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Hydroelectricity Costs – Not as Simple as Dollars per Kilowatthour

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Hydroelectricity is one of the largest sources of energy accounting for roughly 20% of the worldwide demand of electricity with around 800 GW of capacity installed.There is considerable potential still left and developing countries like India and China can be expected to install another 500 GW over the coming years.Hydroelectricity is very important as it does not lead to GHG emissions and contribute to global warming.It also does not have the drawbacks like other renewable energy forms of high costs and intermittency.The advantages of hydroelectricity are substantial enough to far outweigh any disadvantages.But like nuclear energy,hydro power has some tail risks which can lead to catastrophic damage.The costs of hydroelectricity are not a simple function of dollar costs.It should also take into account the massive displacement costs in case of massive hydro dams,the loss of ecology and potential tails risks which can lead to massive payments.

Hydroelectricity costs can be broken down into 2 categories

a) Investment costs

b) Operating Costs

Investment Costs are the biggest component of Hydroelectricity accounting for almost 75-80% of the total lifecycle costs of a hydro power station.The investment costs like all other forms of energy varies depending on the site,technology etc.In general it costs between $1-3 per watt of hydro electricity.

Operating Costs of Hydel Power on the other hand are considerably lower as Hydro Electricity does not require any fuel except for water which is freely available.However it does not plant operators to monitor and maintain hydro power plant parts like turbines etc.

The total dollar costs of a hydro power plant is 2-5c/Kwh while that of small hydro power turbines is 3-10c/KwH.Note these costs are comparable to the lowest fossil fuel energy forms like coal and nuclear power.

External Costs of Hydroelectricity

Besides the normal cots of  hydroelectiricyty,there are external costs to hydroelectricity as well.The massive displacement of people due to the creation of reservoirs,wildlife affects,potential losses from catastrophic failure should also be factored in.However in the real world these costs are not added as the society bear the external costs while the hydroelectricity owners only bear the normal intrinsic costs.

It is very difficult to put a dollar number on the external cost of hydroelectricity as putting a cost on a human life or even for that matter animal life is not possible.Nuclear Power is considered as a very low cost but the cost of running the Fukushima Plant are extremely high.Using that cost as a benchmark would wipe out nuclear energy from the world map.

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Abhishek Shah

2 Responses so far | Have Your Say!

  1. Outhai Oudavong

    Sub: Requesting fund for development of Namngiou hydro power project in Lao PDR

    Dear Sir,
    -To demonstrate the viability of the project, a feasibility study by RE shows that with an installed capacity of 2x4Mw the annual production in order of 40Gwh plus at a construction cost of about U$10million. The net revenue from selling electricity to national grid is U$2.4m/year. The electricity tariff selling to EDL is 6.2c/kwh from the first ten year after COD
    The main criteria to select this project are:
    -High head project of 80m by constructing tunnel of 500m
    -Near to the national road of 800m & small dam of 5m height
    -Very close to 110kv existing transmission line of about 1km
    -Big market available domestic use and for export
    On the completion of the project the following will be obtained:
    1- Stable electricity supply in the northern provinces
    2- Reforestation
    3- job creation
    4- poverty reduction
    5- tourism development
    6- rural development
    – In order to benefit from this advantage and get the project off from the ground, your participation in this project is fundamental requirement therefore I would like to meet you & make presentation of the project to your team, then have a site visit together after that meeting with the high ranking people in the government first before any decision is made. It is a BOT scheme with concession period of 30 years.
    -Taking all technical, economical and environmental factors into consideration it can be concluded that the Namngiou hydropower project is feasible with a high economic rate of return.
    -We would like to thank your good self in advance and hope that our official letter would receive your favorable consideration and approval
    Sincerely yours
    Outhai Oudavong
    Project Manager

    709 Phontongchommany, PO Box 710 Vientiane Lao PDR
    Email: Tel: 856 21 561515-6
    Fax: 856 21 562414 Mob: 856 20 97788760

  2. Steven O'Leary

    To whom it may concern, I have a hydroelectric system that will produce Between 23-26 “Tarawatts” a year… If my homework is up to par. The world uses Between 13- 18 “Tarawatts” a year. My 3D drawling of Power Plant will make any investor “Jump” at this opportunity. 856 449-9523
    (Ask for Steve).