Almost 70% of the world’s surface is covered with water and although small hydro is the second biggest renewables sector, it is yet to fulfil its enormous potential. After first gaining popularity during the 1970s energy crisis, small hydro now generates around 16% of the world’s electricity supply.

The World Energy Council estimates that under current policies, the capacity of small hydro will increase to 55GW by 2010, with the majority of the increase stemming from China. But with fresh renewables-focused legislation due in the EU and with a massive surge of investment across the Atlantic, the sector is set to explode. The trends and technologies pushing this sector forward will be discussed by the major players in ViB’s inaugural Small Hydro event taking place in Vancouver this month – again signalling the growing importance of the sector.

European concerns

Hydropower now accounts for 80% of electricity generated from renewable sources in Europe, and 19% of total electricity production. Although definitions vary across the globe, the EU and the European Small Hydropower Association (ESHA) generally regards small hydro as plants with a capacity of up to 10MW.

ESHA has been in existence for 20 years and has consolidated small hydro stakeholders to allow the industry to work with the government in an effective way. ESHA Secretary General Gema San Bruno says that while the EU encourages the advancement of renewables, the implementation of small hydro is largely dependent on national legislation.

“Much of the legislation dismisses the positive impact [of small hydropower] on the energy sector.”

“The pieces of legislation coming from the European Commission cover the sector generally, there is no specific legislation for small hydropower,” says San Bruno. “We are now waiting for the final approval of a directive on renewable energy that has the objective that by 2020 there will be 20% of energy consumption coming from renewable energy sources. This is seen as a support mechanism for small hydro.”

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData

In Europe, small hydro stands at a cross roads in the mind sets of environmentalists promoting renewable energy and those that work to ensure maximum quality and minimal degradation of the environment.

“Much of the legislation dismisses the positive impact [of small hydropower] on the energy sector,” says San Bruno and instead focuses on the negative aspects. Finding the balance is the challenge that Europe now faces.

Going someway to bridge this gap, however, is a wealth of new technologies set to mitigate hydropower’s impact on the surrounding environment. Pressure from environmental regulation has led to important advancements over recent years and new concepts of turbines are evolving. For example, there are new designs of fish friendly turbines that allow fish to pass through the systems. In addition, small hydro dams can be fitted with infrasound systems that act as warning signals to fish that they should not come near the facility.

San Bruno says, however, that while these technologies are available, the environmental cost of small hydro is much harder to quantify than their larger counterparts.

“The critical point is how to measure the impact as small hydro projects are very site oriented – every plant is different. It is up to the developer to balance their business and the environment. The technology is ready to mitigate the impact but it is up to the individual to choose it.”

Across the pond

Canada has both the climate and topography that makes it ideally suited for hydropower projects and while they have been popular since the 1970s, it has been the last ten years where there has been a dramatic growth in privately financed projects. With a series of mountain ranges and a long coastline, the province of British Columbia (BC) is a particular small hydro pioneer, with roughly 80% of its energy produced by hydropower.

The BC Energy Plan says that any new energy procurement as a clean target of 90%. In British Columbia, small hydro’s pricing is very competitive with other renewables such as wind and biomass proving less cost effective. With nuclear banned and coal not meeting clean energy targets small hydro has been pushed forward.

“The technology is ready to mitigate the impact but it is up to the individual to choose it.”

Engineering consultancy Knight Piésold President Jeremy Haile says the market has been evolving for the past ten years. He estimates that there are 35 operating projects, another 45 with electricity purchase agreements and about another 50 that may get approval in the next ten years. Haile is quick to caution, however, that although predominant, hydro projects are not taking over BC’s landscape.

“There is a lot of hysteria in British Columbia that every stream might end up with a hydro [plant] on it. But really when it comes down to it, there aren’t many that have the right combination of flow and head drop and the right environmental setting. To get everything right and still make it cost effective there aren’t really that many sites,” says Haile.

The electricity in the province is run by a single utility, BC Hydro, which operates 30 hydroelectricity facilities having issued calls for power from Independent Power Producers since 1989. A paper produced by Knight Piésold, which will be discussed at Small Hydro 2009 in Vancouver, estimates that the latest clean power call attracted as many as 60 small hydropower facilities.

“There are probably two or three dozen development companies that think they have competitive sites but it is only the ones who bid the lowest price that will get the contract. The bid out at the moment is looking for 5000GW per year,” says Haile.

But like in Europe, pressure to be cost effective and environmentally friendly is leading to new innovation.

“We have an opportunity as we are working on a lot of innovations in intake and penstock designs because it is a competitive environment just to come up with a low cost solution.” On the penstock side new materials, eliminating anchor blocks and simplifying installation techniques are all advancing the sector.

“We are working on a lot of innovations in intake and penstock designs.”

Financial waves

The jewel in small hydro’s crown is that the financial slowdown is impacting the sector positively. In BC contracts with the province’s utility can last anything up to 40 years and therefore debt financing can be relatively easy to find as projects are seen as a safe bet. Meanwhile, European investors shying away from the turbulent stock markets are being drawn to alternative investments such as renewable fuels.

Although projects in more developed economies may now be focusing on upgrade work, less economical regions in parts of Africa, for example, are still ripe for development as previous projects have been on a grand scale. As consortiums club together to share expertise and mitigate financial risk, they look set to share an increasing profit from small hydro in the years to come.