Feasibility study of a hydro power project
The feasibility study of a hydro power project aimed at verifying costs and economic returns, as well as selecting the machines that are most suitable and their size, is a task given to design engineers, consultants or to the manufacturers themselves.
It is quite a complex task that needs to take into account several factors:
- cost of civil works;
- cost of hydraulic works;
- cost of electrical and mechanical works;
- design costs.
In addition to these costs there are recurring costs:
- operating costs: these include all those cost items incurred in the normal operation of the plant (personnel costs, royalties, income tax, etc.);
- maintenance costs: these are interventions aimed at the repair and maintenance of the plant;
- rental costs.
An unquestionable advantage of mini-hydroelectric plants compared to large-scale facilities is the low incidence of operational and maintenance costs. Operational costs relating to personnel are minimised since there is no need for a fixed presence at the facility and its control is carried out remotely. The mechanical and hydraulic works need to be checked occasionally to
ensure perfect working order and the peak performance of the facility. The feasibility study is completed by assessing the presumed revenues of the new plant.
Costs are compared with revenue arising from:
- sale of electricity;
- savings (avoided cost) of electricity;
- sales of green certificates;
- income from other incentives.
If the economic result of a business plan that includes the items listed above is acceptable to the investor, the authorisation and construction processes can commence.
Once the site for building the facility has been identified and the economic viability of the project has been verified, the implementation phase commences.