Peru is a country with great hydropower potential

Abstract

Peru is a country with great hydropower potential; nowadays, hydroelectric power plants generate 40% of the country’s installed capacity. For this reason, investors/owners hold hydropower projects in high regard, even if they are not the most economical source of electricity generation.

In this context, the capital expenditure (CAPEX) of a wide array of hydropower projects in their different engineering stages has been estimated, associating their maturity levels to AACEi’s Cost Estimate Classification System.

The objective of making cost estimates is to facilitate decision-making of investors/owners regarding the costs of projects.

As a result of cost estimation, probable CAPEX values ​​of hydropower projects were determined using estimation techniques and AACEi Recommended Practices regarding constructability, costs, schedule, contingency, and escalation.

Introduction

Hydroelectric power plants are facilities that use flowing water from rivers, lakes and lagoons, which is a renewable resource, to generate electricity. Figure 1 shows a histogram of the electricity generation capacity by source in Peru, with an installed capacity of 13.5 thousand MW in 2017.

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Figure 1 – Installed generation capacity by source in Peru

Based on its installed capacity, hydroelectric power plants can be:

• Large hydroelectric power plant (more than 50 MW)
• Small hydroelectric power plant (more than 10 MW)
• Micro hydroelectric power plant (less than 1 MW)

In general, hydropower projects have a high CAPEX and a long construction time compared to other sources of electricity generation. However, they have greater acceptance thanks to their low environmental impact and greater job opportunities for communities.

Hydropower projects are multidisciplinary and complex; therefore, it is critical to implement an adequate identification, selection and definition methodology that allows investors/owners to carry out the most appropriate projects. In this sense, cost estimation in the engineering stage provides an early idea of ​​project associated costs, thus facilitating decision-making.

In view of the above, we decided to implement the AACEi Cost Classification System into the FEL methodology used by the investor/owner for its upcoming hydropower projects.

It should be noted that there are other valuable technical, construction, environmental, social and risk variables that together allow to make final decisions.

The Problem

The general project scope involves identifying hydropower projects in a hydrographic basin with high potential in northern Peru. The total installed capacity requested by the investor/owner was 500 MW. To generate such amount of MW, it was necessary to develop a large number of hydropower project alternatives, which were mainly classified into three (03) types:

• Surface hydroelectric power plants (surface catchment, waterways and generation area)
• Underground hydroelectric power plants (surface catchment and underground waterways and generation area)
• Mixed hydroelectric power plants (surface catchment, underground waterways and surface generation area)

Table 1 lists the various structures that make up hydroelectric power plants based on their type:

Table 1 – Typical structures per type of hydroelectric power plant

The specific cost-related project scope involves developing estimates of capital expenditure (CAPEX) for all the alternatives by engineering stage, taking as selection criterion, at the suggestion of the investor/owner, a ratio less than or equal to 2,800 USD/kW obtained from dividing the CAPEX (USD) by installed power (kW).

Figure 2 shows the engineering stages to be developed in the project, which have been assigned a cost estimation class taking as reference the AACEi.

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Figure 2 – Engineering stages and cost estimation classes

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