Performance &
Financial Analysis
Written by: Phil Davis, Managing Director at Renewables First. Phil has been working in the renewables sector since 2001 and is a recognised expert in hydropower as well as wind and solar PV at all project stages.
Reviewed by the Renewables First engineering team for technical accuracy.
Reviewed June 2026
Hydropower systems are capable of achieving some of the highest energy conversion efficiencies of any renewable energy technology. Modern turbines can convert more than 90% of the available energy in flowing water into useful electrical power under optimal operating conditions. However, actual efficiency varies according to turbine design, available head, flow characteristics, and the way a scheme is operated throughout the year.
For developers, landowners and community energy groups, understanding hydropower efficiency is essential when estimating annual generation, project income and long-term financial performance. This section explores the typical efficiency ranges of different hydropower technologies and explains how efficiency affects energy output and project economics.
Frequently Asked Questions
How much power could I generate from a hydro turbine?
If you mean energy (which is what you sell), read How much energy could I generate from a hydro turbine?.
If you mean power, read on.
Power is the rate of producing energy. Power is measured in Watts (W) or kiloWatts (kW). Energy is what is used to do work and is measured in kilowatt-hours (kWh) or megawatt-hours (MWh).
In simple terms, the maximum hydropower power output is entirely dependent on how much head and flow is available at the site, so a tiny micro-hydro system might produce just 2 kW, whereas a large utility-scale hydro system could easily produce hundreds of Megawatts (MW). To put this in context, a 2 kW hydropower system could satisfy the annual electrical energy needs of two average UK homes, whereas a utility-scale 200 MW system could supply 200,000 average UK homes.
If you don’t mind equations the easiest way to explain how much power you could generate is to look at the equation for calculating hydropower:
Where:
- P
- power, measured in Watts (W).
- m
- mass flow rate in kg/s (numerically the same as the flow rate in litres/second because 1 litre of water weighs 1 kg)
- g
- the gravitational constant, which is 9.81m/s2
- Hnet
- the net head. This is the gross head physically measured at the site, less any head losses. To keep things simple head losses can be assumed to be 10%, so Hnet=Hgross x 0.9
- η
- the product of all of the component efficiencies, which are normally the turbine, drive system and generator
0.85 x 0.95 x 0.93 = 0.751 i.e. 75.1%
First convert the gross head into the net head by multiplying it by 0.9, so:
Then convert the flow rate in m3/s into litres/second by multiplying it by 1000, so:
Remember that 1 litre of water weighs 1 kg, so m is the same numerically as the flow rate in litres/second, in this case 3,000 kg/s.
Now, do the same for a high-head hydropower site where the gross head is 50 metres and maximum flow rate through the turbine is 150 litres / second.
In this case Hnet = 50 x 0.9 = 45 m and the flow rate in litres/second is 150, hence:
What is interesting here is that for two entirely different sites, one with a net head of 2.25 metres and the other 45 metres, can generate exactly the same amount of power because the low-head site has much more flow (3,000 litres / second) compared to the high-head site with just 150 litres/second.
This clearly shows how the two main variables when calculating hydropower power output from a hydropower system are the head and the flow, and the power output is proportional to the head multiplied by the flow.
Of course the two systems in the example above would be physically very different. The low head site would need a physically large Archimedean Screw or Kaplan turbine inside a turbine house the size of a large garage because it would have to be physically large to discharge such a large volume of water with a relatively low pressure (head) across it. The high-head site would only need a small Pelton or Turgo turbine the size of a fridge because it only has to discharge 5% of the flow rate of the low-head system and under a much higher pressure.
It is interesting that in the real world the heads and flows in the example above aren’t too far from reality, because high-head sites tend to be at the heads of rivers in upland areas, so the ground slopes steeply enabling high heads to be created, but the rainfall catchment of the watercourse is relatively small, so the flow rate is small. That same upland stream 20 km downstream would have merged with countless small tributaries and formed into a much larger river with a higher flow rate, but the surrounding area would now be lowland agricultural land with only a modest gradient. It would only be possible to have a low head across a weir to avoid risking flooding the surrounding land, but the flow rate in the lowland river would be much larger to compensate.
The UK has a range of all types of high, medium and low head hydropower sites. England has more low-head sites, Scotland more high-head, and Wales a mixture of everything but still with significant medium and high-head opportunities.
Power and energy generation can be maximised by keeping the inlet screen clear of debris which maintains a maximum system head. This can be automatically acheived using our innovative GoFlo Travelling screen manufactured in the UK by our sister company . Discover the benefits of installing a GoFlo travelling screen on your hydropower system in this case study: Maximising the benefits of hydropower technology using innovative GoFlo travelling screen technology.
How much energy could I generate from a hydro turbine?
If you mean power, read How much power could I generate from a hydro turbine?
If you mean hydro energy (which is what you sell), read on.
Energy is everything; you can sell energy, but you can’t sell power (at least not in the context of small hydropower). People often get obsessed with wanting the highest possible power output from a hydro system, but this is really quite irrelevant.
When you sell electricity you are paid depending on the number of kWh (kilowatt-hours) you sell (i.e. based on the energy) and not for the power you produce. Energy is the capacity to do work, while power is the rate at which work can be done. It is a bit like miles and miles-per-hour; the two are clearly related, but are fundamentally different.
If you want a quick answer to the question, see the table below which shows how much hydro energy would be generated in a year for a range of hydro systems with different maximum power outputs. It is interesting to note that an ‘average’ UK home uses 12 kWh of electricity every day, or 4,368 kWh per year. Hence the number of ‘average UK homes powered’ is also shown homes powered’ is also shown. There is a more detailed discussion below for anyone that is interested.
| Maximum Power Output | Annual Energy Production [AEP] | No. of ‘Average’ UK Homes Powered |
|---|---|---|
| 5 kW | 22 MWh | 5 |
| 25 kW | 110 MWh | 25 |
| 50 kW | 219 MWh | 50 |
| 100 kW | 438 MWh | 100 |
| 250 kW | 1,095 MWh | 250 |
| 500 kW | 2,190 MWh | 500 |
For any hydropower site, once all of that site’s peculiarities have been considered and the ‘Hands Off Flow (HOF)’ agreed with the environmental regulator, there will normally be a single optimum turbine choice that will make best use of the water resource available and result in the maximum energy production. Maximising hydro energy production within the project budget available is one of the key skills of a hydropower engineer.
To estimate how much energy a hydropower system produces accurately needs specialist software, but you can get a good approximation by using a ‘capacity factor’. A capacity factor is basically the annual amount of energy produced by a hydro system divided by the theoretical maximum if the system operated at maximum power output 24/7. For a typical UK site with a good quality turbine and a maximum flow rate of Qmean and a HOF of Q95, it can be shown that the capacity factor would be approximately 0.5. Assuming you know the maximum power output from the hydro system the Annual Energy Production (AEP) from the system can be calculated from:
Annual Energy Production (kWh) = Maximum power output (kW) x No. hours in a year x capacity factor
Note that there are 8,760 hours in a (non leap) year.
As an example, for the low-head and high-head example sites above, both of which had maximum power outputs of 49.7 kW, the Annual Hydro Energy Production (AEP) would be:
AEP = 49.7 (kW) X 8,760 (h) X 0.5 = 217,686 (kWh)
Energy generation can be maximised by keeping the inlet screen clear of debris which maintains a maximum system head. This can be automatically acheived using our innovative GoFlo Travelling screen manufactured in the UK by our sister company . Discover the benefits of installing a GoFlo travelling screen on your hydropower system in this case study: Maximising the benefits of hydropower technology using innovative GoFlo travelling screen technology.
How much income would my hydro system provide?
Hydropower income is complicated. There are several components that make up the total value of generated hydro electricity, namely:
- Export value
- Offset value for energy used on-site
- Future changes to export value and import electricity prices
Each of these components is described in more detail here along with information on how they can affect the overall value of the energy generated.
The greatest income can be achieved if the electricity generated is consumed on site rather than being exported to the grid. The greater the proportion of energy consumed, the higher the income. This is because the value of electricity consumed on site (the imported electricity value) is typically 12 p/kWh, which is higher than the maximum value of electricity that can be exported to the national grid which is typically 6.5 p/kWh.
This is further complicated because of the rising cost of electricity. The graph below shows historical price rises for non domestic electricity between 2004 and 2019. The data for this can be found at the UK government department, BEIS here.
Historical UK Non Domestic electricity prices, 2004 – 2019.
This shows an annual average electricity price rise between 2004 and 2019 of approximately 9% per year.
Future changes to electricity prices may not follow historical price rises and are very hard to predict because they are heavily influenced by fossil-fuel prices and government policy changes in response to market conditions and carbon reduction commitments.
Committee on Climate Change Electricity Price predictions
The last assessment of Energy Prices and Bills made by the Committee on Climate change was in 2017, and their report is here. Their assessment of the impact of carbon reduction commitments made to 2017 how price rises of approximate 3% per year to 2030 as shown on the right. The UK government has since increased its commitment to carbon reduction which would mean that investment in low carbon energy will inevitably have to increase beyond that shown in this report.
It is very difficult to predict the future cost of energy, it could rise based on historical price rises, but is more likely to rise based on predictions made by authoritative bodies advising the government – so for the purposes of this illustration an annual electricity price rise of 3% is assumed, as opposed to the historical price rise of 9%.
For illustration purposes, the net income (annual effective gain from electricity production, minus typical operational and maintenance costs) for four scenarios are shown below, assuming a 40 year lifespan for the hydropower equipment:
- 100% on site consumption, annual electricity price rise of 3%
- 50% on site consumption, annual electricity price rise of 3%
- 100% on site energy consumption, static electricity price
- 100% exported to the grid, with export price rising with inflation of 2%
100% on-site consumption, annual electricity price rise of 3%
Illustration 1 – 100% of the generated energy consumed on site, annual electricity price rise of 3%, hydro system generating at a typical UK capacity factor of 0.5, annual income averaged over 40 years. In this scenario the net income could be:
| Maximum Power Output | Annual Energy Production (AEP) | Typical Annual Income, Averaged over 40 years |
|---|---|---|
| 25 kW | 110 MWh | £26,100 |
| 50 kW | 219 MWh | £54,500 |
| 100 kW | 438 MWh | £99,000 |
| 250 kW | 1,095 MWh | £210,000 |
| 500 kW | 2,190 MWh | £422,500 |
| 1 MW | 4,380 MWh | £991,000 |
| 2 MW | 8,760 MWh | £1,982,000 |
50% on-site consumption, annual electricity price rise of 3%
Unless the commercial operation is a 24 hour, high energy use operation, or energy storage is added, then it is likely that only a portion of electricity generated by the hydro system can offset on site electricity usage. If only a proportion of electricity that can be consumed in this scenario is complex and depends on electricity consumption and generation patterns over a period of time. Renewables First can assess this demand \\ generation relationship as part of the Hydropower Feasibility Study service. For illustrative purposes, we will assume that 50% of electricity generated is consumed on site, and 50% is exported to the grid.
Illustration 2 – 50% of the generated energy consumed on site, annual electricity price rise of 3%, hydro system generating at a typical UK capacity factor of 0.5, annual income averaged over 40 years. In this scenario the net income could be:
| Maximum Power Output | Annual Energy Production (AEP) | Typical Annual Income, Averaged over 40 years |
|---|---|---|
| 25 kW | 110 MWh | £16,800 |
| 50 kW | 219 MWh | £35,900 |
| 100 kW | 438 MWh | £68,000 |
| 250 kW | 1,095 MWh | £153,200 |
| 500 kW | 2,190 MWh | £308,900 |
| 1 MW | 4,380 MWh | £764,000 |
| 2 MW | 8,760 MWh | £1,527,000 |
100% on-site consumption, no electricity price rise
For comparison purposes, electricity prices did not rise from the current level, this is illustrated below.
Illustration 3 – 100% of the generated energy consumed on site, no annual electricity price rise, hydro system generating at a typical UK capacity factor of 0.5. In this scenario the net income could be:
| Maximum Power Output | Annual Energy Production (AEP) | Typical Annual Income |
|---|---|---|
| 25 kW | 110 MWh | £13,000 |
| 50 kW | 219 MWh | £28,000 |
| 100 kW | 438 MWh | £50,000 |
| 250 kW | 1,095 MWh | £106,000 |
| 500 kW | 2,190 MWh | £215,000 |
| 1 MW | 4,380 MWh | £526,000 |
| 2 MW | 8,760 MWh | £1,051,000 |
100% export to the grid, export price rising with inflation of 2%
Finally, if it is not possible to consume any electricity on site, then 100% of the electricity must be exported to the grid. A typical current export price of 6.5 p/kWh is used for this illustration.
Illustration 4 – 100% of the generated energy exported to the national grid, assumed export price rises with inflation of 2%, hydro system generating at a typical UK capacity factor of 0.5. In this scenario the net income could be:
| Maximum Power Output | Annual Energy Production (AEP) | Typical Annual Income, Averaged over 40 years |
|---|---|---|
| 25 kW | 110 MWh | £7,400 |
| 50 kW | 219 MWh | £17,300 |
| 100 kW | 438 MWh | £37,000 |
| 250 kW | 1,095 MWh | £96,400 |
| 500 kW | 2,190 MWh | £195,400 |
| 1 MW | 4,380 MWh | £536,700 |
| 2 MW | 8,760 MWh | £1,073,000 |
Clearly the net income prediction is complex, is very site specific and is dependent on unknown factors within the electricity market, however the most profitable schemes are those than can consume the most amount of generated electricity on site. Site specific income needs to be assessed carefully based on site conditions and assumptions which will be completed as part of an expert site assessment.
Please note it is possible that electricity prices may rise or fall in the future.
Also worthy of mention, many hydropower sites generate a great deal of positive publicity and ‘green credibility’ through association with clean renewable energy generation. Sometimes the value of this is greater than the revenue generated by the system, but because of its non-tangible nature it has been ignored here.
To see how this translates into a return on investment you need to consider what the project will cost and what hydropower systems cost to operate, then the return on investment can be calculated.
How much does a hydropower system cost to build?
It’s quite difficult to make generalisations about the cost to build hydro systems because of the different combinations of head (the change in water levels between the intake and discharge) and maximum flow rate, and how that affects the maximum power output and choice of turbine type.
Also the extent of any civil engineering works is very site dependent, with some new-build sites requiring everything to be built from scratch, while other retrofit projects can make use of and adapt the existing civil engineering structures.
Having said that, we’ll try to answer the question anyway to give you an idea of the ‘scale’ of costs involved. The table below is a rough ball-park estimate of typical project costs for systems requiring an ‘average’ amount of civil engineering works and grid connection upgrades and assuming access to the site was reasonable. In all cases it is assumed that good quality hardware is used throughout, which we would recommend anyway if you want a reliable hydro system in the long-term.
It is possible to install systems for a lower cost, particularly if the existing infrastructure at the site lends itself to easy adaption for a modern hydropower system so only modest or no civil engineering works would be needed. However even in the most favourable circumstances it is unlikely that the cost would reduce by more than 50% from that shown in the table.
| Maximum Power Output | Estimated Project Cost | £ / kW installed |
|---|---|---|
| 25 kW | £169k | £6.8k |
| 50 kW | £300k | £6.0k |
| 100 kW | £529k | £5.3k |
| 250 kW | £963k | £3.8k |
| 500 kW | £1.6M | £3.2k |
To estimate the cost to build hydro systems for a maximum power output between the bands shown, use the chart below and read-off the appropriate £/kW figure – for example a 130 kW hydro system would be approximately
130kW x 4,800 £/kW = £624,000.
Hydropower system build cost
You’ll notice that very small hydropower systems are disproportionately expensive, and this is because hydro projects of any size have to include a substantial fixed-cost element at the design and consenting stages, and to a slightly lesser degree during the installation stage. This is why we generally advise people that to get an economically-viable hydropower system the maximum power output will have to be at least 25 kW, and preferably at least 50 kW. Smaller systems can make sense, particularly at sites with higher heads or if other intangible benefits, such as sustainability, environmental protection or publicity, are valued as much as return on investment.
How does the project cost determine the investment return for a hydropower project ? Look at some typical examples here.
The payback period for the project can be reduced, keeping the inlet screen clear of debris which maximises energy generation. This can be automatically achieved using our innovative GoFlo Travelling screen manufactured in the UK by our sister company . Discover the benefits of installing a GoFlo travelling screen on your hydropower system in this case study: Maximising the benefits of hydropower technology using innovative GoFlo travelling screen technology.
How much does a hydropower system cost to operate?
The operating hydropower system cost varies depending on many factors, the main ones being the size of the system, the head and the type of turbine. If you want a quick idea of operational costs use the table below, or if you have a particular size of system you are interested in use the chart
| Maximum Power Output | Estimated Annual Operational Costs |
|---|---|
| 5 kW | £2,200 |
| 25 kW | £4,000 |
| 50 kW | £6,300 |
| 100 kW | £11,000 |
| 250 kW | £25,000 |
| 500 kW | £48,300 |
Generally speaking, hydropower systems are reliable in the long-term. The biggest maintenance task is keeping the intake screen clear of debris, particularly during the autumn period or after heavy rain. Even outside of these periods it is a surprising just how much debris there is in flowing water. Smaller hydro systems up to around 25 kW can have manually-raked intake screens, though many owners still opt for automatic screen cleaning systems, such as the travelling screens manufactured by our sister company, GoFlo Screens. Larger systems will invariably have automatically-raked systems or in the case of high-head sites a self-cleaning coanda intake screen is often used. 
Archimedean screws are slightly different because they can operate with intake screens with a wide bar-spacing (up to 100 mm) which allows a lot of the small debris to pass straight through the system reducing the amount of screen cleaning required, though larger debris will still get caught on the screen and will need to be removed either manually or automatically.
It is also good practice to look-over a hydro site on a daily basis, or certainly a couple of times a week. This not only means that the intake screens will be checked, but would also give an early warning of any other issues before they become significant. Hydropower machinery is quite rugged and generally heavily built.
As hydro turbines are not subjected to shock loads like many other machines, they generally have very long operational lives of at least 40 years. Routine maintenance is monthly grease lubrication and hydraulic fluids are normally changed every two or three years. Drive belts (if fitted) normally last at least three years. Generator bearings should last 10 to 15 years and turbine bearings much longer because of the slower rotational speeds (on lower-head systems at least). As well as maintenance, the other hydropower system cost included in the estimates above are insurance and business rates. Business rates are a particularly complicated subject because they vary depending on where you are and the size of the system.
What would the return on investment be for a hydropower system?
The Return on Investment of a hydropower scheme depends on the net income received and the capital costs of the project.
Determining the income is complicated, it depends on:
- The proportion of electricity exported to the grid vs electricity consumed on site.
- The current and future cost of using electricity imported from the national grid on site.
- The current and future price paid for electricity sold to the grid from the hydro system.
These figures are complicated because of the uncertainty in the rising cost of electricity. The graph below shows historical prices for non domestic electricity between 2004 and 2019. The data for this is provided by the UK government department, BEIS here.
Historical UK Non Domestic electricity prices, 2004 – 2019
This shows an annual average electricity price rise between 2004 and 2019 of approximately 9% per year. Future changes to electricity prices may not follow historical price rises and are very hard to predict because they are heavily influenced by fossil-fuel prices and government policy changes in response to market conditions and carbon reduction commitments.
Committee on Climate Change Electricity Price predictions
The last assessment of Energy Prices and Bills made by the Committee on Climate change was in 2017, and their report is here. Their assessment of the impact of carbon reduction commitments made to 2017 show price rises of approximately 3% per year to 2030 as shown on the right. The UK government has since increased its commitment to carbon reduction which would mean that investment in low carbon energy will inevitably have to increase beyond that shown in this report. Please note it is possible that electricity prices may rise or fall in the future.
For illustration purposes, the Rate of Return for three scenarios are shown below. This assumes a typical lifespan of 40 years for hydropower equipment – in reality this could be considerably longer if it is well maintained. The hydro system returns on investment shown are realistic for typical, viable sites:
- 100% on site consumption, annual electricity price rise of 3%
- 50% on site consumption, annual electricity price rise of 3%
- 100% exported to the grid, with export price rise by inflation of 2%
100% on-site consumption, annual electricity price rise 3%
The table below shows what the Internal Rate of Return (IRR) could be for a range of small hydro and micro hydro systems where 100% of electricity is consumed on site and there is an assumed annual price rise of the cost of electricity of 3%.
| Maximum Power Output | Internal Rate of Return (IRR) New Build | Internal Rate of Return (IRR) Existing Site, No Civils |
|---|---|---|
| 25 kW | 10% | 15% |
| 50 kW | 12% | 17% |
| 100 kW | 12% | 18% |
| 250 kW | 14% | 20% |
| 500 kW | 17% | 24% |
50% on-site consumption, annual electricity price rise 3%
Unless the commercial operation is a 24 hour, high energy use operation, or energy storage is added, then it is likely that only a portion of electricity generated by the hydro system can offset on site electricity usage. If only a proportion of electricity can be consumed on-site, this scenario is complex and depends on electricity consumption and generation patterns over a period of time. Renewables First can assess this demand and generation relationship as part of the Hydropower Feasibility Study service. For illustrative purposes, we will assume that 50% of electricity generated is consumed on site, and 50% is exported to the grid.
The table below shows what the Internal Rate of Return (IRR) could be where 50% of electricity is consumed on site and there is an assumed annual price rise of the cost of electricity of 3%.
| Maximum Power Output | Internal Rate of Return (IRR) New Build | Internal Rate of Return (IRR) Existing Site, No Civils |
|---|---|---|
| 25 kW | 7% | 10% |
| 50 kW | 8% | 12% |
| 100 kW | 9% | 13% |
| 250 kW | 11% | 15% |
| 500 kW | 13% | 18% |
100% exported to the grid, annual export price rise of 2%
Finally, if it is not possible to consume any electricity on-site, then 100% of the electricity must be exported to the grid. A typical initial export price of 6.5 p/kWh, which increases annually by an inflation rate of 2%, is used for this Rate of Return illustration:
| Maximum Power Output | Internal Rate of Return (IRR) New Build | Internal Rate of Return (IRR) Existing Site, No Civils |
|---|---|---|
| 25 kW | 2% | 5% |
| 50 kW | 4% | 6% |
| 100 kW | 5% | 7% |
| 250 kW | 7% | 10% |
| 500 kW | 8% | 12% |
The IRR is calculated over 40 years, assuming good quality hardware is used and the system is well maintained. Options are given for new build projects including civils works and for existing sites with no or only minor civils works.
It is worth mentioning that sometimes intangible benefits can be worth a lot, for example at sites frequented by tourists a small hydro or micro hydro system can add a lot of additional interest as a visitor attraction and in other cases the marketing benefit to a company from being able to say that their energy is generated on site from zero emission hydropower can be significant.
The best sites are generally larger (100 kW+), with higher heads, easy to adapt infrastructure, easy access and a good grid connections.
What are the Sources of income for hydro turbines.?
One of the sources of income for hydro turbines was the Feed in Tariff (FiT) scheme. This scheme was scrapped at the end of March 2019.
However, there are still several key sources of income for wind turbine projects that are significant and can make a project financially viable. They are:
- Export price
- Offset value
- Combined offsetting and exporting
Export value
This is payable for every kWh of electricity exported to the national grid. Exporting electricity means that it must pass outwards into the local electricity distribution network (what most people call ‘the grid’) through an export meter. An export meter looks the same as a normal import meter, but records the flow of electricity outwards from a site. Nowadays a single import/export meter is normally fitted.
To export all the energy produced by a hydro turbine it would have to be directly connected to the grid with its own dedicated electrical supply and not first pass through the site distribution board (see more details below under ‘offset value’). Under this arrangement every kWh generated by the system would be exported, and the export rate would be paid.
The value of exported electricity can vary considerably and Renewables First have extensive expertise in negotiating the best value export price for electricity.
The exported electricity can be paid for by entering a Power Purchase Agreement, or by entering a contract with an electricity supplier as part of the Smart Export Guarantee scheme which is due to start in early 2020.
Typically, a value of 6.5 p/kWh can be obtained using a Power Purchase Agreement, or 5.5 p/kWh using the Smart Export Guarantee scheme, although the latter scheme has not yet started.
Offset value
This is where the small hydro or micro hydro system connects into the site owner’s main distribution board. It is important to remember that electricity flows like water and will always follow the easiest route to the nearest load. This means that all of the site owners loads (i.e. lighting, sockets, machinery, air conditioners etc.) that connect to the same distribution board will be supplied firstly by the hydropower system, and only once all of these loads have been satisfied will any surplus energy from the hydro system flow backwards through the incoming supply cables, either to the next nearest distribution board on the site, or out through the export meter to the grid.
Also, because the electricity produced by the hydropower system is fully grid-synchronised, it will mix seamlessly with grid-imported electricity. This mean that if the hydro system cannot meet all of the site owners loads, then all of the electricity from the hydro system will go towards the loads and any deficit will be seamlessly imported from the grid.
Equally, if the hydro system was supplying all of the local loads but then a reduction in the river flow rate caused the output to suddenly drop, then the grid would instantly supply more to make up the deficit. From a consumers point of view the source of the electricity would be unknown; it could be from the hydro system, the grid or a combination of both.
In the situation where the on-site loads far exceed what the hydropower system could produce, then all of the electricity generated by the hydro system would be consumed on site. For example, if a hydropower system with a maximum power output of 100 kW was connected to a site that had a base load (i.e. the minimum load 24/7) of 500 kW, then 100% of the energy generated by the hydro system would be consumed on site. Financially this would be a good arrangement because the price paid for importing electricity from the grid is typically 12 p/kWh (varies between 8 – 16 p/kWh depending on the import tariff), so if the amount of import can be reduced, for every kWh it is reduced by the site owner saves 12 p. If you compare this saving of 12 p/kWh to an export price of 6 p/kWh, you can see that offsetting on-site loads is worth two times more than exporting the electricity.
Combined offsetting and exporting
This is actually the most common arrangement and is basically the arrangement described above under ‘offset value’ except where the on-site loads are less than the power being produced by the hydropower system. Under this arrangement the on site loads would be supplied first, then the excess power exported.
The value would be made up of the amount of energy offset at 12 p/kWh (or whatever your import electricity price is) plus the amount of energy exported at around 6.5 p/kWh. Obviously the actual value would depend on the relative proportions, but these can be estimated at a feasibility stage based on existing electricity bills and forecast energy production from the hydro system.
Generally speaking it is best to offset imported electricity first, then export any remaining surplus to get the highest revenue from a hydropower system.
How can I maximise the financial return of hydropower?
View our sister company for details about how GoFlo travelling screens can help your hydropower system:
Maximising the financial return of hydropower with GoFlo Travelling Screens
Phil Davis
Manging Director | Renewables First
About the Author
Phil has worked in the renewables sector since 2001 and founded Hydro Generation, which became Renewables First in 2009.
A qualified mechanical engineer (BEng, MSc Renewable Energy Systems), Phil is a recognised expert in hydropower, wind and solar PV across all project stages.
Are you considering a hydropower project ?
Renewables First have considerable experience as a hydro consultant and have a full project capability, from initial feasibility study through to system design and installation.
The first step to develop any hydropower site is to conduct a full feasibility study.
Contact us about a feasibility study today!
Once complete, you will understand the site potential and be guided through the next steps to develop your project. You can read more about hydropower in our Hydro Learning Centre.
Minimise manual cleaning of your intake screen, maximise the financial return of you hydropower system and protect fish and eels, with GoFlo Travelling Screens. Find out more here.