G.P. Harrison, H.W. Whittington, and A.R. Wallace
Hydroelectric power generation, climatic changes, sensitivity analy-sis, river flow, investments
One way of reducing the extent of climate change is to replace fossil-fuelled electricity generation with renewable sources, includ- ing hydropower. However, simultaneous changes in climate may alter the available hydropower resource, threatening the financial viability of schemes. To illustrate the potential problem, a sen- sitivity analysis is presented that considers the impact of altered precipitation and temperature on river flows, energy production, and financial performance measures of a planned hydro scheme in Sub-Saharan Africa. The behaviour of the river basin was found to amplify changes in precipitation and, although the design and planned operational strategy of the station tended to moderate the impact, the overall financial impact remained significant. Compar- ison with (nonclimate) project parameters indicated that financial performance, not surprisingly, depends strongly on discount rate and electricity sales price and that, importantly, it showed a similar sensitivity to precipitation change and rising temperature. Critical changes in climate were identified in order to indicate the severity of climate change that could be tolerated before the project becomes financially nonviable.
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