A Framework for Screening

Hydropower Facilities for Climate

Change Risks: Application to
Hydropower Plants in ASEAN
Countries
Dr. Molly Hellmuth
Prepared for:
International Workshop on Adaptation Policies and
Actions towards Enhanced Climate Resilience of Affected
Populations in Asia River Basins
April 29, 2015
Rationale and Context
 Reliable and cost-efficient energy services are a critical ingredient for
development and growth;

 ASEAN has emphasized the need to strengthen renewable energy development

and to promote investment in the requisite infrastructure for clean power
development to support climate change mitigation objectives;

 At the same time, climate change is beginning to have significant impacts on

some industries (e.g. those with a critical dependence on water resources, and
those with valuable, long-lived fixed assets), necessitating climate change
adaptation.

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Climate change: business implications
 Climate is changing now;

 Regardless of success (or otherwise) of GHG emissions

reductions, some further climate change will occur;

 Decisions based on historic climate data are no longer

robust;

 Unless the risks are managed appropriately, climate change

will increasingly impact business performance; including
environmental, financial, and social performance

 A wide range of business stakeholders, including

governments, investors, banks and insurers are developing
climate change adaptation policies;

 Climate adaptation should be integrated into core business

risk management processes.
Compounding Impacts…

General public asked to save electricity in summer

KPL (Lao State News Agency) 19/03/2015

“Last week, the Ministry of Energy and Mines called on people .. to

save electricity due to the lack of water during summer that is used to
generate electricity. .. due to possible electricity shortages.

Last summer, a shortage of electricity was experienced...

Electricité du Laos is forecasting there will be additional shortages of

electricity due to increases in consumption between the hours of 6
and 10 pm. ..requesting ..reduce their use of electricity by at least
50% during [peak] times to prevent shortages.”
Climate change: business implications

 USAID, 2014. Hydroelectric energy production at risk from climate change in the LMB

 Facilities that are located in tributary reaches where climate change projected significant
increases in temperature and increases in agricultural drought conditions
Objectives and Intended Benefits of the Framework

 To demonstrate an approach that can:

• be used to help hydropower investors develop projects that are
robust in the face of uncertainties associated with climate change,
• assist stakeholders in managing existing pressures/concerns as the
climate changes.

 To identify key direct impacts on energy supply and demand

 To also identify additional research needed to better
understand the implications of climate change for the
hydropower sector.

Increasingly a requirement of DUE DILIGENCE:

 All new World Bank projects in IDA countries require climate risk screening
A tiered approach to understanding and managing
climate risk
• Risk Screening – e.g., Due diligence tools for World
Bank, Asian Development Bank

Increasing Complexity
• First-Level Risk Analysis – e.g., Exposure analysis
tool for U.S. DOE/OE
• Second-Level Risk Analysis – e.g., Impact modeling
using energy system and IA models
• Detailed Risk Analysis – e.g., Using site-specific
models coupled to system-wide models

Note: This tiered approach requires a consistent set of

scenarios that are appropriate to the scale of the analysis.
The Framework

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Background
 With support from USAID and DOE, under the USAID ACTI Project build on
existing work to develop a practical framework for screening climate
sensitivities for hydropower facilities and operations:
 Guidance document that introduces users to the business risks of climate
change and walks them through the steps of the tool
 Our Excel-based tool helps users apply the framework methodology by guiding
them through a series of steps to understand these risks

 Identify case study pilots and test the tool: Tudaya HPP (Philippines),
Pleikrong HPP (Vietnam), Theun Hinboun HPP (Laos)

 Engage key energy planning officials, policy makers, and hydropower

industry stakeholders in information gathering and sharing to support
understanding and implementation of lessons learned (throughout)

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Intended Users
 (1) Hydropower plant managers and operators –
to identify climate-related vulnerabilities of
existing facilities Intended to be
accessible,
 (2) Hydropower project developers or investors –
to screen planned hydropower projects for climate without requiring
vulnerabilities (at the conceptualization stage) expertise in
climate change
Risk Assessment Framework

Climate-related Stressors Adaptive Capacity Recommendations

Flow volume and timing Operational flexibility
Average and extreme temperature Flow forecasts
Sedimentation Contingency plans
Extreme events Insurance

HPP
Business
Risks
Non-Climate Drivers
Population growth
Land use / land cover
Upstream/downstream hydro
Energy demand
Competing users
Tool Structure
1. Describe facility

2. Describe climate

3. Describe non-climate drivers

4. Assess risk to environmental 5. Assess risk to financial performance 6. Assess risk to social performance
performance

Identify environmental Identify financial performance Identify social performance

performance objectives objectives objectives

Rate potential impact from Rate potential impact from Rate potential impact from
climate-related stressors climate-related stressors climate-related stressors

Repeat for each objective

Repeat for each objective

Rate potential impact from non- Rate potential impact from non- Rate potential impact from non-
Repeat for each objective

climate drivers climate drivers climate drivers

Rate adaptive capacity Rate adaptive capacity Rate adaptive capacity

Rate risk to objective Rate risk to objective Rate risk to objective

7. Assess overall risks

8. Next steps
Climate-related Stressors
 Temperature
– Increase evaporation from reservoirs  less water available for generation
– Reduce efficiency of transmission and distribution
– Increase peak demand

 Flow volume and timing

– Reduce water available for generation
– Facility may not be able to increase generation to take advantage of higher flow rates

 Sedimentation
– Increase wear and tear on turbines  reduced generating efficiency and higher costs
– Exacerbate harm to surrounding ecosystem

 Extreme events
– Floods can endanger nearby communities and those downstream
– Facility’s reputation can suffer from perception that it exacerbated floods, landslides,
or droughts
– Can directly impede/damage generation and transmission infrastructure
Climate-related Stressors – Relative Effect on Electricity
Generation by Plant Type
Project Type
Pumped Storage
Storage Run-of-River
Climate Stressor Change Open Loop Closed Loop
Increase
Temperature
Decrease
Increase
Flow volume and timing
Decrease
Increase
Sedimentation
Decrease
Extreme events (floods, Increase
droughts, heat waves)

Legend:
Relative effect on electricity Bigger
N/A Smaller decrease Smaller increase Larger increase
generation capacity: decrease
Non-Climate Drivers
 Non-climate drivers exacerbate climate-related impacts on
hydropower facilities, including:

 Population growth
 Land use / land cover
 Upstream / downstream hydro
 Energy demand / grid reliability
 Competing water users
Adaptive Capacity

 Adaptive capacity enables facilities to counter and cope with

the combined impacts of climate-related stressors and non-
climate drivers. These include:

 Operational flexibility
 Access to high-quality forecasts
 Insurance
 Contingency plans
Business Risks
 Business risks are a product of climate- and non-climate impacts
and adaptive capacity. Our framework includes:

 Environmental performance risks

 Financial performance risks
 Social performance risks
Tool Application

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USAID ACTI Project: Case Studies
 Objectives:
 Gather information and test the tool with stakeholders
 Sensitize HPP managers to potential climate change impacts,
and ways to adapt
 Get feedback on utility of the framework and other needs for
improving climate risk management

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Pleikrong HPP: Snapshot Steps 1-3
 [Step 1]: Facility Description
 100 MW, conventional storage, operational, peak and non-peak
 [Step 2] - Climate Stressors (CCKP, ICEM 2013, Hong Troung 2013):
 Increasing temperature trend to continue, ICEM 2013 projects max. daily temp.
increase of 3.5°C (2055-80)
 No historical mean rainfall trend; Projected reductions in dry season rainfall, and
mean runoff; projected increases in wet season rainfall/runoff (A2, 2060-79)
 Increasing drought trend in Sesan (Hong Troung et al. 2013).
 Projected increases in frequency intensity of extreme rainfall, flash flooding
 Increasing trend in tropical cyclones that affect (OCHA, 2012); projected increase
rainfall rates /wind speeds, and frequency intense cyclones
 [Step 3] – Non- Climate Drivers:
 Population is growing, and the deforestation rate is high.
 Energy demand increasing, dry season energy is highly valuable.
 Shift from forested to agriculture land use

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 STEP 4: Assessing Risks to Business Performance
 Step 1- Identify Priority Objectives
 Environmental:
4. Assess risk to environmental
performance • Meet instream flow requirements, and
Identify environmental • Respect water ramping restrictions
performance objectives
 Financial:
Rate potential impact from • Maximize revenue from power generation and ancillary
climate-related stressors
services,
Rate potential impact from non- • Maintain high operating efficiency, and
Repeat for each objective

climate drivers
• Meet peak electricity demands
Rate adaptive capacity  Social:
• Provide affordable and reliable electricity to consumers,
Rate risk to objective and
• Positively impact the community
 Step 2- Rate impacts from climate stressors, non-
climate drivers, adaptive capacity
 Step 3 – Rate risk to objective
Rating Risk to Financial Performance Objectives

Pleikrong Reduced stored water volumes

can affect the ability of
hydropower plants to operate at
their designed efficiency levels.
High temperature decreases the
efficiency of electrical
transmission and production
Hydropower plants are designed
to perform optimally and
efficiently given the expected
design range of flows. Changes in
seasonal, annual, or longer term
runoff (outside of the design
Hydropower plant operation at parameters) could result in sub-
higher-than-optimal loads (e.g., optimal performance.
increased water volumes) can
increase risk of cavitation
damage to turbines, though
intake is typically controlled.
Floods can directly damage
infrastructure, inhibit access to
facilities, and cause high repair
costs. Heat waves can damage
transmission infrastructure.

Efficiency can be maximized by

tailoring operations (reservoir
• Dry season concerns, flooding releases, generation, etc.) to the
hydrological forecasts.
and sedimentation
Assess Overall Risk
Environmental Financial Performance Social Performance
Performance
Meet Respect Maximize Maintain Meet Peak Positive Ensure
Instream Water Revenue Efficient Demands Impact Safety
Flow Ramping Operations
Current | Future C F C F C F C F C F C F C F
Climate Stressors
Temperature
Flow volume and timing -
Sedimentation
Extreme events - -
Salinity
Non- Climate Drivers
Land use / land cover -
Up/downstream hydro
Population growth
Energy demand
Adaptive Capacity
Insurance
Early warning system
Operational flexibility
Storage + +
Access to quality forecasts
Climate-sensitivity of grid
Overall Risk M H M M L L L M L L L M L M

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Feedback
 Application was useful, interested to apply it to all of their HPP investments

 Believe that it will be difficult to convince HPP investors to invest money to

mitigate potential climate change risks given large upfront costs

 Would be useful to:

– Provide a range of adaptation options (low cost to higher cost options) based on
identified risks
– Extend tool to provide economic rationale for additional investment in adaptation
measures
– Better understand options for adaptation funding to subsidize additional costs
(connect mitigation and adaptation streams?)
 Work with National government: better understand additional cost for Hydro
pricing (e.g., such as land use management); a ‘due diligence’ mechanism for
HPP evaluation/approval; to think through flood risk management protocols

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Next Steps
 US DOE: Application of the tool to micro-small scale hydropower plants

 Better connection to watersheds, hydrologic changes, and indicators

 Development of quantitative indicators tying changes in climate to changes

in business performance (e.g., changes in flow-> changes in potential power)

 Development of quantitative cost-benefit analysis of adaptation options

 Assessment of benefits of hydropower electricity to communities

 Work with government stakeholders to apply the framework- improving

understanding of risks, costs of hydro development- “due diligence”?

 Support for developing web-based platform of the Framework/Tool

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Thank You!