Project cost modelling for hydropower schemes in developing countries

The estimation of the cost of a hydropower project is a complex and enigmatic task. Among the renewable sources, hydropower is considered to carry the greater cost uncertainty, for both technical and non-technical reasons. As a result, even ‘final’ cost estimates based on fixed tender prices may vary significantly from the real costs at completion, sometimes beyond the adopted contingency. On the other hand, developers and investors require a certain confidence level, with the risk of cost escalation being one of the main reasons undermining the successful implementation of a project. While sound development and robust design, along with the assessment of the bespoke environmental, technical and economic characteristics of potential sites, are the key to minimizing the risk of a deceptive cost estimate, the present study seeks to propose an alternative methodology to support the initial financial feasibility of a hydropower scheme in a developing country (or neighbouring regions).