Fast Tracking Hydro Infrastructure Build in Developing Economies. BJ Rochecouste Collet Technical Director Aurecon South Africa

Transcription

1 Fast Tracking Hydro Infrastructure Build in Developing Economies BJ Rochecouste Collet Technical Director Aurecon South Africa

2 Fast Tracking? Hydro is the cheapest power source in the Nordic market (Source: PWC, 2014 & Hydropower projects are capital-intensive and financing them, by finding an optimum balance between bankability and affordability, is often a challenge. (Source: PWC, 2014 ) Each site is unique in its own way and offers different challenges but all project have effectively only two inherent risks, namely hydrological and geotechnical/geological. Developers, shareholders and Lenders need to be able to analyze, understand and mitigate such risks and this takes time..so how do we fast track hydro

3 Fast Tracking? A route or method which provides for more rapid results than usual To accelerate the progress of (a person or project) (Source Oxford Online dictionaries )

4 How can hydropower development be fast tracked? 1. Rehabilitation/Refurbishments of existing plants (Fastest?) 2. Having dedicated programs in place to encourage new build hydro (renewable) development (REFiT, GETFiT, REIPPP etc.) and having legislative (and tax) incentives to encourage developers (Country level) 3. Good planning from Pre-feasibility stage to development stage (Partnership with Developer, Consulting Eng. & Supplier ) 4. Technical innovations & Skills (Consulting Eng.) 5. Using off the shelf products and early engagements to accelerate delivery (Consulting Eng. & Supplier) 6. Using well understood Contract terms (FIDIC/NEC)

5 How can hydropower development be fast tracked? 7. Consider off-grid solutions (Utility / Regulator/Govt. Agencies) 8. Project selections (rather focus on many small projects. than a mega project ) (Govt. initiatives / Regulator) 9. Coordination from all government department (Environmental, Water resources, energy, etc.) 10. Finance the project off balance sheet (not Project Finance) (Developers) 11. Reduce requirements for small projects (< 50 Mil Capex) in terms of a Project Finance Lite (Lenders)

6 Rehabilitation/Refurbishment of existing plants

7 Rehabilitation is required when: Rehabilitation of existing plants Overall efficiency of the plant is lower (Increased the current generating capacity) Old equipment for which spare parts can no longer be obtained easily (Obsolete relays for example) Plant not maintained properly (Lubrication, oil and filter change, ensuring all pumps are working adequately, checking bearings, etc.) Failure of the Plant (Inadequate skills faulty repair faulty design faulty electrical protection system) Flooding & Fire Siltation

8 Rehabilitation/Refurbishment of existing plants Timeline It s the fastest although the actual timing depends on the severity of the rehabilitation required? (1 2.5 years). Capital Investment is less depends on the severity of the rehabilitation but generally not more than say 40% of the total scheme development. Regulatory hurdles are less as the project is existing. Risks are more easily defined. Finance is generally easier. But..unfortunately the number of projects requiring rehabilitation / refurbishment is few and far between and generally the tarrifs would be lower than new build plants.

9 Programmes, Policies & Frameworks Facilitate Investment Technical Knowhow & capacity build Coordination & Planning Technology Incentives Ease of doing business Accelerated Hydropower Development Strengthening of governance in the natural resource sector is a key determinant for sustainable and inclusive growth. Thus, a nation needs to have an overarching policy framework, specific sector strategies, and clear and transparent processes for accelerating hydropower development. (Source PWC, 2014)

10 Dedicated Programmes &Frameworks Typical programmes have shown to be great incentives for the private sector to enter as Independent Power Producers (IPPs) or Private Public Partnerships (PPPs). Such programs are, for example, Renewable Energy Feed-in Tariff (most common) Global Energy Feed in Tariff (Top up tariff in Uganda as Pilot) REIPPP (South Africa) These programmes generally offer: Bankable Short to Medium PPAs Sovereign Guarantees Stable (hard?) Currencies (USD in most cases). Hence offer stability and guarantees to the private sector

11 Dedicated Programmes &Frameworks Some developing countries have developed strategies to accelerate and facilitate hydropower developments. Such as: Strategy for New and Renewable Energy Development (EDENR) (Mozambique) Framework and Package of Incentives (FPI) for hydropower generation and transmission development (OPPPI, 2013) (Zambia) Renewable Energy Development and Network Expansion and Rehabilitation for Remote Communes Sector Project & Viet Nam Renewable Energy Development Project (Vietnam) Promotion of Renewable Energy and Energy Efficiency Programme(PREEEP) (Uganda) Amongst others..

12 Dedicated Programmes &Frameworks Other Countries incentives includes: Relaxation of taxation and customs duties on hydropower projects, but not only on the imported items (customs duties), but also WHT and VAT exemptions at the development stages. Tax deferrals processes during the first few years of operations. In some cases support for self build of the transmission and interconnections, in other cases commitment by the regulator to construct the power evacuation line where such costs are excluded from the project CAPEX Technical support to access Government owned assets (including Land and other natural resources) Internal policies to minimise red tape & improve approvals Off grid project initiatives

13 Good planning from Pre-feasibility stage to development stage With proper planning, a small (< 10 MW) hydropower station can be completed from commencement of Reconnaissance Study Phase to Commercial Operations Date (COD) in less than 48 months allowing for: 2 month reconnaissance study; 4 months Pre-Feasibility Study; 4 months Bankable Technical Feasibility Study; 11 months ESIA, which commences at the Pre-Feasibility Study; 10 months to raise finance and obtain permits and licenses and negotiations to FC; months for implementation to COD.

14 Good planning from Pre-feasibility stage to development stage The Key in achieving this timeline is: Developers to know the game. Technical team to keep the Client/Developer informed throughout in the decision making and progress. Developer be able (and authorised) to make decisions in 2 weeks from submissions (since he has been kept abreast throughout). Employ a dedicated professional team with all expertise required in house from the beginning. Run the ESIA in parallel, starting at the Pre-Feasibility Study. Contact turbine suppliers already at final F.Study stage to get their input, budgetary offers and preliminary designs. Early engagement with civil contractors.

15 Good planning from Pre-feasibility stage to development stage The Key in achieving this timeline is (Cont.): Commence negotiations with land owners soon after Pre-feasibility (as at this stage, the project will already be considered economically viable ) Commence discussion with regulatory authorities and start applying for the applicable permits. Commence raising finance and talking to lenders and LTAs before the F. Study is completed use Pre Feasibility and Reconnaissance Reports Identify risks (which the LTA / Lender may foresee) and address them upfront (be pro-active)

16 MEAN FLOW - Mm³ GROSS YIELD - Mm³ p.a. MONTHLY FLOW - Mm³ ANNUAL FLOW - Mm³ Fast Tracking Hydro Development Technical innovations & Skills Use of latest technology and software makes the process easier, such as: Hydrological modeling (Calibrated Rain/Runoff) for reduced hydrological risks, and Yield models for optimized output ROUTE NO. 48 MONTHLY HYDROGRAPHS (T5H007) Observed Simulated WRSM 2000 HYDROLOGICAL YEAR 2010/04/14 (16:29) Record Period: ROUTE NO. 48 YEARLY HYDROGRAPHS (T5H007) WRSM 2000 Observed Simulated HYDROLOGICAL YEAR 2010/04/14 (16:29) Record Period: ROUTE NO. 48 MEAN MONTHLY FLOWS (T5H007) Observed Simulated WRSM 2000 MONTH (Oct - Sep) 2010/04/14 (16:29) Record Period: ROUTE NO. 48 GROSS YIELD (T5H007) Observed Simulated WRSM 2000 STORAGE CAPACITY - Mm³ 2010/04/14 (16:29) Record Period:

17 Technical innovations & Skills Flow measurements of large rivers using acoustic dopplers and electronic wading rods to confirm the hydrology by spot flow measurements. Putting measuring probes with data logger to measure the water level at the proposed intake locations

18 Technical innovations & Skills Use of latest technology and software makes the process easier, such as: 3D modeling Such as Autodesk Inventor, Civil 3D, Revit, etc. done which assists in early optimisation of the project at Pre F.Study levels;

19 Technical innovations & Skills

20 Technical innovations & Skills CFD modeling carried out, reinforcing the F. Study designs;

21 Technical innovations & Skills Surge analysis completed at F. Study level, which assists in defining the turbine/generator inertia requirements and penstock designs; Structural FEA done directly on the 3D models, using information from the detailed geotechnical investigations;

22 Technical innovations & Skills Using these technologies have for effect in Making Feasibility designs are more accurate and detailed, making them more bankable Reducing Perceived risk by developer and contractors (EPC?) Reduces time for (EPC?) pricing of the project and reaching FC earlier.

23 Using off the shelf products and early engagements to accelerate delivery Using off the shelf products have significant advantages, in particular to the development of small hydropower project, such as: Reduced lead time for supply; Readily available spare parts; Tried and tested solutions and have generally already been optimised. Early engagements with electro-mechanical suppliers and civil contractors at F.Study level ensures: Constructability is taken into consideration; Optimal solution is already found, hence no need for further detailed analysis;

24 Using well understood Contract terms Well understood contracts by the Contractor(s) and the Developer will: Reduce the Contractor s Risk and hence marginally price of the implementation; Reduce costs of disputes (if any); Generally well tested in courts/arbitration; Generally such contracts allow / motivate for amicable resolution of disputes; All resulting to simpler and shorter negotiations process, resulting in earlier commencement of the project and hence early delivery of energy.

25 Dankjewel, Děkuji, Obrigado, Gracias, Weebale, Asante Sana, Thank You, Enkosi, Ngiyathokoza, ke a leboga, Ndo livhuwa, Ngiyabonga, Dankie.