Assessing the Profitability of Changing a Turbine for a Hydroelectric Power Plant Based on Long-Period Water Gauge Readings

Assessing the Profitability of Changing a Turbine for a Hydroelectric Power Plant Based on Long-Period Water Gauge Readings

Jan H. Wiśniewski (Warsaw University of Technology, Poland) and Bartosz M. Olszański (Warsaw University of Technology, Poland)
DOI: 10.4018/978-1-4666-8222-1.ch003
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The chapter focuses on explaining the construction of author's own engineering-level model which calculates energy production based on historical water level and flow rate readings as well as economic factors such as net present value of the proposed investment on the example of a HPP on the Wkra River. The model methodology assumes the identification of location's hydrological features and translates them into a set of contingency scenarios. Various internal costs, such as maintenance or labor costs, related to normal HPP activity and taxation are discussed and incorporated into the economic part of the model. Test case results indicate that for a series of good years in terms of water flow and electricity production, full repayment of initial investment costs is possible after less than three years. Results for the chosen modernization parameters indicate that within 10 years of installing a new turbine, even the most pessimistic case would bring added value to the real estate valuation.
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Increased need for “clean” electric energy in recent years is fundamental for raising a question whether a modernization of old and frequently dilapidated infrastructure will be more beneficial than building completely new installations in a different location, bearing in mind however, that production assessment without the necessary hydrological data production estimates may prove to be incorrect and usually overestimated. In cases in which the answer proves to be positive for the former option, the next step should be defining the technical capabilities and challenges (at the site) facing the expected investment. In that circumstances the cost of turbine that can be as high as couple of hundred thousand dollars for a 100 kW class machinery usually dominates overall investment expenditures for small HPP. It is therefore a necessity that some elements of economic analysis should be an integral part of an assessment model since a financing of investments requires realistic planning of income & costs, return rates as well as awareness of independent factors (natural disasters like drought or floods, regulation of the river upstream HPP activities) possibly acting on the profitability of modernization should be taken into account to some extent.

A helpful, preliminary tool in solving this issues can be for example a SWOT/TOWS analysis with strengths, weaknesses, opportunities and threats clearly defined and connected with each other by mutual dependencies. In the literature integrated technical & economic approach relating to the small HPP topic is rarely seen.

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