Water Power and Dam Construction. Issue September 2010
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Let IWP&DC’s readers know about your forthcoming conferences and events.
For publication in a future issue, send your diary dates to: Carrieann Stocks, IWP&DC, Global Trade Media Ltd, Progressive House, 2 Maidstone Road,
Foots Cray, Sidcup, Kent, DA14 5HZ, UK. Alternatively, email: carrieannstocks@globaltrademedia.com, or fax:+44 208 269 7804
DIARY OF EVENTS
WWW.WATERPOWERMAGAZINE.COM SEPTEMBER 2010 11
DIARY
April 2011
11-15 April
United States Society on Dams
20 1 1 An n u a l M e e t i ng a nd
Conference
San Diego, California, US
CONTACT: United States Society
on Dams, 1616 Seventeenth Street
#483, Denver CO 80202, US
Tel: +1 303-628-5430.
Fax: +1 303-628-5431.
15-17 April
Energy Efciency and Renewable
Energy Sources for South-East
Europe
Soa, Bulgaria
CONTACT: Via Expo Ltd, 3
Chehov Square, Plovdiv 4003,
Bulgaria.
Fax: +359 32 945 459.
Email: ofce@viaexpo.com.
http://viaexpo.com.
May 2011
16-20 May
2 5 t h E u r o p e a n R e g i o n a l
Conference of ICID
Groningen, The Netherlands
CONTACT: Bert Toussaint, Chairman
of the Organizing Committee, Ministry
of Transport, Public Works & Water
Management, Rijkswaterstaat Centre
for Corporate Services, PO Box 2232,
NL-3500 GE Utrecht, Netherlands
Tel: +31 62 079 1372
Email: bert.toussaint@rws.nl.
www.nethcid.nl.
29 May - 3 June
79th Annual Meeting of ICOLD
Lucerne, Switzerland
CONTACT: Swiss Committee
on Dams, c/o Stucky Consulting
Engineers.
Email: swissdams@stucky.ch
http://www.swissdams.ch
June 2011
14-17 June
IHA’s 2011 World Congress
Iguassu Falls, Brazil
C O N T A C T : I n t e r n a t i o n a l
Hydropower Association , Nine
Sutton Court Road, Sutton, Surrey,
SM1 4SZ, UK.
Tel: +44 20 8652 5290.
Email: congress@hydropower.org.
September 2011
5-7 September
3rd Australasian Hydro Power
Conference
Queenstown, New Zealand
CONTACT: John Schurink.
Tel: +64 3 3646607.
Fax: +64 3 3646615.
Email: schurinkj@mace-eng.co.nz.
www.hydroconference.co.nz.
25-29 September
Dam Safety 2011
Washington DC, US
CONTACT: Association of State
Dam Safety Ofcials.
info@damsafety.org.
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Here you will find details on some of the executive appointments made by companies within the hydro power and dams industry
over the past few months. To submit details of appointments for publication in a future issue of the magazine,
please send an email to the editor, Carrieann Stocks, at: carrieannstocks@globaltrademedia.com
EXECUTIVE MOVEMENTS
APPOINTMENTS
12 SEPTEMBER 2010 INTERNATIONAL WATER POWER & DAM CONSTRUCTION
Run of River Power appoints
President and CEO
Run of River Power Inc has
appointed Richard Hopp as
President and Chief Executive
Ofcer. Hopp comes to the posi-
tion from the Company’s Board
of Directors, where he has been
an independent member since his
appointment in April 2006.
“We are extremely pleased to
welcome Rick to the position of
CEO,” said William Hardwick,
Chairman of the Board of Directors.
“His proven track record in global
renewable power generation and
close relationship with ROR
Power make him the ideal candi-
date to lead the Company to the
next level.”
Hopp has over 30 years of expe-
rience in the energy marketing
and power development sectors.
Most recently, he served as Vice
President, Business Development
for Elemental Energy Inc. He
is a technical advisor to Clean
Energy BC (formerly Independent
Power Producers Association of
British Columbia). He has a BSc
in Applied Economics from the
University of British Columbia
(1978) and a Master of Public
Administration from the University
of Victoria (1981).
Sutherland Partner appointed
Chair of American Bar
Association’s Electricity
Committee
Sutherland Asbill & Brennan LLP
announces Partner Dorothy B.
Franzoni has been appointed, effec-
tive 1 September 2010, as the Chair
of the Electricity Committee of the
American Bar Association’s Section
of Public Utility, Communications
and Transportation Law (PUCAT).
“We are proud of Dorothy
and celebrate this appointment,”
said Energy and Environmental
Practice Group Leader Herbert
J. Short, Jr. “Dorothy has played
an integral role in our Energy and
Environmental Practice and to our
electric industry clients. Dorothy
wi ll pro vid e the Ele ctr ici ty
Committee with invaluable insight
about the various issues facing
businesses within the electric
power industry.”
The Electricity Committee
reports to the section council on
regulatory and other legal develop-
ments in the rapidly changing elec-
tric power industry. These include
the initiatives of federal regulators
and others to foster a competi-
tive market for wholesale power,
both state and federal actions that
affect retail electricity markets and
the mergers, joint ventures, and
other business restructuring activ-
ity taking place in the industry. The
Committee also monitors decisions
that concern rates, hydroelectric
licensing, and other current issues.
The section initiates ABA program-
ming and activities in these areas,
as well as recommending policies
to the ABA House of Delegates, the
association’s policy-making body.
PUCAT brings together mem-
bers of the bar interested in the
rapidly changing legal environ-
ment in the communications,
cable TV, internet, electricity, gas,
oil pipelines, aviation, motor car-
riers, railroads, and water indus-
tries. The third oldest Section in
the ABA, the Section was estab-
lished in 1917 when public inter-
est demanded regulation of these
elds. The Section currently has
approximately 7,000 members.
Franzoni i s a p a r t n e r i n
S u t h e r l a n d ’ s E n e r g y a n d
Environmental Practice Group and
co-chair of Sutherland’s Renewable
and Alternative Energy Team.
Tri-Tech Holding Announces
New Senior Executive
Appointments
Mr. Gavin Cheng has been named
co-president of Tri-Tech, responsi-
ble for the company’s general opera-
tions in Chin, with Mr. Hongzhi Ma
appointed deputy general manager
of Tri-Tech’s subsidiary company
Beijing Yanyu Water Tech Co., Ltd.
(Yanyu). He will be responsible for
Yanyu’s business development of
water resource management and
environmental business activities.
Cheng has more than 20 years
experience in the elds of produc-
tion safety and industrial pollution
control. He has been focused on
production safety automation for
the oil, gas and petrochemical indus-
tries, including the development of
technology for industrial environ-
mental pollution controls. He is also
an expert in product integration and
project implementation.
Before joining Tri-Tech,Cheng
served as president of Beijing
Satellite Science & Technology Co.
(BSST), which was acquired by Tri-
Tech in August 2010.
Cheng founded BSST in 1994
and has been president since then.
From 1987 to 1993, he worked
on R&D and project manage-
ment at the Beijing Test & Control
Technology Institute of the
Aeronautics Ministry. He gradu-
ated from Nanjing University of
Aeronautics and Astronautics in
1987 with Bachelor of Engineering
and Master of Engineering degrees.
He received his Executive MBA
from Peking University in 2001.
Ma is an expert in water resource
management and water pollu-
tion control with more than 10
years experience. He was a par-
ticipant in the national key sci-
entific and technological project
“Research on Carrying Capacity
of Water Resources,” where he
won the second place award for
“Technology Development” at pro-
vincial and ministerial levels. He has
successfully completed several river
basin and provincial water consul-
tation system projects as well as the
installation of state and provincial
information management systems
for drought prevention projects.
Ma is also experienced in planning
and managing water resources and
environmental projects. He is famil-
iar with the GIS platform and MIS
development and applications.
Prior to Tri-Tech, Ma founded
Beijing Tianfuqin Technology,
Ltd. in 2007 and served as general
manager, he founded and served
from 2001 to 2007 as general man-
ager of Beijing Huitu Information
& Technology, Ltd. He was a
lecturer at the Department of
Water Resource and Hydropower
Engineering at Tsinghua University
from 1998 to 2001. He graduated
in 1998 from the Water Resource
and Hydropower Department
at Tsinghua University, with a
Bachelor of Engineering in hydrau-
lic architecture and a Master of
Engineering in hydrology and
water resources.
Management appointments
at SKM
Global engineering, sciences and
project delivery firm Sinclair
Knight Merz (SKM) has announced
several appointments to its senior
management team. Geoff Linke has
been appointed General Manager,
Strategy after several success-
ful years as General Manager,
Water & Environment. Linke has
more than 25 years experience in
project management, investigation
and engineering of water resource
and land management projects,
and has lled a range of business
leadership roles at SKM over the
past 10 years.
Mark Clarke has been appoint-
ed General Manager, Water &
Environment. He was previously
General Manager, Power & Energy
and remains a Director of the SKM
Management and SKM Holdings
Boards. Clarke has 25 years expe-
rience in the power, water, heavy
industrial and mining industries.
In particular, he has worked with
water and power utilities on most
aspects of their business. Prior to his
role in the Power & Energy port-
folio, Mr Clarke was COO, Asia,
based in Kuala Lumpur.
Patrick Hill has been named
General Manager, Power &
Energy. He was previously Regional
Manager, Western Australia/
Northern Territory. Since joining
SKM, he has held process engi-
neering, project management and
site commissioning roles on major
water infrastructure projects. Prior
to his appointment to regional man-
agement, Hill managed the integra-
tion and leadership of SKM’s three
Water & Environment Operation
Centres in South East Australia.
Additionally, he has held key alli-
ance leadership roles on major
projects in the Utilities and Energy
sectors. Most recently, he has served
as a member of the Project Board on
Chevron’s Gorgon LNG project. In
2007, Mr Hill was named National
Young Professional Engineer of the
Year by Engineers Australia.
14 SEPTEMBER 2010 INTERNATIONAL WATER POWER & DAM CONSTRUCTION
PROJECT FINANCE
T
HE European Bank for Reconstruction and Development
(EBRD) is the leading nancier of energy projects in the
CIS (former Soviet Republics) region, including Ukraine. Up
to the end of 2009 the bank had provided around €325M
(US$429M) in loans or equity for projects in Ukraine’s power sector
with total value of €650M (US$859M). These have focused on
improving efciency of power production and transmission. Yet
Ukraine has great renewable energy potential, including a strong
track record in the development of small hydro facilities, most of
which are now many decades old and have long since stopped oper-
ating. However, the situation is now changing. The Government of
Ukraine has made the decision to prioritise renewable energy and has
now put in place the basic regulatory support framework needed to
allow commercial development. Local entrepreneurs are emerging as
project developers, particularly in the small hydro sector. However
they are still hampered by a chronic lack of long term project nance.
The EBRD has responded to this with the launch of the Ukraine
Renewable Energy Direct Lending Facility.
PROJECT BACKGROUND
Ukraine relies heavily on imported fuel (up to 80% of primary energy
needs during peak demand) and its own generating assets are ageing
and highly polluting. The need to improve energy security and reduce
the environmental impact of its energy sector is acute. Renewable
energy can play a key role in addressing both these issues. Ukraine has
great potential yet these resources have hardly been utilised so far. The
technical potential for the different sectors has been estimated as:
r Wind energy – 40TWh/yr.
r Small hydro – 8.3TWh/yr.
r Biomass – 120TWh/yr.
r Solar energy – 50TWh/yr.
Yet current production is only 0.5 TWh/year. The main reason for
this low level of activity is that until now the legislative and regulatory
frameworks have not been adequate to allow the implementation of
the numerous potentially feasible projects in this area.
During the rst part of 2009 the Government of Ukraine issued
primary legislation setting a green tariff for renewable energy and
recently the National Energy Regulator of Ukraine (NERC) issued
the rst green tariff approvals to developers. The green tariff sets a
minimum ination indexed price for renewables based on different
multiples of the retail tariff (depending on the renewable technology)
and xed in Euro terms as at 1 January 2009 and is applicable until
2030. Table 1 gives the Hyrvna and Euro equivalent green tariffs for
the eligible renewable technologies as at January 2009.
Despite the introduction of the green tariff it is clear that developers
continue to face signicant obstacles compared to similar projects in
countries with a more developed framework for renewables. These
include permitting and licensing procedures, land rights, environmen-
tal assessments as well as managing what is still an emerging tariff
methodology under development by NERC. Therefore developers
are still hesitant to commit equity to projects where development
expenses and outcomes are uncertain.
The Ukraine Renewable Energy Direct Lending Facility is a nanc-
ing framework dedicated to providing debt nance to smaller renew-
able energy projects in Ukraine and to provide parallel technical
assistance to developers and the regulator to help implement projects.
The amount of the facility is initially up to €50M (US$66M) which
was board approved by the EBRD at the end of 2009. The technical
assistance component is nanced by a grant of US$8.45M from the
Global Environment Facility (GEF) which was approved in March
2010. The bank is now in the process of contracting the various con-
sultancy teams that will implement the facility and expects the rst
resources to be on the ground in Kyiv around September 2010. The
facility will provide loans to eligible projects with the possibility to
nance on a limited recourse basis if required.
THE FACILITY
The facility will consider all forms of renewable energy generation
including hydro, wind, biomass, geothermal and solar. The facility
will be available for an initial period of two years but may be extend-
ed and increased in amount if this is justied by demand.
The nancial viability of each project will be judged on a case-by-
case basis, in line with the bank’s normal criteria – essentially the
same level of creditworthiness and project quality any commercial
bank would expect. The minimum amount of EBRD nance which
the facility will consider is €500,000 (US$660,000). There is no upper
limit although loans above €10M will have to be submitted to the
EBRD board for additional approval.
The bank will seek or require equity and co-nancing participa-
tion in projects supported by the facility. Availability of commer-
cial nancing for renewable energy projects in Ukraine is extremely
limited at the current time. Hard currency lending is restricted to
larger corporates with export revenues and high levels of collateral.
Hyrvna loans are relatively short term (generally not more than ve
years) and unlikely to be available on a limited recourse basis. This
gives developers very few possibilities other than their own equity and
short term debt which can be raised against collateral.
There is a great need to improve energy
security and reduce the environmental
impact of Ukraine’s energy sector. However,
project developers in this area are hampered
by a lack of long term project nance.
Peter Hobson from the European Bank for
Reconstruction and Development (EBRD)
explains how the launch of the Ukraine
Renewable Energy Direct Lending Facility
will play a vital role in rectifying this
EBRD lends
a hand
An existing hydropower project in Ukraine
WWW.WATERPOWERMAGAZINE.COM SEPTEMBER 2010 15
PROJECT FINANCE
Given these restrictions the EBRD is taking a much more exible
approach to nancing than it is normally able to. Providing sponsors
are able to provide equity of around one third of total investment
needs, and of course following satisfactory due diligence, the EBRD is
ready to consider providing the full balance of nancing on a limited
recourse basis. Terms and conditions will be determined on a project
by project basis but will essentially be commercially priced. Tenor
may be up to 12 years including up to two year’s grace.
THE SUPPORT PROGRAMME
The facility will be supported by a comprehensive technical assistance
programme designed to provide both institutional and project sup-
port. This will be implemented through a consultancy team based
in Ukraine throughout the duration of the assignment and working
directly with government and project developers as well as the EBRD.
Funding of US$8.45M has been provided by the Global Environment
Facility and the bank is now busy selecting the consultants to run the
facility. The components of the technical assistance programme and
principle beneciaries are described below.
INSTITUTIONAL SUPPORT
Following introduction of the primary legislation for renewables
in September 2008 and the green tariff in early 2009 the assign-
ment is focusing on assisting NERC in developing the green tariff
methodology, renements to primary legislation and development
of detailed technical and operational procedures for assessment
and approval of renewable projects. A dedicated consultancy
team will be based with NERC for the duration of the assignment,
working closely with the bank and other involved government
departments and ministries.
ENVIRONMENTAL ASSESSMENT AND PROCEDURES
Local environmental procedures in Ukraine have not been prepared
to efciently deal with renewable energy projects and there is no
procedure in place for considering the likely cumulative impact of a
number of similar projects being built close together. The environ-
mental support component will cover two main aspects:
r Strategic environmental assessments (SEAs) to assess the cumulative
impact of renewable energy projects and establish the overall capac-
ity for specied renewable energy projects in a region together with
criteria to be met for approval.
r Environmental approval procedures and standards will be assessed
and guidance given on how these can be adapted to properly reect
the characteristics of renewable energy projects.
PROJECT DEVELOPMENT SUPPORT
On-going project development support will be provided through a
permanent project support team (PST) based in Kyiv for the duration
of the availability period of the facility. The main purpose of the PST
will be to work with the bank in order to screen projects for sup-
port under the facility and then to work with developers of selected
projects in order to prepare proposals for EBRD nancing. Through
this approach the bank will be able to provide developers with the
support they need to prepare projects in Ukraine, while at the same
time ensuring the information required for the bank’s due diligence is
prepared in a thorough and consistent way for each project.
The bank’s consultants will conduct initial project screening of
proposals to identify strong candidates and weed out weak ones.
This analysis will take account of the basic technical and commer-
cial viability of the project, the sponsor’s experience and nancial
strength, and assess support needs going forward for those projects
which are accepted for further work. The output of this phase will be
the information which the bank requires in order to make a decision
to proceed with the project.
Following a positive decision from the bank to proceed with a
project the PST will then work with each developer as required to
help prepare their projects for nal approval. The areas covered under
the project support arrangements will include assistance with:
r Project permitting and licensing.
r Assessment of feasibility studies.
r Assistance with commercial negotiations.
r Legal support in preparation of loan documents.
r Support in undertaking environmental and social impact assessments.
PROJECT PIPELINE
An initial pipeline of projects has already been identied covering
several renewable energy sectors. These will be followed up once the
support team is on the ground but new projects may be submitted for
consideration at any time. Table 2 above gives some details of the
projects currently under consideration.
NEXT STEPS
The bank is currently completing the selection of the three consul-
tancy teams that will support the project. This will be nalised soon
and it is hoped the teams will be on the ground by September 2010.
The facility will be formally launched around that time but the EBRD
is happy to receive project proposals and enquiries at any time. These
should be directed to either Peter Hobson, Senior Banker in London
(hobsonp@ebbrd.com) or Segiy Maslischenko, Business Development
Manager in Kyiv (maslichs@ebrd.com).
IWP& DC
Table 2: Projects under
consideration
Type of Project Capacity Investment amount
Wind Power 20MW US$46M
Biomass (Sunower Husk) 3.8MW US$15.7M
Biomass (Sunower Husk) 2.8MW US$11M
Wind Power 2.0MW US$6.4M
Landll gas 1.6MW US$3.7M
Biogas 1.5MW US$4.2M
Landll gas 1.0MW US$2.5M
Hydro rehabilitation 1.0MW US$1.8M
Hydro rehabilitation 0.9MW US$2.4M
Biogas 0.5MW US$2.5M
Biogas 0.5MW US$2.6M
Hydro rehabilitation 0.5MW US$1.3M
Hydro rehabilitation 0.5MW US$1.3M
Hydro rehabilitation 0.3MW US$0.5M
Hydro rehabilitation 0.26MW US$0.7M
Hydro rehabilitation 0.2MW US$0.5M
Table 1: Ukraine Renewable
Energy Tariffs
Type of E-RES
Minimum Green Tariff (Res. 857)
kopek/kWh (excl VAT)
Euro/MWh
Wind (below 600kW) 70.15 64.6
Wind (above 600kW and
below 2000kW)
81.84 75.4
Wind (above 2000kW) 122.77 113.1
Biomass 134.46 123.9
PV on the ground 505.09 465.3
PV on roofs (above 100kW) 484.05 445.9
PV on roofs (below 100kW) 463.00 426.5
Small hydro 84.18 77.5
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WWW.WATERPOWERMAGAZINE.COM SEPTEMBER 2010 17
PROJECT FINANCE
A
MONG the latest new hydro and rehabilitation schemes
being funded in Europe by combinations of local, and
other, banks are projects in Spain, Norway, Iceland but
there is also a strong focus on Ukraine, Georgia and
Armenia, and there are efforts underway in Romania.
For example, the European Investment Bank (EIB), which is
the EU’s long-term nancing institution, last year agreed a loan of
EUR300M (US$378M) to Iberdrola to help expansion projects: San
Esteban II, San Pedro II and La Muela II pumped storage.
In northern Europe, EIB has also agreed to loan EUR120M
(US$151M) to Statkraft to help fund rehabilitation and upgrades at
40 plants in Norway. A loan of up to EUR70M to Landsirkjun is being
considered to help build the 120MW Budarhals plant and dam.
The support for the existing hydro sector in eastern perimeter of
Europe, however, is a growing area of activity.
UKRAINE
Major long-term efforts are underway in Ukraine to rehabilitate a
group of hydropower facilities held by UkrHydroEnergo (UHE), and
support is coming from the European Bank for Reconstruction and
Development (EBRD), EIB and World Bank Group (WBG). The util-
ity’s programme is to have the rehabilitation of its entire 4.6GW asset
portfolio completed by 2022 with the bulk completed by 2017.
UHE was formed in 2004 by the merger of two companies in charge
of the cascades on Dnipro (“Dnieper”) and Dnister (“Dniester”) rivers.
Before the merger there had been 18 generating units refurbished
between 1996-2002 with some foreign funding support. The state-
owned utility nanced the ongoing work to 2006, adding a further
seven units to the total refurbished. Since then it has received more
international funding support for the programme. The main objectives
are to improve reliability, efciency and safety of the utility’s dams and
hydro assets, and to help the country reduce its greenhouse gas (GHG)
emissions in line with the aims of the Kyoto protocol.
In addition, the project will add about 400MW capacity to the
Dnipro cascade, which will increase electricity production by about
500GWh per year.
The rehabilitation works range over the following plants on
the Dnipro river: Kiev pumped storage & hydro plant; Kaniv;
Dniprodzerzhinsk (“Dnieprojerzinsk”); Dniprovsky 1 (“Dnieprovska
1” or “DniproGES-1”); Dniprovsky 2 (“Dnieprovska 2” or
“DniproGES-2”); Kremenchug (“Kreminchug’); and Kakhovka
(“Kakhovska”); together with the Dnistrovska hydropower plant on
the Dnister river.
WBG agreed a loan of US$106M towards the rehabilitation pro-
gramme with effect from 2006, helping to fund improvements to a
further 62 generating units over 2007-17. Late last year, though, the
World Bank agreed to a further loan of US$60M (grace period of six
years, maturity in 12 years).
Extra funding was needed to help the rehabilitation of three units
at the Dniprovsky 2 plant and also three units at the Kremenchug
facilities. The works are on the programme’s critical path and are to
be completed by mid-2012 but a turbine replacement has hit a bottle-
neck with a local supplier unable to deliver within the required time-
frame, said the World Bank. The additional funding will help widen
procurement options to overcome the supply problem but the loan
will also help the utility overcome a reduction in nancial strength,
due to the impact on currencies from global nancial crisis, and so
help co-nance the foreign component of project costs.
An additional objective of the extra loan is to support the
Ministry of Fuel and Energy and the National Electricity Regulatory
Commission (NERC) in planning the electricity sector reforms for
Ukraine, including establishment a wholesale market.
The board of EBRD is due, in October, to consider a loan of up to
EUR200M (US$252M) towards the refurbishment programme under
a co-nancing deal that would see EIB lend a similar amount. It said
the loans would be used to help fund the upgrade and refurbishment
of the hydro-mechanical and electro-mechanical equipment, improve
efciency, plant life, and safety, operational capacity and exibility,
and optimise use of water resources. Institutional and staff capabili-
ties also need to be improved.
The EBRD loan application passed nal review earlier this year.
The project also supports the expansion of capacity at the Kakhovka
plant.
In June, EIB approved a loan of EUR200M (US$252M) towards
the refurbishment programme for the plants on the Dnipro.
Last month, US rm Emerson Process Management was awarded
a US$28M contract by UHE to provide automated management and
control systems for all 100 units in the plants on the Dnipro and
Dnister being rehabilitated under the programme. It noted that the
nine plants it will supply systems to have total installed capacity of
4639MW. The contract is being funded by World Bank loan, it noted.
Separately, the company has supplied equipment to the Dnistrovska
(“Dnestrovskaya”) plant recently commissioned on the Dnister.
GEORGIA, ARMENIA
EBRD is supporting development of small hydro in Georgia and
Armenia, and also the refurbishment of the 1.3GW Enguri (“Inguri”)
plant and downstream facilities in Georgia.
The bank notes that the two countries want to reduce their energy
dependence and are pushing renewables with favourable legislation
and regulation. Under Georgia’s “Renewable Energy 2008” pro-
gramme it plans to build about 80 new small and medium hydro
plants, and in Armenia there’s guaranteed off-take for all small
European development banks are funding new hydro and rehabilitation projects around
the perimeter of the region, often alongside the World Bank, and their efforts also reach
further aeld. Report by Patrick Reynolds
New and renewed funding in Europe
Dniprovsky-2 project in Ukraine. Photo courtesy Emerson Process Management
18 SEPTEMBER 2010 INTERNATIONAL WATER POWER & DAM CONSTRUCTION
PROJECT FINANCE
renewable plants at set tariff for the rst 15 years of operations.
Under its own initiatives to back sustainable energy in general, and
also development in the two countries, EBRD will provide funds for
consultancy services to support the developers of, mainly, small hydro
plants in Georgia and Armenia, and also rehabilitation of similar
facilities. The closing date for expressions of interest (EoI) by con-
sultants was mid-August, and the 18-month assignment is due to
start in late September. The budget is EUR247,730 (US$318,525),
excluding VAT.
The consultant will screen potential projects through separate lters
for greeneld and refurbishment projects for the EBRD to select those
schemes to proceed to concurrent technical and environmental due
diligence assessments. The bank is looking for about eight projects
evenly split between the countries.
At Enguri, the funds would help with a range of works including
the refurbishment of the last two of the plant’s ve generating units
and, downstream, enable the rehabilitation of Vardnili I dam and
spillway, and clear and dredge the Vardnili cascade canal. Enguri is
owned and operated by state utility Engurhesi, and improvements are
required to the bottleneck being experienced at the Varnili facilities to
enable full capacity operation of the large power station.
The total budget for the Enguri and Vardnili improvement works
is US$180M. Initial refurbishment works were funded to almost
US$49M in 1998 and 2006 with funding from Europe, Japan,
Germany and Georgia. The next phase requires up to EUR37.5M
(US$48.2M) in loans with potential for co-nancing between Europe
and Georgia.
EBRD has also been involved with funding dam safety improve-
ments at Enguri, which has a 271.5m high double-curvature arch
dam founded on complex geology.
The Vardnili cascade was built in the early 1970s and comprises
four plants with total capacity of 340MW downstream of the Gali
reservoir. Stucky and local rm Gamma studied the environmental
impact of the rehabilitation and cleanup of the Vardnili cascade
canal, which is partly blocked by severe sedimentation and was dam-
aged during the Abkhazia conict. Their report was developed for
submission to EBRD and EIB in 2008, and staged improvements to
the cascade are planned.
ROMANIA
In July, EBRD noted it is considering approval of a loan of EUR85M
(US$109.3M) to Romania’s Hidroelectrica to help fund just over
three-quarters of the rehabilitation and modernisation cost of the
almost half-century old Stejarul Bicaz plant.
The project would improve lifespan, efciency, plant availability,
environmental performance and allow remote monitoring and opera-
tions. Additionally, it would enable Hidroelectrica to optimise the oper-
ation of the hydropower cascade and upstream reservoir capacity.
At a total cost of approximately EUR110M (US$141.5M), the
project calls for replacement of turbines, generators and auxiliary
systems on six units at the 210MW facility, rehabilitation of hydro-
mechanical equipment and penstocks, upgrade of electrical equip-
ment and control systems, and consulting services.
The Board of EBRD is to discuss the loan in late September and,
should it be approved, it is expected that the procurement process
would get underway for the various contracts involved in the project.
State-owned Hidroelectrica has a portfolio of 272 hydro facilities
with a combined installed capacity of just over 6.4GW, and in 2009
generated 17.3GWh of electricity.
FURTHER AFIELD
While supporting hydro and renewables across Europe, and in par-
ticular the outskirts, the European banks are also looking at further
contributing to hydro through notable capacity expansion in Costa
Rica and Zambia, and supporting small hydro in Chile and China.
In Costa Rica, EIB is reviewing a possible loan of EUR200M
(US$252M) to help build the 305MW Ice Reventazon project being
developed on the Reventazon river by Instituto Costarricense de
Electricidad (ICE). The scheme includes a dam and the plant, which will
be one of the largest in Costa Rica, and is due to be operational in 2015.
The loan would fund about a quarter of the estimated project cost.
The bank is also looking at a loan of EUR135M (US$170M), or just
over half the EUR265M (US$334M) anticipated project cost, for the
120MW Itezhi-Tezhi project in Zambia. The project is being developed
by Itezhi-Tezhi Power Corp and uses an existing dam and reservoir.
EIB has approved a loan to GDF Suez to help build the 34.4MW
Laja project in Chile.
Similarly far aeld, the bank is looking at providing up to EUR44M
(US$56.5M) in loans, or more than half of the total cost of EUR71M
(US$91.2M), to help fund the design, construction and operation
of 10 small hydro projects with a combined installed capacity of
62MW in Hubei province, China. The funding would be given to the
Ministry of Finance under the China Climate Change Framework
Loan (CCCFL).
IWP& DC
Hydro funding - World Bank Group
The additional loan of US$60M agreed by the World Bank Group (WBG) at the
end of 2009 for the Ukraine rehabilitation programme is counted as one of
three loans made by the bank so far in FY 2010 for the hydropower sector. The
other two projects receiving funds are the Jiangxi Shihutang Navigation and
hydro scheme, in China, and the 60MW run-of-river Felou project, in Mali.
Total funding in FY 2010, so far, is US$284M split almost equally between
WBG’s World Bank and International Finance Corp (IFC). The total for the previous
nancial years were: US$459M in FY2009 for ve projects; US$1,064M in FY2008
for 11 projects; and, US$674M in FY 2007 for nine projects.
The average annual loans approved for hydropower by WBG over FY06-10
is US$541M. Over the past decade, its commitments to hydropower have
increased from a total of US$1B in FY01-05 to US$1.5B in FY06-10.
Lending volumes will naturally uctuate in line with lending limits for different
areas and managing risk, but also reect the requirement of projects of different
sizes as and when they reach suitable points in their long-term development. Most
recently, though, it can be only noted that FY2008 was a peak for lending in hydro.
IFC and WBG’s Multilateral Investment Guarantee Agency (MIGA) have annual
average commitments to hydropower of US$200M and US$27M, respectively.
The most notable recent contribution from MIGA was US$115M in FY2007.
Prior to that MIGA’s prime contribution in hydro was US$91M for the Nam
Theun 2, in Lao PDR, with the scheme recently commencing commercial
operations.
As of 31 July, WBG had 88 active projects with hydropower-related
components in its portfolio, and its nancing for these totals about US$4.4B.
World Bank Group Hydropower Portfolio (annual approvals)
Institution/region FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 Annual Av. FY06-10
World (no. projects) 6 5 10 7 9 11 5 3 7
WB (US$M) $196 $282 $226 $118 $387 $678 $237 $147 $314
IFC (US$M) $23 $0 $49 $182 $172 $365 $222 $137 $200
MIGA (US$M $0 $0 $91 $0 $115 $21 $0 $0 $27
WBG (US$M) $219 $282 $366 $300 $674 $1,064 $459 $284 $541
IFC = International Finance Corporation, MIGA = Multilateral Investment Guarantee Agency
WB = World Bank, WBG = World Bank Group
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20 SEPTEMBER 2010 INTERNATIONAL WATER POWER & DAM CONSTRUCTION
T
HE UK’s Environment Agency (EA) is keen to show it
is championing the cause for hydropower development
throughout the country. It states that it strongly sup-
ports the UK and Welsh Assembly government’s targets
for renewable energy, and further acknowledges the role that
hydropower schemes can play in meeting these and greenhouse
gas reduction targets.
“Some hydropower schemes have the potential to deliver low
carbon electricity and improve the local environment for wildlife,
for example by improving sh migration,” says Tony Grayling, head
of climate change and sustainable development at the EA. “With
the government’s feed-in tariff for renewably generated electricity,
hydropower could become an attractive income generator for power
developers.”
The rst phase of a wider programme to make information avail-
able to developers and stakeholders was published in February 2010.
In an effort to develop a more strategic approach to sustainable hydro
development throughout England and Wales, the EA has identied
and mapped potential opportunities. The aim of this is to make it
quicker and easier to gain approval for a scheme.
A technical report (Mapping Opportunities and Environmental
Sensitivities for Hydropower in England and Wales) was prepared
by Entec on behalf of the EA. It gives national and regional level
overviews of the potential opportunities available, plus their relative
environmental sensitivities to exploitation.
Over 25,000 locations (barriers) were identied with coarse envi-
ronmental assessments made of each one. In the report the term bar-
rier was used to identify a site where there is sufcient height in river
level for hydro production. These are mostly weirs but could be other
manmade structures or natural features such as a waterfall. As the
EA acknowledges, most new small hydro schemes are usually sited at
existing barriers and do not create new impoundments.
Small hydro has an important but limited role to play in renewable energy generation,
according to the Environment Agency in the UK. In its new mapping project the agency
shows where hydropower could be deployed in England and Wales to utilise untapped
potential; helping to full important green energy requirements
Mapping out hydro’s future
Future work
The hydropower mapping project is the rst phase of a wider project. Others
will include work to:
t Improve and ground-truth the data.
t Apply the analysis at a river catchment level to inform catchment strategies.
t Consider the environmental sensitivities in more detail.
t Develop the data into a spatial tool that can be used by internal and
external customers.
EUROPE