Run-of-river hydroelectric power, a type of hydroelectric power generation that does not require the storage of significant quantities of water, is a clean, renewable and predictable source of energy. It has great potential not only in countries like Canada where 60% of energy comes from hydroelectric sources, but also in small and remote communities in Latin America that currently lack other sources of energy.
How does it work?
In run-of-river schemes, running water is diverted from a flowing river and guided down a channel which leads to a generating house. From there, the force of the moving water spins a turbine and drives a generator. The water is fed back into the main river further downstream. Unlike the large hydroelectric projects, these systems contain a small dam that can store a limited quantity of water, enough for same-day use; it is not possible to store water for future use. Without a dam to store water, there is no stored power. This means that the capacity factor of run-of-river projects can vary from 40%-80%. When you compare this to the 89-90% capacity of a large hydroelectric power plant, it is easy to understand why these projects have only been viable in rivers with large year-round flow rates.
Mini-hydro systems can be used for independent and stand-alone applications in isolated remote areas or connected to a centralized grid that stores the generated power. While maintenance costs are relatively low compared to other technologies, most of the costs are accrued in the building phase. Connecting the run-of-river system to the centralized grid can get expensive if the energy needs to be transmitted over a far distance. However, when the run-of-river projects are used to power small, isolated communities, the costs are significantly lower and can be an economical source of power.
What happens if flow rates fluctuate? - The potential of a hydro-solar combination
One aspect to take into consideration is how flow rates may be affected in the future by climate change. Periods of drought might cause the system to operate below capacity at certain times of the year. As a result, we are starting to see innovative projects that combine mini-hydropower and photovoltaics (PV) solar generation. With the cost of solar electricity declining significantly, this innovation has enabled solar PV to emerge as a cost-effective energy source in many regions across the world, including Latin America, even at small scale generation. Since mini-hydropower can counter power outages and help balance loads during periods of peak demand, this is a highly sought-after source of energy, especially in rural, mountainous areas. Coupling mini-hydropower with solar PV can provide a stable supply of electricity.
Some parts of Central America already offer interesting opportunities for this hydro-solar combination. The region of Honduras close to San Pedro Sula and several rural, mountainous parts of Costa Rica are ideally suited for both hydro and solar generation at a small scale. The combined generation capacity of these combined projects normally ranges from 2 MW to up to 15 MW of clean, renewable energy. This is enough to satisfy the electricity needs of small communities of up to 10,000 people. The run-of-river systems currently established in rural communities of Latin America are showing great success.
What is the environmental footprint of run-of-river?
The environmental footprint on surrounding ecosystems, such as fish habitats, is significantly reduced in these run-of river schemes compared to large hydro plants. Although the impact is not completely eliminated, new technologies are being developed to reduce this impact even further.
In addition, many countries are investing in research and development to make the technology more cost-effective. A large amount of the current research is focused on improving turbines, as they are the most expensive part of the system. However, there are other ways to reduce the costs of these projects such as through the sale of carbon offsets. Carbon offsets are credits for greenhouse gas reductions achieved by one party that can be purchased and used to compensate the emissions of another party. There are several international brokers, online retailers, and trading platforms where you can buy and sell these carbon offsets. These are beneficial to renewable energy producers as the selling of carbon offsets makes their projects more economically viable. At the same time, carbon offsets buyers benefit by using the carbon offsets to mitigate their greenhouse gas emissions.
One example of a successful run-of-river system is in Central Peru, close to the imposing Andes. This small project generates around 10 MW of clean power and, since it started operations four years ago, has displaced a considerable amount of CO2 emissions. The Swedish government buys carbon offsets from the project, which helps generate additional revenue of around $40,000 annually. Part of those funds are reinvested in the community. This run-of-river system also produces positive environmental side effects beyond providing the community with clean energy; the water from the system flows downstream to irrigate small plots of agricultural land which benefits the local farmers.
As technological breakthroughs for small hydroelectric turbines and solar panels continue to take place and new ways to reduce the environmental footprint even further are implemented, the opportunities to build these combined mini-hydropower and solar projects in Latin America will increase significantly. At Deetken Asset Management Inc., we expect to continue investing in these combined projects, as they will provide the right triple bottom line results we seek: financial, environmental, and social.