Talk Risk Managem ent and Resolution Strategies for established and novel Technologies in the low head, sm all Hydropow er Market Patrick Wiemann, 13/ 06/ 2008 Risk Management in the low head, small Hydropower Market 13.06.2008
> > I ntroduction > > Risk Management > > Case study > > Conclusions and Discussion Overview 1 . I ntroduction • Potential • Market • Problem and Motivation 2. Risk Management • Risk Identification • Risk Analysis • Risk Resolution 3. Case Study 4. Conclusions and Discussion Risk Management in the low head, small Hydropower Market 13.06.2008
> > I ntroduction > > Risk Management > > Case study > > Conclusions and Discussion Potential Case Study Stadtwerke Munich : (Third biggest energy company in Germany) Flow 3 0 m 3 / s • • Energy with Head of 1.06 m: 1 ,8 5 7 ,0 0 0 kW h Risk Management in the low head, small Hydropower Market 13.06.2008
> > I ntroduction > > Risk Management > > Case study > > Conclusions and Discussion Market developm ent of sm all hydropow er 14500 White Paper Target Data 2004 and 2005 14000 =14,000 MW Installed power in MW Current Trend 13500 13000 12,786 MW 12500 12000 11,644 MW 11500 11,535 MW 11000 2003 2004 2005 2006 2007 2008 2009 2010 2011 Year • The market growth of small hydropower in Europe was only 0 .9 5 % installed power from 2004 to 2005. • The ambitious target of 14,000MW cannot be reached with current m arket grow th . Risk Management in the low head, small Hydropower Market 13.06.2008
> > I ntroduction > > Risk Management > > Case study > > Conclusions and Discussion Overview established technologies • Overview of established hydraulic machines regarding operating heads and flow rates . • Dem and highlights where new technologies may emerge in the near future. Risk Management in the low head, small Hydropower Market 13.06.2008
> > I ntroduction > > Risk Management > > Case study > > Conclusions and Discussion Research problem 16000 0.12 Running hours per year = 5,250h . . Electrictyy production costs in €/kWh (average) Low head installations Specific cost in € per installed kW power 14000 Medium head installations Total investment cost 0.11 High head installations 12000 0.10 10000 0.09 8000 0.08 6000 0.07 4000 0.06 2000 0.05 0 0.7 0.8 0.9 1 1.1 1.2 1.3 0 200 400 600 800 1000 1200 Parameter variation in % Size • High sensitivity of low head hydropower projects. • Specific investment cost per installed kW of power for low head is significantly higher than for high head installations . Risk Management in the low head, small Hydropower Market 13.06.2008
> > I ntroduction > > Risk Management > > Case study > > Conclusions and Discussion Research problem and Motivation 1 . Raising funds and gaining investor confidence are one of the main hurdle. 2. The uncertainties involved in hydropower are not w ell understood by financiers. 3. There is little investm ent in research in non-equipment areas. 4. There are technological challenges in exploiting the remaining hydropower potential, composed m ainly of low -head and very-low -head sites. Risk Management in the low head, small Hydropower Market 13.06.2008
> > Introduction > > Risk Managem ent > > Case study > > Conclusions and Discussion Overview 1. Introduction • Potential • Market • Problem and Motivation 2 . Risk Managem ent • Risk I dentification • Risk Analysis • Risk Resolution 3. Case Study 4. Conclusions and Discussion Risk Management in the low head, small Hydropower Market 13.06.2008
> > Introduction > > Risk Managem ent > > Case study > > Conclusions and Discussion Process of the Risk-Managem ent-Cycle Risk-Management-Cycle Risk Assessment Risk Controlling Risk Identification Risk Analysis Risk Resolution Physical inspection Economic risk Acceptance Flow charts Technical risk Avoidance Fault trees Socio-economic risk Protection Hazard indices Environmental risk Reduction Transfer Risk Management in the low head, small Hydropower Market 13.06.2008
> > Introduction > > Risk Managem ent > > Case study > > Conclusions and Discussion Risk I dentification Types of risk Quantitative Qualitative Economic risk Technical risk Socio-economic risk Environmental risk Cost overruns risk Weather risk Changes in law Flood risk Price risk Breakdown risk Changes in taxation Noise risk Inflation risk Performance risk Political Force majeure Water quality Risk of innovation Meeting obligations Damage to third party Completion risk Force majeure Fish impact Legend: No insurance or limited cover available, Insurance cover available Risk Management in the low head, small Hydropower Market 13.06.2008
> > Introduction > > Risk Managem ent > > Case study > > Conclusions and Discussion Risk Analysis • I ntuitive approach: Add an item for “unforeseen costs” (the traditional approach for accounting risk). • Sensitivity analysis (probably the most common way of handling project risk in practice). • Statistical m ethods , for example probabilistic risk analysis using the Monte- Carlo Simulation (MCS) method. Risk Management in the low head, small Hydropower Market 13.06.2008
> > Introduction > > Risk Managem ent > > Case study > > Conclusions and Discussion Risk Resolution Strategies • Risk transfer , which is a strategy to shift the risk to another person, group, or organization. • Risk reduction through mitigation, prevention, or anticipation. • Risk research, e.g. dynam ic perform ance risk can be mitigated by analyzing the present performance of previous projects of a chosen project developer. Risk Management in the low head, small Hydropower Market 13.06.2008
> > Introduction > > Risk Management > > Case study > > Conclusions and Discussion Overview 1. Introduction • Potential • Market • Problem and Motivation 2. Risk Management • Risk Identification • Risk Analysis • Risk Resolution 3 . Case Study 4. Conclusions and Discussion Risk Management in the low head, small Hydropower Market 13.06.2008
> > Introduction > > Risk Management > > Case study > > Conclusions and Discussion Case Study • We focus on w eather risk through variation of rainfall and the choice between alternative technologies. • The case study will consider two scenarios: 1. Under low flow volatility , which means relatively low weather risk, and 2. Under high flow volatility , which means relatively high weather risk. Risk Management in the low head, small Hydropower Market 13.06.2008
> > Introduction > > Risk Management > > Case study > > Conclusions and Discussion Turbines • Crossflow- and Kaplan-turbines are appropriate for operation with low heads for a w ide range of flow rates . • The maximum efficiency of Crossflow- and Kaplan- turbines is betw een 8 0 and 9 3 % . Risk Management in the low head, small Hydropower Market 13.06.2008
> > Introduction > > Risk Management > > Case study > > Conclusions and Discussion Hydrodynam ic Screw The Screw can use water flows of 0 .1 -5 m 3 / s and • heads up to 1 0 m , with power capacities from 3 kW to 3 0 0 kW . • The screw reached an efficiency of 60% at 20% of max. flow and 7 0 % for 6 0 - 1 0 0 % of maximum flow. Risk Management in the low head, small Hydropower Market 13.06.2008
> > Introduction > > Risk Management > > Case study > > Conclusions and Discussion Efficiency curves for Turbine and Screw 1 Overall plant efficiency in % . 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 0% 20% 40% 60% 80% 100% Admission (Q/Qmax) in % The Turbine efficiency curve is very tight around • maximum efficiency value of 85% . The Screw has a very flat efficiency curve with a • maximum efficiency value of around 70% . Risk Management in the low head, small Hydropower Market 13.06.2008
> > Introduction > > Risk Management > > Case study > > Conclusions and Discussion Cost curves for Turbine and Screw Case Studies: A 50kW B 350kW 12000 Specific investment cost in €/kW Turbine 10000 Screw 8000 6000 . 4000 2000 0 1 10 100 1000 Installed power in kW (log) • Two cases: A for a 5 0 kW and B for a 3 5 0 kW engine. • The cases A and B will be considered under low flow volatility and under high flow volatility . Risk Management in the low head, small Hydropower Market 13.06.2008
> > Introduction > > Risk Management > > Case study > > Conclusions and Discussion Flow duration curves 6 .1000 Low volatility = low weather risk 5 High volatility = high weather risk Flow in m3/s 4 Probability 3 2 1 0 .0000 0.0 0.2 0.4 0.6 0.8 1.0 60 63 65 68 70 73 75 78 80 83 85 88 90 93 95 98 100 103 105 108 110 113 115 118 120 Flow in m 3 /s Probability • Key variable is the w eather risk measured as variability around the mean value of the flow data . • The flow variation from available historical flow data by using the log-normal or the Gum bel distribution. Risk Management in the low head, small Hydropower Market 13.06.2008
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