Viability of mini hydroelectric power plants. Risk analysis approach

Abstract

The growing importance of the concept of sustainable development has found in renewable energy technologies an unavoidable instrument for its atiainment. Among these, energy production in mini hydroelectric power plants is of special significance. Presently, the development of such plants is hindered, not by technical aspects, but by the financing mechanisms for investment projects. This delays a possible growth of installed potential, which is essential to meet the commitments adopted in Kyoto, Japan. Entities participating in the financing of micro hydroelectric powerplants demand the inclusion of the concept of risk in viability studies, since they are aware of the uncertainties of some of the variables involved. This article presents the application of the Montecarlo method with the aim of translating uncertainly into a concept of  mathematical risk to several projects already executed in Spain and managed by the Institute for  Energy Diversification and Efficiency (IDAE). The suitability of the method is analyzed for   determining the statistical crutch of possible results of investment return, thus giving investors an adequate tool for decision-making.