SMALL HYDRO POWER PLANTS IN ARMENIA
21:19, July 10, 2012
BY AREG GHARABEGIAN ARTAK HAMBARIAN, AND KENELL TOURYAN
The Armenian Government has made remarkable progress within the
past 10 years in reforming country’s energy sector and overcoming
the difficulties faced in the 1990’s. With assistance from
international sources, government has taken serious steps to
improve energy sector performance. The nuclear power plant was
re-commissioned in 1995 and the reliability of energy supply has
increased substantially. Nonpayment by customers has been reduced
with practically all private consumers now paying for their energy use.
Armenia does not have fossil fuel resources; therefore, it has to
import gasoline, natural gas, and heavy oil for its needs. Besides
using fossil fuel, Armenia generates approximately 40% of its
electricity using nuclear power plant and 35% using large hydro power
plants. Armenia needs to develop its renewable energy resources to
reduce its reliance on imported fuel.
Historically hydropower has been a large part of Armenia’s electrical
energy production resources. There are two large hydropower cascades,
Sevan-Hrazdan and Vorotan that have combined installed capacity of
approximately 960 Mega Watt (MW).
Table 1 provides distribution of the installed capacity and generation
of electricity by different sources in Armenia.
Table 1 – Electricity Sources in 2010
Source
Installed Capacity, MW
Generation GWh
Nuclear
400
2,400
Thermal
2,082
1,059
Large Hydro
960
2,020
Small Hydro
103
308
Wind
2.6
4.6
Total
3,550
5,780
The following are the possible sources of the renewable energy in
Armenia for the three major energy components:
* Electricity: hydropower, wind power, photovoltaic’s, geothermal
power, and biomass; * Thermal (heating): heat pumps, solar thermal
power, geothermal power, and biomass; * Transportation: bio-ethanol.
Potential of Small Hydropower Power Projects
The findings of a comprehensive review of renewable energy potential
in Armenia have ranked small hydropower power projects (SHPP) as the
most advanced renewable energy technology and the most economical for
Armenia in the short to medium-term. Typically plants with less than
30 MW of installed capacity are considered SHPP.
Development of SHPP has been a success story in Armenia over the
last decade. In 2010, SHPPs generated approximately 5% of the
electricity used in Armenia and this percentage can be doubled if
favorite conditions are created and certain barriers that hinder
further growth of the industry are eliminated.
As of early 1990’s Armenia had 28 small hydro plants which were
originally commissioned from 1930’s through 1950’s. About half of
those were economically unattractive and not feasible due to their
age and changed water flow. In the mid-1990’s Government of Armenia
decided to privatize these SHPPs through a competitive tender but
there were no bids for most of them due their poor conditions.
As of late 2010, there were more than 80 commercial size SHPPs
operating in Armenia. About 60 of these have been developed and
constructed in the past 10 years. There are also numerous small
units (micro) that are operated by individuals to satisfy their own
electrical needs. Figure 1 shows a good size SHPP and Figure 2 shows
a small unit in Armenia.
Table 2 summarizes the potential for additional SHPP development in
Armenia over the next 10 years and is based upon data presented in
a recent study prepared by Armenia Renewable Resources and Energy
Efficiency Fund (R2E2). It should be noted that values presented
in Table 2 are average annual energy output number with the maximum
peak occurring during spring runoff and the minimum occurring during
winter months when stream flows are at their lowest.
Table 2 – Potential Remaining SHPP Capacity in Armenia
Mid and Long Range
Capacity (MW)
Output (GWh)
Needed Investment (Mil $)
Resource: Possible Max
305
1,118
366
Possible Min
252
774
303
2015 (forecast)
179
517
214-225
2020 (forecast)
216
626
259-270
The assumption is that hydro power generation would grow from current
5% penetration level to 10% within the next 10 years. Once the best
locations are explored the tempo of implementation of new projects
will slow down due to increasing marginal costs of construction in
more remote, inconvenient, and lower capacity factor locations thus
making investors less eager to do projects.
Recent studies indicate that there are 115 sites remain to be
developed. In addition, licenses have been issued for 45 but they
were not constructed as of early 2011. However, development of some
of these sites may not be possible due to environmental concerns. A
good example is Trchkan Waterfall where a permit was granted for
developing a SHPP but permit was then canceled due to the fears public
opposition of developing this scenic location. Government granted
Trchkan a specially protected area status that would make it immune
from future industrial developments.
Figure 3 shows the history of SHPP development in recent years. A
flurry of activities started in 2004 when Public Service Regulatory
Commission (PSRC) adopted a clear feed-in-tariff for new projects.
[table-3.jpg]
Source: USAID, 2010
Technical Issues
Over the past five years, those SHPPs that have been approved for
licensing and actually constructed faced and overcame a number
of issues. Strides were made to address and deal with competing
land use claims, environmental impacts and stream flow limitations,
differences between actual construction costs and study cost estimates,
new hydrology information that differed from historical data measured
by the various hydrological research institutes from the Soviet era,
and conflicts with other water uses to name but a few. Resolution
of these issues is essential for considering the future potential of
SHPP additions to installed capacity.
The main technical problem with SHPPs in Armenia has been the lack
of automation and utilization of modern control technologies. Other
factors include poor performance and low reliability of locally
produced equipment and those that are imported from China,
metallurgical and materials problems resulting from the re-use of
salvaged piping from irrigation systems and hydro facilities that
are no longer operational, as well as substandard engineering design
and poor quality control during construction. Addressing each of
these problems will ensure that Armenia continues to add small hydro
generation capacity over the next decade at the same rate as has
occurred over the past 10 years, despite the fact that many of the
best hydrological resource sites have already been utilized.
The existing SHPPs should provide over 300 GWh of energy in an
average year; however, in reality these plants produce much lower
amount of energy, due to technical considerations, particularly lack
of automation and low efficiency equipment.
Financing
Funding sources are available today for the construction of new
run-of-the river SHPPs. The only limitation is the availability
of promising sites within reasonable proximity to good road and
transmission access where more SHPP systems can be constructed.
The international financial community has been extremely supportive of
the development of SHPPs in Armenia. The active financing participation
of both Armenia Renewable Resources and Energy Efficiency Fund (R2E2)
through funds provided by World Bank and German KfW funding agency
has enabled the rapid development of SHPP over the past decade.
These international funding mechanisms have been the main cause of
rapid development of SHPP industry. However, in general the industry
and the projects are too small to attract individual financing from
outside commercial sources and they are too large and specialized
for most Armenian banks.
It is important to attract private foreign capital investment to
develop new small hydro capacity. The experience of the past years
indicates that most credible foreign developers do not consider the
current returns for investments in renewable energy projects in Armenia
to be equal to the necessary risk-adjusted returns, and hence have
not been forthcoming with investment funds. There is competition in
the world for renewable energy development capital as many countries
focus on developing internal generating resources. Those countries
with the most attractive risk profiles and investment quality would
attract the most capital.
Tariffs for SHPPs in Armenia today are still fairly low by world
and regional standards such that the only way to ensure a return
on investment is to utilize inferior turbines from local sources,
salvaged piping for penstocks, poor quality construction materials,
and elimination of automated control systems. However, continued
adherence by the government to low feed-in tariffs will discourage
future investments in this promising renewable energy technology given
that the less optimal hydrological sites remaining to be developed
will require more efficient and reliable turbines and automated
control systems to achieve commercially viable capacity factors and
enhanced annual energy outputs–all of which will entail increased
investment levels over previous capital requirements in this renewable
energy area.
Potable Water as a Source
There have been evaluations of installing SHPPs on the existing potable
water supply pipes. The water supplies are moved under high pressure
from mountain areas to cities, and often have pressure reducing valves
which could be replaced with generating units to produce electrical
energy. The potential capacity of hydro generation on water supply
pipes and facilities was estimated to be about 7.5 MW but only less
than 4 MW may be feasible to be utilized.
Conclusion
Developing feasible and economically viable renewable energy resources
will create a stable domestic power generation capabilities,
which in turn could be a major component of Armenia’s national
security. Contribution of the renewable electricity in Armenia
can increase fivefold by 2020 in comparison to the present energy
production from renewable energy. In 2010 renewable energy production
generated 310 GWh, and it is forecasted to generate 740 GWh in 2015,
and 1,500 GWh in 2020. Development of new SHPPs would be a major
component of this increased in capacity.
It is important to emphasis that the achievement of targets is much
more dependent on politically implemented measures than on technical
capabilities.
References
Small Hydro Power (SHPP) Sector Framework, Status, Development Barriers
and Future Development, Assistance to Energy Sector To Strengthen
Energy Security and Regional Integration, Funded by USAID, July 2010,
Prepared by: PA Government Services Inc.
Preparation of Renewable Energy Development Roadmap for the Republic
of Armenia, Task 2 Report, Assessment of the technical, financial and
economic potential for development of renewable energy, February 2011,
Prepared for: Armenia Renewable Resources and Energy Efficiency Fund
(R2E2), Prepared by: Danish Energy Management A/S
Renewable Energy Roadmap for Armenia, June 2011, Prepared for: Armenia
Renewable Resources and Energy Efficiency Fund (R2E2), Prepared by:
Danish Energy Management A/S
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