing SHP.
This trend has been enhanced by the European
Commission’s White Paper on renewable energy 1 and by the
EU Renewable Energy Directive 2 (RES-e Directive), both of
which give a clear signal that the use of renewable energies
must increase in order to reduce environmental impacts and
create a sustainable energy system. The Directive sets
quantified national targets for consumption of electricity from
renewable energy sources,promotes national support schemes
(plus, if necessary, a harmonized support system), simplifies
national administrative procedures for authorization, and
guarantees access to transmission and distribution of
electricity from renewable energy sources. The White Paper
calls for 12% of energy to come from renewables, while the
Directive sets specific goals to reach 22% of electricity use
from renewables in the EU by 2010. For SHP, this means
achieving an ambitious target of 14 GW of installed capacity by
2010 (14 GW, generating 55 TWh of electricity – see Table 1).
As well as setting out a Community strategy and action plan to
double the share of renewable energy from 6% to 12% by 2010,
the White Paper establishes sub-targets for various sectors,
preserves flexibility in how these targets are to be met in view
of Community enlargement, and introduces a tri-annual review
process. The action plan includes internal market measures,
reinforcement of EU policies, and improved co-ordination
between Member States.
TABLE 1. White Paper SHP scenario for 2010
Feature 2010 scenario
Installed capacity > 4500 MW
Electricity generation 55 TWh
Gross energy consumption 4.75 Mtoe
The RES-e Directive gives Member States a reason to look at
SHP because it is the best proven of all renewable energy
technologies. Of special interest for Europe, from both the
economic and environmental point of view, is exploiting the
high potential for upgrading and refurbishing existing plants.
164 ● RENEWABLE ENERGY WORLD ● July–August 2004
TABLE 2. SHP financing schemes in individual Member States. Source:
ESHA, 2001 3
Country Financing scheme Ownership
Austria Corporate finance Small and large utilities
Germany Private finance Private
Participation finance Limited partnership (GmbH)
Municipalities (Stadtwerke)
Spain Third-party finance Through governmental
organizations
Italy Corporate finance Private investors
Third-party finance Local utilities
The Netherlands Private finance Private
Corporate finance Utilities
Sweden Private finance Partnerships
Corporate finance Private (farmers)
Corporations
As well as the incentives introduced by the Directive, some
financial options favouring SHP have been introduced in
certain Member States.Table 2 shows some of these financing
schemes.
MARKET DEVELOPMENT WITHIN AND OUTSIDE THE EU
Tables 3 and 4 show SHP in the EU-15, the new Member States
(the so-called EU-10) and the three candidate countries. In
2000, there were 14,488 SHP plants in the EU-15, mostly
located in Germany (42.8%), France (11.9%), Austria (11.7%),
Sweden (11.1%) and Italy (10.4%).Almost 45% of these plants
are over 60 years old and 68% are over 40 years old. The
average capacity of an SHP plant in the EU was about 0.7 MW
in 2000, while SHP installed capacity was about 10 GW. This
accounted for 9% of the total installed hydro capacity, and
about 2% of all installed electricity capacity.
Electricity production from SHP was about 40 TWh in the
year 2000, accounting for 12% of total electricity produced
from hydro, around 10% of all electricity generated from
renewable energy, and about 2% of total electricity generation
in the EU. SHP electricity production has risen by 8% since
1995 (when it was 37 TWh) and is expected to grow by about
38% by 2010 (55 TWh), according to the White Paper.
FUTURE MARKET DEVELOPMENT
This century will witness a major increase in energy
consumption, going hand-in-hand with greater concern about

environmental issues. In this context, SHP has a huge potential
to meet energy demand with negligible impact on the
environment. Europe has a leading position in the SHP sector
with the best state-of-the-art technology, and is the largest
contributor to installed world capacity and electricity
generation. Nevertheless, there are further technical and
economic challenges to be met.
Outside Europe, there are new opportunities for export
and technology transfer that offer good prospects for EU
Tapping small hydro potential HYDRO
TABLE 3. SHP installed capacity and electricity generation in the EU-15. Sources: Cordis, 2002; 4 ESHA sources (national associations); ESHA, 2001 3
Member State No. of units SHP installed SHP contribution SHP Contribution SHP electricity SHP contribution
capacity (MW) to EU installed to total hydro generation (GWh) to EU electricity
capacity (%) capacity (%) generation (%)
Belgium 82 96 0.61 6.86 385 0.46
Denmark 40 11 0.09 100.00 30 0.08
Germany 6200 1500 1.27 16.67 6500 1.14
Greece 40 69 0.63 2.30 350 0.65
Spain 1106 1607 3.06 9.08 4825 2.14
France 1730 2000 1.73 7.81 7500 1.39
Ireland 45 23 0.48 4.51 96 0.40
Italy 1510 2229 3.12 10.98 8320 3.01
Luxembourg 29 39 3.25 3.55 195 0.22
The Netherlands 3 2 0.01 2.22 1 8.47
Austria 1700 866 4.89 7.53 4246 6.87
Portugal 74 286 2.62 6.36 1100 2.51
Finland 204 320 1.96 11.03 1280 1.83
Sweden 1615 1050 3.20 6.40 4600 3.15
UK 110 162 0.21 3.77 840 0.22
Total 14,488 10,260 1.77 8.67 40,268 1.55
manufacturers. Asia, especially China and India, is set to
become a hydro power leader. Present developments in
Australia and New Zealand are focusing on SHP plants. Canada,
a country with a long tradition of using hydro power, is
developing SHP as a replacement for expensive diesel
generation in remote, off-grid communities. Markets such as
South America and Africa also have a wide potential. Table 5
shows a shortlist of target countries with conditions favourable
for SHP exports.
July–August 2004 ● RENEWABLE ENERGY WORLD ● 165

HYDRO Tapping small hydro potential
TABLE 4. SHP in the EU-10 and candidate countries. Sources: ESHA, 2001; 3 2002 World Atlas & Industry Guide; 5 The International Journal on
Hydropower and Dams; 6 ESHA internal sources, 2003
Country No. of Installed Electricity Contribution Contribution Potential capacity Potential annual Forecast
plants capacity generation to total hydro to total (MW) generation (GWh) 2015
(MW) (GWh) electricity electricity (GWh)
production (%) production (%)
Upgrading New plant Upgrading New plant
Cyprus 1 0.5 – 0 0 – 1 – 0.002 0.002
Czech 1136 250 677 32.3 1.0 10 200 50 1148 1000
Republic
Estonia 13 3.0 10 100 0.1 2 2 6 6 50
Hungary 35 8.6 38 25.4 0.1 2 22 9 90 106
Latvia 57 1.7 14 0.5 0.3 36 60 90 150 152
Lithuania 29 9.3 30 3.6 0.2 3 40 11 186 100
Malta 0 0 0 0 0 0 0 0 0 No
forecast
Poland 472 127 705 31.0 0.5 320 1600 1300
Slovakia 180 31 175 3.8 0.7 23 37 120 178 350
Slovenia 413 77 270 7.6 2.3 10 180 50 780 900
Bulgaria 64 141 412 22.3 1.0 – – – – 1000
Romania 9 44 287 1.8 0.5 – – – – 300
Turkey 67 138 500 1.7 0.4 – – – – 2800
The greatest impetus for small hydro development is
currently coming from Asia, including China and India (see
Figure 1).This region has the best resources and a major need
for power – and is the recipient of large amounts of financial
support for rural electrification, backed by government
initiatives. Latin America also has good potential for hydro
development,but several countries have significant oil reserves
that are keeping small hydro lower down the political agenda.
Eastern Europe, including the former Soviet nations, is also
now becoming a strong potential market.
Looking to the future there are good reasons to support
small hydro power:
• the depletion of oil and natural gas deposits will lead to
higher generation costs for thermal plants
Output (TWh/year)
8000
7000
6000
5000
4000
3000
2000
1000
0
Africa
Asia
Australasia/
Oceania
Technical potential
Europe
Exploited potential
166 ● RENEWABLE ENERGY WORLD ● July–August 2004
North & Central
America
South
America
Economic potential
FIGURE 1. Total hydro power potential by continent. Source: ESHA, 2002 8
TABLE 5. Target countries with favourable conditions for SHP exports.
Source: ESHA, 2003 7
Region Time frame Countries for consideration
Latin America Short to medium Brazil, Peru, Argentina, Ecuador,
term Colombia
Africa Immediate Uganda
Central and Short to medium Slovakia, Czech Republic,
Eastern Europe term Ukraine, most independent
former USSR states
Asia (excluding Short to medium Nepal, Thailand, Sri Lanka,
India and China) term Philippines, Indonesia, Laos,
Vietnam
Other Immediate India, China, Russia, Caribbean,
Cuba
• by offsetting thermal generation, small hydro power is a
leading technology in efforts to reduce greenhouse gases
– with the introduction of carbon trading, thermal plant
will become more expensive
• high-voltage direct current transmission over long
The greatest impetus for small hydro
development is currently coming from Asia,
including China and India
distances is becoming cheaper and electricity networks
are getting interconnected and growing
• the growth of the world’s population, especially in
developing countries, will require the appropriate
infrastructure for irrigation and water supply; the addition
of a hydro power component to such a project is
economic and has no major environmental or social
impacts

Capacity (MW)
14,000
13,000
12,000
11,000
10,000
9000
8000
7000
6000
10,212
10,319
10,718
2000 2001 2003 2010
Year
Current trend White paper
FIGURE 2. Comparison of the current trend with the White Paper
objectives. Source: EurObserv’ER 2003 9
• it is widely believed that, as part of the long-term changes
in the energy sector, hydrogen is the fuel of the future;
remote hydro can also become one of the major carbonfree,
financially viable producers of hydrogen.
TARGETS FOR FUTURE MARKET DEVELOPMENT
12,000
Following the current trend, Figure 2 shows that the SHP
sector will not completely reach the targets set in the White
Paper. This is mainly due to long and complicated licensing
procedures for new installations. Increased political support
for SHP, as well as an emphasis on exploiting the high level of
potential for upgrading and refurbishing existing plants, is
needed in order to achieve the targets.
At present, numerous institutional barriers still stand in the
way, mainly resulting from the difficulties inherent in gaining
permission to abstract water from rivers, but also due to the
perception that hydro plant adversely affect fishing.Difficulties
in gaining affordable connections to the grid are also common,
although this situation is tending to improve.
BELOW An SHP facility in Sweden, a country in the European small hydro ‘top five’
SERO BELOW RIGHT Fish-friendly turbine in Versoix, Switzerland MHYLAB
Tapping small hydro potential HYDRO
At the same time, pressure from environmental groups –
which can oppose SHP for its negative local environmental
impacts on river ecosystems – hinders progress in many
developed countries. Sometimes no distinction is made
between the impact of large hydro and that of small hydro
schemes. Such opposition is often related to specific cases and
should not be applied to SHP across the board. However, new
technology and improved methods of operating SHP are
steadily reducing its adverse environmental impacts, while
involving local communities in the planning, design and
management process is helping to change negative
perceptions of SHP.
Small hydro power offers one of the most
practical and immediately realizable routes to
expanding use of renewable energy sources
The SHP industry has been affected by exaggerated
criticisms of negative environmental impacts which ignore its
important environmental and social benefits. These benefits
include the replacement of fossil fuels – thus reducing
greenhouse gas emissions, air pollution and resource depletion
– and boosting the local economy of isolated populations.
Since SHP provides autonomous and reliable energy, it is
suitable for co-operative or communal ownership, and
combined with irrigation systems, it is an appropriate solution
in developing countries. In the last few years, much emphasis
has been put on the environmental integration of SHP plants
into river systems in order to minimize impacts to the
ecosystem and enhance the quality of the aquatic
environment.
The EU’s clear commitment to renewables and climate
protection, which is reflected, for instance, in the RES-e
Directive and the bloc’s ratification of the Kyoto Protocol, is
expected to provide further stimulus for the SHP sector within
the Member States. Based on this strong domestic market, EU
turbine manufacturers should have a sound policy framework
for promoting their products on the global market.
July–August 2004 ● RENEWABLE ENERGY WORLD ● 167

HYDRO Tapping small hydro potential
Small hydro in France, second only to Germany amongst the EU nations in terms of
installed SHP ADEME
FRAMEWORK CONDITIONS FOR SUSTAINABLE MARKET
DEVELOPMENT
Small hydro power offers one of the most practical and
immediately realizable routes to expanding the use of
renewable energy sources in Europe,at the same time boosting
exports by strengthening the technically advanced European
small hydro manufacturing industry. However, SHP does not
have a very favourable regulatory framework, and official
support for the technology is generally limited. Awareness of
small hydro’s benefits and the need to develop a more
objective view of its true environmental impact are therefore
both essential components in future strategies to develop its use.
Hydro represents a long-established
technology – but that does not mean there is
no more room for technical development
Effective and realistic standards for meeting requirements
to minimize any environmental problems are needed, whilst
tariff rates on offer to SHP owners and developers for the
purchase of electricity should reflect the technology’s low
environmental impact and high potential performance.
The initial strategic requirements are for small hydro to
feature more prominently in national and EU energy planning,
with a view to its stronger encouragement.The regulatory and
financial framework for SHP needs to be improved and,
wherever possible, harmonized across the EU. Contrary to
popular mythology, the fact that hydro represents a longestablished
technology does not mean there is no further room
for technical development.A resurgence of small hydro power
development in Europe needs to be backed by technical
improvements.
A sustainable market for SHP requires a number of
conditions:
• Energy policy framework – Member States should
168 ● RENEWABLE ENERGY WORLD ● July–August 2004
develop energy policies that clearly set out objectives
regarding the development of power generation options,
including small hydro power.
• Decision-making process – governments should establish
an equitable, credible and effective environmental
assessment process that takes into account both
environmental and social concerns, with a predictable and
reasonable schedule.
• Comparison of small hydro power project alternatives –
project designers should apply environmental and social
criteria when comparing project alternatives in order to
eliminate unacceptable schemes early in the planning
process.
• Improving environmental management of plants –
project design and operation should be optimized by
ensuring the proper management of environmental and
social issues through the project cycle.
• Sharing benefits with local communities – communities
should benefit from local SHP projects, both in the short
and the long term.
Small hydro power represents a clean alternative to fossil
fuel electricity generation. However, developing the remaining
hydro power potential offers many challenges, and pressure
from some environmental action groups over the impact of
SHP schemes has tended to increase over time. Moreover, in
the context of the restructuring of the electricity sector,
markets may favour more polluting and less costly options.
Christine Lins is Secretary General of the European Small Hydropower
Association in Brussels, Belgium, and Maria Laguna is the Project
Manager at ESHA.
Fax: +32 2546 1947
e-mail: esha@arcadis.be
maria.laguna@esha.be
website: www.esha.be
REFERENCES
1. European Commission. Energy for the future: Renewable sources of energy.
White Paper for a Community Strategy and Action Plan. COM(97)599 final.
Brussels. 1997.
2. Directive 2001/77/EC on the promotion of electricity produced from renewable
energy sources in the internal electricity market. OJ L 283, 27.1.2001
3. ESHA. BlueAGE: Blue Energy for A Green Europe. Strategic Study for the
Development of Small Hydro Power in the European Union. 2001.
4. Cordis – www.cordis/lu/eesd/src/indicators.htm
5. 2002 World Atlas and Industry Guide International Journal on Hydropower &
Dams. Sutton: Aqua~Media International Ltd. 2003.
6. The International Journal on Hydropower and Dams (www.hydropowerdams.com)
7. Target countries with favourable conditions form small hydropower exports.
ESHA. 2003.
8. ESHA. Discussion Paper on the Comparison of Compensation Systems for
Electricity for Renewables. 2002
9. Observ’ER. EurObserv’ER: European Barometer 2001. Renewable Energy
Overview. 2002.
FURTHER READING
Renewable Energy in Europe. Building Markets and Capacity. EREC. 2004.