‘We need to think differently,’ said Bernhard Pelikan of the University of Natural Resources in Austria. Think differently was indeed the message all round at this year’s Small Hydro conference in Lisbon, Portugal. But despite this enthusiasm, thoughts often returned to the immediate difficulties of financing and regulating small hydro plants worldwide.


One of the main issues raised was the problem of connecting small hydro schemes to local and national grid systems. The main function of a grid system is to ensure all customers have access to a reliable supply of electricity at a constant voltage. It is not always possible for companies which own small hydro plants to offer a predictable output, so the contractual cost to the supplier of meeting the terms of agreement may make potential projects uneconomical. The financial charges which must be paid to connect the supply to the grid are also too high for some generators.

In the UK, the present tariff system will be replaced in 2000 by the New Electricity Trading Arrangement (NETA), which is designed to make electricity a tradable commodity and reduce its price to the consumer. It is an idea that looks set to take off across Europe. But many feel that this system will hinder the development of hydro technology and increase competition between the renewable sources of energy. It therefore comes as no surprise that profitable, fixed price systems for renewable electricity are preferred by the industry, and that the buy-back rate or price paid by utilities for the energy delivered to the grid should be fixed.

Another important legislative factor affecting the development of small hydro power is the water abstraction process. For example, the surface water abstraction licensing policy in England and Wales which is implemented by the Environment Agency (EA), is considered as a major barrier to small hydro development in the region. Ian Barker of the EA was a brave man to step into the lion’s den at Small Hydro 2000, but his presence highlighted the need and benefits of more open discussions between the small hydro developer and the regulator.

Hydro technology has advanced considerably in recent years, to the point where it is now possible to implement small hydro schemes that produce minimal impact on the environment. The regulator must now recognise these efforts and the global role of small hydro in reducing greenhouse gas emissions. ‘Carbon or carbon dioxide tax is the only transparent way to introduce help for small hydro,’ said George Babalis, the former general secretary and now honorary member of the european-small-hydropower-association. A common tax on pollution will emphasise the emission-free advantage of small hydro, and cause the regulator and investor to look more favourably on this renewable source of energy.

Think differently

Despite these obstacles, the ‘think differently’ approach reigned at Small Hydro 2000, and a number of interesting and innovative ideas were presented

to ease some of these financial and regulatory concerns.

Peter Klingenberger of Harpen in Germany, discussed revolving project finance as a means to develop more hydro schemes in Europe. This procedure allows a small hydro developer to get a number of projects off the ground, by substituting shareholder loans with bank debt which releases capital for the next project. Although this method accelerates project development and only requires a small amount of fixed equity, the owner of the plant will carry the total construction risk for the project. ‘Expertise is a key factor for success,’ said Klingenberger. He also emphasised the need to calculate finance on an asset basis, and persuade people to accept a plant as part of their village. This may help to overcome problems associated with grid connection.

It was also interesting to hear that Klingenberger believes it is easier

to develop hydro in Europe than in

Asia, due to easier plant access, better communication and a common currency which offers stability to the investor. However, the industry often receives much fiercer opposition from environmental groups in Europe and must meet stricter environmental standards before a project can go ahead. One of the largest obstacles which small hydro developers face are the environmental impacts connected to the construction and operation of a small hydro plant. Nino Frosio of Studio Frosio in Italy, presented a guide and a software for the environmental impact assessment of small hydro power plants to deal with this issue.


In 1999, Studio Frosio, in collaboration with the Austrian and Italian associations promoting small hydro power, started working on the software within the frame of the THERMIE B programme supported by the European Commission. The result of this work is a series of indexes, including a global one, which allows the evaluator to determine which project is the best when the value of the weight of each criterion (economical, technical, environmental) varies.

According to Frosio, one of the most significant problems is representing as faithfully as possible, the decision maker’s perception of reality at the time of making the choice about criteria. There

is a danger of attempting to answer questions that are incorrectly formulated or attempting to obtain correct results from inaccurate data. But despite this, the developers of this software believe they have created a tool which will help the discussion and the environmental decision making process to be objective. This can only help to build bridges between the small hydro developer, the environmental regulator and the consumer, as well as balancing the economic costs and benefits of each individual hydro plant with

its environmental impact. The guide gives plant designers a tool to evaluate

the environmental effects of the choices they make in order to improve the acceptability of a plant.


The further exploitation of small hydro power will depend considerably on public opinion and acceptance. In Europe, a considerable amount of hydro power

has already been exploited or is not economically viable, often because of public opinion.

Portugal, however, is making the effort to improve the environmental and social acceptability of small hydro plants. Delegates were given the opportunity to see this for themselves during a study tour which visited four small hydro plants in northern Portugal, with a quick stop-off at a large dam where it was difficult to

see anything at all at midnight in the

mist. Nevertheless, the whistle-stop

tour provided a valuable insight into Portuguese small hydro, and everyone was able to take away some ideas they could apply to their own projects.

There was also the chance to see some beautiful scenery, particularly in the municipality of Baião, where the 3050kW Ribadouro hydro power plant is located. This run-of-river plant is situated on the downstream section of the Ovil river, a right bank tributary of the Douro river. The modern design of the power house does not detract from the local architecture or the focus of the church which is opposite the power house. It was important to maintain the natural beauty and serenity of this location which is particularly attractive to tourists, and it was commendable that the spectacular waterfall next to the power house was kept at this site.

The Ribadouro plant has been successfully integrated into the environment, landscape and society, and has improved and enlarged the existing access to the water lines. The plant is a good example of how a small hydro plant can be implemented which is sensitive

to the environmental and social needs of the surrounding area.


Multi-purpose projects were highlighted at Small Hydro 2000 as a means of generating more power from existing structures or adding additional functions to energy production. This is expected

to improve public and government acceptance, funding opportunities, and ecological conditions as well as reduce construction costs. It may also help the industry to provide that extra generation required to meet the EU’s renewable energy targets set out in the white paper, which aims to double the share of renewable sources in the energy mix from 6% to 12% by 2010. The paper suggests than an additional installed capacity of 4500MW of small hydro power is a realistic contribution towards achieving this target.

According to Bernhard Pelikan, it is possible to replace most of the pressure reducing installations used in water supply systems with a small turbine. A 15litre/sec discharge and a 180m net head will offer about 20kW, enough to operate light, heating, quality treatment devices and small pumps. Power can also be generated from irrigation channels or cooling water canals. A discharge of 2.5m3/sec and a 3m head can produce about 55kW, probably enough to operate the pumps at the beginning of the cooling system. Sluice systems also offer a potential source of energy, but there is great variability of the head and a need for specially designed equipment. However, the Matrix turbine, a recent THERMIE project has demonstrated how this energy potential can be tapped.

The use of residual flow to generate additional power was well received

at Small Hydro 2000. The main advantage of residual flow is that simple

turbine technology can be used due

to a constant load. The cost, operation

and maintenance of this system is therefore reduced.

As well as using existing structures to promote small hydro, a huge emphasis was placed on other functions associated with energy production. The industry is realising that the simple exploitation of hydro power is not enough to continue its success. Small hydro owners and operators must look at solutions which improve the overall value of a site to the environment and community, such as rehabilitating embankments, increasing flood protection, dotation of wetland areas and stabilising groundwater levels.


Recreation has a high priority in modern life. It is good advice to owners and operators of small hydro plants to spend a little additional money on incorporating some recreational ideas into their projects, such as playgrounds, boating facilities or an energy museum. These recreational aspects can be promoted along with hydro power, and may persuade more of the public to accept small hydro into their communities. Small hydro power needs a better marketing strategy. If local people are behind it, then money and development will be too.

Pelikan believes that the solution lies in understanding the individuality of each project and a more imaginative approach to hydro development. ‘Now is a revolutionary time,’ Pelikan concluded. With the need to meet the renewable energy targets of the EU’s white paper and the growing environmental and economic demands of today’s consumers, he couldn’t be more right.