Comparación entre el sistema de solución de

construction companies, suppliers of equipment, etc.) have entered the market. These new actors do not always have the competencies to design, rehabilitate and/or construct a SHP plant thus reducing the technical quality of the plant and its performance176. In addition, and already before the FIR introduction, suppliers for SHP equipment did not always consider technical efficiency and performance as important. Efficiency losses above 20% could occur177. With reduced efficiency kWhs are lost and the economic cost-effectiveness is reduced.

Due to the set-up of the FIR scheme based on reference plants, a SHP with a weak technical design can still be economically viable if constructed at a more suitable site than the reference plant. In addition, the FIR scheme is based on the adjusted capacity which is the installed capacity adjusted by a factor linked to the annual production kWh (see Section 5.2.2). A lack in efficiency decreases the production and therefore the adjusted capacity, which increases the FIR per kWh produced. The project can remain financially viable even though the technical efficiency is below what would be technically feasible. For example, badly designed turbines or the wrong choice of pipes decrease the technical efficiency of the plant. Therefore, the FIR scheme has to be improved.

Within the FIR scheme, the only technical requirement is for rehabilitated plants (with an increase of production by 20% required to apply for the FIR (see Section 5.2.2)). Thus, there are no technical requirements for new plants.

Within the FIR regulation, the SFOE is allowed to define ecological and energetic minimum requirements within guidelines. However, it has not yet been implemented as judicial questions remain178.

SHP plants have high investment costs but are built to last and operate for decades. Therefore, the technical quality is extremely important due to hugely expensive replacement and redesign costs. Poor quality results in reduced efficiency and frequent shut downs for maintenance, thus reducing production (Leutwiler, Bölli et al., 2011). Quality management must start with the design of the plant. However, SHP plants and especially MHP plants are too small to be developed with norms (e.g., IEC, DIN, and SIA). Such norms can be used as guidelines but are unable to be applied literally (Leutwiler, Bölli et al., 2011: 30).

From an environmental perspective, SHP plants are often better integrated into the environment if they do not use all the available flow (UVEK, 2011: 18). For each plant, the available SHP potential has thus to be used in the most optimal way from an energetic and environmental perspective (BAFU, BFE et al., 2011: 18), This leads to the right balance between electricity production and environmental protection (see Section 5.2.2 and Section 6.1). Once the head and flow to be used with the SHP plant are defined, then the technical quality and performance of the plant has to be optimised (i.e. maximise the kWh per m3 flow through the plant). It should force actors who do not have all the required technical competencies for designing a SHP plant to acquire them from the technical specialists (e.g., Mhylab for turbine profiles).

Different instruments to guarantee the technical quality of SHP plants are analysed and discussed below. The environmental criteria and standards are accounted for when defining the head and flow. They are not part of the criteria linked to technical optimisation of the plants. Table 6-2 is an overview of the possible instruments.

176

Interviews CH-1 and CH-4 177

Table 6-2: Instruments to guarantee the technical quality of SHP plants (chronological order during the research)

Instrument Description Evaluation Sources

Technical standardisation

Some components of a SHP plant are technically standardised (mainly the electromechanical parts).

The smaller the installed capacities, the more standardisation is possible without losing too much on the technical efficiency. ABB, for example, has developed standard turbines of 150 kW1. Standardised components reduce investment costs. Their development triggers technical innovation for the sector and offers export opportunities. Technical standardisation does not lead to additional transaction costs from an institutional perspective. However, the development of standardised components is only economically viable if the demand on the market is big enough. Finally, standardised components reduce the technical efficiency due to a design which is generic and not site specific.

Of the interviewees who expressed a view on technical standardisation, only one was in favour of it compared to six opposed. In the survey, only 16% were in favour of technical standardisation. (Leutwiler, Bölli et al., 2011) Interviews CH-10, CH- 11, VS-1, VS-4, VS-5, VS-6 and VS-7 Survey results in Appendix D Technical standards

Technical standards for each component of a SHP plant are defined. Examples are the criteria of reliability and endurance leading to the right choice of materials. For each standard, several categories can be defined. The overall label of the SHP plant would then be a combination of the different standards thus leading to a final ―grade‖. This grade could be linked to a label required to obtain the water concession or FIR allocation.

The standards have to be based on clear criteria. The standards would generate innovative research to meet the requirements. For plants receiving the FIR they would avoid payments to inefficient plants. However, the transaction costs (establishing criteria, introducing into regulation, auditing and monitoring, etc.) are very high and the choice of the right values to fulfil each criterion is a challenging task. The interviews showed 54% against this instrument. The favour was more towards a single global criterion. The survey results showed 83% opposed to technical standards compared to a global criterion. Large companies operating SHP plants were completely against technical standards in comparison to a single global criterion.

(Freimüller, 2010) Interviews CH-1, CH-6, CH-7, CH-9, CH-10, CH- 11, VS-1, VS-2, VS-4, VS-5, VS-6, VS-7 and VS-8 Survey results in Appendix D Single global criterion

The overall technical efficiency of a SHP plant is chosen as the single criterion for a label. The efficiency is the ratio of the electric energy fed into the grid divided by the potential energy of the water going through the water intake. A high efficiency is a good indicator of the high quality of the plant2. The Canton of Fribourg investigated in such a global criterion whereby the overall efficiency would have to be at least 75%3.

A single global criterion is easily implementable combined with applying for the FIR. It could be linked to the water concession as well. There would be low additional transaction costs linked to controlling the criterion. However, the choice of the minimum criterion value would need to be further investigated and such a value would not be site specific.

The interviewees strongly supported this instrument (85%). The survey confirmed this result with 83% in favour of a global criterion instead of several technical standards.

Interviews CH-1, CH-2, CH-10, CH- 11, VS-4, VS-5 and VS-7 Survey results in Appendix D Price regulation

This instrument applies only to the FIR. The remuneration values for each technology and installed capacities are

Such a FIR scheme would have added only some additional transaction costs to the scheme. It would have triggered innovation. However, the choice of the initial values

Interview CH-7

6. Analysis and discussion of alignment between small hydropower and its institutional framework in Switzerland

chosen at initial values. If these values do not lead to remunerations which are high enough to develop RET plants in order to reach the RET targets, the values are increased. Thus only the most cost-efficient plants are facilitated.

would have been a challenge and it may not have excluded badly designed schemes in the beginning. As the FIR scheme has been launched without this progressive increase of remuneration, it is difficult to implement it now. Nevertheless, within the on-going review of the FIR scheme, the remuneration could maybe be adapted (see Table 6-3).

Expert evaluation

The technical quality of the design of a SHP plant and later the construction and operation is evaluated by an SHP expert. It is combined with applying for the FIR or the water concession.

A pool of experts has to be set up (e.g., with ISKB/ADUR) which needs to be of a certain size in order to avoid a monopolistic situation of some experts. The additional transaction costs for this instrument are probably lower than with standards. This instrument is an alternative to standards as standards are difficult to define for SHP. The heterogeneity of sites is difficult to account for with standards and individual site and project evaluation offer an alternative.

(ISKB and ADUR, 2011) Interview VS-4 1

Personal communication, Stefan Kullander, ABB, 30.06.2010

2

(BAFU, BFE et al., 2011: 18)

3

(Platform Water Management in the Alps, 2011a, Appendix 2, p.33). Two other criteria were defined by the Canton of Fribourg: energy efficiency - recuperation of the energy used for the construction of the installation within <5 years, and the specific power <0.1 kW per m of head.

Sources: in the table

When defining the instrument to guarantee the technical quality of SHP plants the aim is to have minimum additional transaction costs, avoid new legislation as far as possible and target simplicity. Based on Table 6-2, the following conclusion can be derived: Ten interviewees were in favour of introducing a new instrument to guarantee the technical quality of SHP plants and two were against it. The technical standardisation can be done on a voluntary basis by suppliers. The single global criterion is more supported than technical standards and thus further developed below. Price regulation considerations can flow into the current FIR review and expert evaluations are more appropriate in evaluating the feasibility of SHP plants (see Section 6.1 for the evaluation approach at the project level) than for the technical optimisation of the plants.

It has to be mentioned that in the survey only 24% were in favour of introducing a new label. This figure does not match with the results from the interviews and is due to the sample of the survey. The questionnaire was completed by firms who have already built their plant and receive the FIR. They do not wish additional regulation. Furthermore, only eight answers came from plants above 300 kW which are mainly considered in this research. Therefore, the survey results have to be taken into account with caution.

The chosen instrument is the single global criterion which could be linked to the available head, equipped flow and type of plants (run-of-the-river, storage, within infrastructures). For example, the more head that is available, the higher the value of the criterion would need to be179. This would make the criterion more site-specific which was one of the disadvantages mentioned in Table 6-2. Exceptions would be allowed for plants bringing an increased ecological value to the site.

The SFOE is currently working on such a global single criterion. However, it would have been useful to have established it before launching the FIR scheme in order to avoid new SHP plants supported by the FIR but designed or built with poor technical quality.

The global single criterion can also be seen as an ―energy label‖. Today, energy labels exist at the consumption level (e.g., fridge, washing machine, energy label for buildings), but not at the production level. Based on the inverse concept of minEnergy label for buildings180, which aims at the lowest consumption, the energy label for SHP plants would aim at the maximisation of electricity production for a given head and flow.

Regarding the question linking the global single criterion with the FIR or water concession application, the interviewees were clearly in favour of linking it with the concession application181, as were the survey results with 80%. Therefore, a SHP project applying for the water concession would have to fulfil the value of the criterion given for its head, flow and type of plant. The value could be controlled at the beginning of operation and monitored every five years. However, the value could not be changed retroactively. If the value is not fulfilled, the plant owner is obliged to improve the plant‘s efficiency.

Rehabilitated plants would therefore not be concerned if the water concession remained unchanged. Nevertheless, most rehabilitated plants apply for the FIR and already have to increase their production on the given site. An instrument for guaranteeing the technical quality in these cases is less important.

However, the implementation of the global criterion with the water concession is complicated, as the regulations are not harmonised across the country. Furthermore, as guaranteeing the quality is mainly linked to the FIR, it is suggested to link the implementation of the global criterion with the FIR regulation182. In a later stage, if the regulation linked to the water concessions is changed, the criterion could be linked with the water concession.