This brochure has been developed under SHERPA

project Small Hydro Energy Efficient Promotion

Campaign Action.
SHERPA is a European Funded Project in the
framework of the Intelligent Energy for Europe
Programme (IEE).
SHERPA aims to make a significant contribution in
reducing the barriers that are currently hindering the
development of SHP, addressing the challenges and
contributing to the uptake of SHP in the new enlarged
European Union.
The result of SHERPA will not only increase the
awareness of politicians and decision makers on SHP
as a key renewable energy source, but will also create
favourable framework conditions for the further
uptake of SHP within the European Union.
The project specifically addresses the issue of
environmental performance of SHP plants, as well as a
comprehensive territorial planning approach at the
level of water bodies.
ESHA, the European Small Hydropower Association, is
the European coordinator of this project, which
includes eight additional partners: Slovenian Small
Hydropower Association (SSHA),
Lithuanian
Hydropower Association (LHA),
Association for
Renewable Energy (APER, Italy), Swedish Renewable
Energies Association (SERO),
Inovation-EnergyDevelopment (IED, France), Institute for Water
Management, Hydrology and Hydraulic Engineering
(IWHW, Austria), EC Baltic Renewable Energy Centre
(EC BREC, Poland) and French Environment and
Energy Management Agency (ADEME, France).
This brochure has been prepared by the SHP Policy
Framework and Market Development Group of the
SHERPA project, coordinated by ESHA, together with
Swedish Renewable Energy Association (SERO) and
the Lithuanian Hydropower Association (LHA).

For further information please contact:

ESHA European Small Hydropower Association
Renewable Energy House
Rue d'Arlon 63-65, 1040 Brussels - Belgium
Telephone: 32 2 546.19.45 Fax : 32 2 546.19.47
E-mail Secretariat: info@esha.be

Contents
INTRODUCTION

1. STATE OF THE ART

2. SHP POTENTIAL IN THE EU

3. EU DIRECTIVES AND THEIR IMPACT ON SHP

3.1 Directive 2001/77/EC

3.2 Directive 2000/60/EC

3.3 Proposed Directive: EU Energy and Climate Change Package 2020

4. SUPPORT SYSTEMS

10

5 SHP GENERAL POLICY FRAMEWORK

12

5.1 Barriers Related to Hydropower Development

12

5.1.1 Administrative Barriers

12

5.1.2 Environmental Barriers

13

5.2 Possible strategies for improvement

14

6. ECONOMICS

15

7. SHP AND THE ENVIRONMENT

18

8. SHP TECHNOLOGY

19

9. SHP MARKET FOR MANUFACTURERS

21

10. CONSTRAINTS

23

11. CONCLUSIONS AND RECOMMENDATIONS

24

12. REFERENCES

28

13. ACRONYMS

28

Introduction
This study develops six main subject-areas
pertaining to the possible exploitation of SHP
energy in Europe.
The situation of Small Hydropower (SHP) in
the EU has changed. The enlargement of the
EU along with increasing interest in renewable
energies has led to a new and growing focus
on SHP. As a result, more complex questions
have arisen that require increased knowledge
in order to be resolved.
This study, which is part of the SHERPA-project
(Small Hydropower Energy Efficiency Campaign Action), aims to provide a better understanding of SHP in the EU. It is intended for decision makers and politicians at EU, national,
regional as well as local level in order to facilitate the achievement of the various targets set
out in EU legislation (RES White Paper targets
and the RES-E Directive) but may also be of
general interest. On the basis of the data collection and analysis, new initiatives at EU level
will be developed by the European Small Hydropower Association (ESHA) in close collaboration with the EU Commission. The definition
of SHP used by the European Commission, i.e.
SHP plants up to 10 MW, has also been employed in this study.
The following issues have been dealt with: (i)
Current Status and potential of SHP technology within the 27 EU member states (EU-27)
and recent technological and market development of small hydropower and (ii) review of
policy framework conditions for SHP within the
EU-27 and Candidate Countries (Croatia, the
former Yugoslav Republic of Macedonia and
Turkey). An overview of current policy initiatives within the European Union has been prepared, taking all levels of decision making (EU,
national, regional and local) into account.

1. Gathering data on the actual state-of-theart of SHP development in most European

countries.
2. Assessing the potential for future SHP development, both in terms of upgrading existing plants and building at new sites.
3. Analysing the economics of SHP sources in
order to understand how competitive SHP is
today with respect to the other principal electricity generation technologies.
4. Analysing the policy framework in each
country, with emphasis on the constraints that
are hindering the development of SHP plants.
5. Analysing the situation and competitiveness of the EU manufacturing industry in the
SHP sector.
6. Providing some concrete recommendations
for promoting SHP development in the short
and medium term, as well as suggesting some
good policies and best practices to achieve
this goal.

Since the start of the project in 2006 Bulgaria

and Romania have joined the EU, which means
that EU-25 became EU-27. For comparison
with previous reports an additional division
into EU-15 and EU-12 has sometimes been
made. In many cases the report also includes
Candidate countries (CC). Finally, some comparison has been made with Norway, Switzerland, Bosnia & Herzegovina and Montenegro.

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

The SHERPA project and the work on this report started in September 2006 and finished
in September 2008. The project was financed
by the EU Commission and by the participants.
Intelligent Energy Europe (IEE) commissioned this
project to the European Small Hydropower Association (ESHA). ESHA then co-ordinated the
project, which was subsequently divided into different sub-projects, of which the present one was
performed by the Lithuanian Hydropower Association (LHA) and the Swedish Renewable Energy
Association (SERO).
This study is based on a questionnaire that was
sent to main SHP actors in different EU countries as well as Norway, Switzerland, Bosnia &
Herzegovina and Montenegro. Information
from official databases and existing studies

Figure 1. Outline of the questionnaire

was used when no other data were available.

The most comprehensive information was gathered through SHP national associations, as well
as by individual contacts with SHP consultants,
project developers and producers. Information
from the questionnaires, which mainly related to
SHP potential and historic statistics (number of
SHP plants, installed capacity and electricity generation) was checked for consistency with other
relevant data sources from the hydropower and
renewable sectors, notably: Eurostat, the International Energy Agency (IEA), the International
Journal on Hydropower & Dams, the World Energy Council etc.
The questionnaire comprised a total of 69 questions grouped into 6 main sections (Fig. 1).

1 State of the Art

The era of hydropower by means of turbines
started in France in 1832. However, the real development of hydropower began around 1900
with the invention of three-phase electricity, although from the 1950s until about 1980, SHP
had a negative development in some EU member states (MS). Many SHP plants were shut
down because of age and competition from
newer, larger plants. When some EU countries
decided to reduce their dependence on imported energy, SHP was given economic support
and the number of SHP plants gradually started
to increase again.
In 2006 there were nearly 21,000 SHP plants
(SHPPs) in the EU-27 and if CCs as well as Norway, Switzerland and other countries are included, the number of SHPPs increases to a total of
nearly 23,000 (Table 4). The installed capacity
of EU-27 was more than 13,000 MW, or more
than 15,000 MW if CCs, Norway, Switzerland
and other countries are included. In 2006 the
total electricity generation from SHP in EU-27
was more than 41,000 GWh and if including
CCs, Norway, Switzerland and other countriesnearly 52,000 GWh.

This means that in 2006 about 1.2 % of the total

electricity generated as well as 9 % of the RES-E
in EU-27 came from SHP (Fig. 2). On average,
a SHPP in the EU-27 had a capacity of 0.6 MW
and produced about 2.0 GWh in 2006.
A large proportion of this capacity (nearly
12,000 MW or nearly 38,000 GWh annually)
comes from EU-15. More than 90 % is concentrated in the following 6 countries; Austria,
France, Germany, Italy, Spain and Sweden. In
addition, Switzerland and Norway have a high
SHP capacity, while Bulgaria, the Czech Republic, Poland and Romania account for nearly
80 % of the total capacity of EU-12.
Many of the SHPPs in the EU are old. Only 45 %
are less than 60 years old and only 32 % are less
40 years old. The eastern European countries
have the highest share of young plants (about
38 % are less then 20 years old). The two nonEU western countries (Norway and Switzerland)
are in an intermediate position, with a slightly
lower percentage of young plants (34 % less
than 20 years old) but the highest percentage
of plants less than 40 years old (about 59 %).

Figure 2. The proportion of RES-E in the EU

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

2 SHP Potential in the EU

In this chapter Potential is defined as additional or remaining economically feasible potential
(Potential of upgrading and of new SHP plants)
with environmental constraints taken into account environmental constraints. The Total potential includes existing plants and Potential.
The SHP potential in the EU from upgrading and
building of new SHPPs is considerable, 10,000
MW or 38,000 GWh annually. The Total potential of EU-27 is therefore 23,000 MW or nearly
79,000 GWh annually (Figures 3, 4 and Table
2). It is important to note that the Potential takes

economic and environmental constraints into

consideration. It is therefore very realistic and
can be exploited. The largest potential among
the MS is not surprisingly in countries such as
Austria, France, Italy, Poland and Romania that
already have high electricity generation from
SHPs. It is also worth noting that Norway, Switzerland and Turkey have large potentials. Scotland and Norway have made great efforts to
evaluate their potential. In Norway, the Norwegian Water Resources and Energy Directorate
(NVE) has made a detailed study of the potential for SHP. The study that used GIS to identify

Figure 3. Capacity 2006 and potentials in EU-27

Figure 4. Electricity generation 2006 and potentials in the EU-27

6
the economic potential indicated an increase
from the previously assumed 10,000 GWh to
20,000 GWh annually, while still taking account
of economic and environmental constraints.
However, developing potential into real electricity generation takes time. According to this
study, the realistic SHP forecast for EU-15 in
2010 is about 13,400 MW with electricity generation of nearly 47,400 GWh annually. This

is less than the 14,000 MW and 55,000 GWh

estimated for 2010 by the EU Commission in
the White Paper. Electricity generation can of
course vary from year to year due to hydrological conditions (precipitation). The reduction in
capacity and electricity generation in 2003 (Figures 5 and 6) mainly refers to France and to
Austria.1.

Figure 5. SHP Capacity 2000-2006 and forecast to 2010 for SHP in EU-15,
EU-12 and EU-27

Figure 6. Electricity generation 2000-2006 and forecast to 2010 for SHP in

EU-15, EU-12 and EU-27

There seems to be some discrepancy in the input to Eurostat.

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

According to the present study, the 2010 estimations for SHP stated in the White Paper will
not be reached for EU-15, but are likely to be
achieved if EU-12 is included. In order to reach
the White Paper target better conditions such
as less administrative barriers for SHP are required.
It is difficult to make forecast after 2010 due
to the many uncertainties. However by making
some assumptions it is possible to set up scenarios. In this study two scenarios have been
developed:
1. Scenario existing conditions, assuming
the economical situation, license procedure etc is as today.
2. Scenario improved conditions, optimal
conditions for developing SHP (barriers are
not an obstacle, the support system are
well designed for SHP etc) which means
that the growth is depending on how fast
the manufacturing industry can deliver
equipment for new SHPs.

Scenario existing conditions. The development of SHP will expand more slowly after year
2010 due to that the most suitable places for
SHPP already have been used. In this study it
has been estimated that 1/3 of the potential
(i.e. potential still not developed in year 2006)
in EU-27 can be developed with existing conditions until year 2020. Which means a total
capacity for SHP in the EU-27 of more than
16000 MW.
Scenario improved conditions. The yearly
growth is quite the same after year 2010 until
year 2020. In this study it has been estimated
that 2/3 (i.e. potential still not developed in year
2006) of the potential in EU-27 can be developed with existing conditions until year 2020.
Which means a total capacity for SHP in the EU27 of nearly 20,000 MW.
The differences between the two scenarios are
3,300 MW or about 13,000 GWh annually.
(Fig. 7).

Figure 7. SHP Capacity 2000-2006 and forecast to 2010 for SHP in EU-27.

Data for this report have been collected from different sources and in some cases there are significant differences. Capacity and production data have to a great extent been derived from Eurostat, but they appear
to contain some discrepancies. For instance there is a reduction in capacity in the year 2003, while in 2004
there is a return to the 2002 level. It is unlikely that a capacity of almost 500 MW would have been shut down
for one year and taken into operation again the year after. In the chapter Conclusions and Recommendations
we suggest how more accurate data can be obtained from MS.

3 EU Directives and their Impact

on SHP
3.1 Directive 2001/77/EC
The main purpose of Directive 2001/77/EC is

to promote an increase in the contribution of

renewable energy sources for electricity generation in the internal electricity market. Renewable energy sources are defined as renewable,
non-fossil and non nuclear sources such as
electricity generation from wind, solar, geothermal, wave, tidal, hydro, biomass, landfill gas,
sewage treatment plant gas and biogas.
Article 6 presents guidelines to simplify the
administrative procedures for promoting renewable energy sources in the EU. The MS or
competent bodies appointed by the MS should
evaluate the existing legislative and regulatory
framework pertaining to authorisation procedures in terms of:
reducing the regulatory and non-regulatory
barriers to the increase in electricity generation from renewable energy sources

streamlining and accelerating procedures at

the appropriate administrative levels and
ensuring that the rules are objective, transparent and non-discriminatory, and fully take
into account the particularities of the various
renewable energy source technologies.
RES-E targets for each country to be achieved by
the year 2010 as well as their status in 2004 and
in some cases 2005 can be found in Figure 8. As
can be seen, countries such as Austria, France
and Italy have developed slowly and will have
difficulties reaching their targets, despite their
great SHP potential.

3.2 Directive 2000/60/EC

By means of this Water Framework Directive
(WFD), the EU provides for the management of
inland surface waters, groundwater, transitional
waters and coastal waters in order to prevent
and reduce pollution, promote sustainable water use, protect the aquatic environment, im-

Figure 8. RES-E share in gross electricity consumption. Observed data in 2006 from
Eurostat

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

prove the status of aquatic ecosystems and mitigate the effects of floods and droughts.
The fear that SHP plant owners and investors
have about this framework is that the residual
flow may increase and thus investment costs
may also increase. Several MS associations have
reported that they can already feel the effect
of the WFD. In some countries environmental
groups have a very negative attitude towards
hydropower. This is mainly due to the fact that
they are unfamiliar with the new technologies
that benefit the environment and that large and
small-scale hydropower plants are often put in
the same box.
Although the construction of new plants is not
prevented by the WFD, all new licenses and
new or amended restrictions on existing plants
are dealt with by means of the water regulation
laws. The main impacts are likely to be new or
higher residual flows and stricter regulations on
the use of reservoirs.
However, this framework is a great opportunity
for environmentalists and hydro engineers to
work together to create sustainable solutions
where the environment is protected at the same
time as the country produces clean renewable
energy.

3.3. Proposed Directive: EU Energy

and Climate Change Package 2020
This is a proposed directive from the EU Commission on the promotion of the use of renewable energy sources. The proposal encompasses a legally binding target for the entire
EU by 2020, namely that 20 % of gross energy
consumption should be covered by renewable
energy, compared to 8.5 % of gross energy consumption in 2005. The package has an indicative target for the transport sector, 10 % of the
fuel used should be biofuels.
The package also has binding targets aimed at
reducing greenhouse gases by at least 20 % by
the year 2020. This target is likely to change to
30 % as soon as a new global climate change
agreement has been reached.
Not only is the 20 % target binding for the EU,
but the proposal also contains binding targets
for each of the Member States. There are also
interim targets for each country every second
year from 2011 to 2018, which represent a percentage share of their targets.
Member States will have to adopt a National

Action Plan that sets targets for the proportion

of energy from renewable sources in transport,
electricity, heating and cooling in 2020 and
adequate measures must be taken to achieve
these targets. The National Action Plans for
each of the Member States shall be presented
to the EU Commission by 31st March 2010.
The proposal states that MS shall furnish a
Guarantees of Origin (GoO), certifying that
electricity is generated from renewable sources.
When generated in combined heat and power
plants (CHPP) the capacity shall be at least 5
MWth. The guarantees of origin shall be issued
electronically in a standard unit of 1 MWh.
This new political framework will boost the production of electricity from RES and therefore SHP.
According to the proposal, Member States shall
submit a report to the Commission on progress
in the promotion and use of energy from renewable sources by 30th June 2011, and every
second year thereafter. In the first report, Member States shall outline whether they intend to:
Establish a single administrative body responsible for processing authorization, certification and licensing applications for renewable energy installations
Provide for automatic approval of planning and permit applications for renewable
energy installations where the authorizing
body has not responded within the set time
limits
Indicate geographical locations suitable
for exploitation of energy from renewable
sources in land-use planning.
The fact that SHP is a renewable energy source
that prevents pollution and deployment of fossil fuels in the production of electricity, demonstrates that by definition SHP can be considered
clean and sustainable, placing the sector - together with other RES - at the core of current
economic and political developments in the EU.
Some countries have already started designing
their national plans and in many EU countries
hydropower is being reconsidered a suitable
RES source for achieving the national targets
set by the EU.
It is of significant importance that the contradictions between Directive 2001/77/EC and Directive 2000/60/EC will be made obvious to all policy makers at national and regional level, so that
they can adopt the right approach to overcoming possible conflicts. Commission is advised also
make recommendations how to avoid conflicts.

10

4 Support Systems
As the choice of promotion instruments has not
been prescribed or harmonised within the EU,
each country has adopted its own unique set.
The main drivers for the specific choices are often the national goals in relation to renewable
energy.
The survey reveals that the most widely adopted
support mechanism within the analysed countries is feed-in tariffs, sometimes accompanied
by a variety of incentives. Some MS prefer the
Quota obligation system, which is usually based
on Tradable Green Certificates (TGC).
Feed-in tariffs are generation based, price
driven incentives, usually in the form of either
a fixed amount of money paid for RES-E generation, or an additional premium on top of the
electricity market price paid to every producer.
It should be noted that fixed feed-in tariffs are
currently used in 18 of the EU-27 MS and Quota
obligations in 7 (Belgium, Italy, Latvia, Poland,
Romania, Sweden and the UK) (Fig. 9).
The biggest advantage of the feed-in system is
the long-term certainty about receiving support,
which considerably lowers investment risks. This
fixed and relatively stable system is much preferred by SHP electricity producers in EU-27 and
even in the candidate countries.

Figure 9 Overview of primary renewable electricity support systems in EU-27 in November 2008.
Source: OPTRES and updated with actual status

Investment grants were ranked second, with a

slightly higher score than that attributed to the
quota obligation tariff system based on TGC.
Tax incentives were only ranked fourth, while
the lowest preference was given to the tender
system. It is very surprising that SHP producers
are reluctant to use the tendering system and
is contrary to the findings of the Re-Xpansion
Project, which considered support instruments
for all RES through consultation with stakeholders via a web-based survey (Morthorst et al.
2005).
In a recent web and interview based survey
launched for RES-E producers all over the EU
(EU-15 and EU-12 ) by the OPTRES project (Ragwitz et al., 2007), many stakeholders, especially
from the new MS where feed-in tariffs are the
dominant instrument, pointed out that they considered the introduction of more market based
instruments similar to a quota obligation, premature. The vast majority of recommendations
from the new MS such as Lithuania and the
Czech Republic suggested that maintaining and
improving the feed-in tariff system and providing additional investment grants would be best.
Another key element is to provide a long-term
framework in order to attract investment in SHP
projects.
The advantages and disadvantages of different
support systems are summarised in Table 1.

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

Table 1. Advantages and disadvantages of different support systems. Source: Council of the European Union
The support for electricity from renewable energy sources Impact Assessment 2005, {COM(2005) 627 final}
Advantages

Disadvantages

REFIT
(Feed-in tariffs)

Highly effective.
Highly efficient due to the low risk for investors.
Permits strategic support for technology innovation.

Poor compatibility with the internal market.

Requires regular adjustment.

Premium

Highly effective.
Efficient due to the medium risk for investors.
Good compatibility with the internal market.

Risk of over-compensation in the case of

high electricity prices without appropriate
adjustment.

TGCs
(Green certificates)

Good compatibility with the internal market.

Competition between generators.
Supports the lowest-cost technologies.

Currently less efficient due to higher risks

and administrative costs.
Not very appropriate for developing medium- to long-term technologies.

Tendering

Rapid development in the presence of political

will.

Stop-and-go nature leads to instability.

Development is blocked if competition is
too great.

Investment
subsidy

Good complement for some technologies.

Inefficient as a main instrument.

Fiscal measures

Good secondary instrument.

Good results only in countries with high

taxation and for the most competitive
technologies.

Local conditions combined with the goals for each country must be considered when discussing support
systems. Feed-in tariffs is the most common in the EU. It is also preferred by producers, since it results in
a long period with a certain income.

11

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5 SHP General Policy Framework

Exploitation of SHP resources is subject to governmental regulations and administrative procedures, which at present, vary from one country to another despite the fact that MS must
comply with the directive on RES-E in force. In
order to develop a SHP site, a potential hydropower producer must fulfil these administrative
procedures, which constitute a kind of barrier
or burden. The barriers that SHP developers
and producers reported to encounter when installing new SHP capacities can be of an administrative, grid, financial, environmental and
social nature. (Fig. 10).
The administrative and regulatory barriers can
be grouped into the following main categories:

Large number of authorities involved (no

onestop shop for SHP developers);
lack of co-ordination between different authorities;
long lead-times and high costs involved in
obtaining permits or licenses;
Insufficient account taken of SHP in spatial
planning.
In most cases the administrative and regulatory
barriers seem more severe compared to the
other types, with the exception of environmental
regulations in some countries. The latter, which
is also a part of administrative procedures, will
be considered later on.

Figure 10. Classification of barriers.

5.1. Barriers Related to Hydropower Development

5.1.1 Administrative Barriers
The main non-technical problem that constitutes
an obstacle to the development of small hydropower is the difficulty in obtaining the necessary
authorisations to build a new site. Apart from the
very long time required to process them, procedures vary strongly from one country to another.
A survey co-ordinated by ESHA and sent to SHP
associations in Europe revealed that the average
length of administrative procedures varies from
12 months in the best-case scenario in Austria

(where few new projects are being developed)

to 12 years in Portugal. In most new EU MS the
average time required to obtain all licences is
considerably shorter than in the old MS. However, more significant is the fact that in most MS
only a few dozen licenses have been granted in
recent years.
Different types of licences are normally required
for Electricity generation, Impact on water quality, river flora and fauna, and all environmental
aspects, Construction, Connection to the grid
and Ownership of land or site rights.

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

These issues are normally under the responsibility of different authorities. In this context, the
procedures not only vary from one country to another, but also within a country from one region
to another and even in the same region, from
one project to another.
Co-ordination between different administrative
authorities does not function successfully with
regard to deadlines, reception and treatment of
applications for authorizations. Time limits for
responses from the Administration are usually
not respected. Developers have to undergo successive public consultations on the same project.
There are no real fast track procedures, especially for smaller projects.
These procedures - that are far from being transparent, objective and non discriminatory - are in
some cases supervised by several local administrations that are very sensitive to pressure and
lobby groups, which multiply the number of interlocutors and extend the time required for making
decisions (up to 58 permits from different administrations are necessary in some Italian locations).
In addition, the project has to be made public so
that people can react. As a result, the process in
some MS can last up to 10 years (for new developments), which discourages the potential investor who will switch to another more attractive RES
project or other locations outside the EU.
For the refurbishment and upgrading of plants
the situation is generally easier (but not always2)
although various permits are still required.
Sometimes project developers are requested to
conduct an Environmental Impact Assessment
(EIA) of existing infrastructures.
The cost of permits includes hydrological and
environmental assessment, preliminary designs,
permits and approvals for water and land use
as well as construction, interconnection studies,
power purchase agreements (PPA), and varies
from country to country with an average of between 10,000 to 30,000 per application. This
amount is lost if authorisation is refused.
It seems that MS have not implemented Directive
2001/77/EC to the extent necessary for achieving
SHP targets.

5.1.2 Environmental Barriers

Non-consistent implementation of the WFD can
lead to a significant reduction of SHP production combined with higher costs. In some MS
(Germany, Austria, Eastern Baltic States), the
implementation of the WFD is considered the
main barrier to further SHP development. Solutions may be found in a more precise definition
of some of the terms used in the WFD to make
its transposition clear and predictable in terms
of consequences for society. The implementation of the WFD and the RES-E directive must be
consistent. To ensure better integration between
the different policies, an increase in transparency in the area of decision-making is necessary.
Significant progress in policy integration can be
made by enhancing the recognition of different interests, fostering co-operation between
the various authorities and stakeholders, and
promoting more integrated development strategies. Integration of water and energy policies
is beneficial since it will create synergies and
avoid potential inconsistencies as well as mitigating possible conflicts between water users.
Moreover, some countries even have forbidden
rivers, where no hydropower development can
be carried out or even investigated. Hydropower
is very site specific because rivers are individual
and, as such, any general approach would be
inappropriate. Here, there is a need to re-discuss the classification of sites where hydropower

Hagerums Kvarn SHP plant in Sweden. The original SHP plant was shut down in 1996. The new owner wanted to increase
the capacity to 170 kW (an increase of about 40 percent) and a new licence was needed. The procedure took 6 years and cost
45,000 . The main reason was understaffing at the environmental court and that an association opposing the project was
given too many chances to request investigations that proved to be irrelevant. The final permission was granted in 2005.
Ljunga SHP plant in Sweden. The plant is now under construction and will have a capacity of 1,200 kW. It took over 13
years to obtain a license. The final permit was granted/issued in 2006. The site contained a smaller plant that had been
shut down about 40 years ago. The main reasons have been very strong resistance from the regional authority coupled
with a lack of professionalism on the part of the project team.
2

13

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is forbidden and the criteria used for such classification in a transparent process involving all
stakeholders.
The small hydropower situation clearly highlights how a good support system in terms of
economic revenues or the setting of ambitious
targets is not sufficient to overcome the administrative and environmental barriers that
prevent small hydro power from developing its
untapped potential. Without authorizations no
development is possible and therefore support
schemes are useless, not only for promoting
SHP but also for achieving the 2010 objectives.
It is not easy to state the approval rates for SHP
projects in Europe, and the situation differs a
great deal from one country to another. The
reason for the difficulty is a lack of transparency and information, as most public authorities
rarely publish this kind of information; the majority of installations have to wait for a very long
period before obtaining a response (as the authorisation has neither been refused nor granted it is difficult to establish a rejection rate).

5.2 Possible strategies for

improvement
There is a need to investigate the possibilities for a simplification and harmonisation of
administrative procedures: Set up a single reception point for licenses applications, ensure
co-ordination between the different administrative bodies involved and establish reasonable
deadlines. Establish a fast-track planning
procedure for small hydropower and for refurbishment - nowadays the same procedures are
normally applied for a 50 MW and for a 100 kW
plant. Sometimes it is even more difficult to refurbish an old mill than to build a new 30 MW
gas power plant. Where applicable, create the
possibility of establishing mechanisms under
which the absence of a decision by the competent bodies on an application for authorisation
within a certain period of time automatically
results in an authorisation. Towards the end of
the concession period many producers will not
invest in refurbishment, since they do not know
if the concession will be renewed in the future.

Faster licensing procedure:

prepare best practice guidelines for administrative procedures,
establish a fast-track planning procedure
for SHP developments, especially for smaller
projects and for refurbishment and upgrading and
increasing the competence and capacity of
the licensing authorities.
Public information and monitoring:
requesting the MS and regional authorities
are to publish data and information about
SHP targets, approval rates and duration of
the licensing procedure,
they should periodically monitor the administrative procedures in order to prevent
unjustified requirements and prepare best
practice guidelines for administrative procedures,
identify suitable sites at national, regional
and local level for establishing new capacity
for the generation of SHP electricity and for
refurbishment and upgrading.
Where a river basin plan has been approved:
the local authorities should not be permitted to introduce other environmental restrictions (e.g. a higher reserved flow) without
the support of scientific research or a study,
allow the possibility of increasing the installed capacity of existing power stations
by 20 % without the need to reconsider the
licenses
allow the possibility of exploiting the hydraulic power on existing weirs without the need
for a formal procedure. Brief information to
the authorities and if the latter do not react
within a certain time approval is deemed to
have been granted and
at the end of the concession period the previous owner of the concession should be given special rights of preference to promote
upgrading and refurbishment.
Finally is it important to mention that if the administrative/concession delays and barriers are
not overcome no support scheme will improve
the expansion of SHP even if the incentives increase in monetary terms.

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

6. Economics
Compared to other RES-E, SHP is competitive,
assuming equal conditions. However, compared
to large-scale hydropower and other forms of
large-scale conventional electricity production,
SHP and other RES-E technologies need supports in order to compete on a deregulated
power market. If subsidies for conventional electrical production were eliminated and the sector
obliged to cover all its external costs, SHP would
most likely be very competitive compared to all
other technologies. For instance according to
the UNEP-report Reforming Energy Subsidies,
there are considerable subsidies available for
fossil energy.
When making an investment in SHP there are at
least two items that are of major importance; the
size of investment and the risk. The economics of
running a SHP plant can be roughly divided into
revenues and costs (Table 2).
The revenues from generated electricity vary
between the markets in the EU. On a deregulated market the price differs a great deal between
years (Fig. 11). As revenues are very dependent
on the agreements with the purchaser they do
not only vary between countries, but also from
one plant to another. As the support systems in

the EU vary greatly from one country to another,

the conditions also differ to a large degree between countries. Grid compensation exists in
some countries such as Sweden, where the SHP
plant owner participates by generating power in
such a way that it stabilizes the grid and minimizes transport losses. Labeled RES-E environmental value has recently become tradable in
some countries such as Sweden, and means that
suppliers can use the extra value from the SHP
plants from which they buy their electricity.
Capital cost can be divided into Licensing process, Building process and Long-term financing.
The latter replaces the other two when the plant
is in operation. The capital required for SHPPs
depends on the size, head, flow rate, geographical location, equipment, (turbines, generators
etc.) civil engineering work and flow variations
throughout the year. Making use of existing
weirs, dams, storage reservoirs and ponds can
significantly reduce both the environmental impact and costs. Sites with low heads and high
flows require more capital investment because
greater civil engineer works and bigger turbine
machinery will be needed to handle the larger
flow of water. If, however, the system can have
dual purpose - electricity generation as well as
flood control, electricity generation and irrigation and electricity generation and drinking water supply, the payback period can be reduced.
Operation and maintenance costs. The op-

Table 2. Examples on how revenues and costs combined with volatility affect the uncertainty and the
willingness to invest in SHP. The higher the uncertainty and risk the less interest in investing
Revenues

Volatility

Uncertainty

High but also dependent on agreements.

High varies a great deal in deregulated markets, which results in

uncertainty.

Sales of generated
power

Medium to high.

Support system

Medium in most EU Low to medium

countries.

Low to medium depending on

the system and political decisions.

Grid compensation

Low if available.

Low

Low

Fee for Eco-labeling

electricial production

Low if available.

Low

Low

Costs

Volatility

Uncertainty

Capital costs

High

Medium

High

Operation and Maintenance

Medium

Low to medium

Low to medium

Administrative costs

Low

Low

Low

15

16

Figure 11. The spot prices for the largest exchange electricity markets in
Europe since 2003, Nord Pool (Nordic countries), EEX (Germany) and PWX
(France). Source: Nordpool Monthly report August 2007.

eration cost can vary a great deal between

countries due to the fact that there are different
types and sizes of fees. Special attention must be
paid to the cost of using water (water charges
and/or concession fees). Operation and maintenance costs vary in line with the quality and
design of a plant and the availability of specialist maintenance resources in the different MS.

The administrative costs include insurances,

tax, accountancy etc.
At European level, the latest economic indicators (Table 3) show an electricity generation
cost for small hydropower in average about
1.5-2.5 cents/kWh, typical turnkey investment
costs in average about 2,000-5,000 /kW, a
typical payback time on investments of between

Table 3. Investment and production costs. Some countries has very high average SHP production costs
which may be explained by that they have included the capital cost.
Range of invest- Average SHP
ment costs
production
costs

Country

Euro/kW

Eurocent/
kWh

Bulgaria

BG

1000 - 1500

0.4 - 0.8

Cyprus

CY

n/ap

n/ap

Czech Republic CZ

1000 - 6000

Estonia

EE

1000 - 4000

2-5

Hungary

HU

n/a

3.8 - 4.6

Latvia

LV

1800 - 2000

Lithuania

LT

2200 - 2500

2.5 - 3

Malta

MT

n/ap

n/ap

Poland

PL

2200 - 2500

3-4

RO
SK
SI
HR
MK
TR

1250
2000
1500 - 3000
1300 - 2500
1200 - 3000
500 - 1100

4
0.6 - 0.8
n/a
1.5
n/a
0.2

Austria

AT

3000 - 5500

8 - 30.9

Belgium

BE

1000 - 8000

6-8

Denmark

DK

n/a

n/a

Finland

FI

1750 - 10000

3 - 3.5

France

FR

1850 - 4000

0.5 - 1.8

Germany

DE

5000 - 12000

0.7 - 1.1

Greece

EL

1500

70

Ireland

IE

1600 - 5000

0.87 - 6.34

Italy

IT

2150 - 4500

10.5 - 17.4

Luxemburg

LU

6000 - 3000

10 - 15

Netherlands

NL

3000 - 6000

10 - 15

Romania
Slovakia
Slovenia
Croatia
Macedonia
Turkey

Portugal

PT

1800 - 2500

0.56 - 0.6

Norway

NO

1000 - 1500

1.5 - 2

Spain

ES

1000 - 1500

3.5 - 7

CH

4000 - 10000

3 - 15

Sweden
United Kingdom

SE

2150 - 3500

2.0 - 2.5

BA

1300 - 1600

1.5

UK

2200 - 6000

5.0 - 15.0

Switzerland
Bosnia & Herzegovina
Montenegro

ME

n/a

n/a

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

10 and 25 years (based on a 5% discount rate

over 20 years).
As can be seen in Figure 12, the revenue (income from selling electricity plus support system
minus production costs) varies between the MS.
A large part of production costs consists of the
capital cost (interest and depreciation) during
the period of depreciation, which is normally
around 25 years for SHP. When referring to production costs, it is important to know whether or
not capital costs are included. In both cases SHP
is competitive when compared to other RES-E
technologies of a similar capacity.

13). In Figure 13 large hydropower has nearly the same costs as SHP, but according to this
study the Long Range Marginal Cost (LRMC) for
SHP is higher than for large scale Hydropower in
almost all cases. Also worth mentioning is that
biomass and biogas are often paid for handling
their fuels.

Figure 13. Compared to other RES-E technologies, electricity generation from SHP is competitive for comparable investments. Source:
OPTRES 2007.

Figure 12. Compared to other RES-E technologies, electricity generation from SHP is competitive for comparable investments. Source:
OPTRES 2007.

Due to scale effects, SHP is not normally competitive compared to large scale electricity generation plants unless external costs have been internalised. Our own findings and those of other
studies (Optres 2007) demonstrate that SHP is
very competitive compared to other RES-E. (Fig.

Current and Future Operational and

Development Costs. SHP operational costs will
probably not increase in the future. The amount
of man-hours will decrease with technical development. The development of manufacturing processes will also reduce costs, although higher steel
prices and labour costs will tend to have the opposite effect. Environmental restrictions can increase
the cost of electricity generation. The specific capital cost of small hydropower installed capacity depends on the size and head of the plant; the cost
per installed kW is highest where heads are lowest,
but it decreases rapidly as heads increase. This effect is reduced at heads of around 25 metres and
eventually, the specific cost stabilises. Two potential
areas for improvement therefore exist; the first concerning cost reductions for low heads, the second
for developments supplying less than 250 kW. As a
large proportion of the potential in Europe involves
low-head plants, the benefits of concentrating development efforts in this area, and particularly for
low capacity plants, are obvious.
Capital costs are a crucial factor when considering the costs and uncertainties of SHP. Government guarantees for investments, investment
grants or other ways of decreasing the financial
risks involved in SHP projects would be desirable.

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7 SHP and the Environment

The SHP relation to the environment is twofold.
On the one hand there are many positive effects resulting from SHP operations such as the
replacement of fossil electricity generation, which
produces harmful emissions, and the reduced
risk of river flooding. In some cases SHP can
also increase biological diversity. SHP production in EU-27 amounts to 41,400 GWh (2006).
It replaces fossil production and protects nature
and society from many harmful emissions such
as greenhouse gases and sulphur dioxide, which
have the worst environmental impact. SHP production reduces greenhouse gases such as CO2
by 29,000,000 tons annually (41,400 GWh/
year x 700 tonnes/GWh) and sulphur dioxide by
108,000 tons annually (41,400 GWh/year x
2.6 tonnes/GWh).
A positive feature of hydropower is its ranking in
Life Cycle analyses (LCA) where it has the highest
ranking of all electricity production technologies.
On the other hand, environmental groups that
oppose SHP point to its negative impact on the
local environment. Most of these arguments
are, however, based more on theories than on
scientific research. Some arguments are related to specific cases and may be relevant, but
they do not generally apply to SHP. At times the
criticism seems to be emotionally charged. New
technology and improved SHP operating methods show that it is possible to reduce the local
environmental impact. (Fig. 14).

Therefore, the positive impact of SHP on the environment outweighs the negative effects. Further information can be found in the SHERPA
environmental report.
A study The application of the ISO 14001 Environmental Management System to Small Hydropower Plants, which is a part of the SHERPA
project, discussed how ISO 14001 can be used
among other things as a tool when working to
reduce the impact of SHP on the environment.
In the study the negative impact of SHP on the
environment is also dealt with.
The ISO 14000 environmental management
standards exist to help organisations minimise
the negative affect of SHP operations on the environment and to comply with applicable laws
and regulations.
An individual example in the spirit of ISO 14001
is that of a small hydropower plant in Sweden,
called the Forsa plant in Rolfsan, situated in the
southwest of the country. A project was launched
to retrieve migratory fish in the Rolfsans water system. For further information see www.rolfsan.se.
Compared to conventional generation, SHP is better for the environment. More research is needed
if and how SHP affects the environment. There are
interesting projects indicating that SHP operators,
environmentalist and researchers can co-operate
to find broad solutions acceptable to all parties.

Figure 14. Environmental Integration Resistance to SHP development EU-27 & CC.

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

8 SHP Technology
During recent years hydropower development
has focused on the adoption of new technology
from other sectors. Only a few decades ago, a
person responsible for operating a SHP plant
had to live nearby in order to control the operation. Such a system would be impossible today with the current ratio between income from
electricity generation and the cost of labour. The
scene has dramatically changed with the development of electronics. The following describes
some areas where this development has made
SHP operation more efficient.

Automation
Thanks to modern electronics SHP plants nowadays operate automatically and new IT technology has made it possible to introduce remote
monitoring and control. This constitutes a big
step forward and results in less visits to a plant,
more efficient regulation, safer operation and
reduced operating costs. This development is
still in progress.

Frequency conversion
Many SHP turbines are forced to run at a speed
for which they were not designed, due to the
fact that it is too expensive to design and build
a turbine that exactly suits the conditions at a
specific site. Although mechanical gears have
been used in order to overcome this problem,
correct frequency is still not achieved. Electronic
frequency converters have been too expensive,
but technical development and mass production has reduced the price to a level where they
are economically viable for SHP use.

Efficient Low Head Turbines

Up to a few years ago turbine development
concentrated more on medium and high heads
than low heads, as it is more economical to
use higher heads. In Europe and the rest of the
world there are many abandoned power plants
and numerous of millponds that have not been
used since the milling era. These sites are normally low head, and putting them back into operation would enable Europe to make a good
contribution to clean energy. Low head turbine
technology has recently started in France, Germany and Switzerland.

Fish Friendly Turbines

Running a turbine at the correct speed can in

many cases improve turbine efficiency by over
10 percent.

The growing interest in fishing migrating fish

and the fact that the population of such fish is
decreasing has led to a requirement to improve
fish passage at SHP plants. Many turbine manufacturers and research institutes are engaged in
on-going research how to design turbines that
enable fish to pass through.

Permanent Magneto Generators

New Material

There are many advantages in using permanent magneto generators, but up to now they
have normally been too expensive for SHP to
compete with standard generators. Development has now led to price reductions and these
generators are becoming economically interesting for installation in new SHP plants.

This is an area with many possibilities. Steel alloys more resistant to cavitations in turbines and
their development is in progress. Finding new
applications for fibreglass and special plastics is
another ongoing development, while aluminium is replacing steel in water structures such

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as trash racks and stop logs in spillways. Aluminium is not as corrosive as steel, which reduces maintenance costs and the time to stop
operations during maintenance. An aluminium
trash rack is also easier to clean. The fisheries requirement for a shorter distance between
the bars in SHP trash racks can result in loss
of head. Aluminium bars can be manufactured
with streamlined profiles to reduce head losses.
Aluminium stop logs are almost maintenance
free and easier to handle as they weigh far less
than traditional wooden stop logs.

Environmental Requirements
The increased environmental requirements on
SHP plants have led to technical development
to adapt the plants to these regulations. Reducing amplitudes in dams is one requirement that
has been fulfilled by means of automatic water
level regulation to keep the amplitude within
acceptable levels.

Increasing the passage of migratory fish at

power plants is not a new issue, has been an
issue for more than 50 years. However, few fish
pass designs work well in practice, thus a great
deal of research remains in order to develop
more efficient fish passes specifically adapted
to the migrating fish in the river in question, as
well as to develop methods how to operate SHP
plants during periods of fish migration.

Turbine Development
Although water turbine technology is considered to be a mature technology, there is still
interesting development taking place to improve efficiency and dynamic characteristics.
During the last two decades the top efficiency
of small turbines has increased from around 88
to 93 percent and the efficiency curve has been
considerably improved. New research on and
development of special turbines for very low
heads has become an interesting area.
The development of SHP technology is far from
complete and new techniques not only bring
down the cost but also emphasise environmental issues. Some areas that deserve mention are
the development of automation, more environmental friendly solutions and more efficient turbines.

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

9 SHP Market for Manufacturers

In EU-15 there are more than 40 manufacturers
of small water turbines. Not surprisingly most of
them are located in countries with highly developed SHP such as Germany, France, Spain, Austria and Italy and they offer a high technological
level. During recent years many larger turbine
manufacturers have incorporated smaller manufacturers, but this does not seem to have led to
any reduction in manufacturing capacity. Some
manufacturers have efficient development departments to improve their products, whereas
other seem to rely on proven technology. A survey of Eastern Europe revealed that some 24
small-scale water turbine manufacturers exist in
EU-12 and CC. The Czech Republic and Slovenia have the largest turbine manufacturing
industry, while Hungary, Poland, Croatia and
Romania have some limited turbine manufacturing capacity. Internationally recognized manufacturers exist in all of the above mentioned
countries. No SHP turbine industry was reported in Denmark, Cyprus Greece, Netherlands,
Estonia, Macedonia, Montenegro and Slovakia.
(Fig. 15).

Figure 15. Turbine manufactures in EU-27.

The European SHP equipment manufacturers are market leaders. They have successfully
developed hydropower technology and they
have become the main exporters of equipment
worldwide. Indeed, it can be said that Europe
gave light to the world.
Although EU equipment manufacturers are still
world leaders, this position is under threat as
MS have shown little interest in stimulating investments in new SHP and maintaining existing plants. This situation is due to decreasing
profits for energy producers in the deregulated
electricity market and the increasing obstacles
created by environmental and legal constraints.
The introduction of support systems has improved this situation. The margins for producers
are still good in a few countries such as Germany and Spain and consequently the markets for
manufactures in these countries are better, but
have recently been reduced because of the rising cost of materials, which has not been possible to transfer to customers. The non-EU market
is still promising and offers good prospects for

21

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EU manufacturers, although financing hydroprojects is a serious problem as is differences in

business culture. Small companies are finding it
difficult to deal with such problems. The world
is strongly in favour of electricity from renewable energy sources and the small-scale format
is well suited not only for developing countries.
However, there still appear to be too many obstacles to SHP within the EU giving the European manufacturers difficulties in demonstrate
their competitiveness.
European SHP manufacturers have been in a
negative spiral and many have chosen to leave
the SHP market. This negative spiral has now
stopped and the EU have a better chance to
maintain their industrial position as well as the
competence that has been built up over the
years. Such competence, if lost, is hard to recover because of the special technology related
to hydropower. In some countries, for example
Sweden, an ambitious programme has been
launched to supply competence to the industry.

Turbine manufactures, other SHP equipment

manufacturers and consulting companies will
only stay in business as long as the market provides them with enough work. It would be wise
for European manufacturers to make arrangements with export offices and export credit institutions in order to successfully penetrate the
non-EU market. It would also be advisable to
initiate a study on ways to strengthen the manufacturers in the short term so that they will be
well prepared when both the EU and non-EU
markets become stronger.
In 2003 approximately 20,000 persons directly
earned their living from SHP in EU-27. The SHP
industry in the EU was seen as multi-disciplinary, highly skilled industry offering range of
products and services for the sector. Following
the EREC (European Renewable Energy Council)
projections for 2020, the number of direct and
indirect jobs could reach 28,000.
In the questionnaires many EU SHP manufactures stated that they are competitive. Most
competition within the EU comes from manufactures in MS. Competition from Asian manufactures has become harder during recent years.
Manufactures of SHP technology in the EU have a
long history. They have developed a highly competitive industry that employees many thousands
of people. In order to maintain the competitiveness of the European manufacturing industry it is
of vital importance to have an increasing home
market and to stimulate technical development.
It is an old truth that you are only successful on
an export market if you can qualify your skill on
your home market.

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

10 Constraints
From the data collected it appears that the environmental constraints affecting SHP are mainly
related to fishing and water regulations. In almost all countries the fishermens lobby has the
power to influence the decisions of the regional
and national authorities. Moreover, in many European countries, environmental groups are trying to prevent local river areas from being used
by companies for industrial purposes (mainly
electricity generation), claiming it would negatively impact on the river environment (this is
particularly a problem in northern countries).
Another constraint is that in many countries the
long water licensing procedure is a real burden.
This is mainly caused by the complicated and
time-consuming public administration procedures and the number of subjects involved who
can refuse authorisation, which makes it difficult

to set up new SHP plants as well as finding proper financing schemes (this problem is common in
many southern European countries). (Fig. 16).
A report on Realising Hydro Projects by Involving
Stakeholders, carried out by the SHERPA project,
discusses how Social Engineering can be used as
a tool to implement a SHP-project where there
are objections from different groups.
Social Engineering means combining technical and economic aspects with a great variety
of social aspects. It can be seen as methodical
approach to overcoming opposition to a project.
In the report some tools are described as Conceptual strategies, Operational approaches, Involvement, Ownership and identity and presented together with examples of successful use of
the methods.

Figure 16. Social acceptance - Resistance to SHP development EU-27 & CC.

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11 Conclusions and Recommendations

Current policies pertaining to SHP include many
mechanisms that could, if well implemented,
increase SHP production. In the medium term,
these improvements may lead to substantial
growth of this energy source. In the current economic framework, which is converging towards a
common European market, the European Commission can play a fundamental role in spurring
economic forces to support Small Hydro Power.
However, these benefits can only be achieved if
there is a synergy at European, national and local level. These three levels must work together,
since efforts at only one level are doomed to
failure. The challenge for the European authorities involved in the development of Small Hydro
Power and other renewable energy sources is to
placate the market by reducing uncertainty. Although this is not an easy task, some measures
can be taken to promote the interest of European
citizens in the sustainability of the energy sector.
The present study, SHERPA, will indicate specific
areas and make recommendations as follows.

Gathering data
Statistics for this study were gathered from official sources such as Eurostat, reports, from experts and associations as well as other sources,
e.g. the Internet. The result demonstrates that
there is a great deal of variation between different suppliers and that official sources do not
present an accurate description of SHP.
The Commission should provide MS with more
detailed guidelines for how to report statistics.
The most reliable method is to gather information
on capacity and production from those organisations responsible for measuring the electricity generation to the grid from SHP plants (and
other plants). In most MS this is the responsibility
of grid owners. This is the only reliable way to
an accurate information on capacity and electricity generation. Reliable statistics are important to
precisely follow the development of capacity and
production towards targets, for example the Commissions 2020 targets.

Potentials and Forecasts

Very few MS have made serious and deep analysis of different potentials combined with technical, economic and environmental restrictions.
Potentials are often based on assumptions in-

stead of a scientific approach. The same goes

for forecasts. This means that calculations for future contributions from SHP are uncertain, which
makes it difficult to follow the development towards the 2020 targets.
The Commission should issue detailed guidelines
to MS on the calculation of potentials and forecasts and require these calculations to be updated
every second year. Norway has demonstrated a
method to calculate potentials using the GIS-system. Similar systems should be introduced in all
member countries.

Economics
SHP represents a major investment over an extremely long production period, normally 30-40
years. Other industrial investments have a payback time of around five years. This means that
the SHP sector has a need for a long-term stable
income. SHP also has a higher cost per produced
kWh than large hydro and other large scale electricity generation plants, but offers social advantages such as higher rates of employment, reduced
energy losses and stimulation of Small and Medium-sized Enterprises (SMEs) to support the sector.
Building a SHP plant implies heavy investment and
the capital cost is high, until the loans have been
completely amortized within 15-20 years.
The Commission should require MS to introduce
long sighted rules including a support mechanism
for the SHP sector taking into account the capital
cost over a period of 15-20 years. A differentiated system should be considered. The smaller the
plant, the higher the production cost, but also the
higher the benefit to society. Rules on how to calculate production and investment costs should be
issued by the Commission in order to harmonize
the way of calculating such costs, as the method
employed seems to differ between member states.
This will create an accurate way to compare different electricity generation sources.

Policy framework
Many SHP actors report complicated procedures
for obtaining a license, uncertainty as to whether
an application will result in a license, high costs,
an abnormally long waiting period and too many
authorities involved. The expensive, complicated
and time consuming process reduces the number
of applications as well as the number of applica-

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

tions approved. Directive 2001/77/EC does not

seem to have produced the expected result. Even
if MS introduce good economic incentives for SHP,
the resulting production will not reach the expected targets because of administrative barriers.
The EU should require MS to reduce administrative barriers in accordance with Directive 2001/
77/EC and make a recommendation how to deal
with Directives that appear to be contradictory, for
example the RES-e Directive and WFD Directive.
Directives 2001/77/EC and 2000/60/EC seem
contradictory. The 2001/77/EC promotes the use
of electricity from renewable energy sources and
calls for a reduction of barriers in order to stimulate further development, while the not yet fully
implemented 2000/60/EC, the Water Framework Directive (WFD), has raised new barriers
to the further development of SHP. The coming
directive related to the Energy Package of 2020
is supposed to call for more RES-electricity, thus
there is a clear risk of conflict with the WFD.
It is of vital importance that the contradictions between Directive 2001/77/EC and Directive 2000/
60 are made clear to all policy makers at national
and regional level, so that they can adopt the
right approach to overcoming possible conflicts

Manufacturing industry

The Commission should issue rules on how to

evaluate and balance the arguments for and
against the impact of SHP on the environment,
both locally and globally, and maintain a neutral
stance in the face of arguments from specific interest groups.

Summary of recommendations
To summarise what is said above about promoting SHP development in the short and medium
term, as well as good policies and best practices for SHP the following is suggested.
Concrete recommendations and policies for
promoting SHP in the short term:
Assure higher quality of the data that is being
reported for SHP to Eurostat. Using data from
the measuring of production delivered to the
grid is the most reliable method.
Evaluate different methods and recommend
the MS a state of the art of how to calculate
a more precise potential for SHP in different
MS. Good examples can be found from Scotland and Norway.
Evaluate different methods and recommend
the MS a state of the art of how to calculate
the costs for SHP investments and production
as well as other sources of electricity generation.

The manufacturing industry in the EU has been

built up during a long period and is today most
competitive from an international perspective.
However the international competition from outside the EU is increasing and the industry is now
facing a leap forward in development with very
high demands from producers on efficiency and
cost combined with very high environmental demands from different associations and citizens.

Follow up to what extent the Directive 2001/

77/EC has been implemented to reduce the
obstacles to increasing production and to rationalise and speed up administrative procedures. According to this study there are still
many obstacles and not much have changed.

EU is recommended to support an increasing research of SHP and hydropower in general to be

able to develop SHPP that will meet future demands and be international competitive. This is
a great possibility for the EU to keep the manufacturing industry in the EU supporting the SHPP
inside and outside the EU.

Concrete recommendations for promoting SHP

in the long term:

Environment
SHP has both local and global benefits, but is also
the object of criticism from some organizations,
mainly fishery associations, for the negative impact on the local environment. It is often difficult
to evaluate the different arguments, thus making
the debate more emotional than factual.

Give clear recommendations on how to interpret Directive 2001/77/EC and the WFD Directive that appear to be contradictory.

Decrease the barriers for developing SHPP by

setting up clear rules and timeframes in the
licensing process.
Support the manufacturing industry by increasing the research of finding new, more efficient
and more environmental friendly ways to generate electricity from hydropower. This in order
to secure that the SHP manufacturing industry
will still be international competitive in the future.
Finally it is of vital importance that the Commission
gives concrete guidelines in order to follow the development towards the renewable targets of year 2020.

25

Norway &
Switerzland

Candidate
Countries

EU-12

EU-15

2
9
9
13
0
155
0
0
127
682
10574
38
46
152
236
10810

CZ

EE
HU
LV
LT
MT
PO
RO
SK
SI

18
7933
51795

11

1712

12522

CH

BA

ME

74

3290

747

NO

4551

5
0
25
27
0
720
0
0
340
2050
43500
0
18
344
362
43862

503

4401
255
29
1612
6723
7999
166
123
9239
120
4
878
4436
5251
214
41450
430
0

Switerzland
Bosnia &
Herzegovina
Montenegro
Associated
Countries
EU-27, CC,
Associated
Countries

945

142

BG
CY

HR
MK
TR

843
60
10
357
1833
1421
56
34
2197
39
2
307
1567
1100
66
9892
225
0

AT
BE
DK
FI
FR
DE
GR
IE
IT
LU
NL
PG
ES
SE
UK

[GWh]

[MW]

Norway

Austria
Belgium
Denmark
Finland
France
Germany
Greece
Ireland
Italy
Luxemburg
Netherlands
Portugal
Spain
Sweden
UK
EU-15
Bulgaria
Cyprus
Czech
Republic
Estonia
Hungary
Latvia
Lithuania
Malta
Poland
Romania
Slovakia
Slovenia
EU-12
EU-27
Croatia
Macedonia
Turkey
CC
EU-27 + CC

Energy

Capacity

2000

13297

1748

11

755

973

2
9
12
13
0
182
0
0
147
750
11264
38
46
201
285
11549

160

843
60
11
342
2221
1421
60
37
2233
40
2
317
1618
1120
189
10514
225
0

[MW]

Capacity

2001

51826

7344

15

75

3310

3944

7
33
37
41
0
771
0
0
371
2231
43965
91
15
411
517
44482

691

4259
242
28
1412
6887
7634
135
93
9396
133
3
982
4914
5406
210
41734
280
0

[GWh]

Energy

14782

1789

11

763

1006

3
9
18
13
0
210
346
0
156
1218
12749
38
48
158
244
12993

238

1547
60
11
342
2313
1527
62
16
2291
40
2
344
1652
1130
194
11531
225
0

[MW]

Capacity

2002

52511

8077

16

75

3330

4656

6
28
32
36
0
847
436
0
327
2814
43813
96
16
509
621
44434

749

4632
198
49
1070
6751
8594
150
55
9594
113
3
917
4028
4642
203
40999
353
0

[GWh]

Energy

14315

1840

11

771

1049

4
9
26
19
0
227
348
67
151
1327
12236
34
48
157
239
12475

251

1205
59
11
341
1981
1544
69
34
2330
40
2
330
1704
1140
119
10909
225
0

[MW]

Capacity

2003

46429

6835

17

75

3350

3393

13
24
57
41
0
674
470
250
266
2943
39036
72
17
469
558
39594

660

2681
147
21
971
6381
7967
245
83
7187
77
3
1026
5407
3754
143
36093
488
0

[GWh]

Energy

14947

1912

13

777

1113

4
12
25
20
0
261
319
67
143
1327
12780
32
48
175
255
13035

251

1190
60
11
341
2384
1564
82
38
2364
40
2
335
1749
1150
143
11453
225
0

[MW]

Capacity

2004

53068

8189

24

84

3372

4709

22
43
69
61
0
890
774
250
437
3960
44186
124
24
545
693
44879

903

3792
185
27
1562
6710
8378
303
100
8859
100
3
716
5040
4169
282
40226
511
0

[GWh]

Energy

15203

1988

21

794

1164

5
12
25
27
0
246
325
67
143
1352
12959
33
48
175
256
13215

277

1062
62
11
324
2419
1714
89
38
2405
40
2
335
1788
1160
158
11607
225
0

[MW]

Capacity

51176

9461

23

119

3439

5880

22
49
62
66
0
860
752
250
383
4214
41083
107
23
502
632
41715

1071

3593
166
22
1102
5899
7959
324
103
7616
90
3
395
3977
5177
443
36869
699
0

[GWh]

Energy

2005

Table 4. Observed SHP data in EU-27, CC as well as Norway, Switzerland and other countries

22698

1616

19

1043

547

41
34
140
78
0
676
221
202
478
3361
20949
32
25
76
133
21082

1389

2485
80
34
152
1717
8000
61
44
1799
24
10
68
1119
1869
126
17588
102
0

Number

2006

15164

1729

22

757

941

5
12
25
27
0
253
325
68
144
1359
13169
33
48
185
266
13435

275

1099
57
9
317
2473
1714
116
32
2468
40
2
340
1819
1171
153
11810
225
0

[MW]

Capacity

51849

9244

19

125

3300

5800

850
1082
250
283
3646
41384
165
146
910
1221
42605

23
47
54
54

680

3731
209
24
910
6383
7996
388
120
7875
111
3
1048
4006
4457
477
37738
323

[GWh]

Energy

26

27

REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27

Table 5 Forecast and Potential of SHP in EU-27, CC as well as Norway, Switzerland and other countries
Potential with Economic & Environmental Constraints
2010
Country

Forecast

Capacity
[MW]

EU-15

EU-12

Candidate
Countries

Norway
Switzerland
and
Associated
Countries

Austria
Belgium
Denmark
Finland
France
Germany
Greece
Ireland
Italy
Luxembourg
Netherlands
Portugal
Spain
Sweden
UK
EU-15
Bulgaria
Cyprus
Czech Republic
Estonia
Hungary
Latvia
Lithuania
Malta
Poland
Romania
Slovakia
Slovenia
EU-12
EU-27
Croatia
Macedonia
Turkey
CC
EU-27 + CC
Norway
Switzerland
Bosnia &
Herzegovina
Montenegro
Norway &
Switzerland
EU-27, CC
and Associated
Countries

Energy

Upgrading
Capacity

[GWh]

New SHP

Energy

MW

GWh

Capacity

Energy

Capacity

Total
Energy

GWh

MW

GWh

740
26
0
238
750
350
100
30
500
19
12
330
000
375
615
085
290
20
387
24
50
95
57
0
520
900
258
194
795
880
123
363
485
971
851
750
650

3 700
156
0
1 200
3 000
2 000
600
100
1 850
67
30
943
3 224
1 500
2 550
20 920
1 000
71
1 300
95
16
334
203
0
2 410
3 193
965
585
10 172
31 092
435
1 090
19 520
21 045
52 137
19 000
2 300

1 015
31
0
288
1 368
450
102
35
640
29
12
350
1 100
675
653
6 748
346
20
467
27
62
101
62
0
588
981
275
230
3 159
9 907
131
375
6 565
7 071
16 978
5 000
848

4 633
192
0
1 413
4 595
2 500
605
120
2 350
94
30
1 000
3 574
2 700
2 669
26 475
1 158
71
1 650
106
19
348
218
0
2 613
3 366
1 029
689
11 267
37 742
463
1 126
19 870
21 459
59 201
20 000
3 160

30

425

1 330

432

1 360

220

600

222

606

457

1 896

6 045

23 230

6 502

25 126

2 584

8 960

20 896

75 367

23 480

84 327

1 449
60
9
360
2 590
1 795
117
32
3 000
42
0
400
2 199
1 200
160
13 413
255
0
300
7
15
32
28
0
305
400
70
160
1 572
14 985
38
80
250
368
15 353
1 700
1 300

5 481
245
24
1 360
7 487
9 379
495
120
9 237
130
0
1 200
6 692
5 000
559
47 410
810
0
970
31
57
70
96
0
924
900
260
452
4 570
51 980
120
240
750
1 110
53 090
8 000
5 000

275
5
0
50
618
100
2
5
140
10
0
20
100
300
38
1 663
56
0
80
3
12
6
5
0
68
81
17
36
364
2 027
8
12
80
100
2 127
250
198

150

500

14

35

3 000

13 000

18 353

66 090

1
5

1
6

7
1

MW

Total

933
36
0
213
595
500
5
20
500
27
0
57
350
200
119
555
158
0
350
11
3
14
15
0
203
173
64
104
095
650
28
36
350
414
064
000
860

2
7

6
6
14
4

28

References

Acronyms

World Wide Web

APER

1. http://epp.eurostat.ec.europa.eu
2. http://www.esha.be
3. http://eur-lex.europa.eu/
4. http://ec.europa.eu/energy/res/publications/doc/2007_02_optres_en.pdf
5. www.rolfsan.se
6. http://www.nordpool.com/Docuents/Communications/Publications/Monthlyreports/
2007Aug.pdf

CC
EIA
EREC
ESHA
EU-12
EU-15
EU-27

Literature
1. 2008 World Atlas & Industry Guide. The Intern. Journal on Hydropower & Dams.
2. EUROSTAT. Energy - Yearly statistics 2006,
ISSN 1830-7833.
3. Laguna M., Administrative barriers for small
Hydropower development in Europe, 2007,
Brussels, ESHA
4. ESHA, Lithuanian Hydropower Association.
Small hydropower situation in the new EU
Member States and Candidate countries.
Thematic Network on Small Hydropower
(TNSHP), 2004, ESHA. (Available from http://
www.esha.be/).
5. OPTRES final report. Assessment and optimisation of renewable energy support schemes
in European electricity market, Intelligent
Energy Europe, 2007.
6. San Bruno G., Developing small hydro to its
full economic potential: a European perspective, (2008), Belgium, ESHA
7. Strategic Study for the development of Small
Hydro Power in the European Union, Blue
Energy for a Green Energy (BlueAge), 2000,
ESHA. (Available from http://www.esha.be/)

GoO
GW
GWh
Head

IEA
IEE
kW
kWh
LHA
LRMC
MS
MW
MWh
N/A
N/Ap
O&M
PPA
SERO
SHP
SHPP
SME
UNEP
WFD

Associazione Produttori di energia

da fonti Rinnovabili
Candidate Countries
Environmental Impact Assessment
European Renewable Energy
Council
European Small Hydropower
Association
EU member states from
1 May 2004
EU member states before 1 May
2004
All EU member states from
1 January 2007
Guaranties of Origin
GigaWatt = 1000 MW
GigaWatt hours = 1000 MWh
The difference between upper surface and lower surface at the
hydropower plant
International Energy Agency
The Intelligent Energy Europe
kiloWatt
kiloWatt hours
Lithuanian Hydropower
Association
Long Range Marginal Cost
Member States
MegaWatt = 1000 kW
MegaWatt hours = 1000 kWh
Not Available
Not Applicable
Operation and Maintenance
Power Purchase Agreements
Swedish Renewable Energy
Association
Small HydroPower
Small HydroPower Plant
Small and Medium-sized
Enterprise
United Nations Environment
Programme
Water Framework Directive

This brochure has been prepared by:

Christer Sderberg (SERO)
Tomas Sderlund (SERO)
Annicka Wnn (SERO)
Petras Punys (LHA)

soderberg.sero@telia.com
tsem.se
tomas@
tomas@tsem.se
annicka.wann@gmail.com
punys@hidro.lzuu.lt

Acknowledgements
The authors wish to thank ESHA staff for the revision and
other SHERPA partners for their contributions.
We are grateful to the experts for providing data. The
following experts/organisations have answered the
questionnaire or supplied data:
EU-15: Dipl. Ing. Martina Prechtl of the Austrian Small
Hydropower Association, Ms Nomie Laumont of Belgium
Federation of Renewable and Alternative Energy, Mr Jrgen
Krogsgaard of Denmark, Mr Peter Reiter of Finnish Small
Hydropower Association, Dr Anne Penalba of France Hydro
and Mr Geoffroy du Crest of Inovation-Energy-Develop
Inovation-Energy-Develop-ment (France), Mr Gerhard Eckert of RENERTEC GmbH
(Germany), Mr George Babalis of Greece, Mr Fiacc
O'Brolchain of Irish Hydropower Association, Ms Sara
Gollessi of the Association for Renewable Energy (APER,
Italy), Mr Dirk Snikkers of Nuon Energy Sourcing (Nether
(Nether-lands), Dr Antonio Sa Da Costa of Portugal, Mr Manuel de
Delas of the Spanish Renewable Energy Association, MSc
(Eng) Christer Sderberg of Swedish Renewable Energy
Association, Tomas Sderlund of TS Energi & Marknad and
Peter Danielsson of P&C AB (Sweden), Mr Bill MacGregor of
Npower Renewables and Dr Drona Upadhyay of IT Power
(UK)
(UK)..
EU-12 and CCs: MSc (Eng.) Anton Tzenkov of EnergoprojectHydropower Ltd (Bulgaria), MM. Libor Samanek, Mirsolav
Bartusek and Jiri Venos of ELZACO s.r.o. (the Czech
Republic), Prof Dr Peeter Raesaar of Tallinn Technical
University (Estonia), Mr Csaba Kovacs of Sinergy
Energiaszolgaltato Kft, (Hungary), Prof Karlis Silke of Latvia
University of Agriculture (Latvia), Mr Algis Jonas Jakucionis
and MSc (Eng.) Dainius Tirunas of the Lithuanian Hydro
Hydro-power Association (Lithuania), Dr Janusz Steller of the
Institute of Fluid-Flow Machinery of the Polish Academy of
Sciences (Poland), Mr Marko Gospodjinacki of the Asso
Asso-ciation of Small Hydropower Plants Societies (Slovenia), Eng.
Peter Breza of ROTOR Ltd, Slovakia, Prof Dr Bogdan Popa,
University Politehnica of Bucharest (Romania), Mr Almir
Ajanovic of Intrade Energija d.o.o (Bosnia and Herzegovina),
Dr Eng. Kristijan Horvat of KONCAR - Electrical Engineering
Institute, Inc (Croatia), Mr Igor Nikolov of JSC ELEM Macedonian Power Plants, Macedonia, Prof Dr Sretren
Skuletic of the University of Montenegro, Montenegro, Ms
Ayla Tutus of Ickale Group Company (Turkey).

ESHA - European Small Hydropower Association

Renewable Energy House
Rue d'Arlon 63 - 65, 1040 Brussels - Belgium
T: +32 2 546 1945
F: 32 2 546 1947
E : info@esha.be
I : www. Esha.be
ESHA is founding member of EREC, the European
Renewable Energy Council

LHA - Lithuanian Hydropower Association

(Lietuvos hidroenergetik asociacija)
Universiteto 10, Water & Land Management
Faculty, LZUU, Akademija, Kaunas r.
LT-53361, Lithuania
T: +370 37 752 337
F: +370 37 752392
E: punys@hidro.lzuu.lt
I: www.hidro.lt

SERO - Sveriges
Energifreningars
RiksOrganisation
SERO, Box 57, S - 731 22 Kping,
Sweden
T: +46 (0)221 824 22
E: info@sero.se
I: www.sero.se

The sole responsibility for the content of this publication lies with the authors. It does not necessarily reflect the opinion of the European Communities. The
European Commission is not responsible for any use that may be made of the information contained therein.