This brochure hos been developed under SHEkFA

pro[ect Smoll Hydro Energy Efficient Fromotion

Compoign Action.
SHEkFA is o Europeon Funded Fro[ect in the
fromework of the ntelligent Energy for Europe
Frogromme (EE}.
SHEkFA oims to moke o significont contribution in
reducing the borriers thot ore currently hindering the
development of SHF, oddressing the chollenges ond
contributing to the uptoke of SHF in the new enlorged
Europeon Union.
The result of SHEkFA will not only increose the
oworeness of politicions ond decision mokers on SHF
os o key renewoble energy source, but will olso creote
fovouroble fromework conditions for the further
uptoke of SHF within the Europeon Union.
The pro[ect specificolly oddresses the issue of
environmentol performonce of SHF plonts, os well os o
comprehensive territoriol plonning opprooch ot the
level of woter bodies.
ESHA, the Europeon Smoll Hydropower Associotion, is
the Europeon coordinotor of this pro[ect, which
includes eight odditionol portners. Slovenion Smoll
Hydropower Associotion (SSHA}, Lithuonion
Hydropower Associotion (LHA}, Associotion for
kenewoble Energy (AFEk, toly}, Swedish kenewoble
Energies Associotion (SEkO}, novotion-Energy-
Development (ED, Fronce}, nstitute for Woter
Monogement, Hydrology ond Hydroulic Engineering
(WHW, Austrio}, EC 8oltic kenewoble Energy Centre
(EC 8kEC, Folond} ond French Environment ond
Energy Monogement Agency (ADEME, Fronce}.
This brochure hos been prepored by the SHF Folicy
Fromework ond Morket Development Group of the
SHEkFA pro[ect, coordinoted by ESHA, together with
Swedish kenewoble Energy Associotion (SEkO} ond
the Lithuonion Hydropower Associotion (LHA}.
For further informotion pleose contoct.
ESHA Europeon Smoll Hydropower Associotion
kenewoble Energy House
kue d'Arlon 3-5, 1040 8russels - 8elgium
Telephone. 32 2 54.1.45 Fox . 32 2 54.1.47
E-moil Secretoriot. info@esho.be
INTRODUCTION 2
1. STATE OF THE ART 4
2. SHP POTENTIAL IN THE EU 5
3. EU DIRECTIVES AND THEIR IMPACT ON SHP 8
3.1 Directive 2001/77/EC 8
3.2 Directive 2000/60/EC 8
3.3 Proposed Directive: EU Energy and Climate Change Package 2020 9
4. SUPPORT SYSTEMS 10
5 SHP GENERAL POLICY FRAMEWORK 12
5.1 Barriers Related to Hydropower Development 12
5.1.1 Administrative Barriers 12
5.1.2 Environmental Barriers 13
5.2 Possible strategies for improvement 14
6. ECONOMICS 15
7. SHP AND THE ENVIRONMENT 18
8. SHP TECHNOLOGY 19
9. SHP MARKET FOR MANUFACTURERS 21
10. CONSTRAINTS 23
11. CONCLUSIONS AND RECOMMENDATIONS 24
12. REFERENCES 28
13. ACRONYMS 28
Contents
2
The situation of Small Hydropower (SHP) in
the EU has changed. The enlargement of the
EU along with increasing interest in renewable
energies has led to a new and growing focus
on SHP. As a result, more complex questions
have arisen that require increased knowledge
in order to be resolved.
This study, which is part of the SHERPA-project
(Small Hydropower Energy Efficiency Cam-
paign Action), aims to provide a better under-
standing of SHP in the EU. It is intended for de-
cision makers and politicians at EU, national,
regional as well as local level in order to facili-
tate the achievement of the various targets set
out in EU legislation (RES White Paper targets
and the RES-E Directive) but may also be of
general interest. On the basis of the data col-
lection and analysis, new initiatives at EU level
will be developed by the European Small Hy-
dropower Association (ESHA) in close collabo-
ration with the EU Commission. The definition
of SHP used by the European Commission, i.e.
SHP plants up to 10 MW, has also been em-
ployed in this study.
The following issues have been dealt with: (i)
Current Status and potential of SHP technol-
ogy within the 27 EU member states (EU-27)
and recent technological and market develop-
ment of small hydropower and (ii) review of
policy framework conditions for SHP within the
EU-27 and Candidate Countries (Croatia, the
former Yugoslav Republic of Macedonia and
Turkey). An overview of current policy initia-
tives within the European Union has been pre-
pared, taking all levels of decision making (EU,
national, regional and local) into account.
Since the start of the project in 2006 Bulgaria
and Romania have joined the EU, which means
that EU-25 became EU-27. For comparison
with previous reports an additional division
into EU-15 and EU-12 has sometimes been
made. In many cases the report also includes
Candidate countries (CC). Finally, some com-
parison has been made with Norway, Switzer-
land, Bosnia & Herzegovina and Montenegro.
Introduction
This study develops six main subject-areas
pertaining to the possible exploitation of SHP
energy in Europe.
1. Gathering data on the actual state-of-the-
art of SHP development in most European
countries.
2. Assessing the potential for future SHP de-
velopment, both in terms of upgrading exist-
ing plants and building at new sites.
3. Analysing the economics of SHP sources in
order to understand how competitive SHP is
today with respect to the other principal elec-
tricity generation technologies.
4. Analysing the policy framework in each
country, with emphasis on the constraints that
are hindering the development of SHP plants.
5. Analysing the situation and competitive-
ness of the EU manufacturing industry in the
SHP sector.
6. Providing some concrete recommendations
for promoting SHP development in the short
and medium term, as well as suggesting some
good policies and best practices to achieve
this goal.
REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27
3
The SHERPA project and the work on this re-
port started in September 2006 and finished
in September 2008. The project was financed
by the EU Commission and by the participants.
Intelligent Energy Europe (IEE) commissioned this
project to the European Small Hydropower As-
sociation (ESHA). ESHA then co-ordinated the
project, which was subsequently divided into dif-
ferent sub-projects, of which the present one was
performed by the Lithuanian Hydropower Asso-
ciation (LHA) and the Swedish Renewable Energy
Association (SERO).
This study is based on a questionnaire that was
sent to main SHP actors in different EU coun-
tries as well as Norway, Switzerland, Bosnia &
Herzegovina and Montenegro. Information
from official databases and existing studies
was used when no other data were available.
The most comprehensive information was gath-
ered through SHP national associations, as well
as by individual contacts with SHP consultants,
project developers and producers. Information
from the questionnaires, which mainly related to
SHP potential and historic statistics (number of
SHP plants, installed capacity and electricity gen-
eration) was checked for consistency with other
relevant data sources from the hydropower and
renewable sectors, notably: Eurostat, the Inter-
national Energy Agency (IEA), the International
Journal on Hydropower & Dams, the World En-
ergy Council etc.
The questionnaire comprised a total of 69 ques-
tions grouped into 6 main sections (Fig. 1).
Figure 1. Outline of the questionnaire
4
1 State of the Art
Figure 2. The proportion of RES-E in the EU
The era of hydropower by means of turbines
started in France in 1832. However, the real de-
velopment of hydropower began around 1900
with the invention of three-phase electricity, al-
though from the 1950s until about 1980, SHP
had a negative development in some EU mem-
ber states (MS). Many SHP plants were shut
down because of age and competition from
newer, larger plants. When some EU countries
decided to reduce their dependence on import-
ed energy, SHP was given economic support
and the number of SHP plants gradually started
to increase again.
In 2006 there were nearly 21,000 SHP plants
(SHPPs) in the EU-27 and if CCs as well as Nor-
way, Switzerland and other countries are includ-
ed, the number of SHPPs increases to a total of
nearly 23,000 (Table 4). The installed capacity
of EU-27 was more than 13,000 MW, or more
than 15,000 MW if CCs, Norway, Switzerland
and other countries are included. In 2006 the
total electricity generation from SHP in EU-27
was more than 41,000 GWh and if including
CCs, Norway, Switzerland and other countries-
nearly 52,000 GWh.
This means that in 2006 about 1.2 % of the total
electricity generated as well as 9 % of the RES-E
in EU-27 came from SHP (Fig. 2). On average,
a SHPP in the EU-27 had a capacity of 0.6 MW
and produced about 2.0 GWh in 2006.
A large proportion of this capacity (nearly
12,000 MW or nearly 38,000 GWh annually)
comes from EU-15. More than 90 % is con-
centrated in the following 6 countries; Austria,
France, Germany, Italy, Spain and Sweden. In
addition, Switzerland and Norway have a high
SHP capacity, while Bulgaria, the Czech Re-
public, Poland and Romania account for nearly
80 % of the total capacity of EU-12.
Many of the SHPPs in the EU are old. Only 45 %
are less than 60 years old and only 32 % are less
40 years old. The eastern European countries
have the highest share of young plants (about
38 % are less then 20 years old). The two non-
EU western countries (Norway and Switzerland)
are in an intermediate position, with a slightly
lower percentage of young plants (34 % less
than 20 years old) but the highest percentage
of plants less than 40 years old (about 59 %).
REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27
5
2 SHP Potential in the EU
In this chapter Potential is defined as addition-
al or remaining economically feasible potential
(Potential of upgrading and of new SHP plants)
with environmental constraints taken into ac-
count environmental constraints. The Total po-
tential includes existing plants and Potential.
The SHP potential in the EU from upgrading and
building of new SHPPs is considerable, 10,000
MW or 38,000 GWh annually. The Total poten-
tial of EU-27 is therefore 23,000 MW or nearly
79,000 GWh annually (Figures 3, 4 and Table
2). It is important to note that the Potential takes
economic and environmental constraints into
consideration. It is therefore very realistic and
can be exploited. The largest potential among
the MS is not surprisingly in countries such as
Austria, France, Italy, Poland and Romania that
already have high electricity generation from
SHPs. It is also worth noting that Norway, Swit-
zerland and Turkey have large potentials. Scot-
land and Norway have made great efforts to
evaluate their potential. In Norway, the Norwe-
gian Water Resources and Energy Directorate
(NVE) has made a detailed study of the poten-
tial for SHP. The study that used GIS to identify
Figure 3. Capacity 2006 and potentials in EU-27
Figure 4. Electricity generation 2006 and potentials in the EU-27
6
the economic potential indicated an increase
from the previously assumed 10,000 GWh to
20,000 GWh annually, while still taking account
of economic and environmental constraints.
However, developing potential into real elec-
tricity generation takes time. According to this
study, the realistic SHP forecast for EU-15 in
2010 is about 13,400 MW with electricity gen-
eration of nearly 47,400 GWh annually. This
is less than the 14,000 MW and 55,000 GWh
estimated for 2010 by the EU Commission in
the White Paper. Electricity generation can of
course vary from year to year due to hydrologi-
cal conditions (precipitation). The reduction in
capacity and electricity generation in 2003 (Fig-
ures 5 and 6) mainly refers to France and to
Austria.
1
.
1
There seems to be some discrepancy in the input to Eurostat.
Figure 5. SHP Capacity 2000-2006 and forecast to 2010 for SHP in EU-15,
EU-12 and EU-27
Figure 6. Electricity generation 2000-2006 and forecast to 2010 for SHP in
EU-15, EU-12 and EU-27
REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27
7
According to the present study, the 2010 esti-
mations for SHP stated in the White Paper will
not be reached for EU-15, but are likely to be
achieved if EU-12 is included. In order to reach
the White Paper target better conditions such
as less administrative barriers for SHP are re-
quired.
It is difficult to make forecast after 2010 due
to the many uncertainties. However by making
some assumptions it is possible to set up sce-
narios. In this study two scenarios have been
developed:
Scenario existing conditions. The develop-
ment of SHP will expand more slowly after year
2010 due to that the most suitable places for
SHPP already have been used. In this study it
has been estimated that 1/3 of the potential
(i.e. potential still not developed in year 2006)
in EU-27 can be developed with existing con-
ditions until year 2020. Which means a total
capacity for SHP in the EU-27 of more than
16000 MW.
Scenario improved conditions. The yearly
growth is quite the same after year 2010 until
year 2020. In this study it has been estimated
that 2/3 (i.e. potential still not developed in year
2006) of the potential in EU-27 can be devel-
oped with existing conditions until year 2020.
Which means a total capacity for SHP in the EU-
27 of nearly 20,000 MW.
The differences between the two scenarios are
3,300 MW or about 13,000 GWh annually.
(Fig. 7).
1. Scenario existing conditions, assuming
the economical situation, license proce-
dure etc is as today.
2. Scenario improved conditions, optimal
conditions for developing SHP (barriers are
not an obstacle, the support system are
well designed for SHP etc) which means
that the growth is depending on how fast
the manufacturing industry can deliver
equipment for new SHPs.
Figure 7. SHP Capacity 2000-2006 and forecast to 2010 for SHP in EU-27.
Data for this report have been collected from different sources and in some cases there are significant dif-
ferences. Capacity and production data have to a great extent been derived from Eurostat, but they appear
to contain some discrepancies. For instance there is a reduction in capacity in the year 2003, while in 2004
there is a return to the 2002 level. It is unlikely that a capacity of almost 500 MW would have been shut down
for one year and taken into operation again the year after. In the chapter Conclusions and Recommendations
we suggest how more accurate data can be obtained from MS.
8
3.1 Directive 2001/77/EC
The main purpose of Directive 2001/77/EC is
to promote an increase in the contribution of
renewable energy sources for electricity gener-
ation in the internal electricity market. Renew-
able energy sources are defined as renewable,
non-fossil and non nuclear sources such as
electricity generation from wind, solar, geother-
mal, wave, tidal, hydro, biomass, landfill gas,
sewage treatment plant gas and biogas.
Article 6 presents guidelines to simplify the
administrative procedures for promoting re-
newable energy sources in the EU. The MS or
competent bodies appointed by the MS should
evaluate the existing legislative and regulatory
framework pertaining to authorisation proce-
dures in terms of:
reducing the regulatory and non-regulatory
barriers to the increase in electricity genera-
tion from renewable energy sources
streamlining and accelerating procedures at
the appropriate administrative levels and
ensuring that the rules are objective, trans-
parent and non-discriminatory, and fully take
into account the particularities of the various
renewable energy source technologies.
RES-E targets for each country to be achieved by
the year 2010 as well as their status in 2004 and
in some cases 2005 can be found in Figure 8. As
can be seen, countries such as Austria, France
and Italy have developed slowly and will have
difficulties reaching their targets, despite their
great SHP potential.
3.2 Directive 2000/60/EC
By means of this Water Framework Directive
(WFD), the EU provides for the management of
inland surface waters, groundwater, transitional
waters and coastal waters in order to prevent
and reduce pollution, promote sustainable wa-
ter use, protect the aquatic environment, im-
3 EU Directives and their Impact
on SHP
Figure 8. RES-E share in gross electricity consumption. Observed data in 2006 from
Eurostat
REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27
9
prove the status of aquatic ecosystems and miti-
gate the effects of floods and droughts.
The fear that SHP plant owners and investors
have about this framework is that the residual
flow may increase and thus investment costs
may also increase. Several MS associations have
reported that they can already feel the effect
of the WFD. In some countries environmental
groups have a very negative attitude towards
hydropower. This is mainly due to the fact that
they are unfamiliar with the new technologies
that benefit the environment and that large and
small-scale hydropower plants are often put in
the same box.
Although the construction of new plants is not
prevented by the WFD, all new licenses and
new or amended restrictions on existing plants
are dealt with by means of the water regulation
laws. The main impacts are likely to be new or
higher residual flows and stricter regulations on
the use of reservoirs.
However, this framework is a great opportunity
for environmentalists and hydro engineers to
work together to create sustainable solutions
where the environment is protected at the same
time as the country produces clean renewable
energy.
3.3. Proposed Directive: EU Energy
and Climate Change Package 2020
This is a proposed directive from the EU Com-
mission on the promotion of the use of renew-
able energy sources. The proposal encom-
passes a legally binding target for the entire
EU by 2020, namely that 20 % of gross energy
consumption should be covered by renewable
energy, compared to 8.5 % of gross energy con-
sumption in 2005. The package has an indica-
tive target for the transport sector, 10 % of the
fuel used should be biofuels.
The package also has binding targets aimed at
reducing greenhouse gases by at least 20 % by
the year 2020. This target is likely to change to
30 % as soon as a new global climate change
agreement has been reached.
Not only is the 20 % target binding for the EU,
but the proposal also contains binding targets
for each of the Member States. There are also
interim targets for each country every second
year from 2011 to 2018, which represent a per-
centage share of their targets.
Member States will have to adopt a National
Action Plan that sets targets for the proportion
of energy from renewable sources in transport,
electricity, heating and cooling in 2020 and
adequate measures must be taken to achieve
these targets. The National Action Plans for
each of the Member States shall be presented
to the EU Commission by 31
st
March 2010.
The proposal states that MS shall furnish a
Guarantees of Origin (GoO), certifying that
electricity is generated from renewable sources.
When generated in combined heat and power
plants (CHPP) the capacity shall be at least 5
MWth. The guarantees of origin shall be issued
electronically in a standard unit of 1 MWh.
This new political framework will boost the pro-
duction of electricity from RES and therefore SHP.
According to the proposal, Member States shall
submit a report to the Commission on progress
in the promotion and use of energy from re-
newable sources by 30
th
June 2011, and every
second year thereafter. In the first report, Mem-
ber States shall outline whether they intend to:
The fact that SHP is a renewable energy source
that prevents pollution and deployment of fos-
sil fuels in the production of electricity, demon-
strates that by definition SHP can be considered
clean and sustainable, placing the sector - to-
gether with other RES - at the core of current
economic and political developments in the EU.
Some countries have already started designing
their national plans and in many EU countries
hydropower is being reconsidered a suitable
RES source for achieving the national targets
set by the EU.
It is of significant importance that the contradic-
tions between Directive 2001/77/EC and Direc-
tive 2000/60/EC will be made obvious to all pol-
icy makers at national and regional level, so that
they can adopt the right approach to overcom-
ing possible conflicts. Commission is advised also
make recommendations how to avoid conflicts.
Establish a single administrative body re-
sponsible for processing authorization, cer-
tification and licensing applications for re-
newable energy installations
Provide for automatic approval of plan-
ning and permit applications for renewable
energy installations where the authorizing
body has not responded within the set time
limits
Indicate geographical locations suitable
for exploitation of energy from renewable
sources in land-use planning.
10
As the choice of promotion instruments has not
been prescribed or harmonised within the EU,
each country has adopted its own unique set.
The main drivers for the specific choices are of-
ten the national goals in relation to renewable
energy.
The survey reveals that the most widely adopted
support mechanism within the analysed coun-
tries is feed-in tariffs, sometimes accompanied
by a variety of incentives. Some MS prefer the
Quota obligation system, which is usually based
on Tradable Green Certificates (TGC).
Feed-in tariffs are generation based, price
driven incentives, usually in the form of either
a fixed amount of money paid for RES-E gen-
eration, or an additional premium on top of the
electricity market price paid to every producer.
It should be noted that fixed feed-in tariffs are
currently used in 18 of the EU-27 MS and Quota
obligations in 7 (Belgium, Italy, Latvia, Poland,
Romania, Sweden and the UK) (Fig. 9).
The biggest advantage of the feed-in system is
the long-term certainty about receiving support,
which considerably lowers investment risks. This
fixed and relatively stable system is much pre-
ferred by SHP electricity producers in EU-27 and
even in the candidate countries.
Investment grants were ranked second, with a
slightly higher score than that attributed to the
quota obligation tariff system based on TGC.
Tax incentives were only ranked fourth, while
the lowest preference was given to the tender
system. It is very surprising that SHP producers
are reluctant to use the tendering system and
is contrary to the findings of the Re-Xpansion
Project, which considered support instruments
for all RES through consultation with stakehold-
ers via a web-based survey (Morthorst et al.
2005).
In a recent web and interview based survey
launched for RES-E producers all over the EU
(EU-15 and EU-12 ) by the OPTRES project (Rag-
witz et al., 2007), many stakeholders, especially
from the new MS where feed-in tariffs are the
dominant instrument, pointed out that they con-
sidered the introduction of more market based
instruments similar to a quota obligation, pre-
mature. The vast majority of recommendations
from the new MS such as Lithuania and the
Czech Republic suggested that maintaining and
improving the feed-in tariff system and provid-
ing additional investment grants would be best.
Another key element is to provide a long-term
framework in order to attract investment in SHP
projects.
The advantages and disadvantages of different
support systems are summarised in Table 1.
Figure 9 Overview of primary renewable electric-
ity support systems in EU-27 in November 2008.
Source: OPTRES and updated with actual status
4 Support Systems
REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27
11
Table 1. Advantages and disadvantages of different support systems. Source: Council of the European Union
The support for electricity from renewable energy sources Impact Assessment 2005, {COM(2005) 627 final}
Advantages Disadvantages
REFIT
(Feed-in tariffs)
Highly effective.
Highly efficient due to the low risk for investors.
Permits strategic support for technology innova-
tion.
Poor compatibility with the internal market.
Requires regular adjustment.
Premium Highly effective.
Efficient due to the medium risk for investors.
Good compatibility with the internal market.
Risk of over-compensation in the case of
high electricity prices without appropriate
adjustment.
TGCs
(Green certifi-
cates)
Good compatibility with the internal market.
Competition between generators.
Supports the lowest-cost technologies.
Currently less efficient due to higher risks
and administrative costs.
Not very appropriate for developing me-
dium- to long-term technologies.
Tendering Rapid development in the presence of political
will.
Stop-and-go nature leads to instability.
Development is blocked if competition is
too great.
Investment
subsidy
Good complement for some technologies. Inefficient as a main instrument.
Fiscal measures Good secondary instrument. Good results only in countries with high
taxation and for the most competitive
technologies.
Local conditions combined with the goals for each country must be considered when discussing support
systems. Feed-in tariffs is the most common in the EU. It is also preferred by producers, since it results in
a long period with a certain income.
12
5.1.1 Administrative Barriers
The main non-technical problem that constitutes
an obstacle to the development of small hydro-
power is the difficulty in obtaining the necessary
authorisations to build a new site. Apart from the
very long time required to process them, proce-
dures vary strongly from one country to another.
A survey co-ordinated by ESHA and sent to SHP
associations in Europe revealed that the average
length of administrative procedures varies from
12 months in the best-case scenario in Austria
(where few new projects are being developed)
to 12 years in Portugal. In most new EU MS the
average time required to obtain all licences is
considerably shorter than in the old MS. How-
ever, more significant is the fact that in most MS
only a few dozen licenses have been granted in
recent years.
Different types of licences are normally required
for Electricity generation, Impact on water qual-
ity, river flora and fauna, and all environmental
aspects, Construction, Connection to the grid
and Ownership of land or site rights.
5 SHP General Policy Framework
Exploitation of SHP resources is subject to gov-
ernmental regulations and administrative pro-
cedures, which at present, vary from one coun-
try to another despite the fact that MS must
comply with the directive on RES-E in force. In
order to develop a SHP site, a potential hydro-
power producer must fulfil these administrative
procedures, which constitute a kind of barrier
or burden. The barriers that SHP developers
and producers reported to encounter when in-
stalling new SHP capacities can be of an ad-
ministrative, grid, financial, environmental and
social nature. (Fig. 10).
The administrative and regulatory barriers can
be grouped into the following main categories:
Large number of authorities involved (no
onestop shop for SHP developers);
lack of co-ordination between different au-
thorities;
long lead-times and high costs involved in
obtaining permits or licenses;
Insufficient account taken of SHP in spatial
planning.
In most cases the administrative and regulatory
barriers seem more severe compared to the
other types, with the exception of environmental
regulations in some countries. The latter, which
is also a part of administrative procedures, will
be considered later on.
Figure 10. Classification of barriers.
5.1. Barriers Related to Hydropower Development
REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27
13
2
Hagerums Kvarn SHP plant in Sweden. The original SHP plant was shut down in 1996. The new owner wanted to increase
the capacity to 170 kW (an increase of about 40 percent) and a new licence was needed. The procedure took 6 years and cost
45,000 . The main reason was understaffing at the environmental court and that an association opposing the project was
given too many chances to request investigations that proved to be irrelevant. The final permission was granted in 2005.
Ljunga SHP plant in Sweden. The plant is now under construction and will have a capacity of 1,200 kW. It took over 13
years to obtain a license. The final permit was granted/issued in 2006. The site contained a smaller plant that had been
shut down about 40 years ago. The main reasons have been very strong resistance from the regional authority coupled
with a lack of professionalism on the part of the project team.
These issues are normally under the responsi-
bility of different authorities. In this context, the
procedures not only vary from one country to an-
other, but also within a country from one region
to another and even in the same region, from
one project to another.
Co-ordination between different administrative
authorities does not function successfully with
regard to deadlines, reception and treatment of
applications for authorizations. Time limits for
responses from the Administration are usually
not respected. Developers have to undergo suc-
cessive public consultations on the same project.
There are no real fast track procedures, espe-
cially for smaller projects.
These procedures - that are far from being trans-
parent, objective and non discriminatory - are in
some cases supervised by several local admin-
istrations that are very sensitive to pressure and
lobby groups, which multiply the number of inter-
locutors and extend the time required for making
decisions (up to 58 permits from different admin-
istrations are necessary in some Italian locations).
In addition, the project has to be made public so
that people can react. As a result, the process in
some MS can last up to 10 years (for new devel-
opments), which discourages the potential inves-
tor who will switch to another more attractive RES
project or other locations outside the EU.
For the refurbishment and upgrading of plants
the situation is generally easier (but not always
2
)
although various permits are still required.
Sometimes project developers are requested to
conduct an Environmental Impact Assessment
(EIA) of existing infrastructures.
The cost of permits includes hydrological and
environmental assessment, preliminary designs,
permits and approvals for water and land use
as well as construction, interconnection studies,
power purchase agreements (PPA), and varies
from country to country with an average of be-
tween 10,000 to 30,000 per application. This
amount is lost if authorisation is refused.
It seems that MS have not implemented Directive
2001/77/EC to the extent necessary for achieving
SHP targets.
5.1.2 Environmental Barriers
Non-consistent implementation of the WFD can
lead to a significant reduction of SHP produc-
tion combined with higher costs. In some MS
(Germany, Austria, Eastern Baltic States), the
implementation of the WFD is considered the
main barrier to further SHP development. Solu-
tions may be found in a more precise definition
of some of the terms used in the WFD to make
its transposition clear and predictable in terms
of consequences for society. The implementa-
tion of the WFD and the RES-E directive must be
consistent. To ensure better integration between
the different policies, an increase in transparen-
cy in the area of decision-making is necessary.
Significant progress in policy integration can be
made by enhancing the recognition of differ-
ent interests, fostering co-operation between
the various authorities and stakeholders, and
promoting more integrated development strat-
egies. Integration of water and energy policies
is beneficial since it will create synergies and
avoid potential inconsistencies as well as miti-
gating possible conflicts between water users.
Moreover, some countries even have forbidden
rivers, where no hydropower development can
be carried out or even investigated. Hydropower
is very site specific because rivers are individual
and, as such, any general approach would be
inappropriate. Here, there is a need to re-dis-
cuss the classification of sites where hydropower
14
is forbidden and the criteria used for such clas-
sification in a transparent process involving all
stakeholders.
The small hydropower situation clearly high-
lights how a good support system in terms of
economic revenues or the setting of ambitious
targets is not sufficient to overcome the ad-
ministrative and environmental barriers that
prevent small hydro power from developing its
untapped potential. Without authorizations no
development is possible and therefore support
schemes are useless, not only for promoting
SHP but also for achieving the 2010 objectives.
It is not easy to state the approval rates for SHP
projects in Europe, and the situation differs a
great deal from one country to another. The
reason for the difficulty is a lack of transparen-
cy and information, as most public authorities
rarely publish this kind of information; the ma-
jority of installations have to wait for a very long
period before obtaining a response (as the au-
thorisation has neither been refused nor grant-
ed it is difficult to establish a rejection rate).
5.2 Possible strategies for
improvement
There is a need to investigate the possibili-
ties for a simplification and harmonisation of
administrative procedures: Set up a single re-
ception point for licenses applications, ensure
co-ordination between the different administra-
tive bodies involved and establish reasonable
deadlines. Establish a fast-track planning
procedure for small hydropower and for refur-
bishment - nowadays the same procedures are
normally applied for a 50 MW and for a 100 kW
plant. Sometimes it is even more difficult to re-
furbish an old mill than to build a new 30 MW
gas power plant. Where applicable, create the
possibility of establishing mechanisms under
which the absence of a decision by the compe-
tent bodies on an application for authorisation
within a certain period of time automatically
results in an authorisation. Towards the end of
the concession period many producers will not
invest in refurbishment, since they do not know
if the concession will be renewed in the future.
Faster licensing procedure:
prepare best practice guidelines for adminis-
trative procedures,
establish a fast-track planning procedure
for SHP developments, especially for smaller
projects and for refurbishment and upgrad-
ing and
increasing the competence and capacity of
the licensing authorities.
Public information and monitoring:
requesting the MS and regional authorities
are to publish data and information about
SHP targets, approval rates and duration of
the licensing procedure,
they should periodically monitor the ad-
ministrative procedures in order to prevent
unjustified requirements and prepare best
practice guidelines for administrative proce-
dures,
identify suitable sites at national, regional
and local level for establishing new capacity
for the generation of SHP electricity and for
refurbishment and upgrading.
Where a river basin plan has been approved:
the local authorities should not be permit-
ted to introduce other environmental restric-
tions (e.g. a higher reserved flow) without
the support of scientific research or a study,
Finally is it important to mention that if the ad-
ministrative/concession delays and barriers are
not overcome no support scheme will improve
the expansion of SHP even if the incentives in-
crease in monetary terms.
allow the possibility of increasing the in-
stalled capacity of existing power stations
by 20 % without the need to reconsider the
licenses
allow the possibility of exploiting the hydrau-
lic power on existing weirs without the need
for a formal procedure. Brief information to
the authorities and if the latter do not react
within a certain time approval is deemed to
have been granted and
at the end of the concession period the previ-
ous owner of the concession should be giv-
en special rights of preference to promote
upgrading and refurbishment.
REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27
15
Compared to other RES-E, SHP is competitive,
assuming equal conditions. However, compared
to large-scale hydropower and other forms of
large-scale conventional electricity production,
SHP and other RES-E technologies need sup-
ports in order to compete on a deregulated
power market. If subsidies for conventional elec-
trical production were eliminated and the sector
obliged to cover all its external costs, SHP would
most likely be very competitive compared to all
other technologies. For instance according to
the UNEP-report Reforming Energy Subsidies,
there are considerable subsidies available for
fossil energy.
When making an investment in SHP there are at
least two items that are of major importance; the
size of investment and the risk. The economics of
running a SHP plant can be roughly divided into
revenues and costs (Table 2).
The revenues from generated electricity vary
between the markets in the EU. On a deregulat-
ed market the price differs a great deal between
years (Fig. 11). As revenues are very dependent
on the agreements with the purchaser they do
not only vary between countries, but also from
one plant to another. As the support systems in
the EU vary greatly from one country to another,
the conditions also differ to a large degree be-
tween countries. Grid compensation exists in
some countries such as Sweden, where the SHP
plant owner participates by generating power in
such a way that it stabilizes the grid and mini-
mizes transport losses. Labeled RES-E environ-
mental value has recently become tradable in
some countries such as Sweden, and means that
suppliers can use the extra value from the SHP
plants from which they buy their electricity.
Capital cost can be divided into Licensing proc-
ess, Building process and Long-term financing.
The latter replaces the other two when the plant
is in operation. The capital required for SHPPs
depends on the size, head, flow rate, geographi-
cal location, equipment, (turbines, generators
etc.) civil engineering work and flow variations
throughout the year. Making use of existing
weirs, dams, storage reservoirs and ponds can
significantly reduce both the environmental im-
pact and costs. Sites with low heads and high
flows require more capital investment because
greater civil engineer works and bigger turbine
machinery will be needed to handle the larger
flow of water. If, however, the system can have
dual purpose - electricity generation as well as
flood control, electricity generation and irriga-
tion and electricity generation and drinking wa-
ter supply, the payback period can be reduced.
Operation and maintenance costs. The op-
6. Economics
Revenues Volatility Uncertainty
Sales of generated
power
Medium to high. High but also de-
pendent on agree-
ments.
High varies a great deal in dere-
gulated markets, which results in
uncertainty.
Support system Medium in most EU
countries.
Low to medium Low to medium depending on
the system and political decisions.
Grid compensation Low if available. Low Low
Fee for Eco-labeling
electricial production
Low if available. Low Low
Costs Volatility Uncertainty
Capital costs High Medium High
Operation and Main-
tenance
Medium Low to medium Low to medium
Administrative costs Low Low Low
Table 2. Examples on how revenues and costs combined with volatility affect the uncertainty and the
willingness to invest in SHP. The higher the uncertainty and risk the less interest in investing
16
eration cost can vary a great deal between
countries due to the fact that there are different
types and sizes of fees. Special attention must be
paid to the cost of using water (water charges
and/or concession fees). Operation and main-
tenance costs vary in line with the quality and
design of a plant and the availability of special-
ist maintenance resources in the different MS.
The administrative costs include insurances,
tax, accountancy etc.
At European level, the latest economic indica-
tors (Table 3) show an electricity generation
cost for small hydropower in average about
1.5-2.5 cents/kWh, typical turnkey investment
costs in average about 2,000-5,000 /kW, a
typical payback time on investments of between
Figure 11. The spot prices for the largest exchange electricity markets in
Europe since 2003, Nord Pool (Nordic countries), EEX (Germany) and PWX
(France). Source: Nordpool Monthly report August 2007.
Country
Range of invest-
ment costs
Average SHP
production
costs

Euro/kW
Eurocent/
kWh
Austria AT 3000 - 5500 8 - 30.9
Belgium BE 1000 - 8000 6-8
Denmark DK n/a n/a
Finland FI 1750 - 10000 3 - 3.5
France FR 1850 - 4000 0.5 - 1.8
Germany DE 5000 - 12000 0.7 - 1.1
Greece EL 1500 70
Ireland IE 1600 - 5000 0.87 - 6.34
Italy IT 2150 - 4500 10.5 - 17.4
Luxemburg LU 6000 - 3000 10 - 15
Netherlands NL 3000 - 6000 10 - 15
Portugal PT 1800 - 2500 0.56 - 0.6
Spain ES 1000 - 1500 3.5 - 7
Sweden SE 2150 - 3500 2.0 - 2.5
United King-
dom
UK 2200 - 6000 5.0 - 15.0
Bulgaria BG 1000 - 1500 0.4 - 0.8
Cyprus CY n/ap n/ap
Czech Republic CZ 1000 - 6000 1
Estonia EE 1000 - 4000 2 - 5
Hungary HU n/a 3.8 - 4.6
Latvia LV 1800 - 2000 1
Lithuania LT 2200 - 2500 2.5 - 3
Malta MT n/ap n/ap
Poland PL 2200 - 2500 3 - 4
Romania RO 1250 4
Slovakia SK 2000 0.6 - 0.8
Slovenia SI 1500 - 3000 n/a
Croatia HR 1300 - 2500 1.5
Macedonia MK 1200 - 3000 n/a
Turkey TR 500 - 1100 0.2
Norway NO 1000 - 1500 1.5 - 2
Switzerland CH 4000 - 10000 3 - 15
Bosnia & Her-
zegovina
BA 1300 - 1600 1.5
Montenegro ME n/a n/a
Table 3. Investment and production costs. Some countries has very high average SHP production costs
which may be explained by that they have included the capital cost.
REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27
17
10 and 25 years (based on a 5% discount rate
over 20 years).
As can be seen in Figure 12, the revenue (in-
come from selling electricity plus support system
minus production costs) varies between the MS.
A large part of production costs consists of the
capital cost (interest and depreciation) during
the period of depreciation, which is normally
around 25 years for SHP. When referring to pro-
duction costs, it is important to know whether or
not capital costs are included. In both cases SHP
is competitive when compared to other RES-E
technologies of a similar capacity.
Due to scale effects, SHP is not normally compet-
itive compared to large scale electricity genera-
tion plants unless external costs have been in-
ternalised. Our own findings and those of other
studies (Optres 2007) demonstrate that SHP is
very competitive compared to other RES-E. (Fig.
13). In Figure 13 large hydropower has near-
ly the same costs as SHP, but according to this
study the Long Range Marginal Cost (LRMC) for
SHP is higher than for large scale Hydropower in
almost all cases. Also worth mentioning is that
biomass and biogas are often paid for handling
their fuels.
Current and Future Operational and
Development Costs. SHP operational costs will
probably not increase in the future. The amount
of man-hours will decrease with technical devel-
opment. The development of manufacturing proc-
esses will also reduce costs, although higher steel
prices and labour costs will tend to have the oppo-
site effect. Environmental restrictions can increase
the cost of electricity generation. The specific capi-
tal cost of small hydropower installed capacity de-
pends on the size and head of the plant; the cost
per installed kW is highest where heads are lowest,
but it decreases rapidly as heads increase. This ef-
fect is reduced at heads of around 25 metres and
eventually, the specific cost stabilises. Two potential
areas for improvement therefore exist; the first con-
cerning cost reductions for low heads, the second
for developments supplying less than 250 kW. As a
large proportion of the potential in Europe involves
low-head plants, the benefits of concentrating de-
velopment efforts in this area, and particularly for
low capacity plants, are obvious.
Capital costs are a crucial factor when consider-
ing the costs and uncertainties of SHP. Govern-
ment guarantees for investments, investment
grants or other ways of decreasing the financial
risks involved in SHP projects would be desirable.
Figure 12. Compared to other RES-E technolo-
gies, electricity generation from SHP is com-
petitive for comparable investments. Source:
OPTRES 2007.
Figure 13. Compared to other RES-E technolo-
gies, electricity generation from SHP is com-
petitive for comparable investments. Source:
OPTRES 2007.
18
7 SHP and the Environment
The SHP relation to the environment is twofold.
On the one hand there are many positive ef-
fects resulting from SHP operations such as the
replacement of fossil electricity generation, which
produces harmful emissions, and the reduced
risk of river flooding. In some cases SHP can
also increase biological diversity. SHP produc-
tion in EU-27 amounts to 41,400 GWh (2006).
It replaces fossil production and protects nature
and society from many harmful emissions such
as greenhouse gases and sulphur dioxide, which
have the worst environmental impact. SHP pro-
duction reduces greenhouse gases such as CO2
by 29,000,000 tons annually (41,400 GWh/
year x 700 tonnes/GWh) and sulphur dioxide by
108,000 tons annually (41,400 GWh/year x
2.6 tonnes/GWh).
A positive feature of hydropower is its ranking in
Life Cycle analyses (LCA) where it has the highest
ranking of all electricity production technologies.
On the other hand, environmental groups that
oppose SHP point to its negative impact on the
local environment. Most of these arguments
are, however, based more on theories than on
scientific research. Some arguments are relat-
ed to specific cases and may be relevant, but
they do not generally apply to SHP. At times the
criticism seems to be emotionally charged. New
technology and improved SHP operating meth-
ods show that it is possible to reduce the local
environmental impact. (Fig. 14).
Therefore, the positive impact of SHP on the en-
vironment outweighs the negative effects. Fur-
ther information can be found in the SHERPA
environmental report.
A study The application of the ISO 14001 En-
vironmental Management System to Small Hy-
dropower Plants, which is a part of the SHERPA
project, discussed how ISO 14001 can be used
among other things as a tool when working to
reduce the impact of SHP on the environment.
In the study the negative impact of SHP on the
environment is also dealt with.
The ISO 14000 environmental management
standards exist to help organisations minimise
the negative affect of SHP operations on the en-
vironment and to comply with applicable laws
and regulations.
An individual example in the spirit of ISO 14001
is that of a small hydropower plant in Sweden,
called the Forsa plant in Rolfsan, situated in the
southwest of the country. A project was launched
to retrieve migratory fish in the Rolfsans water sys-
tem. For further information see www.rolfsan.se.
Compared to conventional generation, SHP is bet-
ter for the environment. More research is needed
if and how SHP affects the environment. There are
interesting projects indicating that SHP operators,
environmentalist and researchers can co-operate
to find broad solutions acceptable to all parties.
Figure 14. Environmental Integration Resistance to SHP development EU-27 & CC.
REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27
19
During recent years hydropower development
has focused on the adoption of new technology
from other sectors. Only a few decades ago, a
person responsible for operating a SHP plant
had to live nearby in order to control the op-
eration. Such a system would be impossible to-
day with the current ratio between income from
electricity generation and the cost of labour. The
scene has dramatically changed with the devel-
opment of electronics. The following describes
some areas where this development has made
SHP operation more efficient.
Automation
Thanks to modern electronics SHP plants nowa-
days operate automatically and new IT technol-
ogy has made it possible to introduce remote
monitoring and control. This constitutes a big
step forward and results in less visits to a plant,
more efficient regulation, safer operation and
reduced operating costs. This development is
still in progress.
Frequency conversion
Many SHP turbines are forced to run at a speed
for which they were not designed, due to the
fact that it is too expensive to design and build
a turbine that exactly suits the conditions at a
specific site. Although mechanical gears have
been used in order to overcome this problem,
correct frequency is still not achieved. Electronic
frequency converters have been too expensive,
but technical development and mass produc-
tion has reduced the price to a level where they
are economically viable for SHP use.
Running a turbine at the correct speed can in
many cases improve turbine efficiency by over
10 percent.
Permanent Magneto Generators
There are many advantages in using perma-
nent magneto generators, but up to now they
have normally been too expensive for SHP to
compete with standard generators. Develop-
ment has now led to price reductions and these
generators are becoming economically interest-
ing for installation in new SHP plants.

Efficient Low Head Turbines
Up to a few years ago turbine development
concentrated more on medium and high heads
than low heads, as it is more economical to
use higher heads. In Europe and the rest of the
world there are many abandoned power plants
and numerous of millponds that have not been
used since the milling era. These sites are nor-
mally low head, and putting them back into op-
eration would enable Europe to make a good
contribution to clean energy. Low head turbine
technology has recently started in France, Ger-
many and Switzerland.
Fish Friendly Turbines
The growing interest in fishing migrating fish
and the fact that the population of such fish is
decreasing has led to a requirement to improve
fish passage at SHP plants. Many turbine manu-
facturers and research institutes are engaged in
on-going research how to design turbines that
enable fish to pass through.
New Material
This is an area with many possibilities. Steel al-
loys more resistant to cavitations in turbines and
their development is in progress. Finding new
applications for fibreglass and special plastics is
another ongoing development, while alumini-
um is replacing steel in water structures such
8 SHP Technology
20
as trash racks and stop logs in spillways. Alu-
minium is not as corrosive as steel, which re-
duces maintenance costs and the time to stop
operations during maintenance. An aluminium
trash rack is also easier to clean. The fisher-
ies requirement for a shorter distance between
the bars in SHP trash racks can result in loss
of head. Aluminium bars can be manufactured
with streamlined profiles to reduce head losses.
Aluminium stop logs are almost maintenance
free and easier to handle as they weigh far less
than traditional wooden stop logs.
Environmental Requirements
The increased environmental requirements on
SHP plants have led to technical development
to adapt the plants to these regulations. Reduc-
ing amplitudes in dams is one requirement that
has been fulfilled by means of automatic water
level regulation to keep the amplitude within
acceptable levels.
Increasing the passage of migratory fish at
power plants is not a new issue, has been an
issue for more than 50 years. However, few fish
pass designs work well in practice, thus a great
deal of research remains in order to develop
more efficient fish passes specifically adapted
to the migrating fish in the river in question, as
well as to develop methods how to operate SHP
plants during periods of fish migration.
Turbine Development
Although water turbine technology is consid-
ered to be a mature technology, there is still
interesting development taking place to im-
prove efficiency and dynamic characteristics.
During the last two decades the top efficiency
of small turbines has increased from around 88
to 93 percent and the efficiency curve has been
considerably improved. New research on and
development of special turbines for very low
heads has become an interesting area.
The development of SHP technology is far from
complete and new techniques not only bring
down the cost but also emphasise environmen-
tal issues. Some areas that deserve mention are
the development of automation, more environ-
mental friendly solutions and more efficient tur-
bines.
REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27
21
In EU-15 there are more than 40 manufacturers
of small water turbines. Not surprisingly most of
them are located in countries with highly devel-
oped SHP such as Germany, France, Spain, Aus-
tria and Italy and they offer a high technological
level. During recent years many larger turbine
manufacturers have incorporated smaller man-
ufacturers, but this does not seem to have led to
any reduction in manufacturing capacity. Some
manufacturers have efficient development de-
partments to improve their products, whereas
other seem to rely on proven technology. A sur-
vey of Eastern Europe revealed that some 24
small-scale water turbine manufacturers exist in
EU-12 and CC. The Czech Republic and Slov-
enia have the largest turbine manufacturing
industry, while Hungary, Poland, Croatia and
Romania have some limited turbine manufac-
turing capacity. Internationally recognized man-
ufacturers exist in all of the above mentioned
countries. No SHP turbine industry was report-
ed in Denmark, Cyprus Greece, Netherlands,
Estonia, Macedonia, Montenegro and Slovakia.
(Fig. 15).
The European SHP equipment manufactur-
ers are market leaders. They have successfully
developed hydropower technology and they
have become the main exporters of equipment
worldwide. Indeed, it can be said that Europe
gave light to the world.
Although EU equipment manufacturers are still
world leaders, this position is under threat as
MS have shown little interest in stimulating in-
vestments in new SHP and maintaining exist-
ing plants. This situation is due to decreasing
profits for energy producers in the deregulated
electricity market and the increasing obstacles
created by environmental and legal constraints.
The introduction of support systems has im-
proved this situation. The margins for producers
are still good in a few countries such as Germa-
ny and Spain and consequently the markets for
manufactures in these countries are better, but
have recently been reduced because of the ris-
ing cost of materials, which has not been possi-
ble to transfer to customers. The non-EU market
is still promising and offers good prospects for
9 SHP Market for Manufacturers
Figure 15. Turbine manufactures in EU-27.
22
EU manufacturers, although financing hydro-
projects is a serious problem as is differences in
business culture. Small companies are finding it
difficult to deal with such problems. The world
is strongly in favour of electricity from renew-
able energy sources and the small-scale format
is well suited not only for developing countries.
However, there still appear to be too many ob-
stacles to SHP within the EU giving the Euro-
pean manufacturers difficulties in demonstrate
their competitiveness.
European SHP manufacturers have been in a
negative spiral and many have chosen to leave
the SHP market. This negative spiral has now
stopped and the EU have a better chance to
maintain their industrial position as well as the
competence that has been built up over the
years. Such competence, if lost, is hard to re-
cover because of the special technology related
to hydropower. In some countries, for example
Sweden, an ambitious programme has been
launched to supply competence to the industry.
Turbine manufactures, other SHP equipment
manufacturers and consulting companies will
only stay in business as long as the market pro-
vides them with enough work. It would be wise
for European manufacturers to make arrange-
ments with export offices and export credit in-
stitutions in order to successfully penetrate the
non-EU market. It would also be advisable to
initiate a study on ways to strengthen the man-
ufacturers in the short term so that they will be
well prepared when both the EU and non-EU
markets become stronger.
In 2003 approximately 20,000 persons directly
earned their living from SHP in EU-27. The SHP
industry in the EU was seen as multi-discipli-
nary, highly skilled industry offering range of
products and services for the sector. Following
the EREC (European Renewable Energy Council)
projections for 2020, the number of direct and
indirect jobs could reach 28,000.
In the questionnaires many EU SHP manufac-
tures stated that they are competitive. Most
competition within the EU comes from manufac-
tures in MS. Competition from Asian manufac-
tures has become harder during recent years.
Manufactures of SHP technology in the EU have a
long history. They have developed a highly com-
petitive industry that employees many thousands
of people. In order to maintain the competitive-
ness of the European manufacturing industry it is
of vital importance to have an increasing home
market and to stimulate technical development.
It is an old truth that you are only successful on
an export market if you can qualify your skill on
your home market.
REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27
23
From the data collected it appears that the envi-
ronmental constraints affecting SHP are mainly
related to fishing and water regulations. In al-
most all countries the fishermens lobby has the
power to influence the decisions of the regional
and national authorities. Moreover, in many Eu-
ropean countries, environmental groups are try-
ing to prevent local river areas from being used
by companies for industrial purposes (mainly
electricity generation), claiming it would nega-
tively impact on the river environment (this is
particularly a problem in northern countries).
Another constraint is that in many countries the
long water licensing procedure is a real burden.
This is mainly caused by the complicated and
time-consuming public administration proce-
dures and the number of subjects involved who
can refuse authorisation, which makes it difficult
to set up new SHP plants as well as finding prop-
er financing schemes (this problem is common in
many southern European countries). (Fig. 16).
A report on Realising Hydro Projects by Involving
Stakeholders, carried out by the SHERPA project,
discusses how Social Engineering can be used as
a tool to implement a SHP-project where there
are objections from different groups.
Social Engineering means combining techni-
cal and economic aspects with a great variety
of social aspects. It can be seen as methodical
approach to overcoming opposition to a project.
In the report some tools are described as Con-
ceptual strategies, Operational approaches, In-
volvement, Ownership and identity and present-
ed together with examples of successful use of
the methods.
10 Constraints
Figure 16. Social acceptance - Resistance to SHP development EU-27 & CC.
24
Current policies pertaining to SHP include many
mechanisms that could, if well implemented,
increase SHP production. In the medium term,
these improvements may lead to substantial
growth of this energy source. In the current eco-
nomic framework, which is converging towards a
common European market, the European Com-
mission can play a fundamental role in spurring
economic forces to support Small Hydro Power.
However, these benefits can only be achieved if
there is a synergy at European, national and lo-
cal level. These three levels must work together,
since efforts at only one level are doomed to
failure. The challenge for the European authori-
ties involved in the development of Small Hydro
Power and other renewable energy sources is to
placate the market by reducing uncertainty. Al-
though this is not an easy task, some measures
can be taken to promote the interest of European
citizens in the sustainability of the energy sector.
The present study, SHERPA, will indicate specific
areas and make recommendations as follows.
Gathering data
Statistics for this study were gathered from of-
ficial sources such as Eurostat, reports, from ex-
perts and associations as well as other sources,
e.g. the Internet. The result demonstrates that
there is a great deal of variation between dif-
ferent suppliers and that official sources do not
present an accurate description of SHP.
The Commission should provide MS with more
detailed guidelines for how to report statistics.
The most reliable method is to gather information
on capacity and production from those organi-
sations responsible for measuring the electric-
ity generation to the grid from SHP plants (and
other plants). In most MS this is the responsibility
of grid owners. This is the only reliable way to
an accurate information on capacity and electric-
ity generation. Reliable statistics are important to
precisely follow the development of capacity and
production towards targets, for example the Com-
missions 2020 targets.
Potentials and Forecasts
Very few MS have made serious and deep analy-
sis of different potentials combined with techni-
cal, economic and environmental restrictions.
Potentials are often based on assumptions in-
stead of a scientific approach. The same goes
for forecasts. This means that calculations for fu-
ture contributions from SHP are uncertain, which
makes it difficult to follow the development to-
wards the 2020 targets.
The Commission should issue detailed guidelines
to MS on the calculation of potentials and fore-
casts and require these calculations to be updated
every second year. Norway has demonstrated a
method to calculate potentials using the GIS-sys-
tem. Similar systems should be introduced in all
member countries.
Economics
SHP represents a major investment over an ex-
tremely long production period, normally 30-40
years. Other industrial investments have a pay-
back time of around five years. This means that
the SHP sector has a need for a long-term stable
income. SHP also has a higher cost per produced
kWh than large hydro and other large scale elec-
tricity generation plants, but offers social advan-
tages such as higher rates of employment, reduced
energy losses and stimulation of Small and Medi-
um-sized Enterprises (SMEs) to support the sector.
Building a SHP plant implies heavy investment and
the capital cost is high, until the loans have been
completely amortized within 15-20 years.
The Commission should require MS to introduce
long sighted rules including a support mechanism
for the SHP sector taking into account the capital
cost over a period of 15-20 years. A differentiat-
ed system should be considered. The smaller the
plant, the higher the production cost, but also the
higher the benefit to society. Rules on how to cal-
culate production and investment costs should be
issued by the Commission in order to harmonize
the way of calculating such costs, as the method
employed seems to differ between member states.
This will create an accurate way to compare dif-
ferent electricity generation sources.
Policy framework
Many SHP actors report complicated procedures
for obtaining a license, uncertainty as to whether
an application will result in a license, high costs,
an abnormally long waiting period and too many
authorities involved. The expensive, complicated
and time consuming process reduces the number
of applications as well as the number of applica-
11 Conclusions and Recommendations
REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27
25
11 Conclusions and Recommendations
tions approved. Directive 2001/77/EC does not
seem to have produced the expected result. Even
if MS introduce good economic incentives for SHP,
the resulting production will not reach the expect-
ed targets because of administrative barriers.
The EU should require MS to reduce administra-
tive barriers in accordance with Directive 2001/
77/EC and make a recommendation how to deal
with Directives that appear to be contradictory, for
example the RES-e Directive and WFD Directive.
Directives 2001/77/EC and 2000/60/EC seem
contradictory. The 2001/77/EC promotes the use
of electricity from renewable energy sources and
calls for a reduction of barriers in order to stimu-
late further development, while the not yet fully
implemented 2000/60/EC, the Water Frame-
work Directive (WFD), has raised new barriers
to the further development of SHP. The coming
directive related to the Energy Package of 2020
is supposed to call for more RES-electricity, thus
there is a clear risk of conflict with the WFD.
It is of vital importance that the contradictions be-
tween Directive 2001/77/EC and Directive 2000/
60 are made clear to all policy makers at national
and regional level, so that they can adopt the
right approach to overcoming possible conflicts
Manufacturing industry
The manufacturing industry in the EU has been
built up during a long period and is today most
competitive from an international perspective.
However the international competition from out-
side the EU is increasing and the industry is now
facing a leap forward in development with very
high demands from producers on efficiency and
cost combined with very high environmental de-
mands from different associations and citizens.
EU is recommended to support an increasing re-
search of SHP and hydropower in general to be
able to develop SHPP that will meet future de-
mands and be international competitive. This is
a great possibility for the EU to keep the manu-
facturing industry in the EU supporting the SHPP
inside and outside the EU.
Environment
SHP has both local and global benefits, but is also
the object of criticism from some organizations,
mainly fishery associations, for the negative im-
pact on the local environment. It is often difficult
to evaluate the different arguments, thus making
the debate more emotional than factual.
The Commission should issue rules on how to
evaluate and balance the arguments for and
against the impact of SHP on the environment,
both locally and globally, and maintain a neutral
stance in the face of arguments from specific in-
terest groups.
Summary of recommendations
To summarise what is said above about promot-
ing SHP development in the short and medium
term, as well as good policies and best prac-
tices for SHP the following is suggested.
Concrete recommendations and policies for
promoting SHP in the short term:
Assure higher quality of the data that is being
reported for SHP to Eurostat. Using data from
the measuring of production delivered to the
grid is the most reliable method.
Evaluate different methods and recommend
the MS a state of the art of how to calculate
a more precise potential for SHP in different
MS. Good examples can be found from Scot-
land and Norway.
Evaluate different methods and recommend
the MS a state of the art of how to calculate
the costs for SHP investments and production
as well as other sources of electricity genera-
tion.
Follow up to what extent the Directive 2001/
77/EC has been implemented to reduce the
obstacles to increasing production and to ra-
tionalise and speed up administrative proce-
dures. According to this study there are still
many obstacles and not much have changed.
Give clear recommendations on how to inter-
pret Directive 2001/77/EC and the WFD Di-
rective that appear to be contradictory.
Concrete recommendations for promoting SHP
in the long term:
Decrease the barriers for developing SHPP by
setting up clear rules and timeframes in the
licensing process.
Support the manufacturing industry by increas-
ing the research of finding new, more efficient
and more environmental friendly ways to gen-
erate electricity from hydropower. This in order
to secure that the SHP manufacturing industry
will still be international competitive in the fu-
ture.
Finally it is of vital importance that the Commission
gives concrete guidelines in order to follow the devel-
opment towards the renewable targets of year 2020.
26
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9
REPORT ON STATUS OF SHP POLICY FRAMEWORK AND MARKET DEVELOPMENT IN EU-27
27
Country
2010 Forecast
Potential with Economic & Environmental Constraints
Upgrading New SHP Total Total
Capacity Energy Capacity Energy Capacity Energy Capacity Energy
[MW] [GWh] MW GWh MW GWh MW GWh
EU-15
Austria 1 449 5 481 275 933 740 3 700 1 015 4 633
Belgium 60 245 5 36 26 156 31 192
Denmark 9 24 0 0 0 0 0 0
Finland 360 1 360 50 213 238 1 200 288 1 413
France 2 590 7 487 618 1 595 750 3 000 1 368 4 595
Germany 1 795 9 379 100 500 350 2 000 450 2 500
Greece 117 495 2 5 100 600 102 605
Ireland 32 120 5 20 30 100 35 120
Italy 3 000 9 237 140 500 500 1 850 640 2 350
Luxembourg 42 130 10 27 19 67 29 94
Netherlands 0 0 0 0 12 30 12 30
Portugal 400 1 200 20 57 330 943 350 1 000
Spain 2 199 6 692 100 350 1 000 3 224 1 100 3 574
Sweden 1 200 5 000 300 1 200 375 1 500 675 2 700
UK 160 559 38 119 615 2 550 653 2 669
EU-15 13 413 47 410 1 663 5 555 5 085 20 920 6 748 26 475
EU-12
Bulgaria 255 810 56 158 290 1 000 346 1 158
Cyprus 0 0 0 0 20 71 20 71
Czech Republic 300 970 80 350 387 1 300 467 1 650
Estonia 7 31 3 11 24 95 27 106
Hungary 15 57 12 3 50 16 62 19
Latvia 32 70 6 14 95 334 101 348
Lithuania 28 96 5 15 57 203 62 218
Malta 0 0 0 0 0 0 0 0
Poland 305 924 68 203 520 2 410 588 2 613
Romania 400 900 81 173 900 3 193 981 3 366
Slovakia 70 260 17 64 258 965 275 1 029
Slovenia 160 452 36 104 194 585 230 689
EU-12 1 572 4 570 364 1 095 2 795 10 172 3 159 11 267

Candidate
Countries
EU-27 14 985 51 980 2 027 6 650 7 880 31 092 9 907 37 742
Croatia 38 120 8 28 123 435 131 463
Macedonia 80 240 12 36 363 1 090 375 1 126
Turkey 250 750 80 350 6 485 19 520 6 565 19 870
CC 368 1 110 100 414 6 971 21 045 7 071 21 459
EU-27 + CC 15 353 53 090 2 127 7 064 14 851 52 137 16 978 59 201
Norway
Switzerland
and
Associated
Countries
Norway 1 700 8 000 250 1 000 4 750 19 000 5 000 20 000
Switzerland 1 300 5 000 198 860 650 2 300 848 3 160
Bosnia &
Herzegovina
150 500 7 30 425 1 330 432 1 360
Montenegro 14 35 2 6 220 600 222 606
Norway &
Switzerland
3 000 13 000 457 1 896 6 045 23 230 6 502 25 126
EU-27, CC
and Associated
Countries
18 353 66 090 2 584 8 960 20 896 75 367 23 480 84 327
Table 5 Forecast and Potential of SHP in EU-27, CC as well as Norway, Switzerland and other countries
28
World Wide Web
1. http://epp.eurostat.ec.europa.eu
2. http://www.esha.be
3. http://eur-lex.europa.eu/
4. http://ec.europa.eu/energy/res/publica-
tions/doc/2007_02_optres_en.pdf
5. www.rolfsan.se
6. http://www.nordpool.com/Docuents/Com-
munications/Publications/Monthlyreports/
2007Aug.pdf
Literature
1. 2008 World Atlas & Industry Guide. The In-
tern. Journal on Hydropower & Dams.
2. EUROSTAT. Energy - Yearly statistics 2006,
ISSN 1830-7833.
3. Laguna M., Administrative barriers for small
Hydropower development in Europe, 2007,
Brussels, ESHA
4. ESHA, Lithuanian Hydropower Association.
Small hydropower situation in the new EU
Member States and Candidate countries.
Thematic Network on Small Hydropower
(TNSHP), 2004, ESHA. (Available from http://
www.esha.be/).
5. OPTRES final report. Assessment and optimi-
sation of renewable energy support schemes
in European electricity market, Intelligent
Energy Europe, 2007.
6. San Bruno G., Developing small hydro to its
full economic potential: a European perspec-
tive, (2008), Belgium, ESHA
7. Strategic Study for the development of Small
Hydro Power in the European Union, Blue
Energy for a Green Energy (BlueAge), 2000,
ESHA. (Available from http://www.esha.be/)

APER Associazione Produttori di energia
da fonti Rinnovabili
CC Candidate Countries
EIA Environmental Impact Assessment
EREC European Renewable Energy
Council
ESHA European Small Hydropower
Association
EU-12 EU member states from
1 May 2004
EU-15 EU member states before 1 May
2004
EU-27 All EU member states from
1 January 2007
GoO Guaranties of Origin
GW GigaWatt = 1000 MW
GWh GigaWatt hours = 1000 MWh
Head The difference between upper sur-
face and lower surface at the
hydropower plant
IEA International Energy Agency
IEE The Intelligent Energy Europe
kW kiloWatt
kWh kiloWatt hours
LHA Lithuanian Hydropower
Association
LRMC Long Range Marginal Cost
MS Member States
MW MegaWatt = 1000 kW
MWh MegaWatt hours = 1000 kWh
N/A Not Available
N/Ap Not Applicable
O&M Operation and Maintenance
PPA Power Purchase Agreements
SERO Swedish Renewable Energy
Association
SHP Small HydroPower
SHPP Small HydroPower Plant
SME Small and Medium-sized
Enterprise
UNEP United Nations Environment
Programme
WFD Water Framework Directive
References Acronyms
This brochure hos been prepored by.
Christer S derberg (SEkO} soderberg.sero@telio.com
Tomos S derlund (SEkO} tomos@tsem.se
Annicko W nn (SEkO} onnicko.wonn@gmoil.com
Fetros Funys (LHA} punys@hidro.lzuu.lt

Acknowledgements
The outhors wish to thonk ESHA stoff for the revision ond
other SHEkFAportners for their contributions.
We ore groteful to the experts for providing doto. The
following experts/orgonisotions hove onswered the
questionnoire or supplied doto.
EU-15. Dipl. ng. Mortino Frechtl of the Austrion Smoll
Hydropower Associotion, Ms Momie Loumont of 8elgium
Federotion of kenewoble ond Alternotive Energy, Mr 1 rgen
Krogsgoord of Denmork, Mr Feter keiter of Finnish Smoll
Hydropower Associotion, Dr Anne Fenolbo of Fronce Hydro
ond Mr Geoffroy du Crest of novotion-Energy-Develop-
ment (Fronce}, Mr Gerhord Eckert of kEMEkTEC GmbH
(Germony}, Mr George 8obolis of Greece, Mr Fiocc
O'8rolchoin of rish Hydropower Associotion, Ms Soro
Gollessi of the Associotion for kenewoble Energy (AFEk,
toly}, Mr Dirk Snikkers of Muon Energy Sourcing (Mether-
londs}, Dr Antonio So Do Costo of Fortugol, Mr Monuel de
Delos of the Sponish kenewoble Energy Associotion, MSc
(Eng} Christer S derberg of Swedish kenewoble Energy
Associotion, Tomos S derlund of TS Energi & Morknod ond
Feter Donielsson of F&C A8 (Sweden}, Mr 8ill MocGregor of
Mpower kenewobles ond Dr Drono Upodhyoy of T Fower
(UK}.
EU-12 ond CCs. MSc (Eng.} Anton Tzenkov of Energopro[ect-
Hydropower Ltd (8ulgorio}, MM. Libor Somonek, Mirsolov
8ortusek ond 1iri Venos of ELZACO s.r.o. (the Czech
kepublic}, Frof Dr Feeter koesoor of Tollinn Technicol
University (Estonio}, Mr Csobo Kovocs of Sinergy
Energioszolgoltoto Kft, (Hungory}, Frof Korlis Silke of Lotvio
University of Agriculture (Lotvio}, Mr Algis 1onos 1okucionis
ond MSc (Eng.} Doinius Tirunos of the Lithuonion Hydro-
power Associotion (Lithuonio}, Dr 1onusz Steller of the
nstitute of Fluid-Flow Mochinery of the Folish Acodemy of
Sciences (Folond}, Mr Morko Gospod[inocki of the Asso-
ciotion of Smoll Hydropower Flonts Societies (Slovenio}, Eng.
Feter 8rezo of kOTOk Ltd, Slovokio, Frof Dr 8ogdon Fopo,
University Folitehnico of 8uchorest (komonio}, Mr Almir
A[onovic of ntrode Energi[o d.o.o (8osnio ond Herzegovino},
Dr Eng. Kristi[on Horvot of KOMCAk - Electricol Engineering
nstitute, nc (Crootio}, Mr gor Mikolov of 1SC ELEM -
Mocedonion Fower Flonts, Mocedonio, Frof Dr Sretren
Skuletic of the University of Montenegro, Montenegro, Ms
Aylo Tutus of ckole Group Compony (Turkey}.

The sole responsibility Ior the content oI this publication lies with the authors. It does not necessarily reIlect the opinion oI the European Communities. The
European Commission is not responsible Ior any use that may be made oI the inIormation contained therein.
LHA- Lithuanian Hydropower Association
(Lietuvos hidroenergetik asociacija)
Universiteto 10, Water & Land Management
Faculty, LZUU, Akademija, Kaunas r.
LT-53361, Lithuania
T: 370 37 752 337
F: 370 37 752392
E: punyshidro.lzuu.lt
www.hidro.lt

I:
SERO - Sveriges
Energifreningars
RiksOrganisation
SERO, Box 57, S - 731 22 Kping,
Sweden
T: 46 (0)221 824 22
E: inIosero.se
I: www.sero.se
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Renewable Energy House
Rue d'Arlon 63 - 65, 1040 Brussels - Belgium
T: 32 2 546 1945
F: 32 2 546 1947
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Renewable Energy Council