Project Parameters in Hydropower

Annual
Installed
Energy Load Factor Capital Cost
Capacity
Production

Expected Discount Construction

O & M Cost
Interest Rate Rate Period

Cost of Quantifiable
Financing Value of
Distribution Community
Period energy
System Benefits
 Methodology
Economic Analysis

Static methods Dynamic methods

Return on Net present Internal Rate

Payback value(NPV) of Return
investment
method method Method
method

Benefit cost
ratio
 Payback method
The
payback method determines the no. of year
required for the investment capital to be offset by
resulting benefits.
The required number of year is termed the payback,
recover, or break-even period.
 Return On Investment(ROI)
Return
on investment (RIO) calculates average
annual benefits, net of yearly cost, such as
depreciation, as a percentage of the original book
value of the investment
The calculation is as follows:
 Depreciation

 Net present value method
NPV is a method of ranking
investment proposals.
NPV is the difference between the
present value of cash inflows and the
present value of cash outflows that
occur as a result of undertaking an
investment project.
NPV may be positive, zero or negative.
If NPV is positive investment proposal
is considered to be acceptable
 Continued..
If
NPV is zero the investment
proposal is said to be acceptable
If NPV is negative the investment
proposal is rejected
 Continued
Where:
Ii=Investment in period i.
Ri=Revenues in period i.
Oi= Operating cost in period i.
Mi=Maintenance cost in period i.
Vr=Residual value of investment over its lifetime,
where equipment lifetime exceeds plant working life.
r= periodic discount rate.
n= Number of lifetime period.
 Benefit-Cost Ratio
The benefit-cost ratio method
compares the present value of the
plant benefits and investment on a
ratio basis
It compares the revenue flows with
the expenses flow
Project with a ratio of less than 1
generally discarded
 Internal Rate of Return
Method
The annual discount rate at which the present
worth of two streams of cash-flow are equal.
This rate gives the return, in % per annum, on
the asset having higher investment costs
IRR computations usually require an intensive
procedure and the results can also be used as
aranking or screening tool of a project.
The essential element is to reject the project
which has an internal rate of return less the
opportunity cost of capital
Types of maintenance in hydropower

Breakdown maintenance

Routine maintenance

Preventive maintenance

Capital maintenance