Hydro Energy

Classifications of hydro power 

Hydro power can be broadly classified into large hydro and small hydro.

  • The large hydro power plants are represented by the huge dam—based power production we all are aware of. The capacities of these plants typically run into 100s of MW.
  • Small hydro power plants, on the other hand, are typically less than 25 MW,
  • And some small hydro plants are so small (about 100 kW and less) that they are sometimes called micro-hydro power plants. 

The differentiation between large and small hydro power plants is not just academic. In terms of both the operational and ecological risks as well, these two differ. 

  • While large hydro power plants necessitate the use of large dams with significant displacement of local population and altering the local ecology significantly thereby having negative effects on the environment, small hydro power plants are easier to construct which may or may not require a dam like structure and hence requires little or no changes in the local ecology.
  • Another distinction is emerging in the hydro power segment – dam-based and run of the river. In the case of dams, an artificial structure is constructed which stores the water and lets it out as and when required. In the case of run-of-river, which is more applicable to small hydro, locations are identified where by a minor alteration to the flow of the river a natural head (height from which the water falls) is created, and thus the need for a dam is obviated. 

One final emerging trend in hydro power is hydrokinetic energy. Under this, the kinetic energy

of the water flow is utilized to provide power (instead of the potential energy being used by the other forms of hydro power). This enables hydro power to be produced from many locations which may not have a natural head for producing power. 

Market size and growth 

Hydro is already a significant renewable energy source for global electricity production. Sixteen percentage of global electricity supply and about 5% of total commercial energy comes from hydro energy, more than other renewable energy sources. The International Energy Agency (IEA) projects that hydro capacity growth to increase by 63% for the period 2002-2030. The total capacity of ongoing hydro energy projects is 107820 MW (108 GW). 

It is estimated, based on market studies and extensive research in hydro energy that two-thirds of the world's economically feasible potential is still to be exploited and is mainly concentrated in developing countries in Africa, Asia and South America. China has used only about one-quarter of its huge hydro potential of 450 GW. It is the main contributor to hydro development today and government figures suggest that it will add more than 12 GW of new capacity each year until 2020 to reach 300 GW. 

Future growth 

Owing to its large current installed base and its maturity as an industry, the growth rate in hydro energy will be much lower than those for many other renewable energy sources. Potential investments in large hydro-electric power will continue to be dominated by governments and large businesses / companies. 

Hydro power industry has seen new developments like micro hydro and hydrokinetic energy which has great growth potential and is just starting to emerge from its infancy. Small acale and medium businesses can expect excellent business opportunities now and in the near future, as this segment is expected to grow three times as fast as large hydro in terms of installed capacity for electricity generation. 

  

Government mandates and incentives for hydro energy

While large hydro power plants have traditionally enjoyed excellent support from governments worldwide - not least due to the fact that most of these hydro projects were developed by government-owned power companies, the strong business case provided by small hydro in many countries have made governments to support this relatively new use of hydro-power. In many countries worldwide, governments are framing policies and incentives that will make it easier for companies to develop and implement small hydro power projects. These incentives are in the form of tax breaks, grants, subsidies and more. 

Small hydro emerging as viable sector 

Renewable resources such as sun, wind and water, are those that can be harvested in a sustainable manner to provide the electric power that our society depends on. Water (or gravity moving water) has received less attention from project developers than wind and solar.  But that may be changing. 

Approximately 18% of the total world energy supply is hydroelectric. But of course, all hydro is not created equal.  The bulk is large hydro, which employs dams and weirs that disrupt the environment in unalterable ways.  Most hydroelectric facilities are not considered “renewable” – at least not by environmentalists.  Large man-made reservoirs change habitats forever and are often blights on the natural settings in which they are built. 

Small hydro – facilities that generate up to 30 MW – can be developed without harming the environment.  So called run-of-river facilities are designed to take advantage of flowing water in rivers and streams in such a way as to have minimal impact on fish habitats and natural settings.  Also, many of the dams in the US are not powered. These facilities, where the environmental impact of the dams cannot be undone, are ripe for small hydro development.  In September 2009, U.S. Energy Secretary Steven Chu said the hydro industry could add 70,000 MW of capacity by installing more efficient turbines at existing dams, increasing the use of pumped-storage projects and encouraging the use of run-of-river turbines. That capacity is equivalent to 70 nuclear plants or 100 coal-fired plants. 

So developers are exploring ways to advance small hydro in the service of the nation’s renewable energy goals. 

Business opportunities by scale of investments required

Small Scale Hydro Business Opportunities

  • Setting up micro-hydro energy plants. In some parts of the world, homes have started using micro-hydro for residential electricity as well.
  • As micro hydro enable electricity at lower total capital costs (compared to large hydro), these could have a strong business case in regions that do not currently have grid connectivity.
  • New developments, such as small and micro hydro, and hydrokinetic energy, throw open new areas for consultants.

Medium Scale Hydro Business Opportunities 

  • Small hydro is an area where small and medium businesses can expect excellent business opportunities now and in the near future, as this segment is expected to grow three times as fast as large hydro in terms of installed capacity for electricity generation
  • Setting up R&D facilities for research into hydro energy. Companies are experimenting with hydrokinetic turbine to generate additional power from the energy remaining in the water current exiting the dam and flowing downstream.

Large Scale Hydro Business Opportunities 

  • Setting up large-scale hydel energy plants
  • Large-scale manufacturing of components and parts for the hydel energy industry

Benefits

  • Hydro power plants have lifetimes of over 40 years, thus making them very attractive from a financial return point of view.
  • Hydro power is one of the oldest and most stable forms of renewable power production
  • Unlike many other forms of renewable energy (especially solar and wind) that are intermittent in nature, hydropower can be used for producing baseload power.
  • The cost of producing power from hydro is competitive to that from fossil fuels
  • Newer forms of hydro power – such as hydrokinetic power – enables hydro power to be produced from even more locations.
  • Hydro power plants have lifetimes of over 40 years, thus making them very attractive from a financial return point of view.

Challenges

  • Constructing large dams for hydro power could result in considerable damage to the ecology of the location.
  • In many countries worldwide, it takes many years after the concept stage before the hydro power can be commissioned, owing to a large number of statutory approvals that need to be obtained.
  • For an entrepreneur, hydro power might not offer as many possibilities at innovation as could other forms of renewable power such as solar, wind, or biomass power. 

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