Dear Editor,
The Norconsult Report on the Amaila Falls Hydropower Project (AFHP) has very good advice on technical and financial matters that could easily be overlooked with just a cursory review of the report.
The Report highlights the possibility of constructing an underground powerhouse finding that the geology seems generally favourable for underground works, especially in the igneous rocks underlying the sedimentary rocks on top (page 26). This approach obviates the need for costly fixes to the current design, where the report found that to eliminate frequency stability problems, either a separate flywheel would be required using a highly uncommon design, or there would be a need to increase the cross sections of the pressure shaft and pressure tunnel by about 100%, which would increase the cost of the latter by 100% (p 29). Most importantly, the report found that an alternative underground powerhouse location will give substantial cost savings for the tunnel system and generating units (p 30).
The alternative underground powerhouse suggested in the report seems to be technically better and financially cheaper than the current proposed design. Therefore, it would be worthwhile to give this alternative serious consideration.
The report also provided important advice on the transmission lines design stating that with the possible need for transmission from other hydropower development in the same region in the future, as well as a possible extension of Amaila Falls, it should be considered whether the capacity of the line should be upgraded and the line itself be regarded as a backbone in a future transmission system intended for several projects, rather than only as a component of the AFHP (p 28).
This is very important advice, because you need to plan for the future and not just for the current situation at hand. A transmission line is a sort of highway where power from future projects can be interconnected, so the need for future capacity must be taken into account when designing the lines.
Another important piece of advice from the report is that as part of a backbone structure in a future larger system, the transmission lines may be constructed as a separate project in order to obtain more favourable financing than the current Build, Own, Operate & Transfer (BOOT) arrangement (p 28). According to the report, the transmission line adds about 44% to the construction costs of the power plant itself, which is reflected in the energy tariff (p 26).
Transmission lines generally have lives of over 60 years, and given the ability for the lines to interconnect future projects it seems like this would be a less risky venture and could be done under more favourable financing conditions than the 17% to 19% return on equity called for under the 20-year BOOT arrangement.
In a similar vein, given the potential for the transmission lines to interconnect future projects, it might be reasonable to allocate only a portion of the transmission costs to the AFHP when conducting a benefit-cost analysis for the Amaila site.
Other sound technical advice in the report that could reduce costs include:
- Call for the resumption of continuous water flow measurement as soon as possible, because two to three additional years of continuous flow data would provide a more reliable basis for an updated energy production simulation and a reliable basis for deciding on the total installed capacity for a possible later second stage development, which would reduce the risks for both parties related to the Power Purchase Agreement (PPA) (p 21).
- Better basis for assessing future sedimentation and lifespan of the reservoir because sedimentation may not be a concern for the private investor in the BOOT perspective and given that GPL will be the operator beyond the BOOT period, closer attention should be paid to this issue (p 21).
- As preparatory works for a possible second stage, only works required for avoiding later interruption of ongoing plant operation should be considered (p 26).
- Doing seismic profiling along the entire dam base and along selected portions of the tunnel alignment. The benefit of this would be to reduce the Engineering/Procurement/Construction (EPC) contractor’s need for mark-up on his prices for covering geological risk, which may lead to lower bids (p 41).
For my own advice, I would encourage that as part of the new EPC tendering; the right-of-way (ROW) selected for the transmission lines should allow for future expansion in case the Northern Arc project (transmission lines interconnecting points in northern Brazil, Guyana, Suriname and French Guiana) ever comes to fruition. There also seems to be an opportunity in the future to build a transmission corridor linking Linden and lower Berbice which will vastly improve electricity reliability.
Yours faithfully,
Vijay Puran
Engineer
New York
