On The Economics of Environmental Restrictions at Hydropower Plants: Optimize the Costs

Abstract

This paper examines a stochastic approach to solving the impact of water usage rate restrictions imposed on hydro operations in order to maximize income. The hydroelectric power plant was evaluated within a stochastic control framework by taking into account operational constraints such as cash flows, water use and minimum flow rate restrictions for environmental protection. The Quasi-Newton Method of the income maximizing working mode decisions of a hydropower plant is determined for various constraints on the value of useable water. A Turkish hydropower is used for the case study; on Kura River in Ardahan city. The income is negatively affected, although not very large, for a range of restrictions the impact is not large. Numerical results point out that not to take into account environmental constraints may noticeably increase the cash-flows value of hydropower plant.