Hydropower project implementation is always capital intensive with high upfront
investment, needed hence creating a perceived risk among financiers and lenders.
Fund lenders naturally ask why a Kaplan project, with similar capacity output, is costlier than other types, such as a Francis project, and they honestly need adequate explanations. This article aims to provide explanations for these ‘whys’ by reviewing and analysing historical records and highlighting major cost drivers for such assets across the globe to establish specific cost of installations of Kaplan and Francis turbine units.
Financial institutions are always keen to ensure that hydropower projects’ construction risks are manageable among a host of other risks. Other risks that may be considered for developing a hydropower project include foreign exchange, repatriation, sovereign (country risk), interest rates, inflation rates, changes in legislative, market risks (for non-existence of PPA), revenue, payment (due to a lack of creditworthiness of the offtaker) and
Although these aforementioned risks may differ from country to country and are more likely to be present in emerging markets than in developed economies, financing a hydropower project is heavily dependent on the prudent management of such types of risks. Thus, when a bank is faced with limited financial resources for several competing projects of similar capacity output, it is logical to seek a comprehensive understanding of why one project would be more expensive to implement than another so that an
informed decision may be made by the financier before committing financial resources to develop such energy projects.
Kaplan turbine cost benchmarking
Experience in the hydropower sector indicates that Kaplan turbine projects appear to be more costly to build when compared to other types in the peer group. Taken from an extensive literature search on specific cost for water power turbines around the globe, the data shown in Figures 3 and 4 indicate quite interesting results in respect of specific cost of installation per kW for both Kaplan and Francis projects.
The Kaplan plants examined are 12 with installed capacities ranging from 10MW to 3,300MW. Plants with 10MW to 28MW installed capacities constitute about 25% of the plants examined, whereas 75% of the project population sizes have capacities ranging from 70MW to 3,300MW. The maximum specific cost of installation among the examined Kaplan projects is $1,029/kW, while the minimum value is $280/kW and the mean value found among the plants examined is $574/kW.
The Francis plants examined are about 50 with installed capacities ranging from 4MW to 4,900MW. Plants with 4MW to 30MW installed capacities constitute about 30% of the plants examined, whereas 70% of the plants have capacities ranging from 72MW to
4,900MW. The maximum specific cost of installation among the examined Kaplan projects is $889kW, while the minimum value is $118/kW and the mean value found among the plants examined is $414/kW.
Experience on several projects in Africa indicates the market costs of the electromechanical equipment for projects within the range of 1MW to 10MW for a typical
‘water to wire’ package from European suppliers as being:
• Pelton projects: 300 ~ 500 USD/kW
• Francis projects: 400 ~ 700 USD/kW
• Kaplan projects: 800 ~ 1 300 USD/kW
Major cost drivers
Note that hydropower projects are always site specific in terms of terrain/ topography, geological and hydrological conditions.
> The Kaplan machine being a ‘low head and high flow’ scheme will always require more steel (tonnage) and machining.
> In addition, the Kaplan project would typically operate at lower
Footnote: * Data reviewed and collated by L. Kassana from Water Power