August 17, 2008
Making a Big Splash: Hydro Has the Power Once Again With Oil and Gas Prices Soaring, a GBP 20m Investment in Scotland’s Ageing Hydro- Electric Plants Makes Sound Economic Sense
By Jenny Haworth
AS RECENTLY as five years ago power companies would have balked at the idea of spending GBP 20 million sprucing up ageing hydro- electric plants.However, in a sign of the times, with soaring oil and gas prices and the attraction of clean, green energy, ScottishPower has decided this is a wise way to spend its money.
The power company is to pump the cash into maintaining the dams, refurbishing the turbines and sprucing up the waterways at its three hydro-electric schemes, at Cruachan, Galloway and Lanark.
The upgrading programme, which will take place over the next two years, will help keep the plants running for at least the next 25 years.
Some of them were designed in the 1920s and Sandy Rae, energy management director at Scottish Power, said investing such large sums on upgrading them might, in the past, have seemed unwise.
He said world energy markets just five years ago were so different it would have been an unlikely way to spend GBP 20 million.
"It might have been difficult to justify the investment in them," he said.
"That would be a world with very low gas prices and maybe not the same focus on carbon and renewables.
"Certainly, the way the world looks there's a very strong future for them."
The investment means the schemes at Lanark and Galloway will still be in operation when they celebrate their centenary years in 2027 and 2036. This would hardly have been expected when they were built all those decades ago.
Rae explained: "We are investing this to maintain the plants, refurbish them, keep them safe and reliable and extend their life - and the environment for doing that now is very favourable."
He said high oil prices, leading to high gas and coal prices, made hydro-power highly attractive.
"These things are leading to high power prices so the prices these generators get when they run is relatively higher than a few years ago," he said.
"All the benefits of the high gas and carbon prices get captured by these plants.
"These plants have a rosy future looking at the world as it might be in 2020."
Rae continued: "Certainly in Europe we will still have a carbon trading scheme, which could be generating high carbon prices.
"There will be a big demand for gas in Europe, so we will have pretty high gas prices. We may even have a lack of generation, which will point towards high power prices.
"In that world, being a carbon-free generator, and sustainable at that, the future looks rosy."
Frank Mitchell, generation director at ScottishPower, agreed hydro-electric power had many benefits over other forms of generating electricity.
"In a climate of global volatility in the wholesale energy markets, hydro-electric plants are proving an extremely efficient method of generating electricity as input costs are relatively low," he said.
"With no signs that global markets will level off any time soon, hydro will continue to be an important aspect of our generation business, and this is reflected in our investment.
"Hydro is also very versatile and can be brought online quickly when required, so is an essential element in guaranteeing secure supplies of power across the entire network."
Despite the age of the existing plants, ScottishPower insists they were well-enough built to survive.
"They were built to very high standards," said Rae. "In modern times we probably couldn't afford to spend the money on them that we had then.
"They would have been built with the view that we would get 50 to 60 years out of them, so the fact that they are still running might not have been expected."
He said the technology had changed little since they were built.
"The technology around the turbines is pretty much the same.
"There might be some modest efficiency gains in new turbines but there has been no significant development."
Despite the strong decades ahead for the existing plants, there is little scope for new hydro-power schemes due to a lack of suitable locations.
The latest large hydro-power plant to be built in Scotland is the Glendoe Hydro Scheme alongside Loch Ness, run by Scottish and Southern Energy. Building started in 2006 and it is due to come online in March 2009.
It is the first large-scale conventional hydro-electric station built in Scotland for almost 50 years, and generally considered the last likely to be possible in this country.
"In the UK there are very few places left to do this," said Rae. "It will be more a case of maintaining the existing plants and getting the best out of them."
However, he said there was scope for small schemes, maybe serving individual homes or communities.
Those with a river running through their land could potentially avoid high power prices. Planning permission would also be easier to get for a smaller scheme, and it would be easier to get a grid connection.
Despite advances in other areas, such as wave, wind and tidal, hydro-power still accounts for almost half of Scotland's renewable energy generation capacity.
ScottishPower mainly runs its hydro-electricity when prices are highest, such as the early evening peak.
The company's three schemes have a combined output of 562MW. The largest - Cruachan power station- has a capacity to power more than 225,000 homes.
It opened in 1965 and consists of a machine hall hidden inside a giant cavern deep within Ben Cruachan mountain, and a reservoir at the top with a 316m-long dam. The staircase in the cable shaft has 1,420 steps, making it the tallest in Britain.
To build the plant, 220,000 cubic metres of rock and soil had to be excavated and it now serves a catchment area of 23 sq km.
Galloway Hydro Scheme consists of six power stations, at Glenlee, Drumjohn, Kendoon, Carsfad, Earlstoun and Tongland, which between them generate 106MW.
Lanark Hydro Scheme consists of two power stations, at Bonnington and Stonebyres. It has a total output of 16MW.
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