European Small Hydropower Association

ESHA – an umbrella organization for the promotion of small hydropower in Europe.

The European Small Hydropower Association (ESHA) is a lobby organisation promoting the interest of small hydropower in Europe and globally. ESHA was established in 1989 and is a founding member of EREC (European Renewable Energy Council), an umbrella association grouping the main European renewable energy industry and research associations. ESHA is ideally located with other RES Associations in the Renewable Energy House in Brussels just a block away from the European institutions.

ESHA wants to use synergies at the European, national and local level in order to develop the SHP sector. ESHA serves to create a platform for actors in the field of SHP and to represent their interests at European level. ESHA is structured as a federation of EU national hydropower associations and is open to members from all sectors involved in small hydropower, i.e. equipment manufacturers, public utilities, independent producers, research institutions, investors, industry and consultants. 

ESHA unites all these different actors to form a strong platform for the interests of SHP. Through the diversity of its members, ESHA is at the forefront of information on ongoing research and market trends regarding small hydropower.  

ESHA has as its goal to raise the awareness and the interests of the small hydropower sector at European level in order to

• Guarantee the representation of the sector at EU level
• Improve the market conditions of the SHP industry
• Increase the electricity production from SHP
• Remove any barrier to further SHP development in the EU

ESHA’s main activities

• To represent the interest of the European small hydropower sector in the EU by informing and lobbying decision-makers at European institutions, national governments and local authorities on crucial issues facing the small hydropower sector taking into account legal, economic, technical, institutional and environmental aspects;
• Participating actively in various working groups, meetings, workshops and conferences focusing on policy development on renewable energy and in particular hydropower, observer member in 6 different Common Implementation Strategy of the Water Framework Directive working groups such as the Climate Change and Water working group;
• Providing information services to members, e. g.:  reports on current policy developments, newsletter, ESHA website, ESHA Blog to be launched soon to enable dialogue with different stakeholders.
• Coordinating and participating in European projects such as Shapes, Choice, Hydroaction, Rural-RES and Streammap (more detailed information available at www.esha.be)  
• Carrying out studies (e. g: Layman’s Guidebook on How to Develop a Small Hydro Plant, European Atlas of Small Hydropower Resources, BlueAGE: Blue Energy for a Green Europe, Small Hydropower and Environment, Report on the development of SHP in the European Union);
• Collaborating actively with various organisations such as the European Water Partnership, International Hydropower Association,   Eurelectric, etc.
• Enhancing global co-operation with institutions outside of Europe, such as IN-SHP (International Network on Small Hydropower), based in Hangzhou, China, TERI in India etc
• Organising and promoting conferences and seminars and workshops (e. g.: Hidroenergia conferences every two years) – next Hidroenergia  will take place in Lausanne, Switzerland on 16-19  June 2010;

HIDROENERGIA 2010 16-19 June Lausanne, Switzerland

The main bi-annual event of the sector ‘Hidroenergia 2010’ is co-organised by ESHA and MHyLab of Switzerland in Lausanne, Switzerland during 16-19 June 2010.

The conference will focus on Regulation and Finance, Challenges with Technical Innovation, Multipurpose Hydro Schemes, Impact of Water Management and Climate Change on hydro, and Focus on Education and Training.

Top speakers of the sector will tackle most recent challenges to the sector, roundtables on “hot topics” will be organized together with training and experience sharing sessions and a student’s corner where students will be able to present their projects. Exhibitors are offered a large exhibition hall with poster presentation area.

The First Announcement and Call for Papers will be published shortly.

SMALL HYDROPOWER IN THE EU – The unchanged?

The situation of Small Hydropower (SHP) in the EU has changed. The enlargement of the EU along with increasing interest in renewable energies has led to a new and growing focus on SHP. As a result, more complex questions have arisen that require increased knowledge in order to be resolved.

• State of the Art

The era of hydropower by means of turbines started in France in 1832. However, the real development of hydropower began around 1900 with the invention of three-phase electricity, although from the 1950s until about 1980, SHP had a negative development in some EU member states (MS). Many SHP plants were shut down because of age and competition from newer, larger plants. When some EU countries decided to reduce their dependence on imported energy, SHP was given economic support and the number of SHP plants gradually started to increase again.

In 2006 there were nearly 21,000 SHP plants (SHPPs) in the EU-27 and if CCs as well as Norway, Switzerland and other countries are included, the number of SHPPs increases to a total of nearly 23,000. The installed capacity of EU-27 was more than 13,000 MW, or more than 15,000 MW if CCs, Norway, Switzerland and other countries are included. In 2006 the total electricity generation from SHP in EU-27 was more than 41,000 GWh and if including CCs, Norway, Switzerland and other countries nearly 52,000 GWh. This means that in 2006 about 1.2 % of the total electricity generated as well as 9 % of the RES-E in EU-27 came from SHP. On average, a SHPP in the EU-27 had a capacity of 0.6 MW and produced about 2.0 GWh in 2006. A large proportion of this capacity (nearly 12,000 MW or nearly 38,000 GWh annually) comes from the former EU-15. More than 90 % is concentrated in the following 6 countries; Austria, France, Germany, Italy, Spain and Sweden. In addition, Switzerland and Norway have a high SHP capacity, while Bulgaria, the Czech Republic, Poland and Romania account for nearly 80 % of the total capacity of the former EU-12. Many of the SHPPs in the EU are old. Only 45 % are less than 60 years old and only 32 % are less 40 years old. The eastern European countries have the highest share of young plants (about 38 % are less than 20 years old). The two non- EU western countries (Norway and Switzerland) are in an intermediate position, with a slightly lower percentage of young plants (34 % less than 20 years old) but the highest percentage of plants less than 40 years old (about 59 %).

• Potential in the EU

Potential is defined as additional or remaining economically feasible potential (Potential of upgrading and of new SHP plants) with environmental constraints taken into account environmental constraints. The Total potential includes existing plants and Potential. The SHP potential in the EU from upgrading and building of new SHPPs is considerable, 10,000 MW or 38,000 GWh annually. The Total potential of EU-27 is therefore 23,000 MW or nearly 79,000 GWh annually. It is important to note that the Potential takes economic and environmental constraints into consideration. It is therefore very realistic and can be exploited. The largest potential among the MS is not surprisingly in countries such as Austria, France, Italy, Poland and Romania that already have high electricity generation from SHPs. It is also worth noting that Norway, Switzerland and Turkey have large potentials. Scotland and Norway have made great efforts to evaluate their potential.

• General Policy Framework

Exploitation of SHP resources is subject to governmental regulations and administrative procedures, which at present, vary from one country to another despite the fact that MS must comply with the directive on RES-E in force. In order to develop a SHP site, a potential hydropower producer must fulfill these administrative procedures, which constitute a kind of barrier or burden. The barriers that SHP developers and producers reported to encounter when installing new SHP capacities can be of an administrative, grid, financial, environmental and social nature.

• Economics

Compared to other RES-E, SHP is competitive, assuming equal conditions. However, compared to large-scale hydropower and other forms of large-scale conventional electricity production, SHP and other RES-E technologies need supports in order to compete on a deregulated power market. If subsidies for conventional electrical production were eliminated and the sector obliged to cover all its external costs, SHP would most likely be very competitive compared to all other technologies. For instance according to the UNEP-report “Reforming Energy Subsidies”, there are considerable subsidies available for fossil energy. When making an investment in SHP there are at least two items that are of major importance; the size of investment and the risk. The economics of running a SHP plant can be roughly divided into revenues and costs. The revenues from generated electricity vary between the markets in the EU. On a deregulated market the price differs a great deal between years. As revenues are very dependent on the agreements with the purchaser they do not only vary between countries, but also from one plant to another. As the support systems in the EU vary greatly from one country to another, the conditions also differ to a large degree between countries. Grid compensation exists in some countries such as Sweden, where the SHP plant owner participates by generating power in such a way that it stabilizes the grid and minimizes transport losses. Labeled RES-E environmental value has recently become tradable in some countries such as Sweden, and means that suppliers can use the “extra” value from the SHP plants from which they buy their electricity. Capital cost can be divided into Licensing process, Building process and Long-term financing. The latter replaces the other two when the plant is in operation. The capital required for SHPPs depends on the size, head, flow rate, geographical location, equipment, (turbines, generators etc.) civil engineering work and flow variations throughout the year. Making use of existing weirs, dams, storage reservoirs and ponds can significantly reduce both the environmental impact and costs. Sites with low heads and high flows require more capital investment because greater civil engineer works and bigger turbine machinery will be needed to handle the larger flow of water. If, however, the system can have dual purpose – electricity generation as well as flood control, electricity generation and irrigation and electricity generation and drinking water supply, the payback period can be reduced. The operation cost can vary a great deal between countries due to the fact that there are different types and sizes of fees. Special attention must be paid to the cost of using water (water charges and/or concession fees). Operation and maintenance costs vary in line with the quality and design of a plant and the availability of specialist maintenance resources in the different MS. The administrative costs include insurances, tax, accountancy etc.

At European level, the latest economic indicators show an electricity generation cost for small hydropower in average about 1.5-2.5 €cents/kWh, typical turnkey investment costs in average about 2,000-5,000 €/kW, a typical payback time on investments of between 10 and 25 years (based on a 5% discount rate over 20 years).

The revenue (income from selling electricity plus support system minus production costs) varies between the MS. A large part of production costs consists of the capital cost (interest and depreciation) during the period of depreciation, which is normally around 25 years for SHP. When referring to production costs, it is important to know whether or not capital costs are included. In both cases SHP is competitive when compared to other RES-E technologies of a similar capacity. Due to scale effects, SHP is not normally competitive compared to large scale electricity generation plants unless external costs have been internalized.

SHP operational costs will probably not increase in the future. The amount of man-hours will decrease with technical development. The development of manufacturing processes will also reduce costs, although higher steel prices and labor costs will tend to have the opposite effect. Environmental restrictions can increase the cost of electricity generation. The specific capital cost of small hydropower installed capacity depends on the size and head of the plant; the cost per installed kW is highest where heads are lowest, but it decreases rapidly as heads increase. This effect is reduced at heads of around 25 metres and eventually, the specific cost stabilises. Two potential areas for improvement therefore exist; the first concerning cost reductions for low heads, the second for developments supplying less than 250 kW. As a large proportion of the potential in Europe involves low-head plants, the benefits of concentrating development efforts in this area, and particularly for low capacity plants, are obvious.

Capital costs are a crucial factor when considering the costs and uncertainties of SHP. Government guarantees for investments, investment grants or other ways of decreasing the financial risks involved in SHP projects would be desirable.

• SHP and the Environment

The SHP relation to the environment is twofold. On the one hand there are many positive effects resulting from SHP operations such as the replacement of fossil electricity generation, which produces harmful emissions, and the reduced risk of river flooding. In some cases SHP can also increase biological diversity. SHP production in EU-27 amounts to 41,400 GWh (2006).
It replaces fossil production and protects nature and society from many harmful emissions such as greenhouse gases and sulphur dioxide, which have the worst environmental impact. SHP production reduces greenhouse gases such as CO2 by 29,000,000 tons annually (41,400 GWh/ year x 700 tonnes/GWh) and sulphur dioxide by 108,000 tons annually (41,400 GWh/year x 2.6 tonnes/GWh). A positive feature of hydropower is its ranking in Life Cycle analyses (LCA) where it has the highest ranking of all electricity production technologies. On the other hand, environmental groups that oppose SHP point to its negative impact on the local environment. Most of these arguments are, however, based more on theories than on scientific research. Some arguments are related to specific cases and may be relevant, but they do not generally apply to SHP. At times the criticism seems to be emotionally charged. New technology and improved SHP operating methods show that it is possible to reduce the local environmental impact.  Therefore, the positive impact of SHP on the environment outweighs the negative effects.

A study “The application of the ISO 14001 Environmental Management System to Small Hydropower Plants” discussed how ISO 14001 can be used among other things as a tool when working to reduce the impact of SHP on the environment. In the study the negative impact of SHP on the environment is also dealt with.

Compared to conventional generation, SHP is better for the environment. More research is needed if and how SHP affects the environment. There are interesting projects indicating that SHP operators, environmentalist and researchers can co-operate to find broad solutions acceptable to all parties.

• The Technology

During recent years hydropower development has focused on the adoption of new technology from other sectors. Only a few decades ago, a person responsible for operating a SHP plant had to live nearby in order to control the operation. Such a system would be impossible today with the current ratio between income from electricity generation and the cost of labor. The scene has dramatically changed with the development of electronics. The following describes some areas where this development has made SHP operation more efficient: Automation, Frequency conversion, Permanent Magneto Generators, Efficient Low Head Turbines, Fish Friendly Turbines, New Materials, Environmental Requirements and Turbine Development.
The development of SHP technology is far from complete and new techniques not only bring down the cost but also emphasise environmental issues. Some areas that deserve mention are the development of automation, more environmental friendly solutions and more efficient turbines.

• The Market

In the former EU-15 there are more than 40 manufacturers of small water turbines. Not surprisingly most of them are located in countries with highly developed SHP such as Germany, France, Spain, Austria and Italy and they offer a high technological level. During recent years many larger turbine manufacturers have incorporated smaller manufacturers but this does not seem to have led to any reduction in manufacturing capacity. Some manufacturers have efficient development departments to improve their products, whereas other seem to rely on proven technology. A survey of Eastern Europe revealed that some 24 small-scale water turbine manufacturers exist in EU-12 and CC. The Czech Republic and Slovenia have the largest turbine manufacturing industry, while Hungary, Poland, Croatia and Romania have some limited turbine manufacturing capacity. Internationally recognized manufacturers exist in all of the above mentioned countries.

The European SHP equipment manufacturers are market leaders. They have successfully developed hydropower technology and they have become the main exporters of equipment worldwide. Indeed, it can be said that Europe gave light to the world. Although EU equipment manufacturers are still world leaders, this position is under threat as MS have shown little interest in stimulating investments in new SHP and maintaining existing plants. This situation is due to decreasing profits for energy producers in the deregulated electricity market and the increasing obstacles created by environmental and legal constraints. The introduction of support systems has improved this situation. The margins for producers are still good in a few countries such as Germany and Spain and consequently the markets for manufactures in these countries are better, but have recently been reduced because of the rising cost of materials, which has not been possible to transfer to customers. The non-EU market is still promising and offers good prospects for EU manufacturers, although financing hydroprojects is a serious problem as is differences in business culture. Small companies are finding it difficult to deal with such problems. The world is strongly in favour of electricity from renewable energy sources and the small-scale format is well suited not only for developing countries. However, there still appear to be too many obstacles to SHP within the EU giving the European manufacturers difficulties in demonstrate their competitiveness. European SHP manufacturers have been in a negative spiral and many have chosen to leave the SHP market. This negative spiral has now stopped and the EU have a better chance to maintain their industrial position as well as the competence that has been built up over the years. Such competence, if lost, is hard to recover because of the special technology related to hydropower. In some countries, for example Sweden, an ambitious programme has been launched to supply competence to the industry. Turbine manufactures, other SHP equipment manufacturers and consulting companies will only stay in business as long as the market provides them with enough work. It would be wise for European manufacturers to make arrangements with export offices and export credit institutions in order to successfully penetrate the non-EU market. It would also be advisable to initiate a study on ways to strengthen the manufacturers in the short term so that they will be well prepared when both the EU and non-EU markets become stronger.

In 2003 approximately 20,000 persons directly earned their living from SHP in EU-27. The SHP industry in the EU was seen as multi-disciplinary, highly skilled industry offering range of products and services for the sector. Following the EREC (European Renewable Energy Council)
projections for 2020, the number of direct and indirect jobs could reach 28,000.

Manufactures of SHP technology in the EU have a long history. They have developed a highly competitive industry that employees many thousands of people. In order to maintain the competitiveness of the European manufacturing industry it is of vital importance to have an increasing home market and to stimulate technical development. It is an old truth that you are only successful on an export market if you can qualify your skill on your home market.

• The constrains

Environmental constraints affecting SHP are mainly related to fishing and water regulations. In almost all countries the fishermen’s lobby has the power to influence the decisions of the regional and national authorities. Moreover, in many European countries, environmental groups are trying to prevent local river areas from being used by companies for industrial purposes (mainly electricity generation), claiming it would negatively impact on the river environment (this is particularly a problem in northern countries). Another constraint is that in many countries the long water licensing procedure is a real burden. This is mainly caused by the complicated and time-consuming public administration procedures and the number of subjects involved who can refuse authorisation, which makes it difficult to set up new SHP plants as well as finding proper financing schemes (this problem is common in
many southern European countries).

Current policies pertaining to SHP include many mechanisms that could, if well implemented, increase SHP production. In the medium term, these improvements may lead to substantial growth of this energy source. In the current economic framework, which is converging towards a common European market, the European Commission can play a fundamental role in spurring economic forces to support Small Hydro Power. However, these benefits can only be achieved if there is a synergy at European, national and local level. These three levels must work together, since efforts at only one level are doomed to failure. The challenge for the European authorities involved in the development of Small Hydro Power and other renewable energy sources is to placate the market by reducing uncertainty. Although this is not an easy task, some measures can be taken to promote the interest of European citizens in the sustainability of the energy sector.

Promoting SHP development in the short-medium term

• Assure higher quality of the data that is being reported for SHP to Eurostat. Using data from the measuring of production delivered to the grid is the most reliable method.
• Evaluate different methods and recommend the MS a “state of the art” of how to calculate a more precise potential for SHP in different MS. Good examples can be found from Scotland and Norway.
• Evaluate different methods and recommend the MS a “state of the art” of how to calculate the costs for SHP investments and production as well as other sources of electricity generation.
• Follow up to what extent the Directive 2001/ 77/EC has been implemented to reduce the obstacles to increasing production and to rationalize and speed up administrative procedures.
• Give clear recommendations on how to interpret Directive 2001/77/EC and the WFD Directive that appear to be contradictory.
• Decrease the barriers for developing SHPP by setting up clear rules and timeframes in the licensing process.
• Support the manufacturing industry by increasing the research of finding new, more efficient and more environmental friendly ways to generate electricity from hydropower. This in order to secure that the SHP manufacturing industry will still be international competitive in the future.

For further information please contact us

ESHA
Renewable Energy House,
Rue d'Arlon 63-67,
1040 Brussels,
Belgium

Website: www.esha.be

E-mail  Secretariat:
Fax: +32 2 546 1947

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