Hydropower is essential to fulfill future energy demands. Water scarcity is likely to increase due to climate change and aase in water demand. Therefore, Climate Risk Assessments are required before large investments in new and large hydropower stations (>100 MW) are made. Small hydropower (1 – 20 MW) does not require these Climate Risk Assessments yet, but this will eventually happen in the future. Investors are highly interested in the profitability of these small hydropower stations, especially because of the uncertainty caused by future climate change. Current methods for Climate Risk Assessments (CRA) are however still too costly for these small-hydro projects because they are very labor intensive and require specific knowledge.
FutureWater has carried out a feasibility study to assess the possibilities for the development of a «Small-Hydro Climate Risk Assessment tool» (SH-CRA) that can make CRA’s for small-hydro projects cost effective. The starting point of this project to develop the SH-CRA is the recent change in the approach to CRA’s: until a few years ago, these were based purely on climate models, also known as the “Top-down” approach. Nowadays however, investors require a more pragmatic approach in which climate risks are balanced against other risks and presented in a clear way. This new “Bottom-up” approach makes it possible for small-hydro projects to include climate risks in the investment decision.
This feasibility project has therefore investigated whether the “bottom-up” climate risk analysis approach can make it possible to develop such a SH-CRA solution, based on a combination of literature research, an inventory of available technology and potential partners, and competition analysis.