Costs Associated with Hydroelectricity

 

It is difficult to calculate the precise costs of riverside hydro systems as there are many factors that must be taken into consideration which vary between installations, including:

  • civil engineering - materials and labour costs
  • system cost based on size, output and quality
  • electrical costs - connection to grid and electricity distribution
  • planning/project management fees
  • running and maintenance costs, based on the type and size of the installation (this may include metering costs for larger systems)

The key variable when calculating installation costs for hydro systems is the amount of civil construction work that needs to be done, as this is usually the most costly part of the project, costing more than the system itself. At some sites it may be possible to make use of existing structures, while at others the construction will need to be done from scratch, generally speaking.

Non-business owners of renewable energy systems enjoy a reduced rate of VAT (5%).

There may also be funding available from local, UK, and European government sources. The Local Government Association has more information on potential funding sources and loans.

Here are some indicative system sizes and installation and running costs for small and medium river-based hydro systems.

 

System power Estimated annual system output Approx. system and installation cost Approx. annual running costs
5kW 22,000kWh £25,000-£50,000 £1,000
25kW 110,000kWh £100,000-£200,000 £2,500
50kW 220,000kWh £250,000-£350,000 £5,000
100kW 440,000kWh £400,000-£500,000 £7,500
250kW 1,100MWh £800,000-£1,000,000 £17,500
1MW 4,000MWh £2,500,000-£3,500,000 £100,000

 

As noted already, tidal hydro energy generation stations are still relatively untested in this country (and indeed the rest of the world), so there are very few precedents to learn from in terms of cost and potential revenue. As a rough figure, however, tidal hydro can be expected to cost around £3.5-£4 million per MW. Construction and engineering costs for tidal turbines are also very high, as they require extensive drilling into the seabed.

 

Finance for Hydroelectricity

There are a number of companies offering finance for hydro technology in the United Kingdom. Finance, in the form of loans and leasing agreements, is available for domestic, commercial and industrial installations, in both the private and public sectors. Finance for renewable energy technologies allows customers to avoid large upfront costs and make payments out of the income earned from Feed-in tariffs, as well as energy bill savings.

Finance may be offered on a range of bases, each offering varying levels of financial risk and reward, as well as varying interest rates. Typically the finance company will provide the renewable energy technology and the cost of installation in return for payments spread over a period of time. Depending on the type of agreement, the client may either come to own the technology at the end of the period, it may be sold by the company with the proceeds being split between client and company, or the company could retain it.

The arrangements offered by finance companies will vary, however, and each company will offer different advice. It is therefore advisable to obtain quotes and agreement terms from a range of companies, based on clients’ energy needs and financial situation. Caution should also be taken when calculating one’s ability to make repayments, as the returns offered by some renewable technologies depend in large part on the weather.

Look here for some companies offering finance for hydro technology.

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