VRE = variable renewable energy

➜ China: Flexible thermal plant operation resulted in a 30% reduction in VRE

curtailment

➜ India:
Reducing minimum generation levels for thermal plants from 70% to
55% has reduced VRE curtailment from 3.5% to 1.4%

➜ Germany: Refurbishment of a coal power plant reduced minimum load by

170 MW and increased ramp rate by 10 MW per minute

Flexible operation of thermal plants refers to their capability to cope with the
variability and uncertainty that solar and wind generation introduce at
different time scales, avoiding curtailment of power from these VRE sources
and reliably supplying all customer energy demand.This covers short-term
flexible operation, from seconds to hours.

Shorter start-up time and lower start-up costs :

•With shorter start-up times, the plant can quickly reach full load.
• Rapid start-up signicantly improves the operational exibility of a plant.
• Costs associated with the start-ups include more frequent maintenance
and additional fuel consumption.

Lower minimum load and improved part-load effciency

• Operating thermal plants at lower loads increases the bandwith of their operation,
increasing flexibility.
• Most thermal power plants experience a drastic reduction in their fuel efficiency at low
loads, and therefore improving this is an important element of increasing flexibility.
Higher ramp rate
• The rate at witch a plant can change its net power during operation
is de_ned as the ramp rate. With higher ramp rates, the plant can
quickly alter its production in line with system needs.
Shorter minimum uptime and runtime
• Reducing the minimum time that the plant must be kept running after start-up, or remain
closed after shutdown, allows a plant to react more rapidy.

Conventional power sources range from baseload power plants,

characterised by lower flexibility, to peaking power plants, characterised by
relatively high levels of flexibility. For example, nuclear power plants are by
definition inflexible, followed by coal and then gas power plants, which
typically cover the area between baseload and peak load, so-called
“intermediate load”. Natural gas-fired baseload power plants, e.g. combined-
cycle gas turbines (CCGT), are less flexible in operation than open-cycle gas
turbine (OCGT) power plants, which can also cover peak load. Natural gas-
fired internal combustion engine (ICE) power plants are typically used for
applications requiring high levels of operational flexibility. Oil-fired ICE plants
(diesel/fuel oil) provide even greater flexibility in some applications, but they
come with the highest operational costs.

Refurbishments to increase flexibility sometimes address the need to

operate the plant frequently at low loads. This will reduce the capacity factor
of the plant, which in turn increases the levelised cost of energy (LCOE),
since the capital cost and fixed expenses are divided over fewer units of
produced electricity.
Furthermore, operating at low load factors reduces plant efficiency thereby
increasing fuel costs per unit. Operating a plant
flexibly may therefore increase operation and maintenance costs. From a
system, instead of a generation plant owner, perspective these increases
are, however, small compared to the fuel savings associated with higher
shares of renewable generation in the system.

Levelized cost of energy = Discounted lifetime costs divided by discounted lifetime

generation

Levelized cost of energy = As with the NPV and IRR, the simplified LCOE is also
computed for assessing the financial feasibility of hydro projects. The LCOE is
interpreted as the minimum energy price at which energy must be sold for the
hydropower project to break even. It represents the cost per megawatt-hour of
building and operating a hydropower plant over the life-cycle of the project,
……years.
Average investment costs for large hydropower plants with storage typically range from as low as USD
1050/kW to as high as USD 7650/kW while the range for small hydropower projects is between USD
1300/kW and USD 8000/kW. Adding additional capacity at existing hydropower schemes or existing
dams that don’t have a hydropower plant can be significantly cheaper, and can cost as little as USD
500/kW.

Annual operations and maintenance costs (O&M) are often quoted as a percentage of the investment cost
per kW. Typical values range from 1.% to 4.%. Large hydropower projects will typically average around
2.% to 2.5.%. Small hydropower projects don’t have the same economies of scale and can have O&M
costs of between 1.% and 6.%, or in some cases even higher.

The cost of electricity generated by hydropower is generally low although the costs are very site-specific.
The levelised cost of electricity (LCOE) for hydropower refurbishments and upgrades ranges from as low
as USD 0.01/kWh for additional capacity at an existing hydropower project to around USD 0.05/kWh for
a more expensive upgrade project assuming a 10.% cost of capital. The LCOE for large hydropower
projects typically ranges from USD 0.02 to USD 0.19/kWh assuming a 10.% cost of capital, making the
best hydropower power projects the most cost competitive generating option available today. The LCOE
range for small hydropower projects for a number of real world projects in developing countries is
between USD 0.02 and USD 0.10/kWh, making small hydro a very cost competitive option to supply
electricity to the grid, or to supply off-grid rural electrification schemes. Very small hydropower projects
can have higher costs than this and can have an LCOE of USD 0.27/kWh or more for pico-hydro systems.

4. Significant hydropower potential remains unexploited. The technical potential is some 4.8 times greater
than today’s electricity generation. The total worldwide technical potential for hydropower is estimated at
15955 TWh/year.

5. Hydropower, when associated with storage in reservoirs, contributes to the stability of the electrical
system by providing flexibility and grid services. Hydropower can help with grid stability, as spinning
turbines can be ramped up more rapidly than any other generation source. Additionally, with large
reservoirs, hydropower can store energy over weeks, months, seasons or even years. Hydropower can
therefore provide the full range of ancillary services required for the high penetration of variable
renewable energy sources, such as wind and solar.

HYDROPOWER LCOE SENSITIVITY to THE DISCOUNT RATE

Given that hydropower is capital-intensive, has low O&M costs and no

fuel costs, the LCOE is very sensitive to investment costs and interest rates
but less sensitive to lifetime, given the lifetime range typical for
hydropower. The sensitivity of the LCOE of hydropower to different
discount rates (3 %, 7 %, 10 %) and lifetimes (40 and 80 years) (IPCC,
2011) is presented in Table below. The LCOE of hydropower projects is
not particularly sensitive to assumptions about their economic lifetimes
because they are so long. However, because virtually all of the costs are
upfront capital costs, the LCOE is very sensitive to the discount rate used.
The difference between a 3 % discount rate and a 10 % discount rate is
very significant, with the LCOE increasing by between 85 % and 90 % as
the discount rate increases from 3 % to 10 %.

Cost_of base_and_peak power will be lower the better the peak power
capacity is utilized i.e_ the more uniform the load curve is
The sales price of the various tariffs should stimulate the use of electricity
over other forms of energy. This means setting the price of eleciricity
according to its real value to the consumers while looking after the interest of
the power utility. Power utilities, however, are often accused of arbitrariness
in their pricing policy, basing it on the competitiveness of electricity for
various uses instead of cost. Electricity prices to house-holds. for example
may be favoured while industry and business make up the difference.
To describe the rate of utilization the term “load factor” is introduced. The
load factor is the ratio of the average load during a designated period to the
peak or maximum load occuring in that period.
Seasonal variations will influence the load factor for the year. The direct
production cost of power consisting of base power and peak power will be
lower the better the peak power capacity is utilized. i.e. the more uniform the
load curve is. Lower production costs makes price reductions possible,
which is in the interest of both consumer and producer.
A balanced tariff structure can promote reduction of the peak loads and ex-
tend the average utilization time of the generation units.
Annual utilization time for hydropower installations depends on the demand
curve they are designed for, usually 4000-6000 hours. When related to full
utilization 8760 hours per year, it is termed plant factor.
If the energy produced in a year corresponds to e.g. 6000 hours at installed
capacity, the plant factor is 0,68.
Cost of energy produced
The indicator commonly used is the Levelized Cost of Energy (LCOE). It is
the price at which electricity must be generated from a specific source to
break even over the lifetime of the project. The lowest LCOE is attributable
to hydropower plants of medium to large size. In general, the larger the
hydroelectric plant, the cheaper the cost per kilowatt-hour to produce the
electricity. The following table provides a comparison with other sources of
energy.
 The levelized cost of electricity for hydropower projects spans a wide range but, under good conditions, can be
as low as 3 to 5 US cents 2005 per kWh.
It must be stated that discount rates i.e social discount rates must be lower than the market (bank)
interest rates in the country where the hydropower investment shall be done.
Hydrology determines the optimal size and average load factor for a
hydropower plant, which summarizes how much electricity can be produced
throughout the year with a specific installed capacity.
Another factor that affects the economics of hydropower is the long life that
can be expected from a well-designed project. While most power plants
have useful lives of 30–40 years at most, a hydropower plant can continue to
operate for over 100 years provided the turbines are maintained and
periodically replaced.
This implies that hydropower projects have longer-term benefits and
therefore may seem less attractive if the analysis period chosen is too short.
Therefore, even though the period selected for the financial analysis may be
shorter than that considered for the economic analysis, it should still be long
enough to capture longer-term project benefits.

Even with relatively high capital costs, hydropower can offer a low cost of
electricity option. For example, in the United States, the EIA estimated that
the cost of electricity from a new hydropower plant entering service in 2017
would be $89.9/MWh. Of the common technologies this was only undercut
by a natural gas combined cycle power plant without carbon capture and
storage. This price will be based on some form of financing and loan
repayment. However, for plants in the United States that have paid off their
loans, generation costs are estimated to be between $20/MWh and
$40/MWh, undercutting virtually any alternative source.

Generation costs (€/kWh) include capital costs, investment costs, Operation

and Maintenance (O&M) costs. There are two general rules that are widely
valid for the generation costs in an HP plant:
• costs decrease as the size (installed capacity) of the plant increases,
since scale factors occur;
• costs for low head plants are higher than costs for high head plants,
since low head plants generally operate at higher fl ow rate and so
they need bigger turbines and more civil works, that are the two cost
items with higher weight on the fi nancial plan of an HP plant. Typical
investment costs (in US$ per kWh) for the different types of turbines,
dependent on the capacity (in MW). The lower figures are valid for
higher heads, the higher figures for lower heads.
- Generally spoken, the investment costs of turbines plus
generators typically amount to only about 20 to 30% of the total
investment costs of a hydro power plant. Moreover, hydraulic
turbines and generators are a very durable kind of machinery. Their
span of life may amount up to 70 years ore even more.
• Hydropower is a flexible energy resource, but the limits of its flexibility are
not widely understood and vary from plant to plant and region to region.
The flexibility of hydropower generation can support integration of other
variable renewables such as wind and solar energy. The value of
hydropower to the integration of wind and solar will depend in part on the
limits of its flexibility, as well as competition from other flexible resources.
Please see https://www.youtube.com/watch?v=lsSUPpwtqhQ
Utilizing the ability of controllable hydropower generation (including PSH and
dispatchable), the timing of hydropower generation can help maintain
system balance while reducing operational cost.
Performance parameters affecting the levelized cost of hydropower
• Capacity factor: For variable energy sources like solar, wind and
waves, the statistical distribution of the energy resource will largely
determine the capacity factor. For hydropower, however, the
capacity factor is usually designed in the planning and
optimization of the project, by considering both the statistical
distribution of fl ow and the market demand characteristics for
power.
A peaking power plant will be designed to have a low capacity factor, for
example 10 to 20%, in order to supply peaking power to the grid only during
peak hours. On the other hand, a power plant designed for supplying energy
to aluminium plants may be designed to have a capacity factor of 80% or
more, in order to supply a nearly constant base load. Reservoirs may be
built in order to increase the stability of flow for base-load production, but
could also be designed for supplying highly variable (but reliable) fl ow to a
peaking power plant. A low capacity factor gives low production and
higher LCOE.
• Lifetime: For hydropower, and in particular large hydropower, the
largest cost components are civil structures with very long lifetimes, like
dams, tunnels, canals, powerhouses etc. Electrical and mechanical
equipment, with much shorter lifetimes, usually contribute less to the
cost. It is therefore common to use a longer lifetime for hydropower
than for other electricity generation sources.
Discount rate: The discount rate is not strictly a performance
parameter. Nonetheless, it can have a critical influence on the LCOE
depending on the patterns of expenditures and revenues that typically
occur over the lifetime of the investment. Private investors usually
choose discount rates according to the risk-return characteristics of
available investment
alternatives. A high discount rate will be beneficial for technologies
with low initial investment and high running costs. A low discount rate
will generally favour Renevable energy sources, as many of these,
including hydropower,
have relatively high upfront investment cost and low recurring costs.
This effect will be even more pronounced for technologies with long
lifetimes like hydropower. In some of the studies, it is not stated clearly
what discount rate was used to calculate the LCOE. The BMU Lead
Study 2008 (BMU, 2008) used 6%. In IEA (2010b) energy costs were
computed
for both 5 and 10% discount rates. For hydropower, an increase from 5
to 10% gives an increase in the LCOE of nearly 100%. The relationship
between the discount rate and resulting LCOE is illustrated in Figure at
1st page for discount rates of 3, 7 and 10% over a range of capacity
factors, and using other input assumptions as follows: investment
costs of USD2005 2,000/kW, O&M cost of 2.5%/yr of investment cost, and
an economic design lifetime of 60 years.

Many processes are necessary to take a hydroelectric project from concept

to construction. The processes are: licensing and permitting, engineering,
contracting, and Owner's (Dam investor's) considerations. The processes
run concurrently and, in many cases, virtually any item within any process
will intertwine with one or more of the other processes.
In an integrated system, the hydro power plant is used as the peaking plant;
the thermal units are used as base loads thus ensuring maximum thermal
efficiency and lower emissions per output. In an integrated system, the hydro
power plant can also be used as the base or intermittent plant. The hydro
power plant becomes a peak plant as much as its Capacity factor (Plant
factor) is close to 35% : Capacity factor (Plant factor) maybe 60% or 10%
or somewhere inbetween. Hydro power plants have extremely quick
response to intermittent loads as they can be brought on stream within a few
minutes and their outputs can be varied almost instantaneously to respond
to varying loads. Thermal power plants (coal, gas or liquid fuel) on the other
hand require considerable lead times (4 hours for gas turbines and over 8
hours for steam turbines) before they attain the optimum thermal efficiency
state when the emission per unit output is minimum.
The levelized cost of electricity (LCOE) is a way to measure holistically
(Holistic means based on the principles of holism.Holism is the belief
that everything in nature is connected in some way) the costs, including
the timeline of those expenditures, that go into the production of a kilowatt-
hour. It is levelized over the lifetime of the plant.
The levelized cost of energy (LCOE), or levelized cost of electricity, is a
measure of the average net present cost of electricity generation for a
generating plant over its lifetime. The LCOE is calculated as the ratio
between all the discounted costs over the lifetime of a electricity generating
plant divided by a discounted sum of the actual energy amounts delivered.
The LCOE is used to compare different methods of electricity generation on
a consistent basis. The LCOE "represents the average revenue per unit of
electricity generated that would be required to recover the construction costs
of Dam HPP intake structure , tunnel , penstock , hydromechanical-
electrical part of hydropower plants with the right installed power of turbine +
generator and their right construction in situ and transmission lines with the
right kVA for least transmission line loses and operating a generating plant
during an assumed financial life and duty cycle." Inputs to LCOE are chosen
by the estimator. They can include cost of capital, "fuel costs, fixed and
variable operations and maintenance costs, financing costs, and an
assumed utilization rate."
The levelized cost represents the cost of an energy generating system over
its lifetime. It is calculated as the per unit price at which energy must be
generated from a specific source over its lifetime to break even. The
levelized costs usually include all private costs that accrue upstream in the
value chain, but they do not include the downstream cost of delivery to the
final customer, the cost of integration, or external environmental or other
costs. Subsidies for RE generation and tax credits are not included.
However, indirect taxes and subsidies on inputs or commodities affecting the
prices of inputs and, hence, private cost, cannot be fully excluded.
The levelized cost of electricity for hydropower projects spans a wide range
but, under good conditions, can be as low as 3 to 5 US cents 2005 per kWh.
-Load factor is the ratio of the average load during a designated period to the
peak or maximum load occurring in that period.
Capacity Factor or Plant factor are the same in meaning.
Plant Factor namely Capacity Factor is the ratio of the average load to the
installed capacity of the plant , expressed as annual percentage.
Load Factor and Capacity factor are different notions. As can be seen at
Load Factor "a designated period" is taken into account while at Capacity
Factor or Plant factor an "annual period of time" is taken into account.
The capacity factor should not be confused with the availability factor (Plant
Usage factor), capacity credit (firm capacity) or with efficiency.
-Power factor is the percentage ratio of the amount of power , measured in
kilowatts , used by a consuming electric facility to the apparent power
measured in kilovolt-amperes (that is what we pay I mean we pay as per
kilovolt-amperes where we are actually deceived) and we pay for this
kilovolt-amperes which is the total of kilowatts used by us home + the KVAR
which is the unuseful energy produced by magnetic flux of transformers ,
motors and relays which is (I mean the KVAR) unnecessarily paid Money by
us.
- Peak load hydropower plants (Peak load plants) are run for around 4000
hours in a year : Peak load plants run when electricity demand is maximum.
-Base load in any system represent the minimum power demand in a
designated period of time generally 24 hours . Accordingly base load plants
are expected to be run continuously to meet the base load. Nuclear power
plants run 8000 hours a year.
Plant factors (Capacity factor) of the hydroelctrical plants vary inbetween
10% and 60%. As a general rule ; the lesser the plant factor the more you
can think of it being a peak plant. But there may be facilities which do not
obey this rule. For example ; plant factor of a hydroelectrical plant which
produces power from the irrigation water during summer shall be small , but
anyway it shall serve as a base load plant.
-Peak power = Installed power – Annual average firm power/Country peak
day load factor
Country peak day load factor may be assumed to be nearly 0.70 for Turkey.
-Wind plants run around 2500 hours a year. Capacity Factor of wind plants is
around
=100 x 2500/8760
- Capacity Factor of solar plants is around 20%.
Rate of Return on Investment = the interest rate at which the present worth
of annual benefits equals the present worth of annual costs where benefit
/cost ratio equals to 1.
Economic life of a Project is the time difference between the commissioning
of Dam and HEPP and by selling power , the day we we have collected an
amount of Money(marginal benefit) equal to the Money (marginal cost) for
the operation of the HEPP.
Time difference betwen when marginal benefits which start to be obtained by
commissioning of a DAM and HEPP reach to an amount equal to the
marginal costs for operation of that DAM and HEPP is called the economic
life. As you can see economic life of a DAM and HEPP is this not a value
you assume like 50 years or 100 years or 75 years or 30 years.
Regarding the efficiency of generating equipment, it's necessary to
incorporate the losses in transmission lines (In Turkey 15% of electricity
leaks through transmission lines). How much a prediction for losses in per
km length is dependant on local characteristics of each country’s local
transmission line infrastructure efficiency and demand and supply kVAs.
Country peak day load factor may be assumed to be nearly 0.70 for Turkey.