In order for the preceding analysis to be of use it was important to integrate some form of economic evaluation of the schemes in Glen Almond using the data collected. The aim of such an analysis is to better understand the factors that govern the financial feasibility of small scale hydro schemes. This becomes more important when considering some of the design decisions that small scale hydro developers face in light of the recently introduced feed in tariffs. The analysis conducted in this section is made on the assumption that a small scale hydro developer would have the aim of exporting all of the energy generated in order to obtain the maximum benefit. In order to develop a model of the economic performance of potential hydro schemes, we first needed to obtain data for some of the main costs that would likely be incurred, should a specific scheme be developed. Any costs/profits discussed within this section should be taken as indicative only as the contractors and consultants whom were contacted to provide the data, did so on the understanding that it was for research purposes only. The results obtained from our economic analysis are to be representative of the hypothetical schemes considered in the Glen and should again be taken as indicative only. NOTE: Any costs discussed in this section are based on 2010 prices.

Revenue

As the excel estimation tool can calculate the probable energy yield in kWhr of a given scheme, this data is combined with feed in tariff generation and export rates in order to ascertain the potential annual revenue. Figure 1 indicates a typical output from the tool.

The tool automatically determines which feed in tariff rate a scheme will fall under depending on the output rating of the turbine and hence annual revenue can be calculated from the annual energy generated.

Estimated Capital Expenditure

The Excel tool has been developed to help estimate the capital expenditure of a potential site from the rated power output. For reservoir independent schemes, aside from grid associated/transmission costs, the main areas of capital expenditure are:

• The major civil works - cost of materials/laying pipelines
• Cost of turbine/generator
• Cost of power house

Economic data was collected from a number of suppliers and manufacturers, which was then extrapolated and coupled with general assumptions in order to estimate the likely cost of a scheme of given capacity. The extrapolated data for the pipe costs per meter laid is given in Figure 2.

Pipe Costs

The data collected for the pipe cost estimations is based on:

• Pipe diameters in the range of 90 – 400 mm and was extrapolated up to 1m
• PVC SDR 17 and SDR 11 materials
• Transporting and laying pipe in moderately difficult terrain, typical to that of Glen Almond

As the estimations cannot account for more or less expensive/advanced materials it should be noted that any developer using a more expensive material than PVC or larger diameter pipe, may incur additional costs to those estimated here.

Turbine Costs

A similar approach was taken when estimating the cost of a turbine for the potential schemes. We obtained the costs for a number of turbines that were specified to the flow rates of each corrie and then evaluated them to calculate a cost per kW rating. It was found that the cost for a turbine could be reasonably estimated from:

Turbine cost (£) = 480*Rating + £85400

Power House Cost

As the net cost of the power house is highly dependent on the type of installation to be build, it was found difficult to generalise and was therefore left as a user input on the excel tool. When conducting our own analysis we assumed that the cost for the power house would vary with the size of turbine and generator installed. As such, the following values were used.

Validating Cost Estimations

Data on the Capital Expenditure (Capex) of 170 built and in build small scale hydro schemes was obtained from the British Hydro Associations response to feed in tariffs from 12th October 2009. This data was used to validate the Capex assumptions that were made during the analysis. Figure 3 shows the data from the BHA report with our best fit curve.

Operational Expenditure

Opex costs were evaluating using data obtained from the British Hydro Association. The operational expenditure of 20 small scale hydro schemes was used to generate an equation for Opex per kW rating. Figure 4 shows the graph plotted from the data and the corresponding best fit curve used to evaluate the equation for Opex/kW rating.

The outcome of the financial projections using this econimic data can be found here.