Determining Feasibility of Small-Scale Hydropower

The key consideration relating to the development of small-scale hydropower is its economic feasibility. Factors which affect the economic feasibility include physical features such as head and flow of water, the capital cost of the physical features of the project, the cost of the connection to the transmission grid, the interest rate and repayment period for borrowed capital, the present and/or future value of equivalent generation from alternative energy sources. Since often the economic factors cannot be determined definitely during the feasibility study stage of the project, procedures are provided to test the sensitivity of the variables. These procedures need to be presented in such a manner that non-technical decision makers, who provide final approval to proceed with projects, can understand and assess the risk of proceeding.