Handbook for Practitioners and Decision Makers

1 OPERATION & MAINTENANCE STRATEGIES FOR HYDROPOWERH andbook for Practitioners and Decision Makers10033_ESMAP_CVR Main 110033_ESMAP_CVR Main 12/5/20 9:23 AM2/5/20 9:23 AM 2020 International Bank for Reconstruction and Development/The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries.

2 Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: Cover photo/illustration: Pierre LorillouCover design: Duina Reyes10033_ESMAP_CVR Main 210033_ESMAP_CVR Main 22/5/20 9:23 AM2/5/20 9:23 AMOperation and Maintenance Strategies for HydropowerHandbook for Practitioners and Decision Makers10033_ESMAP_Hydropower_Main 110033_ESMAP_Hydropower_Main 12/5/20 2:05 PM2/5/20 2:05 PMii | Operation and Maintenance Strategies for Hydropower Handbook for Practitioners and Decision MakersAcknowledgments.

3 ViAbbreviations and Acronyms ..viiExecutive summary ..viiiBackground and rationale for O&M strategies ..xiiA . Handbook audience and objectives ..2B . Key ingredients of O&M for hydropower ..4C . Consequences of poor O&M ..4D . Why and when to prepare an O&M strategy ..6E . Proposed step-by-step methodology .. 9 Step 1: An informed O&M diagnosis as a prerequisite to the strategy ..121 .1 Diagnosing O&M performance and key performance indicators (KPIs) ..131 .2 Systemic risk assessment ..161 .3 Condition assessment of assets ..171 .4 Root cause analysis ..211 .5 Diagnosis of O&M capabilities, organization, and practices ..22 Step 2: Defining objectives of the O&M strategy ..242 .1 Anchoring objectives in KPIs ..252 .2 Influence of public or private ownership on strategy s objectives ..262 .3 Valuing expected benefits from objectives.

4 27 Step 3: Identifying activities for building the strategy ..303 .1 General considerations ..313 .2 Approaches to O&M ..313 .3 Selecting the appropriate maintenance approach ..343 .4 Planning repairs and refurbishments ..363 .5 Improving or upgrading the operation of facilities ..373 .6 Modernizing existing facilities ..423 .7 Integrating O&M in the design of new projects and major refurbishments ..433 .8 Selecting adequate quality standards ..44 CONTENTS10033_ESMAP_Hydropower_Main 210033_ESMAP_Hydropower_Main 22/5/20 2:05 PM2/5/20 2:05 PMContents | iiiStep 4: Exploring strategic models for implementing O&M strategy ..464 .1 Types of O&M strategic models ..474 .2 Strengths and weaknesses of different O&M models ..534 .3 Guidance for selecting O&M model adapted to local context ..544 .4 Structuring O&M services and management contracts.

5 594 .5 Insurance ..62 Step 5: Organizational and staffing options ..645 .1 Organizational structure ..655 .2 Staffing levels ..695 .3 Education and training ..70 Step 6: Estimating financial costs ..726 .1 Factors affecting O&M costs ..736 .2 Estimating OPEX budgets ..746 .3 Estimating CAPEX budgets ..766 .4 Benchmarking ..786 .5 Impacts of outsourcing (Models 2 and 3) .. 81 Step 7: Validating and financing the strategy ..827 .1 Cost-benefit analysis ..837 .2 Financial/funding assessment ..847 .3 Validation of the strategy ..84 Step 8: Implementing the strategy ..868 .1 Supporting contracts and agreements ..878 .2 Annual operating plans (including five-year capital program) ..878 .3 Monitoring implementation of the strategy ..89 Summary of case studies ..929 .1 Statkraft Energias Renovaveis, Brazil ..939.

6 2 Mount Coffee Hydropower Project, Liberia ..949 .3 Kainji-Jebba Hydropower Complex, Nigeria ..959 .4 New Bong Escape Hydropower Project, Pakistan ..969 .5 Nalubaale-Kiira Hydropower Complex, Uganda ..979 .6 Salto Grande Hydropower Complex, Uruguay/Argentina ..98 Appendixes ..100 Appendix A: O&M glossary ..101 Appendix B: Sample dashboards from technical diagnosis ..10410033_ESMAP_Hydropower_Main 310033_ESMAP_Hydropower_Main 32/5/20 2:05 PM2/5/20 2:05 PMiv | Operation and Maintenance Strategies for Hydropower Handbook for Practitioners and Decision MakersAppendix C: O&M job titles and summary requirements ..106 Appendix D: Key O&M job descriptions ..109 Appendix E: Performance measurement: Key performance indicators ..135 Appendix F: Template terms of reference for soliciting preparation of an O&M strategy.

7 140 Appendix G: Template for OPEX costs (with illustrative data) ..147 Appendix H: Detailed case studies ..152 References ..153 TABLES Table 1 Major failures at hydropower facilities, 2005 2017 ..5 Table 1 .1 Key O&M performance indicators, by performance area ..14 Table 1 .2 Minimum KPIs of fleet O&M performance ..15 Table 2 .1 Typical objectives of an O&M strategy (for illustration only) ..25 Table 3 .1 Approaches to O&M ..33 Table 3 .2 Checklist for deciding whether to repair or replace ..37 Table 4 .1 Strengths and weaknesses of Model 1 ..54 Table 4 .2 Strengths and weaknesses of Model 2 (some O&M is outsourced) ..54 Table 4 .3 Strengths and weaknesses of Model 3 (all O&M is outsourced) ..55 Table 4 .4 Strategy selection based on owner capabilities to implement adequate O&M ..58 Table 4 .5 Example of performance measures used to calculate incentive payments.

8 61 Table 5 .1 Staffing levels at case study schemes ..69 Table 5 .2 Training requirements for technician and engineer at typical utility in North America ..71 Table 6 .1 Average life expectancy of plant parts and systems ..77 Table 6 .2 O&M cost per unit of capacity and energy of case study facilities ..80 Table 8 .1 Contractual arrangements to legally frame implementation of the O&M strategy ..87 Table 8 .2 Difference between a strategy plan and an operating plan for O&M ..89 Table 9 .1 List of case studies and models adopted ..93 Table B .1 Example of output from technical diagnosis on the need for major repair/replacement ..104 Table B .2 Sample from site observations as part of diagnostic (Step 1) ..105 Table C .1 Typical hydropower O&M organization chart at the facility level ..106 Table C .2 Typical hydropower O&M support organization chart at the corporate level.

9 108 Table E .1 Commonly used key performance indicators ..136 Table E .2 Two key indicators on performance, costs, and staffing ..13710033_ESMAP_Hydropower_Main 410033_ESMAP_Hydropower_Main 42/5/20 2:05 PM2/5/20 2:05 PMContents | vFIGURES Figure E .1 Step-by-step approach to O&M strategy development and implementation ..xFigure 1 Accident at the Sayano Shushenskaya hydroelectric facility in the Russian Federation, 2009 6 Figure 2 Timing of O&M strategies for new facilities ..8 Figure 3 Flowchart to establish whether a new O&M strategy is required ..9 Figure 4 O&M strategy process ..10 Figure 1 .1 Matrix of risks ..17 Figure 1 .2 Example of a risk matrix for condition of hydropower components ..18 Figure 1 .3 Extract technical diagnosis for major repairs/replacement ..20 Figure 3 .1 Bathtub curve of reliability of typical hydropower over time.

10 32 Figure 3 .2 Types of maintenance included in a maintenance program ..34 Figure 3 .3 Operation of a hydropower reservoir ..38 Figure 3 .4 Floating solar plant setup ..43 Figure 4 .1 Options for outsourcing some O&M activities and responsibilities ..48 Figure 4 .2 Scope for outsourcing O&M services in a service contract (Model 2) ..50 Figure 4 .3 Influence of labor laws and employment restrictions on staffing plan ..57 Figure 4 .4 Public utility Decision tree for selection of model ..58 Figure 4 .5 Private owner Decision tree for selection of model ..59 Figure 5 .1 Centralized management and support services for a fleet of generation facilities ..66 Figure 5 .2 Organizational structure of typical hydropower site ..67 Figure 5 .3 Number of staff compared with installed capacity for case studies ..70 Figure 6 .1 Capital expenditure budget for a Canadian hydropower facility, 2018 2117.