Local power generation benefits discussed

Ruapehu Bulletin, Volume 7, Issue 353, 11 September 1990, Page 5

Local power generation benefits discussed

The King Country Electric Power Board is currently investigating restarting the Karioi hydro plant project and has hired Swiss hydro consultant Eugen BurgerRinger to prepare a pre-feasibility study. Here he backgrounds the case for small hydro plants.

Little need be said here about large scale hydro developments as the basis for New Zealand's electricity system, their role in base-load generation and their function of adjusting, with their storages, the peaks and valleys of daily distribution profile. This system is now at a mature and proven stage. Forecasting the need for future large plant, however, is difficult, given the timescale for such plant - ten to fifteen years from the start of investigation work to commissioning. In contrast, small hydro plants need, from conception to commissioning, only two to five years. When considering the possible development of their own hydro projects, supply authorities need to explain their policy clearly to their customers, particularly the impact this might have on costs arising from new investment. In some cases, the output from new hydro generation may be more expensive for a period than equivalent purchases. Such a situation would be limited to the payback period for the project. Afterwards there would be clear benefits, based on the long average lifetime of hydro plant. Benefits longterm The major benefits indeed, would be enjoyed by our children, just as New Zealanders now benefit from the decisions of earlier genreations whose foresight led to reliance on hydro power as the foundation of the existing electricity system. Presented in such a way, a local small hydro project may be acceptable to the supply authority's customers, even if a cent or two more per unit were necessary, over a five to ten year term, in order to make a "borderline" plant feasable. At present more than five power boards in New Zealand are following this philosophy and preparing to go ahead with modem small hydro power projects. In Australia too, especially Victoria, there is growing support for small hydro, based on the ideas of saving nonrenewable resources and mitigating greenhouse effects. Central government is being asked to provide tax benefits, such as are in place in the United States and many European coun-

tries, to encourage small hydro construction. Advantages Small hydro projects are a useful local employer; on average, about fifty people are employed over a period of more than a year at the construction site. Subsequently, local resources may be used for maintenance, so supporting the local econ-V omy and population base. k> Local power genera-j, tion not only has bene-« fits for the customers, « the environment and the \ national interest, it also means less friction loss in transmission and an improved safety factor. That is, there is less impact on supply with a small plant out of opcration than with a large one and restoration of production will draw on local services. Disadvantages? Years ago, numerous small hydro plants were built in New Zealand and served their purpose well. Some are understood to have been scaled down forms of larger plants which, in the author's opinion, is the wrong approach. In earlier times, of course, there was not the volume of literature nor background of experience on small hydro that is now; available. For smaller projects, pre-feasibility and feasibility reports tended to generate the same amount of paper as do the larger plants. This altogether appears to have led, in New Zealand, to some high project overrun costs, whilst changes in loan interest rates and in Government policy have also been factors. Similar examples and experience in Europe promoted the idea of turnkey, or BOO (buy, own and operate) and BOOT (buy, own, operate and transfer), schemes. This approach helps to protect the buyer (and, hence, the customers) against cost overruns as far as possible. The risk is carried by professional outside interest and, even if costs go higher by, say, 10% than would otherwise be the case (a premium for the general contractors), that can still represent good value for the buyer. A short-term disadvantage may be the present uncertainty with regard to re-structuring of supply authorities in this country. However, ownership of its own plant should be considTurnpage 6

Local hydro

From page 5 ered by supply authority to bc a valuable factor in maintaining viability. Conclusion The increasing pollution and heating of the world's atmosphere should motivate all governments to protect it from the effects of thermal generation and, instead, promote the use of renewable resources. Non-renewable energy, especially oil, is limited and will be exhausted sooner or later;meanwhile some experts predict significantly rising prices by about 1996. Locally, Maui gas is also limited,

with present costs remaining effective until the year 2000. And no major hydro scheme, after Clyde, will be commissioned before the year 2007. Given such a scenario, the time frame and scale of local, small hydro in its modern form, with the consequent advantages of early decisionmaking" and relatively fast project design and construction, provide the example to follow. Small local hydro power capacity is, in the writer's view, the best guarantee of controlled energy costs for the present and following generations.