In the examples examined in the five countries, the capital cost13 of micro hydro plants,
limited to shaft power, ranged from US$714 (Nepal, Zimbabwe) to
US$1,233 (Mozambique). The average cost is US$965 per installed kW
which is in line with the figures quoted in some studies. The installed
costs for electricity generation schemes are much higher.
The
installed cost per kW ranged from US$1,136 (Pucará, Peru) to US$5,630
(Pedro Ruiz, Peru) with an average installed cost of US$3,085. The data
for the complete sample and detailed summary of the financial analyses
of the 16 sample projects is provided in the annex to this report.
The Cost Per Kilowatt Installed
An
important observation is that the cost per installed kilowatt is higher
than the figures usually cited in the literature. This is partly due to
the difficulty analysts have in establishing full costs on a genuinely
comparative basis. A significant part of micro hydro costs can be met
with difficult to value labour provided by the local community as ‘sweat
equity’.
Meaningful dollar values for local costs are difficult
to establish when they are inflating and rapidly depreciating relative
to hard currencies. In addition, there is little consistency in the
definition of boundaries of the systems being compared, for instance,
how much of the distribution cost, or house wiring, is included, how
much of the cost of the civil works contribute to water management and
irrigation, and so forth.
In this article very great care was
taken to produce estimates of the actual costs on a rigorously
comparable basis. It is for example of paramount importance to
distinguish between schemes limited to mechanical power only and schemes
which include electricity generation.
As
with any de-centralised energy supply system, the comparison of actual
costs at the ‘micro’ level of individual plants can also be misleading.
Successful programmes require investments in the systems necessary for
training, repair, and marketing. The critical issue is that these tasks
exhibit substantial economies of scale in that the cost per micro hydro
plant installed falls as the number of plants increases. Comparisons
based on average costs will therefore be strongly influenced by the
number of plants built.
Estimates of these ‘macro’ costs
associated with developing and supporting a programme – sometimes
referred to as “system overhead costs”14 are also difficult to
establish, particularly as many of the costs associated with Research
and Development and the training of engineering workshops are ‘sunk
costs’ which took place over many years.
Summary of Financial Returns on Sample Micro Hydro Plants After Financing |
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