8/10/2019 Variation in design flow effect

1/6

Sunil Kumar Piya

1

, Boonrod Sajjakulnukit

1

1Energy Technology and Management, Joint Graduate School of Energy and Environment,King Mongkut University of

Technology, Thonbury, ,126 Prachuthit, Bangmod, Tung Kru, Bangkok 10140, Thailand.

ABSTRACT

Nepal has a huge hydropower potential due to suddenchange of gradient in short span and is an essential feasiblesource of electric power. Small hydropower projects areconsidered environment friendly, easy and fast to constructand require less initial investment compared to the largeone but cost of generation of power per unit is higher. Thedesign flow for power purchase agreement (PPA) is Q40for small hydropower in Nepal. This paper presents the

various design flow such as Q40, Q35, Q30 and Q25 and itsimplications on the financial parameter of Chhangdi SmallHydropower Project of Nepal. Various parameters of theproject are taken for financial analysis and are presented toshow the impact. Feed in tariff can be one of the incentivesgiven to attract investors and not restricting the design flowto Q40 may be another option for rapid small hydropowerdevelopment in Nepal.

Keywords: Design flow, Feed in tariff, Financial analysis,

Hydropower.

INTRODUCTION

Nepal has a huge hydropower potential of around 83,000MW of which current estimate for economically feasiblepower is around 43,000 MW (180,000 GWh/yr) [1].Despite having enormous potential of hydroelectricity only50% of the total population has access to grid electricity[2]. Because of the gradient difference from lowest point,80 meter above the sea level which has tropical climate, tohighest peak of the world, The Mount Everest 8848 meterswhich has Siberian climate, with in the span of about 160 to240 km width made this potential available [3]. Further itcontains 8 of the 10 highest mountains in the world. Nepalis a mountainous landlocked country, China in the northand India at south, east and west, with an area of 147,181

km

2

.Nepals almost all electricity is produced by hydropowerand hence the supply is mainly dependent on hydropower.The dependency in hydropower is because of theabundance and availability; whereas other sources of powersuch as fossil fuel are not available with in Nepal and haveto be imported from other country. There are two dieselpower stations which are in Hetauda with 14.41 MW andDuhabi Multifuel plant with 39 MW and are used as apeaking load plants. The total installed capacity including

private power producer and others are 705.566 MW [4] inwhich Nepal Electricity Authority (NEA) owns 477.530MW and Independent Power Producer (IPP) owns 174.526MW of hydropower. System peak load is 1056.90 MW. Wecan clearly see that there is a vast difference between thesupply and demand of electricity. We also have to considerthat the power available is not the 705.566 MW it is theinstalled capacity of the system and the hydropowerstations are normally Run of the River (RoR) type and

normally designed for 40% probability of flow exceedance(Q40). There is only one storage type power stationKulekhani of 60 MW which was commissioned in 1982.Later cascade of this power station was build named asKulekhani II with 30 MW installed capacity and anothercascade Kulekhani III 14 MW is under construction. Itshows that there is a huge demand of electric power in theKingdom of Nepal all around the year even though Nepalhas free abundantly available hydro electric energy whichcan be utilized for its electricity as well as othercommercial energy. If the potential is utilized then electricvehicles can be used which will be an alternative to fossilfuel [5]. If this can be done then Nepal will be decreasingthe emission of greenhouse gas.

Hydropower is the most mature renewable energy source[6]. There is a huge potential and market for thedevelopment of hydropower in Nepal and can be harnessedby large and storage type of hydropower. Smallhydropower has less environmental impact, low investmentrequirement which leads to in-house financing capability,possibility of local technological enhancement and less timeconsuming features. Beside this as the small hydropower islocated in the rural area it helps to develop small agro baseindustries and hence leads to promote life standard ofremote villagers. Hence small hydropower is not onlyinvestment friendly and fast to develop it also promoteeconomic activities in rural areas. But small hydropower

construction is lower in number compared to study licenseissued [7], which may be because of higher cost per unit forgeneration. Feed in Tariff can be incentive to the developerto meet the financial criteria for investment [8] and notrestricting the design flow to Q40 may be the option forrapid small hydropower development in Nepal.

Design flow is the maximum flow of water in the riverfor which the hydro system is designed [9]. The design flowis generally lower than the maximum available flow and is

Effect of Variation of design flow in small hydropower plant;

A case study of Chhangdi Small Hydropower project

8/10/2019 Variation in design flow effect

2/6

taken to balance the power output and the cost of project sothat the cost is optimized.

This study is focused on Chhangdi Small HydropowerProject situated in North Western side of Kathmandu, stillunder consideration for its feasibility and financial analysis.This report focuses on energy produced and hence revenuegenerated when considering costs for different flowcondition so that the optimum design flow for the project isfound.

METHODOLOGY

Financial analysis has many variables involved whilecalculating cost and benefits. Cost of the project mainlyinvolves pre-operating, land acquisition, civil, hydromechanical, electro mechanical, transmission,environmental mitigation, corporate social responsibility,engineering management, taxes and custom costs [10].Benefit is calculated from the production and sale ofelectricity. Production electricity depends on flow of waterin the river as the efficiency factor and head of river isassumed to be constant throughout the life time of project.Design flow of the particular river can be found out byinterpreting the flow of that river. Chhangdi River isconsidered for the study in this paper. Data collection, datainterpretation, flow duration curve for design flow andfinancial analysis are the processes involved in this paper.

Data collection was done by going to the site andmeasuring the flow and reading and interpreting the dataread from the gage established in the river. After the data isreceived it is interpreted to give the flow of river. This flowis rearranged so that the flow duration curve is plotted andhence design flow can be estimated. First design flow Q40is taken for financial analysis as Government of Nepal does

Power purchase agreement according to this flow. Thenvarious design flow such as Q35, Q30 and Q25 is taken forfinancial analysis. Various financial parameters such as NetPresent Value (NPV), Benefit to Cost Ratio (B/C Ratio),Internal Rate of Return (IRR) and Equity are taken in toconsideration for the financial analysis of the project.

RESULT AND DISCUSSION

Cost for the project is calculated on the individual basisand added to give the project cost. The table I below showsthe cost associated with different structures and equipment.Costs associated are stated in United States dollar (US$).

Interest during construction is dependent on the

drawdown of debt. It is planned to drawdown 6 times for awhole project period. As the project is scheduled to finishwithin 18 months there are only 6 installments which are10, 20, 10, 20, 20, and 20 percent of total debt. Beginningof construction is the first draw down and then after every3months the draw down is schedule to take place.

TABLEICOSTS OF COMPONENETS OF CHHANGDI HYDROPOWER PROJECT

No. Description Cost in US$

1. Land acquisition 31734

a Land acquisition for power generation 15338

b Land acquisition for power evacuation 16396

2. Civil 870119

aMobilization and preparatory works including

power supply80543

b Access road improvement works 28765

cHeadworks (weir, under sluice, Gravel trap,Canal spill way, etc.)

226671

d Coffer dam (River diversion) 13807

e Approach canal 21678

fWater way(Headrace pipe Ghatte to Chhangdiand cross drainage)

225498

g Desilting basin, spill way and flushing canal 97469

h Forebay 19560

iAnchor block and saddle supports or Penstocksupport

33368

j Power house and tailrace 106961

k Switch yard 15798

3. Hydromechanical 943010

a Intake, sluiceway 20412

b Desilting basin accessories 1036

c Forebay accessories 6110

d Power house 10045

e Penstock pipe 99977

4. Electromechanical 662709

5. Transmission line with interconnection 241629

6. Base cost 2749200

7.Environment mitigation and Corporate SocialResponsibility

39650

8. Contingency cost 206828a Civil 130518

b Hydromechanical 37720

c Electromechanical 26508

d Transmission 12081

9. Project cost 2956028

10.Engineering management, administration andconstruction supervision

204701

11. Insurance 27492

12. Predevelopment/preliminary expenses 57531

13. Custom 19237

14. Local taxes 18675

15. VAT 130083

16. Total project cost 3453396

17. Cost per Kilowatt 2031

18. Interest During Construction (IDC) 170425

19. Financial cost 3623821

Apart from the total project cost associated with theproject are operation and maintenance cost. This includesproject maintenance, staff salary, Insurance, office expenseand other expenses. These costs are needed to find out the

8/10/2019 Variation in design flow effect

3/6

financial parameters and shown below in table II. Normallystaff salary is given for 13 months in Nepal and generally itis in between September and October called Ashwin inNepali month, which is also a festival month.

TABLEIIOPERATION AND MAINTENANCE COST

Month ProjectMaint

Insurance

StaffSalary

OfficeExp.

Others

Total

US$ US$ US$ US$ US$ US$

15Apr-15May(Baisakh)

412 1146 2549 1663 275 6044

16May-15Jun(Jestha)

412 1146 2549 1663 275 6044

16Jun-15Jul(Asadh)

412 1146 2549 1663 275 6044

16Jul-15Aug(Shrawan)

412 1146 2549 1663 275 6044

16Aug-15Sep(Bhadra)

412 1146 2549 1663 275 6044

16Sep-15Oct(Ashwin &

Festival)

412 1146 5097 1663 275 8593

16Oct-15Nov(Kartik)

412 1146 2549 1663 275 6044

16Nov-15Dec(Mangsir)

412 1146 2549 1663 275 6044

16Dec-15Jan(Poush)

412 1146 2549 1663 275 6044

16Jan-15Feb(Magh)

412 1146 2549 1663 275 6044

16Feb-15Mar(Falgun)

412 1146 2549 1663 275 6044

16Mar-15Apr(Chitra)

412 1146 2549 1663 275 6044

Total 4949 13746 33132 19952 3299 75077

Now to find out the benefit part associated with theproject we have to find out the design flow. Flow data fromthe river was taken and interpreted so that the flow durationcurve is drawn.

TABLEIIIFLOW DATA OF CHHANGDI RIVER FROMNOV.2011-AUG.2012

Percentage of time (%) exceeding Flow (m3/sec)

98.3935743 0.3

87.9518072 0.4

67.8714859 0.5

55.8232932 0.6

47.3895582 0.7

44.9799197 0.8

41.3654618 0.9

36.5461847 134.1365462 1.1

31.7269076 1.2

30.5220884 1.4

28.5140562 1.6

27.7108434 1.7

26.9076305 1.8

26.5060241 1.9

25.7028112 2

24.497992 2.1

23.6947791 2.2

22.0883534 2.3

21.686747 2.5

18.4738956 2.6

17.2690763 2.7

16.8674699 2.8

15.6626506 2.913.6546185 3

11.6465863 3.5

10.8433735 3.6

10.0401606 3.7

9.6385542 3.9

8.8353414 4

8.4337349 4.2

8.0321285 4.3

7.2289157 4.4

6.8273092 4.6

6.0240964 4.9

5.2208835 5.1

4.0160643 5.3

2.4096386 5.5

Summary of the data interpreted from flow available inthe river is shown above in the table III. The data is used todraw the flow duration curve which is shown in Fig.1below. From flow duration curve the design flow can beselected. Now it can be seen that design flow for 40 percentexceedance of time (Q40) is 1.3m3/sec similarly Q(35) is1.5m3/sec. Again for Q(30) design flow is 1.75m3/sec andfor Q(25) design flow is 2.05m3/sec.

Fig. 1. Flow duration curve of Chhangdi River.

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

5.5

6

0 10 20 30 40 50 60 70 80 90 100

Discharge(m3/sec)

Percentage of time flow exceeding

8/10/2019 Variation in design flow effect

4/6

TABLEIV

REVENUE AS BENEFIT FOR CHHANGDI HYDROPOWER PROJECT

As design flow is decided turbines, generators andother equipment are installed according to the installedcapacity. Estimated flow for each month in the river isfound out and hence the benefit can be calculatedaccordingly.

Debt is assumed to be 70% and equity is 30% of thetotal cost and this is the usual practice for hydropowerfinancing in Nepal.

TABLEVDEBT AND EQUITY FOR INVESTMENT IN US$

Project cost 3,623,821

Debt 70% 2,536,675

Equity 30% 1,087,146

Data available here are enough for calculation offinancial parameters such as IRR, B/C ratio and NPV asshown in the table VII. Revenue is increased for 5 yearsat the rate of 3% and then kept fixed for the wholeperiod. Depreciation is taken as flat and distributed over30 years as the Government of Nepal provides licensefor 35 years. Operation maintenance cost is increased by5% every year. Social cost and bonus is taken as 2% ofprofit. Royalty and tax is taken according to the law andcalculated. Table VI shows the calculated NPV, IRRand B/C Ratio.

TABLEVI

FINANCIAL PARAMETERS FOR Q40

Net Present Value (NPV) 876,975

Internal Rate of Return (IRR) 13.43%

B/C Ratio/Profitability Index 1.24

Financial parameters were calculated for the designdischarge of Q(35), Q(30) and Q(25) as above withCertain assumptions listed below. Land acquisition for power generation and powerevacuation is the same for all design flow. 33 KV line isused for power evacuation for Q40 and it can be usedfor all the other power produced by altering the designflow. In Civil works Desilting basin, spill way flushingcanal, forebay, anchor block and saddle support forpenstock and power house and tailrace price isincreased. The price of mobilization access road, headworks, cofferdam approach canal is kept the same for all

the design flow. In hydro mechanical equipment price of penstock iskept constant because the analysis is done bycompensating the price of penstock through adopting theloss increased by increase in flow. The new frictionalloss is adopted for the time when design flow isavailable only. Electromechanical cost is increased according to thesize of the project. United States dollar 380 is taken perKilowatt for electromechanical equipment. Transmission line cost is taken as same for all designflow and capacity considered in this thesis. Engineering management, insurance, etc. are increasedaccordingly and predevelopment cost is taken same forall capacity.Financial parameters calculated thereafter is tabulatedand shown in the table VIII.

MonthNo of

days

Discharge

(m3/sec)

Gross

Power KWh

Losses

KWh

Net Energy

KWh

Rate

US$

Total Revenue

US$

Baisakh 31 0.293 300,510 15025 285,484 0.055 15767

Jestha 31 0.503 514,718 25736 488,982 0.055 27006Asadh 32 1.3 1,345,593 67280 1,278,313 0.055 70601

Shrawan 31 1.3 1,303,543 65177 1,238,366 0.055 68394

Bhadra 31 1.3 1,303,543 65177 1,238,366 0.055 68394

Ashwin 31 1.3 1,303,543 65177 1,238,366 0.055 68394

Kartik 30 1.206 1,174,181 58709 1,115,472 0.055 61607

Mangsir 29 0.902 856,648 42832 813,816 0.055 44947

Poush 30 0.682 673,335 33667 639,668 0.097 61825

Magh 29 0.489 468,195 23410 444,785 0.097 42989

Falgun 30 0.356 353,151 17658 335,493 0.097 32426

Chitra 30 0.243 241,292 12065 229,228 0.097 22155

365 9,838,250 491913 9,346,338 584506

8/10/2019 Variation in design flow effect

5/6

CONCLUSION

From calculations done for this paper with certainassumptions we can now conclude that for thisparticular project design flow of Q30 is most feasible infinancial point of view. Financial parameter such asNPV, IRR and B/C ratio all are are found to be thehighest in this flow whereas cost required for Q25 is thehighest. Table VIII shows cost required for the projectfor the given design flow and respective NPV, IRR andB/C ratio. As the cost per unit of power production ishigher small hydropower projects as compared to largeone the author did not do analysis for Q45 or Q50 as ittends to reduce the installed capacity and hence tend tofurther increase unit cost. This paper shows that thespecific design flow may not be financially feasible for

each and every project and hence there should not befixed design flow.

TABLEVIIIFINANCIAL PARAMETERS COMPARED FOR VARIOUS DESIGN FLOW

Q40 Q35 Q30 Q25

Cost US$ 3,623,821 3,845,496 4,067,170 4,348,748

NPV US$ 876,975 1,021,686 1,256,973 1,186,183

IRR 13.43% 13.47% 14.32% 13.82%

B/C Ratio 1.24 1.27 1.31 1.27

ACKNOWLEDGMENT

The author is grateful to Chhangdi SmallHydropower Project, Lamjung, Nepal for providing thevaluable data required for this paper. The author would

Year Revenue O & M Royalty Depreciation Social Profit Tax Profit Cash

+ Cost + Before 10%/ After Inflows

Amortization Bonus Tax 20% Tax

(3,623,821)

1 584,506 75,077 1,968 120,794 7,733 378,934 - 378,934 499,728

2 602,042 78,831 1,968 120,794 8,009 392,439 - 392,439 513,233

3 619,577 82,773 1,968 120,794 8,281 405,761 - 405,761 526,555

4 637,112 86,911 1,969 120,794 8,549 418,889 - 418,889 539,683

5 654,647 91,257 1,969 120,794 8,813 431,815 - 431,815 552,609

6 672,182 95,820 1,969 120,794 9,072 444,527 - 444,527 565,321

7 672,182 100,611 1,969 120,794 8,976 439,832 - 439,832 560,626

8 672,182 105,641 1,969 120,794 8,876 434,902 31,912 402,990 523,784

9 672,182 110,923 1,969 120,794 8,770 429,726 34,859 394,867 515,661

10 672,182 116,469 1,969 120,794 8,659 424,290 38,161 386,130 506,924

11 672,182 122,293 1,969 120,794 8,543 418,583 83,717 334,867 455,661

12 672,182 128,408 1,969 120,794 8,420 412,591 82,518 330,073 450,867

13 672,182 134,828 1,969 120,794 8,292 406,299 81,260 325,039 445,83314 672,182 141,569 1,969 120,794 8,157 399,692 79,938 319,754 440,548

15 672,182 148,648 1,969 120,794 8,015 392,756 78,551 314,204 434,998

16 672,182 156,080 19,628 120,794 7,514 368,167 73,633 294,533 415,327

17 672,182 163,884 19,628 120,794 7,358 360,519 72,104 288,415 409,209

18 672,182 172,078 19,628 120,794 7,194 352,489 70,498 281,991 402,785

19 672,182 180,682 19,628 120,794 7,022 344,057 68,811 275,245 396,039

20 672,182 189,716 19,628 120,794 6,841 335,203 67,041 268,163 388,957

21 672,182 199,202 19,628 120,794 6,651 325,907 65,181 260,726 381,520

22 672,182 209,162 19,628 120,794 6,452 316,146 63,229 252,917 373,711

23 672,182 219,621 19,628 120,794 6,243 305,897 61,179 244,718 365,512

24 672,182 230,602 19,628 120,794 6,023 295,136 59,027 236,109 356,903

25672,182 242,132 19,628 120,794 5,793 283,836 56,767 227,069 347,863

26 672,182 254,238 19,628 120,794 5,550 271,972 54,394 217,578 338,372

27 672,182 266,950 19,628 120,794 5,296 259,514 51,903 207,611 328,405

28 672,182 280,298 19,628 120,794 5,029 246,434 49,287 197,147 317,941

29 672,182 294,313 19,628 120,794 4,749 232,699 46,540 186,159 306,953

30 672,182 309,028 19,628 120,794 4,455 218,278 43,656 174,622 295,416

TABLEVII

FINANCIAL PARAMETERS CALCULATED FOR Q40

8/10/2019 Variation in design flow effect

6/6

like to thank the government of Nepal and thegovernment of Thailand for financial support and JointGraduate School of Energy and Environment and KingMongkuts University of Technology for providing all

the support and help to complete this paper.

REFERENCE

[1] Shrestha KL. Nepals Energy Situation, Energy, 6,817-821.

[2] Gurung A, Gurung OP, Oh SE (2011), The potentialof renewable technology for rural electrification inNepal: Case study from Tangting, RenewableEnergy, 36, 3203-3210.

[3] Agrawal S, Raksakulthai V, Aalst MV, Larsen P,Smith J,Reynolds J (2003), Development ofClimate Change in Nepal: Focus on WaterResources and Hydropower, OECD, 2003.

[4] Nepal Electricity Authority. Available online:http://www.nea.org.np//reports/annualReports/BvTeH9hxFHAnnual Report2011.pdf [Accessed on 27July 2012]

[5] Dhakal S, Raut A.K, Potential and bottlenecks ofcarbon market: The case of a developing countryNepal,Energy Policy, 38, 3781-3789

[6] RETScreen. Available online: http://retscreen.gc.ca[7] Department of Electricity Development, Ministry of

Energy, Government of Nepal. Availableonline:http://www.doed.gov.np/survey_license_for_generation_above-100mw.php [Accessed on 30 July2011]

[8] T. D. Couture, K. C. C. Kreycik, E. Williams (2010),Policy makers guide to Feed-in Tariff policydesign, NREL

[9] Helena Ramos, Guideline for design of smallhydropower plant

[10] J. S. Gulliver, R.E.A. Arndt (1991), HydropowerEngineering Handbook, McGraw-Hill, Inc., NewYork.

,

http://www.nea.org.np/reports/annualReports/BvTeH9hxFHAnnual%20Report2011.pdfhttp://www.nea.org.np/reports/annualReports/BvTeH9hxFHAnnual%20Report2011.pdfhttp://www.nea.org.np/reports/annualReports/BvTeH9hxFHAnnual%20Report2011.pdfhttp://www.nea.org.np/reports/annualReports/BvTeH9hxFHAnnual%20Report2011.pdf