Are Seasonal Hydropower Storage Dams Cost-Effective in Providing Reliability for Solar PV? A Financial and Economic Analysis

This paper develops a financial and economic cost-effectiveness framework to evaluate the integrability of solar power with a seasonal storage hydropower dam in off-grid and on-grid situations. Four key variables are evaluated that affect such a system's levelized cost (LC) of electricity generation. These include the initial capital costs of the solar PV system and hydropower plant, and the costs of alternative methods for maintaining service reliability when expanding solar PV generation. Another key variable is whether the hydropower-solar PV generation is off-grid or on-grid, The final parameter studied is the impact of the LC of electricity of the financial and economic cost of capital (discount rates) faced by a country. The analysis shows that when the economic opportunity cost of funds increases from 2 percent to 11.5 percent the levelized cost of renewable electricity generation systems doubles. The levelized financial cost (LC) of the incremental energy when a reliable service is maintained is between 30% and 89% greater than the LC of a stand-alone solar PV plant. For the same set of scenarios, the range of the economic LCs is 28% to 85% greater with reliability than the stand-alone solar PV field without reliability. Increasing service reliability by expanding the generation capacity of the powerplant of a seasonal storage dam is in this case less costly than increasing the thermal alternative.