Hydropower dams incur substantial financial, socioeconomic and environmental risks, but these risks are not well accounted for by available project assessment methods. A new system has been developed to address often-overlooked environmental and social risks and connect them quantitatively to the commercial performance of these projects.

The Riverscope tool was designed by TMP Systems and International Rivers to quantify financial risks and improve energy planning and investment. Geospatial analysis, financial modeling and qualitative investigations combine to provide a unique and comprehensive assessment of hydropower risks. The system enables users to identify, mitigate and avoid the most serious commercial risks and translates social and environmental risks into financial terms. Competitive alternatives to hydropower that have better impact can also be evaluated.

Riverscope has been applied to five pilot projects within Africa and Southeast Asia, confirming that large hydropower is regularly associated with environmental, social and governance (ESG) risks that are difficult to manage effectively and at a reasonable cost. This leads to long delays and budget overruns, which, in turn, reduce the commercial value of these projects and increase the end costs of electricity. As a result, large hydropower projects are often non-competitive with alternatives like wind and solar by the time they eventually come to market.

Source: TMP SystemsSource: TMP Systems

The developers of Riverscope stress the need for better planning in the sector to avoid ESG as well as financial risks, which should result in better outcomes.

To contact the author of this article, email shimmelstein@globalspec.com