Effect of Variation of design flow in small hydropower plant;

A case study of Chhangdi Small Hydropower project

Sunil Kumar Piya1, Boonrod Sajjakulnukit1
1

Energy Technology and Management, Joint Graduate School of Energy and Environment,King Mongkut University of
Technology, Thonbury, ,126 Prachuthit, Bangmod, Tung Kru, Bangkok 10140, Thailand.

ABSTRACT
Nepal has a huge hydropower potential due to sudden
change of gradient in short span and is an essential feasible
source of electric power. Small hydropower projects are
considered environment friendly, easy and fast to construct
and require less initial investment compared to the large
one but cost of generation of power per unit is higher. The
design flow for power purchase agreement (PPA) is Q40
for small hydropower in Nepal. This paper presents the
various design flow such as Q40, Q35, Q30 and Q25 and its
implications on the financial parameter of Chhangdi Small
Hydropower Project of Nepal. Various parameters of the
project are taken for financial analysis and are presented to
show the impact. Feed in tariff can be one of the incentives
given to attract investors and not restricting the design flow
to Q40 may be another option for rapid small hydropower
development in Nepal.
Keywords: Design flow, Feed in tariff, Financial analysis,
Hydropower.

INTRODUCTION
Nepal has a huge hydropower potential of around 83,000
MW of which current estimate for economically feasible
power is around 43,000 MW (180,000 GWh/yr) [1].
Despite having enormous potential of hydroelectricity only
50% of the total population has access to grid electricity
[2]. Because of the gradient difference from lowest point,
80 meter above the sea level which has tropical climate, to
highest peak of the world, The Mount Everest 8848 meters
which has Siberian climate, with in the span of about 160 to
240 km width made this potential available [3]. Further it
contains 8 of the 10 highest mountains in the world. Nepal
is a mountainous landlocked country, China in the north
and India at south, east and west, with an area of 147,181
km2.
Nepals almost all electricity is produced by hydropower
and hence the supply is mainly dependent on hydropower.
The dependency in hydropower is because of the
abundance and availability; whereas other sources of power
such as fossil fuel are not available with in Nepal and have
to be imported from other country. There are two diesel
power stations which are in Hetauda with 14.41 MW and
Duhabi Multifuel plant with 39 MW and are used as a
peaking load plants. The total installed capacity including

private power producer and others are 705.566 MW [4] in

which Nepal Electricity Authority (NEA) owns 477.530
MW and Independent Power Producer (IPP) owns 174.526
MW of hydropower. System peak load is 1056.90 MW. We
can clearly see that there is a vast difference between the
supply and demand of electricity. We also have to consider
that the power available is not the 705.566 MW it is the
installed capacity of the system and the hydropower
stations are normally Run of the River (RoR) type and
normally designed for 40% probability of flow exceedance
(Q40). There is only one storage type power station
Kulekhani of 60 MW which was commissioned in 1982.
Later cascade of this power station was build named as
Kulekhani II with 30 MW installed capacity and another
cascade Kulekhani III 14 MW is under construction. It
shows that there is a huge demand of electric power in the
Kingdom of Nepal all around the year even though Nepal
has free abundantly available hydro electric energy which
can be utilized for its electricity as well as other
commercial energy. If the potential is utilized then electric
vehicles can be used which will be an alternative to fossil
fuel [5]. If this can be done then Nepal will be decreasing
the emission of greenhouse gas.
Hydropower is the most mature renewable energy source
[6]. There is a huge potential and market for the
development of hydropower in Nepal and can be harnessed
by large and storage type of hydropower. Small
hydropower has less environmental impact, low investment
requirement which leads to in-house financing capability,
possibility of local technological enhancement and less time
consuming features. Beside this as the small hydropower is
located in the rural area it helps to develop small agro base
industries and hence leads to promote life standard of
remote villagers. Hence small hydropower is not only
investment friendly and fast to develop it also promote
economic activities in rural areas. But small hydropower
construction is lower in number compared to study license
issued [7], which may be because of higher cost per unit for
generation. Feed in Tariff can be incentive to the developer
to meet the financial criteria for investment [8] and not
restricting the design flow to Q40 may be the option for
rapid small hydropower development in Nepal.
Design flow is the maximum flow of water in the river
for which the hydro system is designed [9]. The design flow
is generally lower than the maximum available flow and is

taken to balance the power output and the cost of project so

that the cost is optimized.
This study is focused on Chhangdi Small Hydropower
Project situated in North Western side of Kathmandu, still
under consideration for its feasibility and financial analysis.
This report focuses on energy produced and hence revenue
generated when considering costs for different flow
condition so that the optimum design flow for the project is
found.

TABLE I
COSTS OF COMPONENETS OF CHHANGDI HYDROPOWER PROJECT
No.
Description
Cost in US$
31734
1.
Land acquisition
15338
a
Land acquisition for power generation
b
2.
a
b

METHODOLOGY

Financial analysis has many variables involved while

calculating cost and benefits. Cost of the project mainly
involves pre-operating, land acquisition, civil, hydro
mechanical,
electro
mechanical,
transmission,
environmental mitigation, corporate social responsibility,
engineering management, taxes and custom costs [10].
Benefit is calculated from the production and sale of
electricity. Production electricity depends on flow of water
in the river as the efficiency factor and head of river is
assumed to be constant throughout the life time of project.
Design flow of the particular river can be found out by
interpreting the flow of that river. Chhangdi River is
considered for the study in this paper. Data collection, data
interpretation, flow duration curve for design flow and
financial analysis are the processes involved in this paper.
Data collection was done by going to the site and
measuring the flow and reading and interpreting the data
read from the gage established in the river. After the data is
received it is interpreted to give the flow of river. This flow
is rearranged so that the flow duration curve is plotted and
hence design flow can be estimated. First design flow Q40
is taken for financial analysis as Government of Nepal does
Power purchase agreement according to this flow. Then
various design flow such as Q35, Q30 and Q25 is taken for
financial analysis. Various financial parameters such as Net
Present Value (NPV), Benefit to Cost Ratio (B/C Ratio),
Internal Rate of Return (IRR) and Equity are taken in to
consideration for the financial analysis of the project.

d
e
f
g
h

Land acquisition for power evacuation

Civil
Mobilization and preparatory works including
power supply
Access road improvement works
Headworks (weir, under sluice, Gravel trap,
Canal spill way, etc.)
Coffer dam (River diversion)
Approach canal
Water way(Headrace pipe Ghatte to Chhangdi
and cross drainage)
Desilting basin, spill way and flushing canal

16396
870119
80543
28765
226671
13807
21678
225498
97469
19560

Forebay
Anchor block and saddle supports or Penstock
support
Power house and tailrace

Switch yard

3.

Hydromechanical

943010

Intake, sluiceway

20412

Desilting basin accessories

1036

Forebay accessories

6110

Power house

Penstock pipe

4.

Electromechanical

5.

Transmission line with interconnection

6.

8.

Base cost
Environment mitigation and Corporate Social
Responsibility
Contingency cost

7.

33368
106961
15798

10045
99977
662709
241629
2749200
39650
206828
130518

Civil

Hydromechanical

37720

Electromechanical

26508

Transmission

9.

12081
2956028

RESULT AND DISCUSSION

10.

Cost for the project is calculated on the individual basis

and added to give the project cost. The table I below shows
the cost associated with different structures and equipment.
Costs associated are stated in United States dollar (US$).
Interest during construction is dependent on the
drawdown of debt. It is planned to drawdown 6 times for a
whole project period. As the project is scheduled to finish
within 18 months there are only 6 installments which are
10, 20, 10, 20, 20, and 20 percent of total debt. Beginning
of construction is the first draw down and then after every3
months the draw down is schedule to take place.

11.

Project cost
Engineering management, administration and
construction supervision
Insurance

12.

Predevelopment/preliminary expenses

57531

13.

Custom

19237

14.

Local taxes

15.

VAT

16.

Total project cost

3453396

17.

Cost per Kilowatt

2031

18.

Interest During Construction (IDC)

19.

Financial cost

204701
27492

18675
130083

170425
3623821

Apart from the total project cost associated with the

project are operation and maintenance cost. This includes
project maintenance, staff salary, Insurance, office expense
and other expenses. These costs are needed to find out the

financial parameters and shown below in table II. Normally

staff salary is given for 13 months in Nepal and generally it
is in between September and October called Ashwin in
Nepali month, which is also a festival month.

Month

15Apr-15May
(Baisakh)
16May-15Jun
(Jestha)
16Jun-15Jul
(Asadh)
16Jul-15Aug
(Shrawan)
16Aug-15Sep
(Bhadra)
16Sep-15Oct
(Ashwin &
Festival)
16Oct-15Nov
(Kartik)
16Nov-15Dec
(Mangsir)
16Dec-15Jan
(Poush)
16Jan-15Feb
(Magh)
16Feb-15Mar
(Falgun)
16Mar-15Apr
(Chitra)
Total

TABLE II
OPERATION AND MAINTENANCE COST
Projec
Insura
Staff
Office Othe
t
nce
Salary
Exp.
rs
Maint
US$
US$
US$
US$
US$
412
1146 2549
1663
275

Total
US$
6044

412

1146

2549

1663

275

6044

412

1146

2549

1663

275

6044

412

1146

2549

1663

275

6044

412

1146

2549

1663

275

6044

412

1146

5097

1663

275

8593

412

1146

2549

1663

275

6044

412

1146

2549

1663

275

6044

412

1146

2549

1663

275

6044

412

1146

2549

1663

275

6044

412

1146

2549

1663

275

6044

412

1146

2549

1663

275

6044

4949

13746

33132

19952

3299

75077

Now to find out the benefit part associated with the

project we have to find out the design flow. Flow data from
the river was taken and interpreted so that the flow duration
curve is drawn.
TABLE III
FLOW DATA OF CHHANGDI RIVER FROM NOV.2011-AUG.2012
Percentage of time (%) exceeding
Flow (m3/sec)
98.3935743
0.3
87.9518072
0.4
67.8714859
0.5
55.8232932
0.6
47.3895582
0.7
44.9799197
0.8
41.3654618
0.9
36.5461847
1
34.1365462
1.1
31.7269076
1.2
30.5220884
1.4
28.5140562
1.6
27.7108434
1.7
26.9076305
1.8
26.5060241
1.9
25.7028112
2

24.497992
23.6947791
22.0883534
21.686747
18.4738956
17.2690763
16.8674699
15.6626506
13.6546185
11.6465863
10.8433735
10.0401606
9.6385542
8.8353414
8.4337349
8.0321285
7.2289157
6.8273092
6.0240964
5.2208835
4.0160643
2.4096386

2.1
2.2
2.3
2.5
2.6
2.7
2.8
2.9
3
3.5
3.6
3.7
3.9
4
4.2
4.3
4.4
4.6
4.9
5.1
5.3
5.5

Summary of the data interpreted from flow available in

the river is shown above in the table III. The data is used to
draw the flow duration curve which is shown in Fig.1
below. From flow duration curve the design flow can be
selected. Now it can be seen that design flow for 40 percent
exceedance of time (Q40) is 1.3m3/sec similarly Q(35) is
1.5m3/sec. Again for Q(30) design flow is 1.75m3/sec and
for Q(25) design flow is 2.05m3/sec.
6
5.5
5
4.5
4
3.5
3
Discharge
(m3/sec) 2.5
2
1.5
1
0.5

0
0 10 20 30 40 50 60 70 80 90 100
Percentage of time flow exceeding
Fig. 1. Flow duration curve of Chhangdi River.

TABLE IV
REVENUE AS BENEFIT FOR CHHANGDI HYDROPOWER PROJECT

Month

No of
days

Discharge
(m3/sec)

Gross
Power KWh

Losses
KWh

Net Energy
KWh

Rate
US$

Total Revenue
US$

Baisakh

31

0.293

300,510

15025

285,484

0.055

15767

Jestha

31

0.503

514,718

25736

488,982

0.055

27006

Asadh

32

1.3

1,345,593

67280

1,278,313

0.055

70601

Shrawan

31

1.3

1,303,543

65177

1,238,366

0.055

68394

Bhadra

31

1.3

1,303,543

65177

1,238,366

0.055

68394

Ashwin

31

1.3

1,303,543

65177

1,238,366

0.055

68394

Kartik

30

1.206

1,174,181

58709

1,115,472

0.055

61607

Mangsir

29

0.902

856,648

42832

813,816

0.055

44947

Poush

30

0.682

673,335

33667

639,668

0.097

61825

Magh

29

0.489

468,195

23410

444,785

0.097

42989

Falgun

30

0.356

353,151

17658

335,493

0.097

32426

Chitra

30

0.243

241,292

12065

229,228

0.097

9,838,250

491913

9,346,338

365

As design flow is decided turbines, generators and

other equipment are installed according to the installed
capacity. Estimated flow for each month in the river is
found out and hence the benefit can be calculated
accordingly.
Debt is assumed to be 70% and equity is 30% of the
total cost and this is the usual practice for hydropower
financing in Nepal.
TABLE V
DEBT AND EQUITY FOR INVESTMENT IN US$
Project cost
3,623,821
Debt

70%

2,536,675

Equity

30%

1,087,146

Data available here are enough for calculation of

financial parameters such as IRR, B/C ratio and NPV as
shown in the table VII. Revenue is increased for 5 years
at the rate of 3% and then kept fixed for the whole
period. Depreciation is taken as flat and distributed over
30 years as the Government of Nepal provides license
for 35 years. Operation maintenance cost is increased by
5% every year. Social cost and bonus is taken as 2% of
profit. Royalty and tax is taken according to the law and
calculated. Table VI shows the calculated NPV, IRR
and B/C Ratio.
TABLE VI
FINANCIAL PARAMETERS FOR Q40
Net Present Value (NPV)

876,975

Internal Rate of Return (IRR)

13.43%

B/C Ratio/Profitability Index

1.24

22155
584506

Financial parameters were calculated for the design

discharge of Q(35), Q(30) and Q(25) as above with
Certain assumptions listed below.
Land acquisition for power generation and power
evacuation is the same for all design flow. 33 KV line is
used for power evacuation for Q40 and it can be used
for all the other power produced by altering the design
flow.
In Civil works Desilting basin, spill way flushing
canal, forebay, anchor block and saddle support for
penstock and power house and tailrace price is
increased. The price of mobilization access road, head
works, cofferdam approach canal is kept the same for all
the design flow.
In hydro mechanical equipment price of penstock is
kept constant because the analysis is done by
compensating the price of penstock through adopting the
loss increased by increase in flow. The new frictional
loss is adopted for the time when design flow is
available only.
Electromechanical cost is increased according to the
size of the project. United States dollar 380 is taken per
Kilowatt for electromechanical equipment.
Transmission line cost is taken as same for all design
flow and capacity considered in this thesis.
Engineering management, insurance, etc. are increased
accordingly and predevelopment cost is taken same for
all capacity.
Financial parameters calculated thereafter is tabulated
and shown in the table VIII.

TABLE VII
FINANCIAL PARAMETERS CALCULATED FOR Q40
Year

Revenue

O&M

Royalty

Depreciation

Social

Profit

Tax

Profit

Cash

Cost +

Before

10%/

After

Inflows

Amortization

Bonus

Tax

20%

Tax
(3,623,821)

584,506

75,077

1,968

120,794

7,733

378,934

378,934

499,728

602,042

78,831

1,968

120,794

8,009

392,439

392,439

513,233

619,577

82,773

1,968

120,794

8,281

405,761

405,761

526,555

637,112

86,911

1,969

120,794

8,549

418,889

418,889

539,683

654,647

91,257

1,969

120,794

8,813

431,815

431,815

552,609

672,182

95,820

1,969

120,794

9,072

444,527

444,527

565,321

672,182

100,611

1,969

120,794

8,976

439,832

439,832

560,626

672,182

105,641

1,969

120,794

8,876

434,902

31,912

402,990

523,784

672,182

110,923

1,969

120,794

8,770

429,726

34,859

394,867

515,661

10

672,182

116,469

1,969

120,794

8,659

424,290

38,161

386,130

506,924

11

672,182

122,293

1,969

120,794

8,543

418,583

83,717

334,867

455,661

12

672,182

128,408

1,969

120,794

8,420

412,591

82,518

330,073

450,867

13

672,182

134,828

1,969

120,794

8,292

406,299

81,260

325,039

445,833

14

672,182

141,569

1,969

120,794

8,157

399,692

79,938

319,754

440,548

15

672,182

148,648

1,969

120,794

8,015

392,756

78,551

314,204

434,998

16

672,182

156,080

19,628

120,794

7,514

368,167

73,633

294,533

415,327

17

672,182

163,884

19,628

120,794

7,358

360,519

72,104

288,415

409,209

18

672,182

172,078

19,628

120,794

7,194

352,489

70,498

281,991

402,785

19

672,182

180,682

19,628

120,794

7,022

344,057

68,811

275,245

396,039

20

672,182

189,716

19,628

120,794

6,841

335,203

67,041

268,163

388,957

21

672,182

199,202

19,628

120,794

6,651

325,907

65,181

260,726

381,520

22

672,182

209,162

19,628

120,794

6,452

316,146

63,229

252,917

373,711

23

672,182

219,621

19,628

120,794

6,243

305,897

61,179

244,718

365,512

24

672,182

230,602

19,628

120,794

6,023

295,136

59,027

236,109

356,903

25

672,182

242,132

19,628

120,794

5,793

283,836

56,767

227,069

347,863

26

672,182

254,238

19,628

120,794

5,550

271,972

54,394

217,578

338,372

27

672,182

266,950

19,628

120,794

5,296

259,514

51,903

207,611

328,405

28

672,182

280,298

19,628

120,794

5,029

246,434

49,287

197,147

317,941

29

672,182

294,313

19,628

120,794

4,749

232,699

46,540

186,159

306,953

30

672,182

309,028

19,628

120,794

4,455

218,278

43,656

174,622

295,416

CONCLUSION
From calculations done for this paper with certain
assumptions we can now conclude that for this
particular project design flow of Q30 is most feasible in
financial point of view. Financial parameter such as
NPV, IRR and B/C ratio all are are found to be the
highest in this flow whereas cost required for Q25 is the
highest. Table VIII shows cost required for the project
for the given design flow and respective NPV, IRR and
B/C ratio. As the cost per unit of power production is
higher small hydropower projects as compared to large
one the author did not do analysis for Q45 or Q50 as it
tends to reduce the installed capacity and hence tend to
further increase unit cost. This paper shows that the
specific design flow may not be financially feasible for

each and every project and hence there should not be

fixed design flow.
TABLE VIII
FINANCIAL PARAMETERS COMPARED FOR VARIOUS DESIGN FLOW
Q40
Q35
Q30
Q25
Cost US$
3,623,821
3,845,496
4,067,170
4,348,748
NPV US$
876,975
1,021,686
1,256,973
1,186,183
IRR
13.43%
13.47%
14.32%
13.82%
B/C Ratio
1.24
1.27
1.31
1.27

ACKNOWLEDGMENT
The author is grateful to Chhangdi Small
Hydropower Project, Lamjung, Nepal for providing the
valuable data required for this paper. The author would

like to thank the government of Nepal and the

government of Thailand for financial support and Joint
Graduate School of Energy and Environment and King
Mongkuts University of Technology for providing all
the support and help to complete this paper.
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