Internalized Costs of Hydro

What is meant by "internalized costs"?

Internalized costs are the costs which can be accurately accounted for in our current systems. In energy production, these costs typically consist of capital costs, financing costs, operation and maintenance costs, and exploration costs. Some energy options incur these costs in various stages such as extraction, transportation and refinement. Profits and taxes are excluded wherever possible in order to isolate the pure cost of production.

Internalized costs of hydro

The internalized costs of hydropower vary greatly depending on the location. In locations with great water resources and the perfect topography and rock structure for the construction of dams, hydropower can be produced at costs below even the cheapest coal plants. Unfortunately, such locations are in limited supply, implying that hydro cannot economically meet more than a few percent of society's energy needs. As shown below, hydropower has already maxed out in the rich world several decades ago, but is still growing rapidly in the developing world (mainly due to China).

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Internalized costs of hydropower are dominated by capital costs and these costs can vary by as much as an order of magnitude between different counties. For example, this IEA report gives capital costs for Chinese hydropower in the vicinity of $1000/kW and Japanese hydropower in the vicinity of $10000/kW.

Electricity

The LCOE of hydropower is given below as a function of the two most important variables: plant capital costs and financing costs. Other assumptions include O&M costs of $5/MWh, a plant lifetime of 50 years and a 50% capacity factor. The Excel datasheet used to create this figure can be accessed here.

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Heating

The cost of using hydroelectricity for heat is given below.

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Transport

As outlined in the previous article on the internalized costs of nuclear, transport costs using hydroelectricity will be estimated based on projected technologically mature synfuel production costs. Synfuel costs are given below as a function of the electricity cost. 

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Commenting

In order to assist in finding the consensus view on the internalized costs of hydropower, please follow these simple commenting guidelines:

Three types of comments are welcome, each introduced by a keyword:

  1. DATA: Please give your opinion on any of the numbers presented in the article. Of particular interest is the average global capital cost of a hydropower plant at commissioning ($/kW) and the discount rate excluding investor profits (%). Each DATA comment will be weighted by the number of "likes" when the data is ultimately processed.
  2. REBUTTAL: If you strongly disagree with an existing DATA comment, please write a short rebuttal. The "likes" received by a REBUTTAL comment will subtract from the "likes" of the DATA comment. A REBUTTAL comment can once again be rebutted to reduce its weighting.
  3. CORRECTION: If you see a serious error in the numbers presented in the above analysis, please correct me so that I can correct the article.

Miscellaneous guidelines:

  • Make sure your comment gives only one piece of information (use multiple comments for multiple pieces of information).
  • Keep things short.
  • Please try to be as objective as at all possible. For this process to work, we all need to be in the mindset of dialectic instead of debate.
  • Externalities and other energy options are off-topic.

Many comments are welcome. More data = greater accuracy.