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OTHER NEWS 15 Dec 2014

Hydro Power Plants with Cost-Saving Potential

Hydro power benchmarking by Pöyry Management Consulting reveals cost-optimal power plant operation

Approximately 30 percent of Europe’s hydro power plants can cut costs by five to ten percent on average, Pöyry Management Consulting experts have found out. As part of a hydro power benchmarking study, so far more than 250 plants of major European hydro power plant operators have been analysed for their cost efficiency. The study reveals that the most efficient hydro power plants are the more modern ones which are permanently invested in, particularly storage power plants and power plants with Francis turbines.

Pöyry adopted a customised approach, which is the first to take structural and technical differences of hydro power plants into account, systematically including hydro power specific cost drivers. Economic and structural data of every single power plant is collected. Part of the economic data is operation & maintenance expenses (O&M), which provides the basis for the cost performance comparison. As regards structural data, all potential cost drivers and non-modifiable features of the power plant are collected, including information on geographical situation, turbine type, installed capacity, net production as well as length of dams and weirs. The benchmarking study allows for a complete overview on the O&M cost structure, on the basis of which differences to other power plants and potential areas of improvement can be identified.

Dr. Christoph Müser, Managing Director at Pöyry Management Consulting, says: “Cost efficiency plays a significant role particularly for European hydro power plant operators.” They are facing great challenges in the current market environment created by the liberalised single market. Sinking market prices and an increasing number of regulatory requirements result in a decrease in revenue. Sustainable growth opportunities to generate new sources of income are currently very rare for the capital-intensive hydro power sector since investments in new generation capacities require long-term security of investment and a stable political environment. Currently, however, this is in contrast to additional public burdens, administrative barriers and uncertain market developments. “Therefore, hydro power plant operators cannot rely on growth options in order to retain their competitiveness but depend on the constant improvement of their efficiency, which can primarily be achieved by cost optimisation,” Mr Müser continues to say. 

Pöyry has more than 100 years of expertise in the hydropower sector and has installed hydropower plants with a total capacity exceeding 100,000 MW (1/8 of total global capacity). Engineering requires to take into account the economic efficiency of the plants. Pöyry, thus, invites interested hydro power plant operators to discuss and refine methods in order to further promote ‘Best-Practices-Sharing‘ and performance improvements in the hydro power sector.

About Pöyry

Pöyry is an international consulting and engineering company. We serve clients globally across the energy and industrial sectors and locally in our core markets. We deliver strategic advisory and engineering services, underpinned by strong project implementation capability and expertise. Our focus sectors are power generation, transmission & distribution, forest industry, chemicals & biorefining, mining & metals, transportation and water. Pöyry has an extensive local office network employing about 6,000 experts. Pöyry's net sales in 2013 were EUR 650 million.  In Germany, the company has a nationwide presence in 18 locations, with approximately 700 experts.

Contact

Dr. Christoph Müser
Managing Director
Pöyry Management Consulting
E-Mail: christoph.mueser(at)poyry.com
Tel.: +49 211 17 52 38-0

Marcel Forger
Group Communications
Pöyry Deutschland GmbH
E-Mail: marcel.forger(at)poyry.com
Tel.: +49 351 2052-122