Projects of Sector planning Sector

WB Economic Viability of SHPPs in Kyrgyzstan

Organization: DH Infrastructure

Description

Hydropower has historically played an important role in the power sector of the Kyrgyz Republic, but hydropower capacity has become increasingly inadequate to meet growing demand, particularly during winter months. The World Bank wanted to hire a consulting firm to give the Government of the Kyrgyz Republic a better understanding of the economic viability of small hydropower (SHPP) development in the Kyrgyz Republic and the financial support that would be required to facilitate and maintain the commercial operation of SHPPs in the short and long term. The economic and financial analysis conducted as part of this project complements a concurrent assignment of the legal and regulatory framework for SHPPs in the Kyrgyz Republic that is being carried out by the World Bank. Together, these two projects provide insight into the feasibility of developing SHPP potential in the Kyrgyz Republic.

Service Provided

DHInfrastructure assessed the technical potential for SHPP development and the financial support required. We first evaluated the assumptions and methodology used for existing estimates of SHPP potential in the Kyrgyz Republic, both nationwide and for specific SHPP sites. We then utilized DHInfrastructure's LCOE-z tool to estimate the levelized energy costs (LECs) for specific SHPP sites. We calculated these LECs both in economic terms, to assess the cost of each project to the entire economy, and in financial terms, assuming both concessional and commercial opportunity costs of capital. Using supply curves, we compared these SHPP costs to the costs of alternative sources of energy (thermal generation and imports), to determine how much of the technically-viable SHPP potential should be developed. To assess the financial burden of SHPP development on Government and end-users, we quantified the difference between the current Feed-in Tariff (FiT) and an FiT based on marginal cost of supply. We also demonstrated the increases in financial viability of SHPPs which can be achieved with longer off-take period.