Run of River hydropower: in an uncertain world, is smaller financially smarter?

Run of River (RoR) hydropower plants are one of the most cost-effective energy technologies available for rural electrification and sustainable industrial expansion. These plants are characterised by a negligible storage capacity and by generation almost completely dependent on the timing and size of river flows. Their environmental footprint is minimal compared to that of reservoir-powered plants, and they are much easier to build.

RoR plants are deployed in a world with a changing hydro-climate, and in an uncertain economic context (electricity prices, interest rates, cost overruns). Through seven plants proposed in a range of hydro-climatic regions of Turkey, this work investigates whether maximising NPV (net present value), the usual design criterion, leads to financial viability for a range of possible climatic and economic futures. To assess this financial robustness, it uses and extends HYPER, a state-of-the-art toolbox that computes technical performance, energy production, maintenance and operational costs of a design at a given site (hydraulic head, flow record).

It combines HYPER with many-objective robust decision making (MORDM) to find alternatives to NPV design and assess their robustness to changing climatic and financial conditions. Our application of MORDM uses the following steps: (1) an explicit three-objective formulation is introduced to find design parameters that balance cost, revenue, and dry year (first percentile) power generation objectives, (2) coupling of a multi-objective evolutionary algorithm with HYPER to solve the problem using 1,000 years of synthetic streamflow data obtained with the Hirsch-Nowak synthetic streamflow generator, (3) sampling of deeply uncertain factors to analyse robustness to uncertain climatic and financial futures, (4) quantification of robustness based on the probability to make the plant financially viable within 10 and 20 years in each future.

Preliminary results suggest that applying MORDM approach to RoR hydropower plant design provides insights into the trade-offs between installation cost and hydropower production, while supporting design with a range of viable alternatives to help them determine which design is most robust and reliable for given site conditions and river stream characteristics. When contrasting robustness of a design with its NPV, designs with the highest NPVs do not necessarily perform well in terms of dry period revenue unless a small turbine is installed in triple turbine configuration. They also show less robustness to both climate change (and associated drying) and to evolving financial conditions than smaller design alternatives with less installed capacity. These better balance average annual revenue with dry period revenue. Preliminary results also suggest that maximising the benefit cost ratio (BCR) yields more robust and financially viable solutions than maximising NPV, as it leads to less costly designs that generate slightly less revenue on average but tend to better exploit low flows.