• Energy Research
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Deregulated energy markets were founded on the Merchant Power Producer, a stand-alone generator that sold its production to the spot and short-term forward markets, underpinned by long-dated project finance. The initial enthusiasm that existed for investment in existing and new merchant power plant capacity shortly after power system deregulation has progressively dissipated, following an excess entry result. In this article, we demonstrate why this has become a global trend. Using debt-sizing parameters typically used by project banks, we model a benchmark plant, then re-simulate its performance using live energy market price data and find that such financings are no longer feasible in the absence of long-term Power Purchase Agreements.

Deregulated energy markets were founded on the Merchant Power Producer, a stand-alone generator that sold its production to the spot and short-term forward markets, underpinned by long-dated project finance. The initial enthusiasm that existed for investment in existing and new merchant power plant capacity shortly after power system deregulation has progressively dissipated, following an excess entry result. In this article, we demonstrate why this has become a global trend. Using debt-sizing parameters typically used by project banks, we model a benchmark plant, then re-simulate its performance using live energy market price data and find that such financings are no longer feasible in the absence of long-term Power Purchase Agreements.

A brisk building boom of hydropower mega-dams is underway from China to Brazil. Whether benefits of new dams will outweigh costs remains unresolved despite contentious debates. We investigate this question with the "outside view" or "reference class forecasting" based on literature on decision-making under uncertainty in psychology. We find overwhelming evidence that budgets are systematically biased below actual costs of large hydropower dams - excluding inflation, substantial debt servicing, environmental, and social costs. Using the largest and most reliable reference data of its kind and multilevel statistical techniques applied to large dams for the first time, we were successful in fitting parsimonious models to predict cost and schedule overruns. The outside view suggests that in most countries large hydropower dams will be too costly in absolute terms and take too long to build to deliver a positive risk-adjusted return unless suitable risk management measures outlined in this paper can be affordably provided. Policymakers, particularly in developing countries, are advised to prefer agile energy alternatives that can be built over shorter time horizons to energy megaprojects.

A brisk building boom of hydropower mega-dams is underway from China to Brazil. Whether benefits of new dams will outweigh costs remains unresolved despite contentious debates. We investigate this question with the "outside view" or "reference class forecasting" based on literature on decision-making under uncertainty in psychology. We find overwhelming evidence that budgets are systematically biased below actual costs of large hydropower dams - excluding inflation, substantial debt servicing, environmental, and social costs. Using the largest and most reliable reference data of its kind and multilevel statistical techniques applied to large dams for the first time, we were successful in fitting parsimonious models to predict cost and schedule overruns. The outside view suggests that in most countries large hydropower dams will be too costly in absolute terms and take too long to build to deliver a positive risk-adjusted return unless suitable risk management measures outlined in this paper can be affordably provided. Policymakers, particularly in developing countries, are advised to prefer agile energy alternatives that can be built over shorter time horizons to energy megaprojects.

In 2016, 1,100 million people lack access to electricity, mainly in developing countries in Africa, Asia and South America. In these countries, there is a large potential for hydroelectric production through off-grid microgrids, although not fully exploited. This work assesses the long-term sustainability of off-grid microhydro projects operating in rural indigenous communities. More specifically, four sustainability dimensions are analyzed: environmental, technical, socioeconomic and institutional, and specific indicators are proposed for each one. In particular, 6 micro-hydroelectric power plants in southern Venezuela are used as case studies. The data gathering includes surveys, technical visits and interviews with technicians, engineers and beneficiaries. Results show that the institutional dimension and, in particular, alignment between involved institutions has been fundamental for the long-term sustainability. Indeed, appropriate institutional alignment is the key to strengthening the impacts on: (i) the environmental dimension, minimizing emissions and impacts on local ecosystems; (ii) the technical dimension, improving adequacy and reliability of technologies; and (iii) the socioeconomic dimension, making efficient use of electricity to enhance education, health and productivity. Lessons learned and conclusions of this research can significantly contribute to improve future projects, in particular to the 22 included in the electrification plans of Venezuela in coming years. Peer Reviewed

In 2016, 1,100 million people lack access to electricity, mainly in developing countries in Africa, Asia and South America. In these countries, there is a large potential for hydroelectric production through off-grid microgrids, although not fully exploited. This work assesses the long-term sustainability of off-grid microhydro projects operating in rural indigenous communities. More specifically, four sustainability dimensions are analyzed: environmental, technical, socioeconomic and institutional, and specific indicators are proposed for each one. In particular, 6 micro-hydroelectric power plants in southern Venezuela are used as case studies. The data gathering includes surveys, technical visits and interviews with technicians, engineers and beneficiaries. Results show that the institutional dimension and, in particular, alignment between involved institutions has been fundamental for the long-term sustainability. Indeed, appropriate institutional alignment is the key to strengthening the impacts on: (i) the environmental dimension, minimizing emissions and impacts on local ecosystems; (ii) the technical dimension, improving adequacy and reliability of technologies; and (iii) the socioeconomic dimension, making efficient use of electricity to enhance education, health and productivity. Lessons learned and conclusions of this research can significantly contribute to improve future projects, in particular to the 22 included in the electrification plans of Venezuela in coming years. Peer Reviewed