Small hydro power stations, a way to secure electricity supply in Colombia. A policy evaluation using a system dynamics model

Abstract

After its deregulation in 1994, the Colombian Electricity Market (CEM) has developed satisfactorily in some sectors, especially in terms of generation and sales to large costumers and to household sector. However, around 70 % of its production capacity is based on hydroelectric power stations that are built using one or more dams. The available water in the dam (considered potential electricity) is from time to time affected by severe weather conditions which might reduce the water inflow by up to 50 %. The macroclimate phenomenon called ENSO (El Niño South Oscillation) is a strong dry season or drought that occurs randomly. Therefore, to secure electricity supply, additional power stations might be required in the face of the upcoming severe weather conditions. Over the last years, and according to expected demand, the Colombian planning unit, UPME, has developed a capacity expansion plan which includes the power stations that should come into operation in the near future. The construction of two main power stations with dams was, however, canceled due to social and environmental concerns. The main objective of this thesis is to evaluate whether these larger projects can be replaced through the construction of small hydro power stations that, each, has a lower generation capacity, but in total have less social and environmental impact. In this thesis, we present a System Dynamics model of the CEM including the supply from various competing technologies; hydro and thermal. The thermal fired power plants are used sparsely due to their high costs causing the electricity price to rise. Therefore, they will only generate electricity in order to satisfy the demand that is unmet after the hydro scheduling. The future market development will be evaluated under different scenarios that combine variations in the paths of investment in small hydro power stations, expected electricity demand, gas and coal prices, and weather conditions.