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Small Hydropower – Over view of the European Sector
a report by
Maria Laguna
Project Manager, European Small Hydropower Association (ESHA)
Around 70% of the earth’s surface is covered with
water, a resource that has been exploited for many
centuries. Throughout the world, hydropower
provides 17% of the electricity from an installed
capacity of some 720 gigawatts (GW), making
hydropower by far the most important renewable
energy for electrical power production. The
contribution of small hydropower (SHP) to the
worldwide electrical capacity is of a similar scale to the
other renewable energy sources (1–2% of total
capacity), amounting to approximately 61GW. With
approximately 13GW of installed capacity, Europe has
the second biggest contribution to the world’s installed
capacity, just behind Asia. Indeed, hydropower now
accounts for approximately 84% of electricity
generated from renewable sources in EU15 and 19% of
total electricity production in Europe. Electricity
generation from SHP contributed approximately 2% to
the total electricity generation in EU15.
There is no international consensus on the definition
of SHP. In China it can refer to capacities of up to
25MW, in India up to 15MW and in Sweden ‘small’
means up to 1.5MW. However, defining it as a
capacity of up to 10MW in total is becoming generally
accepted by European Small Hydropower Association
(ESHA) of the European Commission (EC).
Small-scale hydropower systems capture the power
in flowing water and convert it to usable energy. The
potential for SHP obviously depends on the
availability of suitable water flow, but where the
resource exists, it can provide clean, reliable
electricity. A well-designed SHP system can blend in
with its surroundings and have a minimal negative
environmental impact. SHP schemes are mainly run
at rivers, with little or no reservoir impoundment.
SHP plants combine the advantages of hydropower
with those of decentralised power generation, without
the disadvantages of large-scale installations. SHP is a
clean, sustainable, efficient and secure renewable
energy source. It has a huge, as yet largely untapped,
potential, which should enable it to make a significant
contribution to future energy needs, offering a very
good alternative to conventional sources of electricity,
EUROPEAN RENEWABLE ENERGY REVIEW 2006
Hydropower
in both industrialised and developing countries.
Asia, especially China, is set to become a leader in
hydroelectric generation. Present developments in
Australia and New Zealand are focusing on small
hydropower plants. Canada, a country with a long
tradition in using hydropower, is developing SHP as
a replacement for expensive diesel generation in
remote off-grid communities. Markets such as South Maria Laguna is Project Manager at
America, the former Soviet Union and Africa also the European Small Hydropower
Association (ESHA). She has several
possess great untapped potential (see Figure 1). years of experience in environmental
and energy policy analysis and in
management of EU-funded projects
SHP in Europe in the field of renewable energy
and climate change. Ms Laguna has
Renewable Electricity Directive Targets an MSc in environmental
management and policy from Lund
University, Sweden.
The trend towards SHP has been enhanced by the
EC’s White Paper on renewable energy and by the
EU Directive on renewable energy sources used to
generate electricity (RES-e). Both give a clear signal
that greater use of renewable energy is necessary to
reduce society’s environmental impact, ensure
security of supply and create a sustainable energy
system. In 1997, the EC’s paper on renewable energy
sources COM (97) 599, 26.11.97 set the goal of
doubling the share of renewable energy sources in
the EU energy sector from 6% to 12% by 2010.
Projections for each renewable energy technology
were made. For SHP, this means the ambitious
target of reaching 14GW of installed capacity in the
EU by 2010, generating 55 terawatt hours (TWh)
of electricity.
Targets for SHP
The EU Directive for the promotion of RES-e in the
Internal Market Directive 2001/77/EC follows up the
White Paper on renewable sources of energy. It also
constitutes an essential part of the package of measures
needed to comply with the commitments made by the
EU under the 1997 Kyoto Protocol on the reduction
of greenhouse gas emissions. According to the RES-e
Directive, renewable generators should provide 22.1%
of electricity by 2010 in EU15 and 11.1% in EU10, the
New Member States (see Table 1).
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Hydropower

Figure 1: Different Regions’ Contribution to the World’s Installed SHP Capacity never be reached in matters of SHP if there is no
harmonisation between the two directives.The
Contribution solution is in a more precise terminology, which makes
80% the transposition of the WFD clear and predictable.
68% Depending on how the WFD is implemented, SHP
70%
production losses could be approximately 15–20%,
60% preventing the European targets on renewable energy
50% and the Kyoto commitments on carbon dioxide (CO2)
reduction from being reached.
40%

30% SHP Plants in Operation

22.3%
20%
6.1% According to a recent report produced by the ESHA’s
10%
0.5%
2.7% 0.4% Thematic Network on Small Hydropower, in the
0 former EU15, approximately 14,000 SHP plants are
Asia Africa South North Europe Australasia/
America America Oceania in operation, with an average size of 0.7MW. There
are approximately 2,800 and 400 SHP plants installed
World Regions
in EU10 and EU Candidate Countries (CC),
respectively. The average plant size of these categories
Table 1: RES-e Directive Targets is 0.3MW in EU10 and 1.6MW in EU-CC. The
total installed capacity of SHP plants in 2004 in New
RES-e, 1999 RES-e, 2010 Member States (820MW) and CC (680MW) is at
EU15 13.9% 22.1% least 10 times less than that of the former EU15
EU10 5.4% 11.1% (10,828MW). Electricity generation by SHP plants in
EU25 12.9% 21.0% the former EU15 (40,000GWh/year) is considerably
higher than in EU10 (2,329GWh/year) and the CC
The RES-e Directive gives Member States a reason to (1,407GWh/year). SHP production shows the real
look at SHP, because it is the best proven of all economic value that the SHP sector provides in each
renewable energy technologies. Of special interest for group of countries, and these figures show the high
Europe – from both an economic and environmental potential for increasing the electricity generation for
point of view – is the high potential for upgrading and power plants in the New Member States and CC by
refurbishing of existing plants, as approximately 70% of improving their efficiency in their operation and
the current installations are more than 40 years old. maintenance (O&M).

Hydropower now accounts for approximately 84% of electricity

generated from renewable sources in EU15 and 19% of total
electricity production in Europe.

SHP and the Water

Framework Directive
The European Water Framework Directive (WFD) is
an environmental directive being currently
implemented at national level. Together with the
Network Natura 2000, it aims to encourage national
environmental legislation on nature protection. This
rigorous environmental framework guarantees the
adequate integration of SHP into the natural
environment. However, some inconsistencies in WFD
terminology and its implementation may contradict the
RES-e Directive and may lead to loss of production at
SHP plants. The targets of the RES-e Directive can
According to Eurostat figures for 2004, Italy accounted
for approximately 21% of the total SHP installed
capacity in EU25, followed by France (17%) and Spain
(16%). Poland and the Czech Republic – both with 2%
of the total EU25 SHP capacity – are the lions of the
New EU Member States. From the Accession
Countries, Romania and Turkey represent
approximately 25% and 15%, respectively, of the total
SHP installed capacity in 2002 in EU10 plus CC.
At present, hydropower is a dominant source of
energy in RES-e production in almost all countries.
SHP accounts for approximately 4.6% of total hydro

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Small Hydropower – Over view of the European Sector

generation in the New EU Member States and CC. Table 2: Investment and Production Costs of SHP Plants in Some Member
None of the other renewable energy sources (wind, States of the EU (2003)
biomass, PV, etc.) is able to compete with SHP in
these countries. Country Average SHP Range of Average
Production Costs Investment Costs O&M Costs
Remaining SHP Potential Spain 3.5–7€cents/kWh €1,500/kW 0.9€cents/kWh
Austria 3.6–14.5€cents/kWh €2,500/kW 0.4€cents/kWh
Among the renewables, SHP has a key role to play, Sweden 4–5€cents/kWh €1,800–2,200/kW 1.4€cents/kWh
being a long-established technology that still has Czech Republic 2–3€cents/kWh €660–2,000/kW –
room for technological development and with high Lithuania 2.5–3€cents/kWh €2,200–2,500/kW –
untapped potential, especially as a cheap and clean Poland 3€cents/kWh €500–1,200/kW –
solution in developing countries. Thus far, more O&M = operations and management, SHP = small hydropower.

than 82% of all economically feasible potential has

been exploited in the former EU15. The SHP
resource exploitation rate in EU10 is less than half of
that in EU15 and very low in the CC (5.8%). The
remaining economically feasible potential of new
plants amounts to some 20TWh/year in EU15,
26TWh/year in the New Member States and CC
(4TWh/year in EU10). The majority of this
potential (roughly 80% or 19,300GWh/year) is
located in Turkey. Poland and Romania rank
second, having indicated a potential six to 10 times
lower than that of Turkey. The third group is
composed by the Czech Republic, Slovenia,
Bulgaria and Slovakia. The largest proportion of the
potential in Europe involves low-head plants and
some extra potential can also be developed by the
refurbishing of existing sites.
the low-head ones – can normally only compete
where allowances are made for the external costs
associated with fossil fuels and nuclear power.
The capital required for small hydro plants depends
on the effective head, flow rate, geological and
geographical features, continuity of water flow,
equipment (such as turbines or generators) and civil
engineering works. Making use of existing weirs,
dams, storage reservoirs and ponds can significantly
reduce both environmental impact and costs. Sites
with low heads and high flows require a greater
capital outlay, as larger civil engineering works and
turbine machinery will be needed to handle the
larger flow of water. If, however, the system can
have a dual purpose – such as power gene-ration and

Small hydro will also serve to enhance economic development

and living standards, especially in remote areas with
limited or no electricity.

SHP in the Renewable Energy Mix
Hydropower is the largest RES in terms of electricity
generation, accounting for approximately 84% of the
RES electricity generation in 2002. Nevertheless,
SHP only represented 9% of the RES electricity
generation in EU15 in 2002. However, in almost all
New Member States and CC, hydropower is the
dominant source of energy in RES-e production.
The RES-e share in EU10 is hydro 99.7% (large
87.5%, small 11.2%) and other RES 1.3%.
SHP Economics and Costs
In general, large hydro electric plants have little
difficulty in competing with conventional generation,
but small hydro plants – especially the very small and
flood control, power generation and irrigation or
power generation and drinking water production –
the pay-back period can be shortened.
Apart from the investment and production costs,
the other principal cost element is O&M, including
repairs and insurance, which can account for
1.5–5.0% of investment costs. Both the production
and investment costs differ considerably depending
on the plant’s head height.
Industry Status
The EU has a multi-disciplinary and highly skilled
small hydro industry that offers the full range of
products and services required to develop small
hydro projects, from initial feasibility and design to

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Hydropower

SHP in Figures

EU15

• 33% – the renewable energy industry EU15 target for the contribution of renewable energy to
electricity production by 2020.

• 22.1% – the renewable electricity target set up by EU Directive RES-e by 2010.

• 14GW – the amount of energy that SHP should need to meet this target; this would generate
55TWh of electricity per year.

• 19,600GWh/year – the potential of new plants in EU15.

• 5–15€cents/kWh – average SHP electricity production costs.

• €1,200–3,500/kW – average SHP investment costs.

• 14,488 – the number of SHP plants.

• 10.8GW – the installed capacity of the 14,488 plants, equivalent to about 1.77% of the total EU capacity.

• 8.6% – the contribution of small hydro to total hydro capacity, producing 40,300GWh; this means
that SHP contributes to 2% of total electricity generation.

• 700kW – the average installed capacity for an SHP plant.

• 20,000 – SHP jobs (direct and indirect) in 2004.

EU10

• 2,770 – the number of SHP plants in EU10.

• 820MW – the installed capacity from the 2,770 plants, producing 2,300GWh of electricity per year; this
would contribute to 0.6% of total electricity generation and 12.8% of the total hydropower in EU10.
• 2.4–3.2€cents/kWh – average SHP electricity production costs.
• €1,200–2 200/kW – average SHP investment costs.
• 300kW – the average installed capacity for an SHP plant.
• 4,000GWh/year – the potential of new plants in EU10.

CO2 Reduction Through SHP

• 1GWh supplies electricity to approximately 220 European households, avoiding the emission of 480
tonnes of CO2.
• Average output of a 1MW SHP plant in Austria is 5GWh/year, providing electricity to 1,100
households.
• 5GWh/year supplies 2,200 households in a developing country.

Source: The Thematic Network on Small Hydropower.

manufacturing, financing and operation. The EU
SHP industry generates an annual turnover of
approximately €150–180 million, and it has
maintained a leading position in the field of
hydropower manufacturing since the development of
the technology started 150 years ago. Very little non-
European equipment has been installed in European
hydropower plants. One important reason for
European dominance has been the strong home
market. By developing technology and production
methods in a fast-growing home market, European
manufacturers have, with few exceptions, kept a
leading edge compared with manufacturers from
other parts of the world.

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Small Hydropower – Over view of the European Sector
Several hydro manufacturers are active in small
hydro in the EU. Four major multinational
companies dominate the market for larger tur-bines,
but the market between 0.5MW/site and 5MW/site
is primarily open to smaller companies. European
companies have pioneered much of the technical
development and have dominated international
contracts for SHP equipment and installations in
recent years. Of the New EU Member States, the
Czech Republic and Slovenia are the countries with
the highest levels of turbine manufacturing industry.
Employment
The EU SHP industry employs approximately
20,000 people and offers a full range of products and
services for the sector. Following the projections
from the European Renewable Energy Council
(EREC) developed for 2020, the number can reach
28,000 for direct and indirect jobs.
Research and Development
EU-funded research and development (R&D)
programmes have made considerable inputs to the
SHP industry over recent years. The results of such
programmes include the development of
environmentally friendly turbines, fish ladders, trash
rack cleaning machines and low-noise gearboxes.
A principal objective of future R&D is to promote
further SHP market penetration by financing
research into:
• further cost reductions, especially in very low-
head schemes;
• minimised environmental impacts;
• increased efficiency and reliability;
• tidal and wave energy use; and
• sewage waters use.
Contrary to the generally accepted idea that
hydropower is an old technology that has reached
such a high level of development that it cannot be
improved, small hydro still has scope to evolve,
especially in equipment and design practices. Indeed,
R&D is essential in this field in order to develop
efficient, economical and environmentally friendly
equipment and construction methods. Key areas for
future research projects include:
• policy and market issues;
• environmental and social impacts (development of
specific bioengineering techniques in the field of
SHP and awareness campaigns to assist in under-
standing the technology and promote better
acceptance of small hydro);
• turbine and design issues (improvement of
EUROPEAN RENEWABLE ENERGY REVIEW 2006
Figure 2: Inside a Refurbished SHP Plant in Sweden
hydrological assessment methods, development of
standardised/systemised hydraulic structures, new
construction materials and flexible turbines); and
• grid integration.
Benefits Worldwide
Looking to the future, there are good reasons to
support SHP in Europe and the rest of the world.
Firstly, it is a source of renewable energy that, if used
on a small scale and handled sensitively, has few
environmental risks. Increased use will help to reduce
CO2 emissions and help countries to achieve their
Kyoto obligations and stave off global warming.
Moreover, the depletion of oil and natural gas deposits
will lead to higher generation costs for thermal plants,
helping to improve the economics of SHP.
Small hydro will also serve to enhance economic
development and living standards, especially in
remote areas with limited or no electricity. Rural
communities have been able to attract new industries
– mostly related to agriculture – owing to their
ability to draw power from SHP stations.
In countries such as South Africa, China and Nepal,
rapid SHP development has boosted the development
of local manufacturers to support these hydro power
plants. In addition, the ability of SHP to be combined
with water infrastructure projects will allow it to be-
come a regular feature in developing countries as they
overhaul their irrigation, water supply and sewerage
systems. Another advantage of SHP is that it would
enable countries to reduce their dependence on impor-
ted fuel, thus reducing costs and improving security.
Finally, from a European point of view, continuing
expansion of this industry can only be good, as
other parts of the world invest in European
expertise and equipment. ■
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