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KPMG CEE Hydro Power Oulook
KPMG CEE Hydro Power Oulook
Central and
Eastern European
Hydro Power Outlook
kpmg.com
Dear Reader,
Sincerely,
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member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Central and Eastern European Hydro Power Outlook | 5
Table of Contents
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6 | Section or Brochure name
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Central and Eastern European Hydro Power Outlook | 7
Executive Summary
Hence hydro facilities account for almost 29,000 MW, or 23% of the total
127,000 MW generating capacity in CEE, and every country, from Estonia to
Bulgaria, has some hydro installations. In Albania and other countries in the
Balkan Peninsula, hydro dominates the generation mix.
After 1990, in the first years of transition to a market economy, the closure
of heavy industry (and subsequent reduced electricity demand) coupled with
political uncertainties, meant a reduced pipeline for new power projects in
many CEE countries.
However, political stabilization and economic progress in the past decade have
led to an upturn in electricity demand – albeit somewhat interrupted by the
recent global economic crisis.
This turnaround, coupled with the need to replace ageing and often inefficient,
polluting plants, has focused minds once more on the need for new investment
in generation capacity.
As this report highlights, the good news is that there remains huge potential for
hydro development within CEE, where the total technical hydro capacity could
generate an estimated 176,300 GWh per year.
In reality, current output stands at 62,700 GWh, meaning the regional utilization
rate is a mere 30%.
This potential includes even those countries which already boast significant
levels of hydro investment.
In Albania, for example, hydro facilities account for 87% of total generation
capacity and an astonishing 97% of electricity generated. Yet an analysis by the
World Energy Council reveals Albania is exploiting only one-quarter of its total
water-sourced potential.
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8 | Central and Eastern European Hydro Power Outlook
Lithuania, for example, currently utilizes less than one-third of its technical
hydro potential, which amounts to an annual 3,000 GWh. Poland is even more
wasteful; the 2,700 GWh it sources from hydro generation being a mere fifth of
its technical potential.
But the most profligate country in the region regarding water resources is
Hungary, where hydro facilities amount to just 46 MW (0.6% of the total) and
generate a paltry 200 GWh annually (again, 0.6% of the total).
Hungary, together with the then Czechoslovakia, sought to tap into its potential
hydro power when in 1977 the two countries announced plans for a system of
dams and hydro-power stations on the Danube, which formed the common
border between the two countries for some distance.
As this report notes, there are certainly many environmental (and often political
and social) factors that require careful evaluation when planning any hydro
project, most particularly large schemes that involve damming rivers to hold
back large volumes of water.
Indeed, with careful planning and consultation between all parties involved,
hydro schemes can garner the support of the general public and, at best,
become the ideal ‘win-win’ development.
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Central and Eastern European Hydro Power Outlook | 9
This report emphasizes the experience of Austria, where a combination of 154 large
and 2,400 hydro generators, built within the framework of clearly-defined regulatory
support system, now provides 60% of the country’s electricity needs.
However, even in Austria, projects have foundered, most notably the Hainburg
hydro scheme of the 1980s, where environmentalists, ignored by the authorities,
fomented protests and eventually forced the abandonment of the project.
Austria learned its lessons, and just a few years later created intense public
involvement for its proposed Freudenau hydro scheme in Vienna. The result
was a 70% yes vote for the scheme in 1991, and seven years later the project
was completed, providing over 1,000 GWh annually to the grid since 1998.
Many of the states in the region lack Austria’s administrative skills, nor do they
possess the financial means to fully fund even small hydro schemes (which are
more expensive than large projects per kW installed).
Furthermore, much of the region’s potential hydro power will require some
form of guaranteed electricity pricing to create a sound business case and
attract external finance. Under these conditions, the most crucial role of the
CEE states is to each create a sound regulatory and legal environment to
assure potential investors (both domestic and international) that their money is
safe and that it will earn a steady, if unspectacular, return.
From this study it is clear that much potential exists across CEE to develop
hydro power, particularly (but not only) in mountainous countries such as
Albania, Romania, Bulgaria and former Yugoslavia.
This potential includes hydro generation in all its forms, including renewal
of older, inefficient facilities, new projects involving both large and small
generators, and pumped-storage schemes that help system balancing and
utilize low-cost electricity at times of low demand.
In addition, environmental concerns and public sentiment generally support the use
of clean energy. But to exploit these potentials in practice will require governments
and utility companies to employ a wide-ranging skill-set from careful, in-depth
technical and financial planning to innovative public relations techniques.
© 2010 KPMG Tanácsadó Kft., a Hungarian limited liability company and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
© 2010 KPMG Tanácsadó Kft., a Hungarian limited liability company and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Central and Eastern European Hydro Power Outlook | 11
For the purposes of this study, the Central and Eastern European region is
defined as the 17 countries – Albania, Bosnia and Herzegovina, Bulgaria,
Croatia, Czech Republic, Estonia, Hungary, Kosovo, Latvia, Lithuania,
Macedonia1, Montenegro, Poland, Romania, Serbia, Slovakia, Slovenia – lying
east and north of the EU-15 (neighbouring Germany, Austria, Italy and Greece)
and west of Russia, Ukraine, Moldova and Belarus – see Figure 1).
Ten out of 17 of the above listed CEE countries are EU members at present,
with Croatia being very close to receiving an accession date and Macedonia
also on the path of accession.2
Central and
Eastern
European
countries
This study aims to collect and organize data, identify major trends and describe
the similarities and differences between the countries in the CEE region.
1 The country is often referred to as Former Yugoslav Republic of Macedonia; in the current report we
refer to it as Macedonia
2 Source: European Commission Enlargement Newsletter
http://ec.europa.eu/enlargement/press_corner/newsletter/index_en.htm accessed on 23 April 2009
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12 | Central and Eastern European Hydro Power Outlook
The current financial turmoil has hit some of the CEE countries hard, the Baltic
countries were influenced the most, but others, such as Hungary and Romania
also needed to apply for IMF credit to ensure their stability.
Their major economic indicators and population data can be found in the table
which follows.
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Central and Eastern European Hydro Power Outlook | 13
EU member states
EE Bulgaria (BG)
GDP: 90.51 billion • GDP growth: -4.9% • Population: 7.1 million
LV Czech Republic (CZ)
GDP: USD 256.6 billion • GDP growth: -4.1% • Population: 10.2 million
LT
Estonia (EE)
GDP: USD 24.36 billion • GDP growth: -14.1% • Population: 1.3 million
Hungary (HU)
PL
GDP: USD 184.9 billion • GDP growth: -6.7% • Population: 9.9 million
Latvia (LV)
CZ GDP: USD 32.4 billion • GDP growth: -17.8% • Population: 2.2 million
SK Lithuania (LT)
GDP: USD 54.84 billion • GDP growth: -15.0% • Population: 3.6 million
HU
SI Poland (PL)
HR RO
RS
GDP: USD 690.1 billion • GDP growth: 1.7% • Population: 38.5 million
BA
Romania (RO)
ME KO BG
GDP: USD 255.4 billion • GDP growth: -7.2% • Population: 22.2 million
MK Slovakia (SK)
AL
GDP: USD 115.7 billion • GDP growth: -4.7% • Population: 5.5 million
Slovenia (SI)
GDP: USD 55.84 billion • GDP growth: -7.3% • Population: 2.0 million
All GDP figures are quoted in Purchasing Power Parity and are 2009 estimates.
* Albania, Bosnia & Herzegovina, Macedonia and Kosovo have large informal economies that might reach
50% on top of the official GDP.
Source: World Factbook, CIA, 2010 Population data represent 2010 estimates.
© 2010 KPMG Tanácsadó Kft., a Hungarian limited liability company and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Source: Alstom
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member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Central and Eastern European Hydro Power Outlook | 15
2. Introduction of
the Technology
Defining Hydro Power Plant Terms This chapter aims to give you an overview on the basics of hydro-based
electricity generation regarding technology. Figure 2 shows the general
Dam schematic structure of a usual Hydro power plant (HPP) to introduce the basic
A structure made out of concrete or locally
terms.
available material constructed in the water
flow to block its way in order to gather water.
Head Reservoir
The head is the elevation difference between Long
the upstream and downstream water. Powerhouse Distance Electrical power
Powerline substation
Intake
Intake
Generator
The headwater is lead through the intake
to access the penstock after passing
the gate. The gate is closed if the power Pensto
ck
generation needs to be halted. Turbine
River
Penstock
High pressure steel penstock pipes deliver
the incoming headwater to the turbine. In
case of low head power plants penstocks Source: KPMG
are substituted by open waterways.
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16 | Central and Eastern European Hydro Power Outlook
Run-of-river plants
Headwater
Run-off
water
Generator
Source: KPMG Turbine
The most common types amongst hydroelectric power plants are the run-
of-river power plants (see Figure 3) whereby the natural flow and elevation
drop of a river are used for the generation of electrical power, and there is only
minimal or no storage of water.
These power plants are constructed on rivers with a consistent and steady
flow. Large reservoirs are required on rivers with great seasonal fluctuations in
order to operate power stations during the dry season resulting in the necessity
to impound and flood large tracts of land. In contrast, large impoundments of
water are not required for run of river projects. Instead, some of the water is
diverted from a river, and sent into the penstock. The penstock feeds the water
downhill to the power station’s turbines. Because of the altitude difference
between headwater and tailwater, potential energy from the water up river is
transformed into kinetic energy on its journey downriver through the penstock,
giving it the pressure required to spin the turbines that in return transform this
kinetic energy into electrical energy through a generator unit. The water leaves
the generating station and is returned to the river without altering the existing
flow or water levels of the tailwater. According to the definition of ENTSO-E the
filling period of these plants is determined in less than two hours.
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Central and Eastern European Hydro Power Outlook | 17
Generator
High-pressure
pipeline array Turbine
Source: KPMG
There is not any strict threshold between run-of-river and storage type HPPs
in term of technical parametres; the distinction can be made by the purpose
of the dam in case of the two types. While run-of-river HPPs need the dam to
create the appropriate head- and tailwater level difference for the operation of
the turbines, the storage type HPPs (see Figure 4) – also known as “reservoir”
HPPs – need the dams to store the appropriate amount of water on rivers where
the natural parametres of the river are not suitable to ensure stable, continuous
operation, or flexibly adjustable performance is needed, which results in the
necessity to impound and flood large tracts of land. A reservoir allows for the
scheduled use of the potential energy of the water that flows from a higher to a
lower elevation. These power plants are able to produce electricity throughout
the year since the reservoir has the capacity to store extremely large quantities
of water to offset seasonal fluctuations in water flow.
These plants exploit the potential energy in the difference in altitude between
the waters of a naturally fed high-level reservoir and a power generation plant at
a lower level.
The reservoir usually fills up during the rainy season and the water lasts for the
whole year till the next summer season. In these hydroelectric power plants a large
reservoir is constructed behind the dam wall. ENTSO-E divides such plants in two
categories, namely pondage is characterized by a filling period of between 2 and
400 hours and reservoir plants with a filling period exceeding 400 hours.
The water flows from the reservoir through pressure pipes or tunnels to drive
the turbines of power plants located in valleys.
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18 | Central and Eastern European Hydro Power Outlook
Cavern
Head race
tunnel
Lower basin
Generator
High-pressure Turbine
dustribution pipeline
Pump
Source: KPMG
Pumped storage power plants (PSPPs – see Figure 5) are usually considered
power plants, but they are in fact electricity storage facilities. They are a special
type of storage HPP since not (only) a river is blocked by a dam, but the water
is (also) pumped up from a lower basin to fill the reservoir. The losses from the
pumping process (whose efficiency is around 75-80%) makes the plant a net
consumer of energy overall. PSPPs store energy in the form of the water’s
potential energy that was pumped from a lower basin or river to a higher basin.
Pumping activities normally take place at night to exploit the excess electrical
power of the off-peak demand period for pumping. As soon as demand increases
during the day, the water is fed back to drive the turbines of the power plant.
This is all controlled by the push of a button and the generators begin to produce
electricity within seconds. Pumped storage is the largest capacity form of energy
storage technologies available for electricity grid operators.
The main purposes of these plants are balancing the electricity demand and
satisfying peak demands along with utilizing electricity surplus on the other
side. The mandates for pumped storage plants can be various:
1. To fit the production of low flexibility power plants (like nuclear power plants)
to the demand
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Central and Eastern European Hydro Power Outlook | 19
5. To ensure best efficiency load for thermal power plants (like coal/biomass
fired steam turbine based plants).
Other types
There are two additional types of HPPs, namely tidal and wave. Connected
to oceanic or sea water movements, these plant technologies are currently
in a pilot phase; consequently, in this study we are restricting our focus to
conventional landlocked hydro power generation technologies.
Figure 6: Francis turbine 2.3. Major Turbine Types and their Application
The history of the hydraulic wheel dates back to antiquity. Water wheels were
already being utilized by mankind in the ancient Greek and Roman era and
throughout medieval Europe.
Reaction turbines
The runners of reaction turbines are under water and exploit water speed
(kinetic energy) and pressure difference. Reaction turbines are used mainly at
low (<30 metres) and medium head (30-300 metres) operations.
Kaplan
This double regulated reaction turbine is a modification of the Francis turbine
designed by Victor Kaplan in 1913. The regulation ability of both flow and blades
make this turbine type capable of operating at a high efficiency level within
a wide range of operational parameters. It is utilized at smaller altitude head
operations, where water flow is significant.
Source: Alstom
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20 | Central and Eastern European Hydro Power Outlook
Impulse turbines utilize the kinetic energy of a free falling water jet that is
transformed by a nozzle to drive the turbine. They are neither submerged into
the water, nor utilizing water pressure differences before and after the turbine.
Pelton
Lester Allan Pelton designed this type of impulse turbine in 1879, directly
Source: Alstom
utilizing the kinetic energy of the drop of a water jet from a high altitude that
reached 92% of efficiency after being optimized by William Doble around 1895.
Pelton turbines are used for very high altitude heads and light water flow.
There are two basic types of units utilized in pumped storage power plants.
1. Reversible type turbines utilized in pumped storage power plants are able
to work both in pump and turbine mode in order to be able to reverse water
flow in off-peak operation mode, and fill the high reservoir. For example
modified Francis turbines are used for this purpose.
2. Separate turbine and pump units can also be installed in pumped storage
plants thus separate instruments are used in the two operation modes of
the plant.
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Central and Eastern European Hydro Power Outlook | 21
2. Wind and solar installed capacities are increasing their market share rapidly
which makes for numerous volatile facilities whose production is not
accurately predictable, generating extra balancing needs.
Both storage and pumped storage HPPs can be rendered capable to provide
supply-side ancillary services such as balancing out:
Pumped storage power plants can also balance out the electricity system
surplus in off-peak periods by demand side balancing – consuming the
electricity necessary to pump water to the upper reservoir.
These two flexible HPP types are favourable for system operators to be able
to stabilize and optimize the electricity systems they are responsible for,
minimizing the risk of a possible frequency fluctuation, overload or black out.
Storage hydro plants are able to provide these services without additional
emission. The pumped storage power plants do not have real competition in
electricity storage of the same achievable size and effectiveness given the
current status of technology.
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22 | Central and Eastern European Hydro Power Outlook
Navigation
Navigation dams resolve the problems of seasonality and raise the water levels
of shallow river sections.
The inland water channels of Europe suffer from seasonality and changing
water levels. These symptoms make continuous commercial navigation
impossible without the help of navigational purpose dams.
Flood Control
Irrigation
Recreation
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Central and Eastern European Hydro Power Outlook | 23
Bridge
Water quality
Changes in water quality are likely to occur within and downstream of the
development as a result of impoundment. The residence time of water within
a reservoir is a major influence on the scale of these changes, along with
bathymetry, climate and catchment activities. Major issues include reduced
oxygenation, temperature, stratification potential, pollutant inflow, propensity
for disease proliferation, nutrient capture, algal bloom potential and the release
of toxicants from inundated sediments. Many water quality problems relate to
activities within the catchment beyond the control of the developer.
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24 | Central and Eastern European Hydro Power Outlook
The loss of rare and threatened species may be a significant issue arising from
dam construction. This can be caused by the loss or changes to habitat during
construction disturbance, or from reservoir creation, altered downstream flow
patterns, or the mixing of aquatic faunas in inter-basin water transfers.
Many fish species require passage along the length of rivers during at least
short periods of their life cycle. In many places the migration of fish is an annual
event and dams and other instream structures constitute major barriers to
their movement. In some cases the long-term sustainability of fish populations
depends on this migration and developing countries’ local economies can be
heavily reliant on this as a source of income.
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Central and Eastern European Hydro Power Outlook | 25
downstream water use through changes in the quality of discharge water (e.g.
algal bloom toxins, deoxygenated water).
Health issues
Construction activities
Water Evaporation
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26 | Central and Eastern European Hydro Power Outlook
© 2010 KPMG Tanácsadó Kft., a Hungarian limited liability company and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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3. Regulations
as good reasons for handling large hydro separated from other renewable
energy sources.
On the other hand governments might offer investment subsidies for small
hydro investments to foster reaching their renewable goals while excluding
large hydro from such renewable incentives based on its relatively low
generation cost and reasonable return potential, but the threshold between
large and small hydro may vary country by country even inside the EU. In our
analysis we use 10 MW as a border line between large and SHPPs.
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30 | Central and Eastern European Hydro Power Outlook
On the one hand, the most important goal of the Directive is to protect
European waters and avoid environmental burdens; on the other hand, there
are essential uses of water such as flood protection and drinking water supply
in which cases the policy objectives can be overridden (although there might be
a significant impact on the surroundings). Accordingly, the approach towards
hydro power generation is not fully clear in the Directive. However, the aim of
environmental protection and related authorization procedures may increase
investment costs or even hinder the realization of some projects. Furthermore,
the implementation of the Directive may have an impact on project economics
in the future, as a key innovation is that it calls for all types of water services to
be charged at a price that reflects all occurring costs.
As an example, this means that the price of electricity generated from an HPP
may cover the damage caused to ecosystems by the reservoir. Based on the
timetable for implementation insisted in the Directive water pricing policies
have to be introduced by 2010 at the latest.
5 Source: http://ec.europa.eu/environment/water/water-framework/index_en.html
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Central and Eastern European Hydro Power Outlook | 31
The European Commission outlines the priority activities and objectives of the
Community regarding energy sources, identifying three major objectives:
ensuring sustainability.
COM (97) 599 White Paper: Energy for the future – renewable sources of
RES-E shares and targets for EU
energy
according to Directive 2001/77/EC
RES-E %, RES-E %, In 1997, the Commission published a White Paper on renewable energy which
1999 2010 defined a strategy and action plan to promote the market penetration of
EU-15 13.9 22.1 renewable energy sources, with a target of doubling their use by 2010 (from
6% of total consumption in 1996 to 12% in 2010).
EU-10 5.4 11.1
EU-25 12.9 21
A key element of the action plan was the establishment of European legislation
Source: European Small Hydropower Association to provide a stable policy framework and clarify the expected development of
http://www.esha.be/index.php?id=43 renewable energy in each Member State.
The two key pieces of legislation (Directives 2001/77/EC and 2003/30/EC) set
indicative 2010 targets for all member states and required actions to improve
the access, growth and development of renewable energy.
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32 | Central and Eastern European Hydro Power Outlook
In Directive 2001/77/EC, all member states adopted national targets for the
proportion of electricity consumption from renewable energy sources. The
indicative targets set in the Directive add up to a 22.1% average share of
electricity produced from renewable energy sources as a percentage of gross
electricity consumption by 2010 in the EU15. With the 2004 accession, the
EU’s overall objective became 21%. Additionally, the Directive encourages the
countries to use national support schemes, as well as eliminate administrative
barriers with respect to renewable energy investments; it encourages grid
system integration, and lays down the obligation to provide renewable energy
producers with guarantees of origin if requested.
The Biofuels Directive entered into force in May 2003, promoting the use of
biofuels for EU transport. It stipulates that national measures must be taken
by member states aiming at replacing 5.75% of all transport fossil fuels with
biofuels by 2010.
Regular assessments and reports have been prepared on the EU’s progress
towards its 2010 targets and on its efforts in general to develop renewable
energy. The reports issued in 2007 as well as the Renewable Energy Roadmap,
highlighted the slow progress member states were making and the likelihood
that the EU as a whole would fail to reach its 2010 target.
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Central and Eastern European Hydro Power Outlook | 33
All EU countries are parties to the Convention and have ratified the Kyoto
Protocol. Developed countries have committed themselves to reducing their
collective emissions of six key greenhouse gases by at least 5%.
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34 | Central and Eastern European Hydro Power Outlook
Generators that cannot comply with the mandatory emission limits have an
alternative to either purchase additional emission allowances on the open
market (Emission Trading – “ET”) or implement a project under the umbrella
of the Clean Development Mechanism (CDM) or the Joint Implementation
(JI) scheme. If a company implements such a project, it receives Certified
Emission Reduction (CER) or Emission Reduction Unit (ERU) certificates which
can be surrendered as a substitute for emission allowances.
Under JI, any country that has emission reduction targets (termed an Annex I
country) can invest in emission reduction projects in any other Annex I country
as an alternative to reducing emissions domestically. In this way countries
can lower the costs of complying with their Kyoto targets by investing in
greenhouse gas reductions in any Annex I country where reductions are
cheaper, and then applying the credit for those reductions towards their
commitment goal.
In order to adopt the UNFCCC on a more practical level, the EU issued Directive
2003/87/EC establishing the EU ETS. This is a market-based mechanism that
translates Kyoto Protocol commitments to an operational level. It has been in
operation since 2005, covering more than 40% of the total GHG emissions of
the European Union and serves as a market mechanism for buying and selling
CO2 emission credits, each of which allow the owner to emit greenhouse
gases of 1 tonne of CO2 equivalent.
Under the framework of the EU ETS, emission allowances can be traded just
as any other commodity. The EU ETS covers several industries, among which
power generation has the largest GHG emission level.
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Central and Eastern European Hydro Power Outlook | 35
The Kyoto Convention will come to its end in 2012, thus as a successor a similar
treaty was expected to be signed in Copenhagen in December 2009 for the
post-2012 period, but the end result is widely considered a failure.
In aggregate the Copenhagen Climate Summit did not achieve its initial goal,
however the participants signed a memorandum which expresses the non-
binding common understanding of keeping the global climate change under
2 degrees’ increase of temperature without containing explicit commitments
to emission reductions to achieve that goal. This document will be the basis of
the next UN Climate World Summit, which takes place in Mexico between 29th
November and 10th December in 2010.
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member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Source: Alstom
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Central and Eastern European Hydro Power Outlook | 37
Due to population increase and economic growth (not taking into consideration
the current financial economic slowdown) energy demand in general and
electricity consumption are increasing globally. This latter trend can also be
observed in the Central and Eastern European region, although the change in the
political and economic systems in the early 1990s resulted in a drop of electricity
consumption in many countries.
100%
80%
60%
40%
20%
0%
2004
2006
2000
2003
2008
2005
2002
2007
1994
1990
1996
2001
1993
1998
1999
1995
1992
1997
1991
Source: World Bank data and KPMG estimates based on national statistics, EIU and UCTE data
4.1. History
CEE countries maintained centrally-planned economies during the communist
era, and partially based on the principle of facilitating the development of heavy
industry they consumed a significant amount of electricity, which totalled
about 339 TWh7 in 1990. After the change of system many of the large but
at the same time uneconomical sectors were closed down which caused a
significant decrease in electricity demand within the region: total consumption
was almost 23%7 less in 1993 than the corresponding value in 1990. Issues
occurring on a country level such as monetary problems or the civil war in the
Balkans as well as the initial general downturn of social welfare arising in line
with the transformation also influenced consumption in a negative way.
Since then the electricity consumption of the region has recovered: the total
demand of the region exceeded 348 TWh8 in 2007. One reason for this is that
national governments have taken several actions in order to stabilize the newly
established market-based economies (monetary restrictions, privatization, etc.),
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38 | Central and Eastern European Hydro Power Outlook
Figure 10: Distribution of Electricity which resulted in continued economic growth in the following years. As the
Consumption by Sector in the CEE9 standard of living has also risen, the significance of residential and commercial
Region consumption in total electricity demand has increased and thus these sectors
have taken over the earlier role of heavy industry.
100%
90%
In the meantime, most of the countries in the CEE region have joined the
80% European Union, which through the entry criteria and by influencing country-
70% level decisions afterwards further facilitated stabilization and economic growth.
60% In line with the goal of establishing a single European electricity market, actions
fostering full liberalization have been implemented in CEE countries, which
50%
could result in a more transparent market with lower prices and in this way in
40%
additional demand. On the whole, EU membership has thus also increased
30% directly or indirectly the electricity consumption of the region.
20%
10% Although demand for electricity is in general relatively constant compared to that
0%
of other products (as it is a necessity good), due to the recent financial turmoil
1990 2007 the electricity industry is facing a downturn as well. Industrial production has
Industry decreased significantly in the region, and household consumers are using less
Transport electricity in this insecure environment. As illustrated in Figure 11 below, monthly
electricity consumption in the CEE region has been lower than the previous year’s
Households
consumption since October 2008.
Services
Other sectors
Source: World Bank data and KPMG estimates Figure 11: Monthly Electricity Consumption in the CEE – Change in
based on national statistics, EIU and UCTE data Percentages Compared to Previous Year (2008–2009)
Financial crisis and related drop of demand
8%
2008/2007 2009/2008
6%
4%
2%
0%
-2%
-4%
-6%
-8%
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb
Source: UCTE
9 Including Bulgaria, Czech Republic, Estonia, Croatia, Hungary, Lithuania, Latvia, Poland, Romania,
Slovenia, Slovakia
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Central and Eastern European Hydro Power Outlook | 39
As an example, the Netherlands was the first country in Europe that promoted
green power to consumers and suggested an extra charge for it to cover
environmental concerns. Initially, in 1995 1% of electricity utility EDON’s
customers (recently part of RWE Group) had signed up to the scheme, through
which they could purchase 25-100% of their electricity from renewable energy
sources. At that time, the additional charge was 4 cents per kWh on top of
the regular price of 21 cents. The idea proved to be relatively successful as all
utilities in the country now offer such a green energy scheme.10
10 Source: http://www.ucc.ie/serg/pub/green.pdf
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Central and Eastern European Hydro Power Outlook | 41
Hydro power plays an important role in the energy production of the Central and
Eastern European region today with a share of approximately 23% of the total
installed capacity. Electricity generation from hydro power makes a substantial
contribution to meeting the increasing electricity demand and is currently
the most used resource which is not fossil fuel- or nuclear-based electricity
generation technology. Hydro is one of the two energy sources along with fossil
fuel that is utilized in all CEE countries for electricity generation.
Figure 12: Share of hydro generation capacities in the CEE region (2008)
Total Hydro
Albania 1,670 1,446 87%
Montenegro 870 660 76%
Latvia 2,566 1,560 61%
Croatia 3,762 2,007 53%
Bosnia and
4,021 2,064 51%
Herzegovina
Macedonia 1,493 586 39%
Romania 16,582 5,843 35%
Serbia 8,355 2,831 34%
Slovakia 7,453 2,478 33%
Slovenia 2,894 879 30%
Bulgaria 11,359 2,993 26%
Lithuania 5,070 1,027 20%
Czech Republic 16,480 2,175 13%
Poland 32,509 2,327 7%
Kosovo 1,522 44 3%
Hungary 7,746 46 1%
Estonia 2,738 5 0%
Total 127,090 28,971 23%
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42 | Central and Eastern European Hydro Power Outlook
Figure 13: Capacity mix in the UCTE and CEE region, 2008
70% 65.9%
60%
52.6%
50%
40%
30%
22.7%
19.0% 17.1%
20%
10.1% 11.3%
10%
1.3%
0%
Thermal Hydropower Nuclear Other RES
Comparing this ratio to that of the UCTE region11, which is 20%, we can see that
hydro power is a more popular source of electricity in the CEE region.
One reason to which this can be attributed is the favourable geographic situation
of many of the countries in the region. Looking at the topographic map one can
fairly easily tell which countries might bear significant opportunities. Countries
lying on the Balkan Peninsula, in the Carpathian Mountains and at the eastern
slopes of the Alps harbour such potential.
The following page contains a summary map of the installed hydro power
capacities of the CEE countries. It is predictable, but still interesting to see how
hydro’s proportion in the capacity mix and the topographic conditions of a country
correlate.
11 The UCTE region includes: Austria, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia,
the Czech Republic, Denmark, Germany, France, Greece, Hungary, Italy, Luxemburg, Macedonia,
Montenegro, the Netherlands, Poland, Portugal, Romania, Serbia, Slovenia, Slovakia, Spain,
Switzerland
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Figure 14: Installed capacities and topographic features of 2%
0 MW
5 MW
98 %
1%
LV
38%
1535 MW
25 MW
61 %
2% 20%
26%
LT
1001 MW
26 MW
52 %
Hydro
Thermal
Nuclear
Other RES
1%7%
PL
2176 MW
151 MW
92 % Country code
Large hydro
1% 13%
1%
2
CZ
Small hydro
1870 MW
305 MW 1%
30%
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33
65% SK
%
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
2254 MW
224 MW
36 %
7% 1%
% HU
24%
30
24
SI
%
39 MW
863 MW 8%
%
1% 7 MW
68
RO
35
16 MW
%
46 % HR
4895 MW
45%
1970 MW
54%
7 MW
57
34
RS %
%
37 MW
2818 MW
66
BA 13 MW
%
49%
51%
2056 MW
3%
8 MW
1%
KO % 26
18
%
BG
35 MW
24
2480 MW
%
ME 9 MW
97% 513 MW
649 MW
55%
13%
MK
39%
11 MW
AL
76 % 536 MW
61 %
1432 MW
50 MW
14 MW
Source: KPMG analysis
87%
44 | Central and Eastern European Hydro Power Outlook
Another reason is for hydro having a higher share in the CEE than in the
UCTE countries is that western European countries have higher electricity
consumption per capita which results in relatively higher installed capacity
needs. After approaching the limitations of exploiting economically feasible
hydro capacities they have had to turn to other sources.
But given a comparison of the UCTE countries and the CEE region in terms of
installed hydro capacities divided by the populations of the countries, things
may look different. In this case the UCTE countries have 241 MW per million
capita installed capacity of HPPs versus 229 MW in the CEE region12.
Besides the fact that hydro power currently makes up a substantial share of the
total installed generating capacity, arguments for the increasing utilization of
hydro power are based on its advantages compared to other sources of energy
that are largely based on low OPEX, effective, sustainable and renewable
energy source through which energy can be stored in large quantities and
which are able to play a major role in power system balancing.
Figure 14 shows the share of hydro power in the total generation capacity
of the CEE region. We can see that the share of hydro power within the total
installed capacity varies considerably between countries, ranging from ~0%
to ~87%. The differences in countries reflect both topographic and climate
constraints or suitability. The table shows that hydroelectricity is of elemental
importance in Albania, Montenegro, Latvia, Croatia and Bosnia-Herzegovina.
The following chart shows the technical hydro power potentials of each country
of the CEE region. Most of the potential for future hydro power expansion
lies in Romania, former Yugoslav republics (Kosovo, Bosnia and Herzegovina,
Serbia, Slovenia, Croatia, Montenegro and Macedonia), Bulgaria and Poland.
Yet despite the vast potential for future development, these countries have
found it difficult to secure financing for large hydro power projects. Out of
the top five countries it should be noted that two countries have enormous
potential considering their size: Bosnia and Herzegovina and Kosovo.
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Central and Eastern European Hydro Power Outlook | 45
Figure 15: Technical Hydro Power Potential vs. Utilization in the CEE Region
Net
Technical Unused technical
generation Utilization
Country potential potential
in 2007 rate
(GWh/year)13 (GWh/year)
(GWh/year)
Bosnia and
Herzegovina 4,552 24,000 19,448 19%
Sources: World Energy Council, 2009, 2007, Kosovo Ministry of Energy and Mining, UCTE, BALTSO,
KPMG analysis, 2009
13 The World Energy Council determined the “technically exploitable capability” for end of 2005, but as
hydro technology is mature, the potential is not expected to change.
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Central and Eastern European Hydro Power Outlook | 47
6. Country Profiles
The aim of this chapter is to give you a short overview of the current status
of hydro power in each country belonging to the CEE region. Through several
recurring elements in the country profiles the goal is to provide a comparable
overview of the CEE countries. These elements are as follows:
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48 | Central and Eastern European Hydro Power Outlook
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6.1. Albania
Hydroelectricity
Fossil fuels
• 86.6% • 97%
• 13.4% • 3%
Shkopeti S 25 Mati Albania has six large HPPs accounting for about 96% of the total electricity
generation15. These power plants are situated along three major rivers: Drini,
Bistrica S 23 Bistrica
Mati and Bistrica. The three largest HPPs are constructed on the Drini River
*S: Storage; RoR: Run-of-river; PS-T: Pumped comprising more than 80% of the country’s installed capacity16.
storage – turbine; PS-P: Pumped storage - pump
There are about 90 SHPPs in Albania, with installed capacity ranging from 0.02
MW to 9.2 MW, however, among these only 36 power plants are in operation.
Fifty-four percent of the operating SHPPs are privately owned17.
14 Source: www.ere.gov.al
15 Source: www.bruessel.austria.be/al/news/local/AKBN.ppt
16 Source: http://www.energy-community.org/pls/portal/docs/36341.PDF
17 Source: http://www.kepa.uoa.gr/PROMITHEAS2_Conference_Policy_Business_Sessions.htm
18 Source: World Energy Council
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50 | Central and Eastern European Hydro Power Outlook
Age of large HPPs Recent hydro power development studies have defined new sites for the
1,600 complete exploitation of Albania’s main rivers. There is however, a concern
to increase reliability in dry years when hydro power output is significantly
1,400
reduced. Biomass, solar and wind energy could be important in Albania’s future
1,200
as the country has very good potentials of these energy sources.
1,000
MW
800 The total hydro power potential on the Drini River is 1,750 MW of which
600 77% has already been utilized. There are projects for the construction of two
400
additional large HPPs with a total installed capacity of 400 MW.
200
According to the above-mentioned studies, the Mati River has a hydro potential
0
<10 11–20 21–30 >30 of 112 MW and only 40% of it has been exploited yet. There are already two
years years years years HPPs built along the river and there is the possibility for a third one.19
On the Vjosa River the hydro potential is 400 MW. Currently there are no plants
along the river, but according to estimates eight dams could be constructed.
Technical and economic feasibility studies for HPPs construction projects
exist20.
HPP developments According to recent studies, 41 new sites have been chosen for small HPP
Installed installations with a technically feasible potential of around 140 MW21.
Name Type* capacity River
(MW) The existing HPPs provide inadequate supply for the population. The energy
Skavica S 350 Drini sector is currently being privatized and the government is determined to solve
its energy problems by offering concessions for the construction and operation
Devolli S 320 Devolli
of HPPs on all of its major rivers.
Kalivaci S 90 Vjosa
19 Source: http://www.kepa.uoa.gr/PROMITHEAS2_Conference_Policy_Business_Sessions.htm
20 Source: Hydro energy in Albania accessed at www.akbn.gov.al
21 Source: RES Opportunities in South East Europe, 2008
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Central and Eastern European Hydro Power Outlook | 51
Major rivers Law “On facilitating conditions establishment for new power generation
Length Drop Runoff resources construction” (2002)
River
(km) (m) (m3/s)
Law “On foreign investments” (1993)
Buna 44 6 672
Law “On water reserves” (1996)
Drini 160 278 352
Vjosa 192 335 204 Albania currently only supports hydro power generation through its renewable
Mati 115 121 103 generation support scheme. A feed-in-tariff for SHPPs below 15 MW was
introduced in 2008.
Semani 85 47 95.7
Regulatory bodies
The Ministry of Economy, Trade and Energy (METE) is the highest state
authority responsible for energy policy-making. Its main function is to
promote steady and sustainable economic development.
(http://www.mete.gov.al/index.php?l=e)
The regulatory functions of the state in the power sector are exercised
by the Electricity Regulatory Entity (ERE). ERE has the responsibility of
regulating the performance of market participants, under appropriate rules
and regulations and in accordance with transparent procedures.
(http://www.ere.gov.al/index.php?lang=EN)
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52 | Central and Eastern European Hydro Power Outlook
• 51.3% • 34.4%
• 48.7% • 65.6%
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Central and Eastern European Hydro Power Outlook | 53
Age of large HPPs The large HPPs provide the vast majority of BiH’s hydro-based electricity
1,400
production with their more than 99% share of the hydro generation capacity.
1,200
The average age of the HPPs in BiH is over 32 years. The oldest HPPs were
1,000
built during the 1950s and are owned by EPRS.
800
MW
600
Prospects for hydro generation
400
Forests and forestland make up more than the half of the country’s territory.
As a result of this, there is a significant biomass generation potential in BiH.
Currently there is neither any wind power installed in BiH nor any complete
wind atlas available in BiH. However according to recent studies the estimated
technical potential for wind power generation is 2,000 MW 24.
Major rivers Bosnia and Herzegovina’s geography includes fast-flowing mountain streams
Length Drop Runoff and powerful rivers that are very well suited for hydro electricity production.
River
(km) (m) (m3/s) The total installed capacity represents 26% of the theoretical potential (8,000
Sava 311 15 1,513 MW), 30% of the technical potential (6,800 MW) and 37% of the economic
potential (5,600 MW)25. According to estimates, the technically potential
Driva 345 352 371 capacity could generate 24,000 GWh annually. 26
Neretva 208 1,225 233
As a result of the above, there is a significant hydro potential among rivers of
Una 207 274 202
BiH that the government and investors should be aware of.
Bosna 271 471 174
Currently the most urgent task in Bosnia and Herzegovina is the rehabilitation
Vrbas 240 1,687 102
and reconstruction of most of the HPPs. Additionally, the construction of new
Sana 140 801 90 hydro plants and reservoirs for water supply is also envisioned.
Trebišnjica 99 167 24
There are more than 10 projects in the preliminary design phase with a total
installed capacity of 1,316 MW, though it is quite likely that there are more
proposals hidden from public scrutiny.
24 Source: www.kepa.uoa.gr/2008_Presentation_CRES.ppt
25 Source: http://ebrdrenewables.com/sites/renew/countries/BosniaHerzegovina/profile.aspx
26 Source: World Energy Council
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54 | Central and Eastern European Hydro Power Outlook
Legislation
The legal framework for electric power sector in Bosnia and Herzegovina is
defined by the following27:
BiH has a feed-in tariff system in operation with a purchase obligation; however,
there are no other incentives for renewable power generation investments.28
HPP developments
Installed capacity
Name Type* River
(MW)
Buk Bijela S 450 Drina
Glavaticevo S 188 Neretva
Dabar S 160 Trebisnjica
Konjic S 125 Neretva
Ustikolina S 63 Neretva
Mostarsko Blato S 61 Listica – Jasenici
Nevesinje S 61 Trebisnjica
Srbinje S 55 Drina
Krupa S 49 Vrbas
Banja Luka Low S 37 Vrbas
Bileća S 30 Trebisnjica
Vranduk S 21 Neretva
Novoselija S 16 Vrbas
Total 1,316
*S: Storage; RoR: Run-of-river; PS-T: Pump storage – turbine; PS-P: Pump storage - pump
27 Source: http://www.energy-community.org/pls/portal/docs/85835.PDF
28 Source: Energy Efficiency and Renewable Energy – Bosnia and Herzegovina – national study’s
summary by Plan Beu
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Central and Eastern European Hydro Power Outlook | 55
Regulatory bodies
6.3. Bulgaria
Hydroelectricity Fossil fuels
Other renewables Nuclear power
• 26.3% • 9.1%
• 1.0% • 0.1%
• 55.0% • 55.9%
• 17.6% • 34.9%
PS-P 788
PS-T 375
Belmeken Krika
PS-P 104
Sestrimo S 240 Krika
Momina Klisura S 120 Krika
Teshel HPP S 60 Buinovska
Vacha Cascade
Studen Kladenets
S 60 Arda
HPP
Ivailovgrad HPP S 104 Arda
*S: Storage; RoR: Run-of-river; PS-T: Pumped storage – turbine; PS-P: Pumped storage - pump
Source: NEK (Natsionalna Electricheska Kompania) Annual Report, 2008
29 Source: UCTE
30 Source: http://www.nek.bg
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Central and Eastern European Hydro Power Outlook | 57
RES goals Bulgaria has vast technical hydro power potential, which could generate 15,000
GWh32 per annum. Approximately 24%33 of this potential had been utilized as
Percentage
of RES of 2008. The country has tremendous wind energy potential and it has a sizable
reserve of geothermal energy. There is a great opportunity to utilize biomass as
2010 – RES-E goal 11%
well: 60% of the overall land area consists of arable and agricultural lands, and
2020 – RES goal for final 16% approximately 30% is forest cover.
energy consumption
2007 – RES-E utilization 7.5% Bulgaria has published a draft version of its new Energy Strategy in August
2008 in order to define national objectives. According to the draft of the
“Bulgarian Energy Strategy by 2020”34 the national target for RES will be met
by promoting the use of biomass, SHPPs and wind power. In the medium-
term, hydro resources (small and large HPPs) will continue to play a dominant
role in the generation of electricity from renewables, contributing to exceeding
the national RES target.
Major rivers
Length Drop Runoff The Bulgarian government believes that a significant contribution to the
River
(km) (m) (m3/s) national target achievement would be the implementation of small hydro
Danube 472 24 6,100 power projects. There are a significant number of SHPPs under construction
with a total installed capacity of 18 MW35.
Maritsa 322 2,335 107
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58 | Central and Eastern European Hydro Power Outlook
HPP developments
Installed capacity
Name Type* River
(MW)
Nikopol & Turnu
N/A 880 Danube
Mugurele
Silistra & Kalarash N/A 530 Danube
Gorna Arda S 170 Arda
Tsankov Kamak S 80 Vacha
Surnica N/A 62
Dolna Arda rehab S 61 Arda
Shreden Iskar N/A 25 Iskar
SHPPS 18
Total 1,826
*S: Storage; RoR: Run-of-river; PS-T: Pumped storage – turbine; PS-P: Pumped storage - pump
Legislation
36 Source: http://reports.andritz.com/2007/print/andritz-report-2007-en-customer-project-hydro-power.pdf
37 Source: Renewable Energy Country Profiles (2008), Promotion and Growth of Renewable Energy
Sources and Systems supported by the European Commission
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Central and Eastern European Hydro Power Outlook | 59
Regulatory bodies
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60 | Central and Eastern European Hydro Power Outlook
6.4. Croatia
Hydroelectricity Fossil fuels
Other renewables
• 53.3% • 46.3%
• 1.5% • 0.4%
• 45.2% • 53.3%
The Croatian HPPs are predominantly located along the Adriatic coastline and
near the Slovenian-Croatian border.
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Central and Eastern European Hydro Power Outlook | 61
Age of large HPPs Most of the Croatian HPPs are old; the first HPP was constructed in the 1890s;
the majority of the operational hydro plants were constructed during the
1,800
1960’s, while the most recent were constructed in the late 1980s39. For the
1,600
last 15 years mostly refurbishment of the older HPPs has taken place, which
1,400 in some cases has made for increases in the installed capacity and turbine
1,200 efficiency.
1,000
MW
800
Currently, the total amount of installed power in SHPPs is 37 MW. According
to studies, the economic potential is estimated at around 177 MW and 699
600
suitable locations have been identified for further development of SHPPs40.
400
200
Prospects for hydro generation
0
<10 11–20 21–30 >30
years years years years In Croatia, the share of renewable energy in gross electricity supply – excluding
the generation of large scale HPPs – was 1.8%41 in 2007. In accordance with the
relevant regulations (EU Directive 2001/77/EC), this ratio should have reached
5.8% by 201042.
RES goals
Percentage However, including large scale HPPs, the share of renewable energy sources in
of RES gross electricity generation was 23% in 2007, which is relatively high compared
2010 – RES-E goal 5.8% to some other countries43.
2020 – RES goal for final n/a The present RES-E is based on hydro and wind power. The country’s technical
energy consumption hydro power potential could generate 9,000 GWh annually.44 Approximately
2007 – RES-E utilization 1.8% 59% of this potential is presently being utilized based on UCTE’s 2008 data.
The most promising renewable energy resource besides them appears to be
geothermal. There are good biomass project opportunities in Croatia as well,
but further studies must be performed to identify specific opportunities.
Major rivers
Length Drop Runoff There is a need for the construction of new HPPs in Croatia not only
River
(km) (m) (m3/s) because of the consistent growth of power consumption, but also because
Danube 188 11 3,206 of the forthcoming shut down of old facilities. There are several projects
in the pipeline for development of both large and SHPPs with a total
Drava 323 115 556
installed capacity of around 453 MW. The biggest investment would be the
Sava 562 57 255 construction of the Novo Virje HPP on the Drava River with a total installed
capacity of 138 MW.
Cetina 105 385 105
Krka 73 242 50
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62 | Central and Eastern European Hydro Power Outlook
HPP developments
Installed capacity
Name Type* River
(MW)
Novo Virje S 138 Drava
Ombla S 69 Rijeka Dubrovacka
Podsused n/a 43 Sava
Lešće n/a 42 Gojačka
Kosinj n/a 22 Lika
Drenje n/a 39 Sava
SHPPs 100
Total 453
*S: Storage; RoR: Run-of-river; PS-T: Pumped storage – turbine; PS-P: Pumped storage - pump
Legislation
Croatia has a feed-in tariff system in place, which can be complemented with
interest free loans, capital grants for eligible producers and a tax exemption for
solar generation investments.
45 Source: Renewable Energy Country Profiles (2008), Promotion and Growth of Renewable Energy
Sources and Systems supported by the European Commission
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Central and Eastern European Hydro Power Outlook | 63
Regulatory bodies
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64 | Central and Eastern European Hydro Power Outlook
• 13.2% • 3.1%
• 1.2% • 0.3%
• 64.2% • 64.1%
• 21.5% • 32.5%
Excluding two pumped storage facilities of 650 MW and 450 MW all other large
hydroelectric power stations are situated on the Vltava River where they form a
cascade system called the Vltava Cascade.
46 Source: UCTE
47 Source: UCTE
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Age of large HPPs The most important HPP in the country is the Dlouhé Stráně Hydroelectric
1,400 Power Station situated in Moravia, which has the largest reversing water
turbine in Europe, the largest head and the largest installed capacity in the
1,200
Czech Republic, at 2 x 325 MW.
1,000
800 There are approximately 1,50048 SHPPs in the country contributing to a total
MW
600 installed capacity of 379 MW, equivalent to 17% of the Czech Republic’s total
400 hydro capacity.
200
Total technical hydro potential of the Czech Republic could generate 4,000
0
<10 11–20 21–30 >30 GWh per annum, however roughly 59%50 of this was utilized in 2008.
years years years years
The first large HPPs were commissioned in the 1930s and most have an
average age of more than 30 years,51 employing old technology.
River Length Drop Runoff The Czech Republic aims to improve energy efficiency and energy substitution
(km) (m) (m3/s) (renewable fuel sources in place of fossil fuels) through the support of projects
Elbe like SHPPs at Ceske Kopisty and Steti. Revitalization of its existing HPPs is
249 1,258 303
(Labe) considered to be of high importance as well54.
Vltava 430 1,016 150
48 Source: www.esha.be
49 Source: World Energy Council
50 Source: UCTE
51 Source: www.cez.cz
52 Source: Directive 2001/77/EC
53 Source: Directive 2009/28/EC
54 Source: http://ebrdrenewables.com/sites/renew/hydro.aspx
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66 | Central and Eastern European Hydro Power Outlook
Legislation
There are relatively high feed-in tariffs with 15-year guaranteed support by
investment funds. Producers can choose between a fixed feed-in tariff and
a premium payment (green bonus). For biomass cogeneration, only a green
bonus applies. Feed-in tariff levels are announced annually.
HPP developments
Installed capacity
Name Type* River
(MW)
Ceske Kopisty/Steti n/a 12 Labe
SHPPs (rehab) 89
Total 101
*S: Storage; RoR: Run-of-river; PS-T: Pumped storage – turbine; PS-P: Pumped storage - pump
Regulatory bodies
The Energy Sector within the Ministry of Trade and Industry is a state
body responsible for the development and implementation of national
energy policies, plans and programmes. (http://www.mpo.cz/)
The State Energy Inspection Board is the inspection body supervising the
activities of the energy sector. Its responsibilities are defined in the Energy
Act. (http://www.cr-sei.cz/)
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Central and Eastern European Hydro Power Outlook | 67
6.6. Estonia
Hydroelectricity Fossil fuels
Other renewables
• 0.2% • 0.3%
• 2.4% • 1.3%
• 97.4% • 98.1%
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68 | Central and Eastern European Hydro Power Outlook
Studies have shown that the country’s technical potential for hydro power
could generate 263 GWh per annum, which is only exploited to a small extent
(11%); even though larger hydroelectric projects are not possible, there are
many places throughout the country where smaller environmentally-friendly
projects might be feasible.
Legislation
Long-Term National Development Plan for the Fuel and Energy Sector until
2015 (2005)
There are feed-in tariffs paid for 7–12 years but not beyond 2015. The single
feed-in tariff level is available for all technologies. The relatively low feed-in
tariffs make new renewable investments very difficult.
Regulatory bodies
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Central and Eastern European Hydro Power Outlook | 69
6.7. Hungary
Hydroelectricity Fossil fuels
Other renewables Nuclear power
• 0.6% • 0.6%
• 6.7% • 4.2%
• 69.2% • 55.3%
• 23.5% • 39.9%
In 2008, 69.2% of the installed capacities (5,360 MW) were thermal units,
while 23.5% (1,822 MW) were nuclear installations.62 In the Hungarian
Major operational HPPs generation mix renewable sources are predominantly biomass (wood) co-fired
in conventional thermal power plants. A small amount of wind and biogas
Installed
Name Type* capacity River generation capacity also exists.
(MW)
Kisköre While Hungary is crossed by many rivers, it is a relatively flat country with moderate
S 28 Tisza hydro resources; the existing total installed capacity was 46 MW in 200863.
(Tisza II.)
Tiszalök
RoR 11 Tisza There are 31 hydro power generators in Hungary – by far the largest of which
(Tisza I.)
are the Kisköre and Tiszalök units on the Tisza River in the eastern part of
*S: Storage; RoR: Run-of-river; PS-T: Pumped
storage – turbine; PS-P: Pumped storage - pump Hungary, owned by the state through Tiszavíz Hydro Power Plants Ltd., with
capacities of 28 MW and 11 MW respectively.
RES-E is based on biomass, wind power and hydro. Aside from these, the most
20
promising renewable energy resource appears to be geothermal.
15
10 The country’s technical hydro power potential is around 8,000 GWh65; as the
5 second largest river in Europe, the River Danube bears a great deal of this
0
potential (72%) but on the Hungarian section of the river these resources are
<10 11–20 21–30 >30
years years years years
62 Source: UCTE
63 Source: www.mavir.hu
64 Source: Directive 2009/28/EC on the promotion of the use of energy from renewable sources
65 Source: World Energy Council, 2009
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70 | Central and Eastern European Hydro Power Outlook
RES goals not utilized. In the communist era efforts were previously implemented to
Percentage jointly build a large HPP system (Gabčíkovo-Nagymaros Hydro Power Project)
of RES with the former Czechoslovakia, but the project was later terminated by the
2010 – RES-E goal 3.6% Hungarian state due to political opposition: near the time of the change of the
regime the rising opposition considered defeating its construction an iconic
2020 – RES goal 13% opportunity to weaken the system.
2007 – RES-E utilization 4.6%
In addition to existing HPPs, the development of a limited number of small and
micro-sized HPPs is in progress. Besides the implementation of new sites,
existing facilities are also being modernized. The renovation of the Tiszalök HPP
is being accomplished in three phases and is set for completion in 2010.
HPP developments
Installed There are also far-reaching plans on several possible locations for the construction
Name Type* capacity River of a pumped storage hydroelectric power plant in Hungary in order to rationalize the
(MW) energy system and to support the extension of the Paks Nuclear Power Plant and
SHPPs 3 a greater number of wind turbines to be installed. However none of the pumped
*S: Storage; RoR: Run-of-river; PS-T: Pumped storage plans had been approved by the authorities as of 2009.
storage – turbine; PS-P: Pumped storage - pump
Major rivers
Drop
River Length (km) Runoff (m3/s)
(m)
Danube 417 40 2,350
Hernád 118 69 28
Legislation
An obligatory off-take and feed-in tariff system is present in Hungary for electricity
generation from renewable sources. This regulation contains the actual tariffs.
There are fixed feed-in tariffs (since January 2003, amended in 2005) combined
with purchase obligation and grants. The support is granted for the payback
period of the facility.
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Central and Eastern European Hydro Power Outlook | 71
Regulatory bodies
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72 | Central and Eastern European Hydro Power Outlook
Major operational HPPs Kosovo has three HPPs that supply electricity directly to local distribution
Installed
systems: HPP Ujman with an installed capacity of 35 MW that is operated by
Name Type* capacity River an irrigation company (Hidrosistem Ibar- Lepenac); SHPP Lumbardhi with a
(MW) generating capacity of 8.3 MW; and SHPP Radavc with an installed capacity of
Ujman S 35 Iber 0.34 MW operated by private producers67.
*S: Storage; RoR: Run-of-river; PS-T: Pumped
storage – turbine; PS-P: Pumped storage - pump The first HPP to be built in Kosovo was a SHPP at Radavc that was put into
operation in 1934. Besides SHPPs, presently HPP Ujman is the only HPP
generating electricity in the country, commissioned in 1983.
20
indicative targets (2007-2016) for electricity produced from renewables.
15
10 As a first priority, MEM is to increase the consumption of RES-E, and there are
5 plans for revitalization of the existing SHPPs and for construction of new ones.
0 A recent study identified 18 technically suitable and economically feasible
<10 11–20 21–30 >30 sites69 for construction of SHPPs, with a total installed capacity of 64 MW70,
years years years years
representing an important step towards the realization of this objective.
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Central and Eastern European Hydro Power Outlook | 73
Legislation
Kosovo is in the initial phase of renewable energy utilization and as such, there
is no support scheme in place yet, however, introduction of a feed-in-tariff
covering SHPPs is expected soon.71
Regulatory bodies
71 Source: http://www.ero-ks.org/Price%20and%20Tariffs/Price%20ang%20Tariffs%202008/Pergjigje_ndaj_
Komenteve_Hidrocentralet_e_vogla_eng.pdf
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74 | Central and Eastern European Hydro Power Outlook
6.9. Latvia
Hydroelectricity Fossil fuels
Other renewables
• 60.8% • 58.7%
• 1.0% • 1.8%
• 38.2% • 39.4%
200 In recent years, the number of SHPPs in Latvia tripled. Currently there are
0 about 150 SHPPs in the country with a total installed capacity exceeding
<10 11–20 21–30 >30
years years years years 25 MW74. This rapid development of small-scale hydro plants was mainly
stimulated by the regulations adopted by the government on the purchase of
electricity produced in small power plants.
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Legislation
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76 | Central and Eastern European Hydro Power Outlook
There is a quota obligation system (since 2002) combined with feed-in tariffs.
Frequent policy changes and the short duration of guaranteed feed-in tariffs
have resulted in a high level of investment uncertainty. The main policy
instrument was reformed in 2007, maintaining the basic structure of the
scheme. At a national level there are yearly quotas and a mandatory purchase
framework set up for RES-E (combined with tendering for wind).
Regulatory bodies
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Central and Eastern European Hydro Power Outlook | 77
6.10. Lithuania
Hydroelectricity Fossil fuels
Other renewables Nuclear power
• 20.3% • 7.0%
• 1.7% • 1.0%
• 52.4% • 21.0%
• 25.6% • 71.0%
Small HPPs (<10 MW) 26 The total installed capacity of these 2 HPPs and the SHPPs of Lithuania added
up to 1,027 MW in 2008, contributing 20.3% to the total installed capacity in
Source: BALTSO, 2008
Lithuania (5,070 MW). Besides hydro, 2,655 MW came from thermal, 1,300
MW from nuclear and 88 MW from other renewable sources78.
Major operational HPPs The first HPP to be built was HPP Kaunas in 1960; PSP Kruonis was erected
in 1992. Most of the SHPPs were built in the period 1990-2000 when their
Installed
Name Type* capacity River development became an attractive business for private investors.
(MW)
According to the relevant EU Directive (2001/77/EC), Lithuania has to achieve
Kruonis PS 900 Nemunas
a share of RES-E of 7% by 201079. It also has a binding target of 23% for the
Kaunas S 101 Nemunas share of RES in final energy consumption by 202080.
*S: Storage; RoR: Run-of-river; PS-T: Pumped
storage – turbine; PS-P: Pumped storage - pump Renewable generation capacities are essentially based on the hydro sector,
however Lithuania has very good potentials in the fields of biomass and wind
power.
Age of large HPPs Due to the topographical conditions of the country, the potential for hydro
1,000
power utilization is rather low, estimated to be 3,000 GWh81 annually.
Approximately 29% of this is being utilized.
800
600 In order to improve utilization of effective hydro energy resources, there are
MW
400 plans for the construction of SHPPs with a total output of 55 MW by 2020
200 in Lithuania. This will be completed in two stages; during the first stage the
0
abandoned SHPPs will be rehabilitated, whilst during the second stage new
<10 11–20 21–30 >30 SHPPs will be built on new sites in line with environmental requirements.
years years years years
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78 | Central and Eastern European Hydro Power Outlook
RES goals In order to improve utilization of effective hydro energy resources, there are
Percentage plans for the construction of SHPPs with a total output of 55 MW by 2020
of RES in Lithuania. This will be completed in two stages; during the first stage the
2010 – RES-E goal 7% abandoned SHPPs will be rehabilitated, whilst during the second stage new
SHPPs will be built on new sites in line with environmental requirements.
2020 – RES goal for final 23%
energy consumption
The development of two large HPPs (Birstonas and Alytus) on the middle
2007 – RES-E utilization 4.6% section of Nemunas River is also planned. The total installed capacity of each
HPP would be about 75 MW. Moreover, the capacity of the Kruonis pumped-
storage HPP is also expected to be increased by constructing additional four
generating units in the long term, but in the foreseeable future one unit of 250
Major rivers
MW installed capacity is to be added.
Length Drop Runoff
River
(km) (m) (m3/s)
HPP developments
Nemunas 359 80 616
Installed capacity
Neris 235 118 182 Name Type* River
(MW)
Kruonis PS 250 Nemunas
Alytus S 75 Nemunas
Birstonas S 75 Nemunas
SHPPs 55
Total 205
*S: Storage; RoR: Run-of-river; PS-T: Pumped storage – turbine; PS-P: Pumped storage - pump
Legislation
The main policy for the support of renewable energy is a feed-in tariff system
introduced in 2002. The tariffs are combined with a purchase obligation
guaranteed for 10 years. Investment subsidies are also available.
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Central and Eastern European Hydro Power Outlook | 79
Regulatory bodies
6.11. Macedonia
Hydroelectricity
Fossil fuels
• 39.2% • 15.0%
• 60.8% • 85.0%
Age of large HPPs The first HPPs were built at the end of the 1950s and their average age in
Macedonia is 36 years.
400
350
There are SHPPs up to 5 MW having a generation capacity of 49.6 MW in
300
Macedonia, which is only 19% of the theoretical potential (256 MW84) for small
250
MW
hydro. In order to further utilize the remaining potential, more than 400 sites
200
have been identified for the construction of SHPPs in the country.
150
100
The reason behind the low level of the potential’s utilization in the past is the
50
lack of investments for modernization and expansion of the existing capacities,
0
<10 11–20 21–30 >30 as well as for construction of new capacities.
years years years years
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Central and Eastern European Hydro Power Outlook | 81
Macedonia has defined its strategy for energy development for the period
2008-2020. This strategy has a goal to increase the share of renewable
energy sources in final energy consumption by 20% compared to 2006 data.
According to the plan, this ratio should be 22.8% by 202087.
The strategy for energy development also envisages the revitalization and
utilization of the existing HPPs and construction of new HPPs with a total
installed generation capacity of 953 MW88.
HPP developments
Installed capacity
Name Type* River
(MW)
PS-T 332
Cebren Crn Drim
PS-P 347
Vardar Cascade
S 324 Vardar
(including 13 HPPs)
Galiste S 193 Crn Drim
Boskov Mort S 68 Mala
Sv. Petka S 36 Treska
Total T 953
P 347
*S: Storage; RoR: Run-of-river; PS-T: Pumped storage – turbine; PS-P: Pumped storage - pump
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82 | Central and Eastern European Hydro Power Outlook
Legislation
Macedonia applies a feed-in tariff scheme for the promotion of SHPPs among
other renewable electricity generation sources. Purchase obligation is defined
and the off-take is guaranteed for 20 years.
Regulatory bodies
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Central and Eastern European Hydro Power Outlook | 83
6.12. Montenegro
Hydroelectricity
Fossil fuels
• 75.9% • 57.1%
• 24.1% • 42.9%
Major operational HPPs The country’s two large HPPs (Piva and Perucica) are of particular importance
to the Montenegrin energy sector, providing more than 74% of the country’s
Installed
Name Type* capacity River generating capacity. Beside these large HPPS, there are seven SHPPs of
(MW) insignificant capacity for electricity production.
Piva S 342 Piva
Montenegro’s HPPs are old; the first ones were constructed during the 1950s
Perucica S 307 Zeta
and the latest HPP has been put into operation in 197690.
*S: Storage; RoR: Run-of-river; PS-T: Pumped
storage – turbine; PS-P: Pumped storage - pump
Prospects for hydro generation
Based on the Energy Community Treaty for South Eastern Europe (ECSEE
Treaty), the Republic of Montenegro has defined desired strategic aims to
Age of large HPPs be achieved through utilization of its renewable energy sources. The country
has agreed to achieve a 3-5% share of energy from renewables in its final
700
energy consumption by 2015 and a 2.5% share of SHPPs generation in gross
600 electricity consumption by 201591.
500
MW
89 Source: UCTE
90 Source: Socio economic analysis of the northern region of Montenegro, 2008
91 Source: Strategy for the development of small hydro power plants, Government of the Republic of
Montenegro (2006)
92 Source: Montenegrin Electric Enterprise, accessed at: http://www.epcg.co.me/enindex.html
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84 | Central and Eastern European Hydro Power Outlook
Major rivers The Government plans to construct SHPPs with total installed capacity of 5
Length Drop Runoff MW by 2010 as well as to provide an additional 15 MW in a number of sites
River
(km) (m) (m3/s) in the period until 2015. This means that within eight years, the installed
Moraca 112 1,600 152 capacities and production in SHPPs should triple in comparison with what
existed at the end of 2007.94 Based on recent plans, until 2025, the annual
Tara 110 666 64 electricity production of SHPPs may reach 78 GWh in Montenegro.92
Piva 82 189 34
In addition to the construction of new HPPs, the long-term goal of the
Cehotina 100 732 22.4
Government of the Republic of Montenegro is the maintenance, rehabilitation
and modernization of the existing HPPs, primarily the major revitalization of
HPP Perucica which would imply total increase of the existing power of the
power plant by 59 MW.93
HPP developments
Installed capacity
Name Type* River
(MW)
Kostanica N/A 544 Kostanica
Moraca HPPs
S 238 Moraca
(including 4)
Ljutica N/A 224 Ljutica
Komarnica N/A 168 Komarnica
Perucica Rehab S 59 Zeta
SHPPs 20
Total 1,263
*S: Storage; RoR: Run-of-river; PS-T: Pumped storage – turbine; PS-P: Pumped storage - pump
Legislation
93 Source: http://re.jrc.ec.europa.eu/biof/pdf/data_gathering_res_istanbul/montenegro.pdf
94 Source: http://www.gov.me/eng/
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Central and Eastern European Hydro Power Outlook | 85
Regulatory bodies
6.13. Poland
Hydroelectricity Fossil fuels
Other renewables
• 7.2% • 1.8%
• 1.5% • 0.7%
• 91.4% • 97.5%
Small HPPs (<10 MW) 151 Hydro power makes up a 1.8% share of the total amount of electricity
generated in the country with 2,668 GWh and 7.2% of the total domestic
Source: UCTE, 2008
installed capacity with 2,327 MW.96 There are more than 700 HPPs in operation
and most of them are located in the southern and western part of the country.
State-controlled power generation and distribution companies operate the
majority of these HPPs, while some are privately owned.
95 Source: UCTE
96 Source: UCTE
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Central and Eastern European Hydro Power Outlook | 87
Age of large HPPs The Elektrownie Szczytowo-Pompowe SA company (Pumped Storage Power
Plants Company, “ESP”) operates 23 hydroelectric power plants in Poland
1,200 accounting for approximately 75% of the total installed capacity in the country’s
1,000 hydroelectric power plant system97. In addition to ESP, ZZW Czorsztyn-Nidzica-
Sromowce Wyżne SA is another major hydroelectric power plant operator in
800
MW
Poland.
600
400 The average age of Polish HPPs exceeds 30 years, whereas the newest hydro
plant has been put into operation in 200098.
200
0
<10 11–20 21–30 >30 Prospects for hydro generation
years years years years
According to the EU Directive on the promotion of the use of energy from
renewable sources, Poland’s objective for the share of RES-E is 7.5% by 201099.
RES goals For the share of renewable energy sources in final energy consumption, Poland
Percentage has a proposed target of 15% by 2020100.
of RES
2010 – RES-E goal 7.5% Currently, hydroelectric power plants play the most significant role in the
production of renewable energy in Poland, but still only about 19% of the
2020 – RES goal for final
15.0% 14,000 GWh101 annual technical potential is being tapped.
energy consumption
2007 – RES-E utilization 3.5% The country has thousands of sites where small hydroelectric power plants
could be built102. Roughly 70% of the total capacity is available in the Vistula
River basin and the Oder River, coastal rivers account for the remaining 30%.
Major rivers The Government’s long-term objective is the construction of small HPPs as
Length Drop Runoff well as modernizing some existing facilities, in particular transforming them
River
(km) (m) (m3/s) into peak-load pumped-storage water power stations. This requires working
Vistula 1,047 1,106 1,054 out a water management strategy in Poland. The largest HPP development is
the Mloty HPP project which will have a total installed capacity of 786 MW.
Oder 742 194 574
97 Source: www.elsp.com.pl/
98 Source: Datamonitor, KPMG analysis
99 Source: Eurostat
100 Source: Directive 2009/28/EC on the promotion of the use of energy from renewable sources
101 Source: World Energy Council
102 Source: http://www.warsawvoice.pl/
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88 | Central and Eastern European Hydro Power Outlook
Legislation
Guidelines for Poland’s Energy Policy until the year 2020 (2000)
Regulatory bodies
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Central and Eastern European Hydro Power Outlook | 89
6.14. Romania
Hydroelectricity Nuclear power
Fossil fuels
• 35.2% • 28.1%
• 56.9% • 54.6%
• 7.8% • 17.3%
2,052 MW of electricity divided equally between the two countries. Since then,
1,500
the Romanian part of the dam has been modernized and the nominal capacity
1,000 of the HPP was increased from 1,026 MW to 1,166 MW. On the Serbian part of
500
the dam modernization is still in progress.
0
<10 11–20 21–30 >30
The average age of Romanian hydroelectric plants is around 31 years. The first
years years years years HPPs were built in the 1950s while the majority were built at the end of 1980s.
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90 | Central and Eastern European Hydro Power Outlook
106 Source: The total output of Portal de Fier II (Iron Gate II) is 540 MW divided equally between Serbia and
Romania
107 Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/energy/data/database
108 Source: www.euractiv.com/en/energy/eu-renewable-energy-policy/article-117536
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Central and Eastern European Hydro Power Outlook | 91
Major rivers The country is considered to have the highest wind energy potential in the
Length Drop Runoff region and the third highest geothermal potential of European nations. Its
River
(km) (m) (m3/s) wind resources are well documented, and there is a broad range of existing
Danube 1,020 65 6,500 applications from small autonomous units for rural areas to large off-shore
potential. The potential market for biomass and solar applications is very large
Siret 470 295 240 but specific incentives will be needed so this potential can be realized.
Olt 615 1,060 174
Romania’s hydro power potential is extremely vast; it has an abundance of water
Mures 695 1,268 155
flows and mountains. Its rivers flow over a total length of 30,000 kilometres and
Someş 345 130 120 the country has about 2,500 lakes. As a result, there are numerous opportunities
for hydro developments. Currently, several hydroelectric power plants, whose
Prut 695 129 110
total capacity comprises 1,662 MW, are under construction. These projects
Jiu (Zsil) 331 1,875 94 began 20-25 years ago, but were stalled due to the lack of financing. The
Argeş 350 2,025 73 Romanian government considers realizing a 1,000 MW hydroelectric pumped-
storage power plant in Tarniţa-Lăpuşteşti as a priority objective of the Energy
Ialomiţa 417 2,155 40
Strategy of Romania for 2007-2020.The second largest recent development is
the Nehoiasu HPP along the Buzau River, situated in the central part of Romania,
whose installed capacity is set to reach 166 MW.
HPP developments
Installed capacity
Name Type* River
(MW)
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92 | Central and Eastern European Hydro Power Outlook
Legislation
Regulatory bodies
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Central and Eastern European Hydro Power Outlook | 93
6.15. Serbia
Hydroelectricity
Fossil fuels
• 33.9% • 28.6%
• 66.1% • 71.4%
HPP Djerdap I is owned and operated jointly by Romania and Serbia. When
the HPP was completed, it had a total capacity of 2,052 MW that was divided
equally between the two countries. Romania has rehabilitated its side of the
dam, increasing its total capacity by 140 MW, while the modernization of the
generating units on the Serbian side is in process.
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94 | Central and Eastern European Hydro Power Outlook
Age of large HPPs The age of an average Serbian HPP is 36 years. Construction of the first HPPs
started at the beginning of the 1950s and these were put into operation in 1955.
2,000
Since Serbia is not a member of the EU, there are no binding targets set for the
1,000
country.
500
Serbia has extensive unused potential for production from hydro and biomass
capacity and there is some potential to use wind energy as well114. However,
0
there are several obstacles to increasing the production of these renewables
<10 11–20 21–30 >30
years years years years – for one, the lack of the proper regulatory environment is a key roadblock to
further advances. While several laws are in place, often there is no guidance on
how to implement them.
Major rivers According to recent studies, about 55% of the 18,200 GWh total technical hydro
power potential has been utilized up to now115. The largest part of the remaining
Length Drop Runoff
River potential is in the catchment areas of the Drina and the Morava Rivers.116
(km) (m) (m3/s)
Danube 450 48 4,000
There are around 900 potential locations for the utilization of small hydro power
Sava 206 10 1,564 in Serbia. The total potential for SHPPs is 500 MW and only less than 3% of it
Tisa 160 7 794 has already been exploited117.
Drina 220 298 371 Among the top priorities of the Serbian government is the revitalization of the
Great existing HPPs as well as the development of new hydro power sites, including the
185 67 232
Morava construction of the Brodarevo and Ribarici HPPs118 by EPS and the development of
Ibar 272 233 60 3,000 MWs of installed hydropower capacity by RWE at several sites.
HPP developments
Installed capacity
Name Type* River
(MW)
RWE (including
RoR, PS 3,000 Danube, Morava, Drina
several plants)
Brodarevo RoR 51 Lim
Ribarici S 49 Ibar
Svodje S 48 Vlasina
Vrtuci S 32 Djetina
Total 3,180
*S: Storage; RoR: Run-of-river; PS-T: Pumped storage – turbine; PS-P: Pumped storage - pump
114 Source: Serbia’s capacity for energy efficiency and renewable energy, accessed at: http://www.watersee.
net/files/sava_river/8_Djuric.pdf
115 Source: The value of hydro potential is calculated by KPMG based on the information of the following two
sources, because the technical potential data of the World Energy Council dates from 2005 thus includes
Kosovo: World Energy Council, http://www.lignitepower.com/pdfdocs/brochure-en.pdf
116 Source: www.eps.rs/razvoj/potentials.htm
117 Source: Renewable Energy Policy, Republic of Serbia
118 Source: http://www.eps.rs/razvoj/newfacilities.htm
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Central and Eastern European Hydro Power Outlook | 95
Legislation
Serbia has an extensive body of laws addressing energy issues including the
following119:
Regulatory bodies
The Ministry of Mining and Energy is the leading institution in the energy
sector, in charge of preparation of proposals for the Government’s adoption
of energy legislation regulations and instruments, and conducting the
relevant laws, secondary legislation and regulations.
(http://www.mem.sr.gov.yu/)
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96 | Central and Eastern European Hydro Power Outlook
• 33.2% • 15.7%
• 0.8% • 1.1%
• 36.4% • 26.6%
• 29.5% • 56.5%
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Central and Eastern European Hydro Power Outlook | 97
Age of large HPPs Much of the hydroelectric development in Slovakia is throughout the Váh River
900
valley, with more than 20 HPPs found there whose total installed capacity is
1,600 MW.
800
700
Moreover, there are approximately 180 SHPPs operating in Slovakia with a total
600
capacity of 58 MW121 and it is expected that a significant amount of additional
MW
500
small hydro capacity will be realized in the mid-term.
400
300
The average age of large hydro installations in Slovakia is approximately 30
200
years.
100
0
<10 11–20 21–30 >30 Prospects for hydro generation
years years years years
Under the EU Directive (2001/77/EC), Slovakia has a binding target to reach a
31% share of RES-E by 2010122. It also has the obligation to achieve a 14% share
of energy from RES in final energy consumption by 2020123.
RES goals
Percentage In Slovakia, biomass, wind and hydro power have the highest additional mid-
of RES term potentials of all renewable energy sources. However, current renewable
2010 – RES-E goal 31% electricity generation is almost solely based on hydro power generation.
The government needs to recognize and support RES sector development in
2020 – RES goal for final 14% order to utilize other RES potentials.
energy consumption
2007 – RES-E utilization 16.6%
The technical hydro power potential for electricity generation is estimated at about
7,000 GWh124 annually, thus approximately 62%125 of this was harnessed in 2008.
The Slovakian hydro power development programme focuses on the continued
and increased utilization of hydro power via rehabilitation of existing facilities and
Major rivers construction of new ones. The major projects designed to enhance hydro power
Length Drop Runoff potential utilization are the HPP Sereď (51 MW) and the HPP Nezbudská Lúčka
River
(km) (m) (m3/s) (23 MW) on the Váh river and PSPP Ipeľ (entailing 600 MW on river Ipeľ).
Danube 172 32 2,320
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98 | Central and Eastern European Hydro Power Outlook
Legislation
A programme exists for supporting RES and energy efficiency, including feed-
in tariffs and tax incentives. The system of fixed feed-in tariff for renewable
electricity was introduced in 2005. Prices are set so that the rate of return on
investment is 12 years when drawing a commercial loan.
In the past weak support, lack of funding and lack of longer-term certainty have
made investors very reluctant.
Regulatory bodies
The Slovak Innovation and Energy Agency (SIEA) acts as the advisory
body to the Ministry of Economy as well as to the Regulatory Office, and
is involved in creation of a legal framework and its harmonization with
the EU energy acquis. SIEA participates in the development of local and
regional policies and cooperates with other state administration bodies on
development of legal and economic instruments supporting the efficient
and environmentally friendly utilization of energy.
(http://www.sea.gov.sk/index.htm)
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Central and Eastern European Hydro Power Outlook | 99
6.17. Slovenia
Hydroelectricity Nuclear power
Fossil fuels
• 30.4% • 22.7%
• 45.4% • 38.1%
• 24.2% • 38.4%
The Drava River is the country’s major source of hydroelectric power. There are
eight large hydroelectric plants along the river constituting the Dem Cascade
which has an overall 581 MW of installed capacity131. These HPPs are owned and
operated by the Dravske Elektrarne power company. Soske Elektrarne manages
a cascade on the Soča River (Sel Cascade)132, representing about 136 MW in total
Ozbalt S/RoR 73
Vuhred S/RoR 72
Drava
Mariborski Otok S/RoR 60
Fala S/RoR 58
Vuzenica S/RoR 56
Dravograd S/RoR 26
Avče PS-T 185
Avče PS-P 180
Sel Cascade
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100 | Central and Eastern European Hydro Power Outlook
Age of large HPPs generating capacity. Savske Elektrarne has four hydroelectric power plants on the
Sava River whose installed capacity totals 127 MW (the Seng Cascade)133.
700
600 The first HPPs in Slovenia were built at the end of the 1930s and their average
500
age is approximately 40 years.
400
MW
0 Renovation of these units will increase their efficiency and could add as much
<10 11–20 21–30 >30 as 150 MW in generating capacity134.
years years years years
HPP developments
Installed capacity
Name Type* River
(MW)
Kozjak PS 400 Drava
Blanca RoR 43 Sava
Brezice RoR 42 Sava
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Central and Eastern European Hydro Power Outlook | 101
Legislation
A feed-in system and premium, CO2 taxation exists as well as public funds
for environmental investments. Renewable electricity producers can choose
between fixed feed-in tariff and premium systems. Tariff levels and premiums
are defined annually by the Slovenian government. Tariffs are guaranteed for
five years, and then reduced by 5%, and after 10 years are reduced by 10%
(compared to the original level). The relatively stable tariffs combined with long
term guaranteed contracts make the system quite attractive for investors.
Regulatory bodies
The Ministry of the Economy has overall responsibility for energy policy in
Slovenia through its Directorate for Energy headed by the State Secretary
for Energy. The Ministry of the Economy is responsible for the preparation of
the national energy strategy as well as for support programmes to promote
the efficient use of energy. Furthermore it is responsible for energy tariffs,
legislation and exploitation licenses. (http://www.mg.gov.si/en/)
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102 | Central and Eastern European Hydro Power Outlook
• 59.4% • 60.6%
• 6.9% • 6.5%
• 33.7% • 32.8%
Installed HPP capacities Austria is a landlocked country of roughly 8.3 million people in Central Europe,
Installed traditionally belonging to the western part of Europe. The territory of Austria
Size capacity covers 83,872 square kilometres of highly mountainous terrain due to the
(MW) presence of the Alps. Only 32% of the country is below 500 metres, and
Large HPPs (>10 MW) 11,381 its highest point is 3,797 metres (Großglockner), resulting in high levels of
precipitation and mountainous rivers. This topography ensures favourable
Small HPPs (<10 MW) 847
conditions for hydro generation, namely 75 TWh per year technical potential
Source: E-Control, 2008 of which 54.2% was utilized in 2008.140 However without systematic state
support, commitment and long term planning Austria could not have become
one of the countries with the highest renewable shares in total generation.
There are 154 large HPPs in Austria – 90 run-of-river and 64 storage and
pumped storage – with an overall yearly output of 35,862 GWh and a total
of about 2,400 small hydropower plants with an output of electrical energy
volume of 4,816 GWh in 2008.141 The above values place Austria among the
highest ranking countries in terms of hydro and other renewables based
electricity production in the UCTE.
140 E-Control
141 E-Control
142 Verbund-Austrian Hydro Power AG
143 Commission Staff Working Document –
The support of electricity from renewable
energy sources, 2008
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Central and Eastern European Hydro Power Outlook | 103
Hydro plants are eligible to receive a feed-in tariff for their production as a state
subsidy for 10+2 years. From 2006 onwards, full feed-in tariffs for new renewable
electricity generation are available for 10 years, while for the 11th and 12th years
gradually decreasing incentives are available (75%, 50%). Feed-in tariffs are
announced annually and their value is dependent on the production of a plant.143
HPPs producing more than 25 GWh/annum are classified as the lowest feed-in
tariff category (EUR 37.7/MWh).
What are the roots of success for the Austrian hydro generation sector?
144 http://www.pedz.uni-mannheim.de/daten/edz-kr/gdv/08/2008_03_progress_country_profiles.pdf
145 http://www.wasser-osttirol.at/media/veoe_mai_09_s8.pdf
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Source: Andritz Hydro
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Central and Eastern European Hydro Power Outlook | 105
8. Public Acceptance of
Hydro Power
A complex hydro power investment, especially for large HPPs, can involve
economical, technological, as well as social, environmental and political factors.
As public acceptance may be a key issue in connection with the realization
of such a project, all of these aspects must be dealt with at the same time
and they must receive proper emphasis to adequately and consciously
communicate them to the public.
The reasons cited were potential environmental harm, but politics were clearly
just as important as the environment: public opposition against the project
became a symbol of fighting against the socialist system and the project’s
shutdown is now considered to be an important milestone of the process
which led to the country’s political changes in 1989. As a result, the completed
facilities of the Hungarian portion were demolished and the site (the Danube
Bend) has been rehabilitated. However, the topic is still a hot button issue for
politicians and Hungarian society.
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106 | Central and Eastern European Hydro Power Outlook
The Slovak portion of the cascade was completed along with detouring
the Danube from Hungary to a channel in Slovakia and started its base load
operation (instead of peak load as was planned originally) in 1992, generating
tension between the two countries which ended up in legal deliberations at
the Hague International Court of Justice, resulting in an adversely interpreted
judgment without leading to any practical progress.
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Central and Eastern European Hydro Power Outlook | 107
The initial plans of hydro power the Freudenau project, which is in fact located
in Vienna, dates back to 1985. As part of the planning process, in addition to
preparing a feasibility study, a contest was organized for hydro power experts,
architects, landscape designers and ecologists. The aim of this competition
was to identify an optimal design for the dam by taking into consideration
the requirements of harmonious integration into the environment, ecological
aspects as well as the needs of local people. An international jury selected one
of the proposals. Public discussions were also held among other intensive PR
activities. Following these efforts the project’s documentation was submitted
to the responsible water authority for approval in 1988. The provincial
government of Vienna required an environmental impact assessment and
suggested a referendum be held in the city. Further improvements were made
based on the recommendations of 10 different expert groups and following a
broad information campaign performed by the development company, more
than 70% of participants approved the construction of the power plant in a vote
in 1991.149,150
8.5. Conclusions
Based on the previous detailed European examples public acceptance can
play a key role in the success (or failure) of a hydro development project. The
involvement of experts and the public at all levels may facilitate a project’s
realization, while the lack of adequate participation and communication may
result in enormous losses and project failure. Project objectives have to be
transparent and beneficial for all parties as well as for the planner/developer
who must be credible in order to convince stakeholders. Developing and
transitional countries are considered less sensitive regarding environmental
issues and accept hydroelectricity en gross as a favourable green technology.
Still, voices of the opposition are rapidly rising all over the world, so large
infrastructural investments must address these aspects which need to be
handled carefully.
There are several tools that can be used such as public hearings, informational
materials, requesting expert opinion, harmonization of interests, referendums,
etc. Although these actions might increase investment costs they considerably
decrease the related risks.
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Source: Alstom
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Central and Eastern European Hydro Power Outlook | 109
9. Economics of a Hydro
Investment
One of the main motivations of investing into different types of HPPs is the fact
that these facilities are able to produce electricity without incurring fuel costs.
By the utilization of water flow the generation-related expenditures of such a
power plant are stable irrespectively of changes in the price of fossil fuels like
oil, natural gas or coal, which is of key importance considering the instability of
prices as well as the recent economic situation. Furthermore, the need for fuel
imports decreases, thus related risks are eliminated too. Another advantage
of HPPs is that contrary to other broadly used renewable generation methods
these facilities can be significantly larger which allows for economies of scale.
When a financial decision must be made about investing into an HPP project
several factors must be considered. The success of the project is determined by
geographical characteristics, the availability and prices of other energy sources
and further related costs of generation with different technologies, as well as
by potential future electricity demand, support schemes and the risks entailed
in certain countries or regions, etc. Moreover, hydro power investments also
involve other aspects: externalities must be taken into consideration, such as
alternative utilization of a man-made lake and the dam itself (which can shorten
the payback period by generating additional revenues or cost sharing) and
negative impacts like the loss of a certain terrain for example.
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110 | Central and Eastern European Hydro Power Outlook
10,000
EUR/kW
8,000
6,000
4,000
2,000
0
Hydropower
2 MW
Hydropower
10 MW
Hydropower
20 MW
Hydropower
75 MW
Hydropower
250 MW
Source: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SEC:2008:2872:FIN:EN:PDF
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Central and Eastern European Hydro Power Outlook | 111
Large HPPs usually have a greater impact on their environment, thus obtaining
all necessary licenses might take longer compared to smaller ones, which can
result in delays and cause extra losses. Besides external costs to be taken into
consideration, there is a greater potential for cooperation and cost-sharing
as these facilities can generate significant additional revenues with multiple
functions.
As for the future, the cost of generating electricity in HPPs will probably
remain stable, as this is a mature technology with low development potential.
However, it is conceivable that installation-related capital expenditures may
increase in the coming years, as within the last century many of the suitable
locations have already been utilized, thus in many countries of the region
only sites with less favourable conditions remained. Accordingly, further
development efforts will probably concentrate on the installation costs –
predominantly for small hydro plants. Recently, the most expensive facilities
are the ones with low water heads and the cost per installed kW decreases
rapidly as the height increases till about 15 metres (above this level capital
expenditures get more and more stable). On the whole, this reveals two main
directions of potential technological improvement in the future: reducing costs
for heads smaller than the above mentioned 15 metres, and developments
supporting reduced installation costs for facilities smaller than 250 kW as
available sites for larger HPP projects could be limited in the coming years.154
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112 | Central and Eastern European Hydro Power Outlook
A comparison of the estimated generation cost and the current end-user tariffs in
a target country could provide a starting point for analyzing the viability of a specific
project. In Figure 17 a summary of relevant information on each CEE country is
provided. The two left columns show the range of electricity generation related total
costs in EUR/MWh in for both large and small scale HPPs. Electricity retail prices for
medium size households and medium size industrial consumers without taxes in
the CEE countries as of 2007 are also included.
Figure 17: Hydro generation cost in the EU versus electricity prices in the CEE region (2007)
200 193 electricity prices – household consumers
electricity prices – industrial consumers
180
140
129
EUR/ MWh
0
Generation cost
range – large hydro
Generation cost
range – small hydro
Slovakia (SK)
Hungary (HU)
Poland (PL)
Slovenia (SI)
Romania (RO)
Albania (AL)
Croatia (HR)
Kosovo (KO)
Bulgaria (BG)
Macedonia (MK)
Serbia (RS)
Czech Republic (CZ)
Montenegro (ME)
Lithuania (LT)
Estonia (EE)
Latvia (LV)
Bosnia and
Herzegovina (BA)
Source: KPMG elaboration based on data provided by working papers of the European Commission, Eurostat, Energy Community
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Central and Eastern European Hydro Power Outlook | 113
The electricity generation cost values for SHPPs presented here include all
relevant expenses, however the opportunity of applying for various state
subsidies has not been taken into account in the comparison. External support
in the form of feed-in tariffs, green certificates, investment subsidies, etc.
results in additional funds or revenues, thus decreasing generation cost
directly or indirectly. Therefore, although it is more expensive to produce
electricity in SHPPs compared to large facilities, such development projects
often proved to be excellent investment opportunities in the past. For more
detailed information about the impact of support systems on the economics of
SHHPs, please see Figure 18. Please note that the following prices are average
values in most EU member states. In case of the Czech Republic a range is
shown as the tariff setting methodology can be chosen by the generators
from feed-in-tariff and green premium. Furthermore, average prices could not
be determined in some non-EU countries, thus – instead of discrete values –
ranges are provided based on minimum and maximum tariffs determined by
national regulations.
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114 | Central and Eastern European Hydro Power Outlook
Figure 18: Generation cost of SHPPs in the EU versus relevant feed-in-tariffs in the CEE region (2007)
113
120
94 94 93 92 92 91
100 81 78 77 75
80 91 68
65 58
60 63 52 50
57 54
40
42
36 31
20
0
Latvia (LV)
Macedonia (MK)*
Croatia (HR)
Poland (PL)
Slovenia (SI)
Romania (RO)
Serbia (RS)*
Slovakia (SK)
Hungary (HU)
Bulgaria (BG)
Montenegro (ME)*
Albania (AL)*
Kosovo (KO)*
Lithuania (LT)
Estonia (EE)
Source: KPMG elaboration based on data provided by European Renewable Energies Federation - Prices for Renewable Energies in
Europe, Report, 2009 and www.ceteor.ba/images/stories/savjetovanje/403.pdf
*Please note, that tariffs are calculated based on 2009 information and modified with inflation in order to present comparable values given
in EUR
2007
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Central and Eastern European Hydro Power Outlook | 115
Figure 19: Merit order analysis – hydros usually take first place in the
ranking (Capacity A or Capacity B)
Demand
P
Pe Export
P(e-r)
Supply
curve
Renew-
ables
Q
Q Q+Qe-
Q+Qe
Qr
Capacity A Capacity B Capacity C Capacity D Capacity E
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116 | Central and Eastern European Hydro Power Outlook
fuel costs, if applicable (for thermal and thermonuclear plants or if fossil fuel
is burnt as secondary fuel as for concentrating solar power).
European Union working papers156, which provide reliable data about certain EU
power plants, were used as a basis for compiling the main expenses of various
technologies. In addition to providing information about natural gas, oil, coal,
nuclear-fuelled power plants and renewable generation methods, a distinction
is made between special production types within these categories as well.
The result is a more comprehensive analysis.
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member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Figure 20: Range and accepted reference level of overnight capital expenditures by power generation
technology (2007)
8,000
7,000
6,000
5222
5,222
4,909
4909
5,000 4,700
4700
EUR/kW
3969
3,969
4,000
3,280
3280
3,029
3029
2,799
2799
3,000 2,350 2559
2,559 2622
2,622
2,193
2,089
2089
1,880
1880
2,000 1,619
1,321 1,462 1598
1,598
1,253 1,191 1,410
1410
1,044
1,000 663 836
324
0
Open Cycle Gas Turbine (GT)
Nuclear fission
Biogas plant
Landfill gas
Photovoltaics
Source: European Union with KPMG elaboration Hydropower – large scale (250 MW)
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118 | Central and Eastern European Hydro Power Outlook
As an example, HPPs usually have a longer economic life than other types of
plants: 50 years or more compared to an average of 25 years for natural gas-
fired technologies. This aspect will also be taken into consideration in the cost
structure of different technologies in Figure 21 which follows.
Modern hydro plants are usually automated and require only a few on-site
personnel, thus operation and maintenance costs are also typically low.
In Figure 21 the annual O&M expenses per kW of different power generation
technologies is presented in EUR2007. It should be noted that, similarly to Figure
20 presenting capital expenditures, an accepted reference level and range are
shown based on European Union153 working papers. However, ranges for this type
of costs for HPPs were not disclosed, thus reference levels have been calculated
for the analyzed HPP facility sizes: 2 MW, 10 MW, 20 MW, 75 MW and 250 MW.
Figure 21: Range and accepted reference level of annual O&M costs by power generation technology (2007)
350
300
272
256
250
209
200
EUR/kW
150 141
136
120
94 94
89
100 84 84 89
73 78
63 68
52 57
42 42 37 42
50
26
10
0
Open Cycle Gas Turbine (GT)
Nuclear fission
Biogas plant
Landfill gas
On-shore Wind
Off-shore Wind
Photovoltaics
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Central and Eastern European Hydro Power Outlook | 119
When evaluating the viability of various power generation technologies, fuel cost
also has to be taken into consideration – if it applies. As for an HPP there is no
fuel consumption, such a comparison on its own does not make sense. Figure
22 shows how high CAPEX, mid-range O&M expenses and non-existent fuel
expenditures compare to the cost structure of 19 other generation technologies.
Figure 22: Range of production cost structure in case of various power plant types (annual values in EUR2007,
corrected with load factor)
1,000
900
800
700
EUR/MWh (2007)
600
500
400
300
200
100
-
Off- shore Wind
Open Cycle Gas Turbine (GT)
Internal Combustion
Diesel Engine
(20 MW)
(75 MW)
(250 MW)
(2 MW)
(10 MW)
Circulating Fluidised Bed
Combustion (CFBC)
Combined Cycle Gas Turbine
(CCGT)
Landfill gas
Nuclear fission
Photovoltaics
Biomass combustion steam
cycle – small scale
Biomass combustion steam
cycle – large scale
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120 | Central and Eastern European Hydro Power Outlook
Final values have been calculated based on high and low case scenario
production cost levels provided by the European Union158 distributed among
fuel, O&M and CAPEX costs159.
1. geographic characteristics
2. current status of hydro power exploitation (the ratio of occupied sites) and
First mover advantage is vital in this sector to obtain the most valuable
locations.
CCGT, coal and nuclear fission plants represent the cheapest power plant
technologies which challenge the competitive advantage of large scale HPPs.
Fossil-fuel power plants are more expensive than the lower limit of HPPs’
cost range. Their range is much narrower, less dependent on geographical
determination, but more dependent on fuel costs. Gas and oil-fired plants are
relatively cheap to build, but they may be less profitable because of significant
fuel costs even if a low price scenario is assumed.
Coal-fired plants represent a lower cost level, but they face an obligation to
purchase vast CO2 quotas in the future, while renewable generators including
HPPs could avoid this obligation.
Nuclear fission plants represent a slightly higher cost level than fossil plants,
including higher CAPEX and OPEX, but bear lower fuel cost. Thus nuclear
plants’ cost level is more predictable than fossil/thermal plants’.
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Central and Eastern European Hydro Power Outlook | 121
Another large advantage exists for hydropower versus low cost fossil or even
nuclear plants. Due to the low level of variable costs hydro facilities are not
excluded from the merit order, as long as the price covers the variable O&M
costs. In comparison gas-fired plants are immediately closed out of the merit
order or start generating loss as soon as they are unable to cover their high fuel
costs and their O&M costs.
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member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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Central and Eastern European Hydro Power Outlook | 123
Hydro Power Potential Index Although hydro power bears the largest share of generation among the
of CEE countries renewable technologies, still less than one-third of the technical hydro power
potential is being exploited in the CEE region. This tremendous unused
2 technical potential promises a number of project opportunities and the
favourable long term financial attributes of HPPs make HPP investments
9
attractive for strategic investors.
2
Hydro Power Potential Index
11
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124 | Central and Eastern European Hydro Power Outlook
Small Hydro Potential Index This index does not incorporate state subsidies offered for these investments
of CEE countries by the region’s governments. Overall prospects can be radically altered by
this factor, but naturally in a positive way. In order to take this aspect into
14 consideration as well, another similar index was created aiming to rank the
potential of small hydro investments in the CEE region, but it was necessary
n/a to devise index provisions, because of the limited availability of relevant
information. In case of SHPPs only economic potential was available in terms of
19 installed capacity (MW) instead of technical potential of electricity production
(GWh) as in the previous index. In line with the previously introduced index
the price of electricity was also incorporated, however, the maximum offered
subsidized off-take price was used. In order to facilitate the analysis the final
21 values were multiplied by 100.160
4
101 The result of the calculation shows that – again – some of the Balkan countries
74 158
may be the best places to invest in SHPPs, highlighting the attractiveness
114
180 of Romania. In general, less developed countries with a higher level of
state support combined with sufficient geographical characteristics (like
362 71 52
Montenegro and Macedonia) provide a more beneficial environment for such
281
175
project developments, while, as could be expected, flat countries appear to be
less attractive (like the Baltics and Hungary).161
x > 150
150 ≥ x > 75
75 ≥ x > 40
40 ≥ x
160 Please note that there is no reliable data available with regard to the economic potential for small hydro
in Latvia. However, based on geographical characteristics, on information provided by the World Energy
Council and on the renewable strategy of the country (a target of 50MW small hydro is set for 2010 while
an annual generation of 150-300 GWh up to 2025 is assumed), it is conceivable that the potential is
relatively low. Furthermore, trustworthy information regarding this topic could not be found for Bulgaria
either.
161 The rankings of Romania and Slovakia are definitely a surprising. However, the economic potential used
in the calculation is based on information provided by the World Energy Council as of 2005 and might be
out of date due to technological development and changes to the market environment. Thus, although in
fact in these countries there is a significant amount of existing installed SHPP capacity, the relatively low
index values might be a result of unreliable data for hydro potential and should be evaluated accordingly.
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Central and Eastern European Hydro Power Outlook | 125
SWOT Analysis
This SWOT analysis is aimed to shed light on the major positive and negative
attributes of HPP investments:
Strengths Opportunities
Weaknesses Threats
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126 | Central and Eastern European Hydro Power Outlook
Acronyms
EC – European Commission
ET – Emission Trading
EU – European Union
GW – GigaWatt
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Central and Eastern European Hydro Power Outlook | 127
JI – Joint Implementation
kW – kiloWatt
MW – MegaWatt
PR – Public Relations
PS – Pumped Storage
RoR – Run-of-River
TW – TeraWatt
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member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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Central and Eastern European Hydro Power Outlook | 129
KPMG’s Power & Utilities practice has one clear vision: to be the leading
provider of professional services to the power and utilities sector. This means
more than just having a strong client base. KPMG member firms provide
services to numerous global power and utilities businesses, state-owned
providers, national businesses and service companies across many regions.
Power & Utilities Centres of Excellence in key locations around the world
Essen Moscow
Calgary London
Budapest
Paris
Tokyo
Dallas
Hong Kong
Sao Paulo
Johannesburg
Melbourne
KPMG member firms offer global connectivity. We have 12 dedicated Power &
Utilities Centres of Excellence in key locations around the world, working as one
global network. They are a direct response to the rapidly evolving power and
utilities sector and the specific challenges that this is placing on industry players.
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130 | Central and Eastern European Hydro Power Outlook
KPMG practices in the Central In each centre, there are professionals with practical, in-depth power and
and Eastern European region utilities experience. They draw on our wider global network of power and
utilities practitioners to provide our clients with immediate access to the latest
EE industry knowledge, skills, resources and technical developments.
LV
Our Centres of Excellence also enable us to transfer knowledge and
information globally, quickly and openly. With regular calls and effective
LT
communications tools, we share observations and insights, debate new
emerging issues and discuss what is on our clients’ management agendas.
The Centres also produce regular surveys and commentary on issues affecting
the sector, business trends, changes in regulations and the commercial, risk
PL and financial challenges of doing business.
Building on the resources and knowledge base of the KPMG global network of
CZ
member firms, our regional industry practice has access to market information
SK
both on a global and regional basis. This allows us to offer strategies to our
clients on both domestic and international assignments based on international
HU
SI
experience and detailed knowledge of the local market.
HR RO
RS
BA
ME KO
KPMG’s Advisory services to the Power & Utilities sector
BG
MK We provide complex advisory services to all of the links in the value chain, as
AL
illustrated by the following references:
Strategy
Market analysis and forecasting within the Central and Eastern European
energy sector
Unbundling strategies
Financial modelling
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Central and Eastern European Hydro Power Outlook | 131
Operational
Transactions
Investor search
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132 | Central and Eastern European Hydro Power Outlook
Across the globe, KPMG member firms provide clients with offerings in relation to the following services:
KPMG Services
Infra- Implemen-
New Transaction tation Procurement Negotiate Implement Monitor Renew/
Investments structure Strategy Plan and Close and Control Dispose
Strategy
Strategic
Commercial Commercial due diligence,
Intelligence market assessment feasibility
PROGRAM MANAGEMENT
Modelling
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member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Central and Eastern European Hydro Power Outlook | 133
Across the globe, KPMG member firms provide clients with offerings in relation to the following services:
KPMG Services
Deal
Opportunity
Acquisition Bid Due Negotiate Enhance/ Renew/
Acquisitions Identification Hypothesis/
Strategy Preparation Diligence and Close Operate Dispose
/Assessment Transaction
Structuring
Strategic
Commercial Pre-deal strategy Commercial due diligence
Intelligence
Project management support, transaction Project management and change Performance improvement /
Business management support, operational value realisation, merger
impact analysis (stakeholders, etc.),
Performance due diligence support, organisational integration, ongoing
organisational change management,
Services design / restructuring, contract performance monitoring,
public sector and infrastructure sector management process design, analysis in support of renew
knowledge performance metrics / dispose decisions
Creation of tax-
Tax Post transaction
efficient Tax due diligence
integration
deal structures
Information Systems
Risk optimisation,
Management IT governance
PROGRAM MANAGEMENT
Modelling
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member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
134 | Central and Eastern European Hydro Power Outlook
© 2010 KPMG Tanácsadó Kft., a Hungarian limited liability company and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
© 2010 KPMG Tanácsadó Kft., a Hungarian limited liability company and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG’s Energy & Utilities Advisory
Services contact in Central and
Eastern Europe
Péter Kiss
KPMG’s Global Head of
Power & Utilities
Head of Sector, Energy,
KPMG in Central and Eastern Europe
T: +36 1 887 7384
M: +36 70 333 1400
F: +36 1 887 7392
E: energy@kpmg.hu
www.kpmg.com
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information
without appropriate professional advice after a thorough examination of the particular situation.
KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity.
© 2010 KPMG Tanácsadó Kft., a Hungarian limited liability company and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.