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Hydro Development

Navigating the Process

Norm Bishop

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Starting Point

North America is blessed with all the attributes for cost-effective, low impact hydropower

Plentiful Renewable Energy Opportunities

Incentives & Low Cost Equipment with Financing

Hydro is a significant contributor to the “Green Jobs Economy”

Many site attributes are needed to make a successful project

Team work and innovation = key to success

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The Common Issues Sustainable Business Social Acceptance &

Community Image Environmental Impacts &

Mitigation Studies, Studies, Studies Consultation & Licensing Over Engineering Legal, Water Rights & Land

Ownership Insurance & Bonding Controlling Pre-Financial

Closing Cost

Equity & Financing & Incentives

Financial Closing Contract Management &

Implementation Controlling Budget &

Schedule Risk Management Project Turnover Project Operation &

Maintenance “The Low Water Year(s)”

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The Seven Desired Elements

Power Sales Agreement

FERC License or Exemption

401, 404, 408, Section 10

State & Local Permits

Land Ownership or Right

Water Rights

Business Plan (Prospectus, Return on Equity, Return on Investment, Life Cycle Costs and Revenues)

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Think Business Viability Understand Flow, & Instream Flow

Requirements (IFR) & How Flow Varies (cfs) Understand The Difference in Water Levels

(ft) at Intake & Powerhouse. Understand How Both Affect Power Output

(MWhrs)& Available Capacity (MWs) Understand Power Purchase Agreement

(PPAs); Payments-what, when, where, how & how much. ($$)

Understand the Costs & Timing-what, when, where, how & how much. ($$)

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Think Run-of-River Hydropower

No change to natural hydrograph - flow downstream unchanged from natural conditions

No Dams; “Water Sharing” Locate Above Impassible Stream Feature or

Accommodate Free Stream Movement Instream Flow Requirements (IFR) to Sustain

Ecosystem Health EcoLogo or Low Impact Certification

Innergex – Rutherford

Creek Project

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Use Common Sense Thinking Chances Are Someone Has Looked at Site Before Incorporate Low Impact Hydro Existing Dam (97% have no hydropower works) Run-of-River (Little Change to Flow or Use) Avoid Affecting Threatened or Endangered Species;

and Avoid Affecting Fish. Financial Incentives-They’ve Changed; New World! FERC Exemption

5-Megawatt (MW) Exemption Conduit Exemption (Conduit Constructed for Non-

Hydropower Purpose) Existing Environmental Resources & Project Effects

Information Available? FERC-First as Advisor, Then as Regulator! “Small”; “Simple”; “Good Value”;

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How Simple? It Works!

Hydro Entrepreneur

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Get the Project Image & Foot Print Right

Listen & Respect All Stakeholders Ideas

Small Project are Not Big Projects

Make Best Value Tradeoffs Run of River; Low Impact Hydro

Consider a Smaller Installed Capacity, that “Shares” Water

Water Deliveries Systems Can Result in Nice Energy Recovery Small Hydro Opportunities

Put Ideas on Paper (Recycled Paper!); Use Scale Models to Get It Right.

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Modern Project Delivery Site Screening Exemption, or not Go for Waivers Settlement

Agreements Site Identification Feasibility/Environmen

tal Assessment (EA) Licensing & Permitting Basic Design EPC Bid Package &

Price

Equity & Financing

Financial Closing

EPC Implementation

EPC Turnover

Operation

Post Operation Support/Rehabilitation

Relicensing & Permitting

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Financial Risk Mitigation Project Framework

& Comprehensive Legal Agreements

Control Project Delivery (Cost, Schedule, Result)

Project Management

Claims Management

Indemnify & Insure Against Risks Political

Currency

Force Majeure

Liability

Bonding

Other

Independent Quality Control & Inspection

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What Attracts Investment? Good Business Practices Project Should Make Technical,

Environmental, Social, Political and Financial Sense.

Satisfactory Return on Investment (Equity, Debt)

Past Satisfactory Financial Dealings & Strength

Profitable Past Ventures Good Leadership Investment is in the Investor’s Comfort Zone.

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Post 1603 Grant Finance Structures Sale Lease Back

The investor purchases the asset and leases it back to the off taker to monetize or take advantage of tax incentives.

Preferred Structure for Government Entities

Sets Predictable payment rate for the both parties

Allows the investor (Owner) to take advantage of the tax credits, depreciation, subsidies and incentives

Tax Equity Flip The investor owns the asset for a minimum of 5 years and monetizes tax credits and incentives. Sells asset at end of incentives and when the return has been reached

Allows the developer or third party to buy back the asset at a discount

Allows the Tax Equity investor to take advantage of all incentives but limit ownership to a predetermined time frame

Strong long term cash flow strategy for an IPP.

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Some Insights into Successful Projects

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Innovative Science & Engineering

Understand the Issues & Solve: Hydrology Studies

Intakes

Penstocks

Powerhouses

Environmental and Socioeconomic Issues

Community & Indian Nation Involvement

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Innovative Science & Engineering Environmental and Socioeconomic Issues

Integrated multiple discipline team approach essential: • Environmental and Permitting

• Instream Flow Requirements (IFR)

• Bypass-valves and ramping

• Engineering and Constructability

Be innovative with mitigation measures (Social Acceptance): • Fisheries Enhancement Channels

• Artificial Whitewater Park

• Creative Ideas & Solutions

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Innovative Science & Engineering

Physical Hydraulic

Models

Computer Models

Site Investigations

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Innovative Science & Engineering Intakes

Typically the “Achilles Heel” of a hydro scheme

Often located on high energy system with heavy sediment bedload.

Typically requires expensive and often ineffective desanders

Innovative cost-effective designs: Coanda (Aqua-Sheer) Screens

Inflatable Rubber Dams + Vortex Desander

No impoundment structure & subterranean options

Renewable Power Corp. – McNair Creek Project

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Coanda Screen Intakes

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Coanda Screen Intakes

Renewable Power Corp. – McNair Creek Project

Cloudworks Energy Inc. - Fire Creek Project

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Rubber Weir Intakes

Innergex. – Rutherford Creek Project

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Intake Model Testing

Vortex Desander – combined

with Instream Flow

Requirements (IFR)

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Innovative Science & Engineering

Penstocks One of the most expensive components

Penstock designed to minimize Capital cost: Routing – Buried, Partially Buried vs Surface

Soil restraint vs Anchor blocks

Latest Construction material: • Steel

• HDPE – “Weholite”

• Glass Reinforced Plastic (GRP)

Configuration

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Innovative Science & Engineering

Powerhouses Challenging foundation conditions

Aesthetic appeal becoming more and more important

Innergex – Rutherford Creek Project

Plutonic – East Toba Project

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High Head Powerhouses

Pelton or Francis turbines

By-pass valves for Francis units

Automated head-level control

Cloudworks - Fire Creek Project

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Low & Medium Head Powerhouses

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Mitigation Measures

Whitewater Kayaking

Park

Enhanced Hiking Trails

Fisheries Enhancement Channels

Innergex –

Rutherford

Creek Project

Renewable Power Corp. –

McNair Creek Project

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Innovative Science & Engineering

Native Peoples & First Nations Involvement (Aboriginal) Early consultation essential

“Social Licence” to exist

Look for training and employment opportunities

Plutonic Power - Montrose Creek Project

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NGO, Community & Native People Involvement

Plutonic Power – Montrose Creek Project

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Thank you

nbishop@knightpiesold.com