‘We need to be more open to changes.’ When Jim Patterson of IMPSA made this statement during the Uprating and Refurbishing Hydro Power Plants VIII conference in December 2001, he was probably unaware that he had summed up the theme of the session chaired by Fred Ayer of Fred Ayer Associates. However, this was exactly the message that came out of Overcoming Barriers to Successful Refurbishment. And it is one that delegates unanimously agreed needs to be addressed.
Taking place on the last day of IWP&DC’s three-day conference, the session was developed to provide URHP delegates in Prague with a forum to exchange ideas and let others know of their experiences. It brought together a range of people from the hydro industry, each with their own expertise in overcoming problems with regards to refurbishment.
The session was designed in two parts. The opening featured presentations from members of the panel on their experiences and advice for delegates. The second part saw members of an earlier panel, World Commission on Dams – Matching Opportunities with Needs, return to the floor to join in an animated discussion on the issues of refurbishment.
Panel presentations
Jim Patterson opened the first session by presenting delegates with an overview of Argentina-based IMPSA’s work in the hydro industry. Offering full development, management and financing of hydroelectric power generation projects under modern BOT, BOO, BROT terms, Patterson said IMPSA had overcome many problems during rehabilitation work by taking advantage of knowledge gained from numerous projects, and through constant training and technology updates.
Patterson listed numerous problems associated with uprating and refurbishment, including traditional risk assessments, structural changes in the industry, new project constraints and project impacts. He pointed out that the hydro industry has gone through numerous changes in the past 50 years, which will obviously have an effect on rehabilitation. From 1950-1980, the industry worked in a Client AE managed situation – equipment and construction were run as separate contracts. Industry consolidation played a big role from 1980-1990, leading to a vertical integration to total product scope and more investment in project developments, with new clients emerging. This was followed in the 1990s with the prevalence of deregulation and privatisations, from which BOT/BOO/BROT projects emerged.
This development led to the need for Impsa to meet new market requirements, including demonstrating a structured approach to the assessment of risk, knowledge outside traditional scope, and financial structuring capability. It also needed to be aware of environmental considerations.
According to Patterson, the company has been able to meet these new requirements. He gave an example of the company’s recent work on projects in the Philippines.
IMPSA, represented in the Philippines by CBK Power Company, is undertaking the rehabilitation of the Caliraya-Botocan-Kalayaan (CBK) hydroelectric power facilities in Laguna and Quezon. Work here will include upgrades of dam abutments and gates, minor tunnel repairs and dam refacing.
Patterson told delegates that the CBK project, which is being run in partnership with Edison Mission Energy, will be designed, constructed and operated in compliance with applicable Philippine and environmental standards. This includes:
• The CBK complex will be capable of meeting or exceeding regulatory requirements for air emissions, water discharge, noise levels and natural disaster protection.
• Each power plant has obtained an environmental compliance certificate.
• The application process includes consultation with the affected population and the submission of an environmental impact statement.
• A comprehensive environmental management system was developed to manage the environmental compliance activities on site.
A further example of the successful refurbishment of a hydro plant was given by John Yale of montgomery-watson-harza. Yale talked about the company’s work on the Rocky Reach project on the Columbia river in Washington, US. The company undertook a US$25M rehabilitation project which involved refurbishing Kaplan turbines, new governors, new transformers, new static exciters and new stators. According to Yale, during the project the economic climate was changing, which meant the company was faced with a regulated utility entering a de-regulated market. Yale told delegates that schedule-based maintenance procedures needed to become condition-based maintenance.
As a result of the demands on the project, work rules were changed to allow the outage maintenance to be undertaken during periods of low demand, during nights and weekends. Yale also told delegates that with this project, outage economics drove the solution. In this case, all generators were replaced because it offered the shortest outage time.
For different countries, the uprating and refurbishment of hydro plants will involve different issues. The situation in India was the subject of consultant I M Sahai’s presentation. India has approximately 150 hydroelectric projects with a total capacity of around 25,000MW. Sahai claimed that the fact the first plant was set up 104 years ago shows that a considerable part of this capacity is old and needs renovation.
He said that although individual efforts were made over the years by respective utilities, the significance of uprating hydro plants was only recognised in the mid 1980s. The Indian government set up a national committee of experts in January 1987 to identify the units needing uprating and refurbishing, and to assess expenditure, time-frame, benefits, pattern of financing and allied issues. Based on the report of the committee, given in July 1987, a national programme was formulated by the government to bring about improvements in plant operations to acceptable standards of safety, and in plant availability and reliability, extension of life, reduction in outages, recovery of lost capacity and uprating plant capacity. This programme covered the uprating of 55 stations, with a total installed capacity of 9653MW. The work, on completion, was expected to give about 2531MW of increased capacity.
Sahai pointed out that in drawing up and executing the individual rehabilitation projects, the importance of engineering solutions was stressed. In future, he suggested, other aspects would need to be addressed, including:
• Environmental issues need priority. Any new technology or equipment used has to be environmentally-friendly.
• Any rehabilitation plans should include remedial measures for land degradation, loss of tree-cover, or damage to fisheries and aqua-culture
• The local population should be kept aware of rehabilitation plans
Bernhard Pelikan of the University of Agricultural Sciences, Austria, brought the renewables situation and environmental issues in Austria to the fore during his presentation, which centred on the introduction of tradable green certificates (TGC).
‘At the moment, hydro power is the playing ball for certificates,’ said Pelikan. He told delegates that the principle behind the TGC system was to split the value of the energy unit into a physical and ideological part representing the sustainability of a unit of renewable generation.
To turn green certificates into TGCs – which have a rolling validity of two years – a market has to be created by setting obligations. This can be done at any point of the electricity supply between production and consumption. Pelikan said the preferred version is the obligation of consumers or the suppliers. Although the consumer obligation may be useful from a strategic point of view, it is hard to handle and execute. The most easily controlled obligation is that of the suppliers.
Pelikan said, however, that any obligation which has a quota to meet its target needs some enforcement. Two models may be offered, both corresponding with the price of a TGC: a fixed amount added or a certain percentage added.
Pelikan also pointed out that TGCs are currently only applicable to small hydro of 10MW or less in Austria. He stressed that he thought it should be extended to all hydro – whatever its size.
When it comes to uprating and refurbishment, legal issues are an important consideration, according to Peter Cassidy of Masons, a UK-based law firm. Cassidy looked at the legal issues of refurbishment and how Europe as a whole is dealing with the renewables issue. He offered advice to the audience about what they should look for when developing projects, including language used in contracts, design liability and price.
Discussing refurbishment
The updated format of URHP 2001 featured two panel sessions – Overcoming Barriers to Successful Refurbishment and World Commission on Dams (WCD): Matching Opportunities with Needs. Although these issues may seem worlds apart, the gap between them can be bridged, as independent consultant Larry Haas, told delegates. Formerly a team leader with the WCD secretariat, Haas pointed out that in its report, the WCD recognised that barriers needed to be overcome with regards to existing dams. And URHP offered an ideal opportunity to help identify these barriers.
The informal discussion which followed the presentations, offered a chance for the WCD speakers to join forces with the existing panellists to share their experiences of the issues surrounding refurbishment. Almost immediately, the panellists pointed out that one of the biggest problems in the industry was the lack of self-promotion.
‘There are obstacles in the way of the hydro industry,’ Haas said. ‘We need to promote the industry and to do this we need the support of the media.’
Another point emphasised during the discussion was the lack of training in the industry. Teams who undertake refurbishment need to be skilled in a multitude of areas, and this can only be achieved through efficient training.
This point was taken up by Jim Patterson, who told delegates that training is a key issue that Impsa deals with on a daily basis. He said the company sends 8-10% of selected employees on courses to help improve areas of their business, such as financial management.
‘The two most important points for our business are schedule and budget,’ he said. ‘If people are sent on specific courses they can help contribute to these areas.’
The need for training is spreading throughout the industry – even to law firms involved in hydro. ‘Training is being applied to lawyers nowadays,’ said Peter Cassidy. ‘Lawyers are becoming businessmen. If they are to represent the hydro industry, then they need to know about the industry.’
Overcoming barriers
The most important message to evolve from this session was that the discussion should not stop at IWP&DC’s conference. Members of the industry must continue with these thought processes to ensure barriers to effective refurbishment are successfully overcome.
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