Total Ecosystem Valuation of an hydropower system ... · Total Ecosystem Valuation of an hydropower system watershed in Serra da Estrela, ... Total Ecosystem Valuation of an hydropower

Direcção de Sustentabilidade e Ambiente

Total Ecosystem Valuation of an hydropower system watershed in Serra da Estrela, Portugal 11 December, 2015

EDP’s Experience

Main results

Direcção de Sustentabilidade e Ambiente 2

EDP key figures

Where we are

Our growth strategy

The importance of Ecosystem Services for Business

WBCSD

Natural Capital Protocol

EDP´s experience: Total Ecosystem Valuation of an hydropower system watershed

The business Case

Methodologies

Results

Lessons learned

Agenda


EDP key figures

Where we are

Our growth strategy


WBCSD



The business Case

Methodologies

Results

Lessons learned

Agenda


EDP worldwide

4

14 countries, Top worldwide renewable energy provider

Brasil Espanha Portugal

Energia Eólica & Solar

25% do EBITDA (10% América Norte; 6% Espanha; 4% Portugal; 5% Outros)

Empresa subsidiária: EDP Renováveis (EDP tem 77,5%)

491 colaboradores

Potência Instalada: 8,1 GW

Líder de mercado em energia renovável em todo o mundo

EBITDA = M€ 3.642

Employees = #11.798 Installed Capacity= 22.469 MW

17% do EBITDA Empresa subsidiária : EDP Brasil (EDP tem 51%)

2.674 colaboradores

Presença desde 1996

Potência Instalada : 1,8 GW (hídrica)

2 concessões de distribuição de energia elétrica

44% do EBITDA 6.733 colaboradores

Privatização em 1997 (IPO)

Única distribuidora de eletricidade

Potência Instalada: 8,7 GW (exceto eólica; dos quais 5,4 GW é hídrica)

14% do EBITDA 1.898 colaboradores

Presença desde 2001

Potência Instalada: 3,8 GW (exceto eólica)

2ª maior distribuidora de gás

Notas: Dados de 2014; (1) O número total de colaboradores apresentado para o Grupo EDP difere do somatório por geografia por incluir os colaboradores da China e de Angola.

33%

29%

36%

2%

Hídrica

Térmica

Eólica

Outros


Renewable growth is key in EDP’s Strategy

9,6

9,4

9,1

7,5

7,5

7,5

7,2

6,7

6,7

6,7

6,0

5,8

+ 2.765 MW

2017

2009

2008

2006

2007

2014

2013

2012

2016

2015

2011

2010

21%

Installed capacity reinforcement

60%

19%

New Dams in Portugal

New dams in Brasil

Hydro installed capacity GW

Com bombagem: 436 MW (84%)

Sem bombagem: 81 MW (16%)

Hydropower is part of this strategy


EDP key figures

Where we are

Our growth strategy


WBCSD



The business Case

Methodologies

Results

Lessons learned

Agenda


World Business Council for Sustainable Development

WBCSD is a CEO-led organization of forward-thinking companies that galvanizes the global business community to create a sustainable future for business, society and the environment. The WBCSD aims to be the leading voice of business that will support companies in scaling up true value-added business solutions and in creating the conditions where more sustainable companies will succeed and be recognized.


EDP is a Member of the WBCSD

B&B private

Sector Guide

B&B Handbook

for corporate

Action

Business &

Ecosystems:

Issue brief

Ecosystems

Challenges and

Business

Implications

Ecosystem

Services

Review

1997 2003 2006 2007 2008 2009 2011

Ecosystem Services Biodiversty

CEV –

Corporate

Ecosystem

Valuation

Working on the importance of Biodiversity and Ecosystem Services for Business

Natural

Capital

Natural

Capital

Protocol


@NatCapCoalition #NatCapProtocol


Introduction to v0 draft



Natural Capital Protocol Early Draft | Public consultation until 26 February 2016

Purpose: help business integrate its relationship with nature more systematically into strategy and operations.

The Protocol is intended to encourage those businesses that may have not yet fully realized the benefits of valuing

natural capital to get started, and ultimately empower all businesses to help reduce environmental decline and

start rebuilding the precious natural capital upon which we all depend.

www.naturalcapitalcoalition.org/natural-capital-protocol.html


EDP key figures

Where we are

Our growth strategy


WBCSD



The business Case

Methodologies

Results

Lessons learned

Agenda

Cascata da Serra da Estrela

Total Ecosystem Valuation

(2012)

13


Supported and contributed to the CEV Guide, published by WBCSD

Followed closely this study and published CEV guide

14

A Partnership

I&D activities include projects with strong business involvement. It includes project design, instrument assessment, policies

and action plans around several sectors, namely agro-forestry

The mission of the Research Centre in Biodiversity and Genetic Resources is to develop world-class research in the areas of biodiversity and evolutionary biologys

A multidisciplinary research centre focused on mountain

Issues. It aims at studying and valorising mountain natural resources, forest and agriculture ecosystems, and local products in order to develop sustainable systems economically,

socially and environmentally


Becoming a Road Tester Strong investment on hydropower facilities, with high environmental impacts

Motivation

Learn with the process

• Believe that Economic Valuation will be part of future environmental regulations

Link Ecosystems to business

• Look at the dependency side of our business (raising awareness)

Open discussion at national level

• Strengthen dialog with academia, where the knowledge is

Change in management approach

• Look for positive externalities (benefits) or opportunity costs


Why chosing Cascata da Serra da Estrela? Main reasons

A Renewable Source

An old system, first dam built in 1923

High ecological sensitivity

Affected by fires

Multi stakeholders use

CO2, NOX, SO2, Particles avoided

Landscape integrated?

Are environmental impacts significant?

Electricity generation affected. Increase of operational costs.

Hydro generation; human consumption; Agriculture; tourism, other?


Why chosing Cascata da Serra da Estrela? After a fire…


Main Goals for CEV The Total Economic Valuation of a watershed and different forest management scenarios were considered as pilot

Look up for opportunities to reduce operational costs

•Summer fires increase operational costs

Comply with Environmental Liability Directive

• Land use caracterization

•Future renegotiation with insurance companies

Strengthen local stakeholder engagement, under EMAS

•Negotiations to maintain water level in summer time for tourism

• A hydropower system located at a Natural Park was chosen for testing CEV • TEV of the watershed was conducted against a dismantlement scenario


Local Stakeholders engagement

Main benefits:

•Water, in its different uses

•Erosion controlControlo da Erosão

•Landscape, mainly recreation

(tourism and fishing )

•Grazing (food)

•Biodiversity

Main question: which ecosystem services are important for the community?

Main barriers:

•Diferent regulation pointing out

to different priorities

•Forest fires

•Depopulation - (Landscape kept by

human activity)

•Property Rights


The Pilot Study location

Serra da Estrela Natural Park

Located in the highest Mountain in Continental Portugal

Watershed:

7.2 m ha


Participatory Workshop

Literature review

Ecological data collection

Main Goal: The TEV of the watershed

TEV

Set System Boundaries

Identify Main Ecosystem

Services

Biophysical units

quantification

Apply economic valuation

techniques

Sensitivity Analysis

21

Private Benefits – Private Costs + Public Benefits – Public Costs

1

2

3 4

5

•Discount rate variation (2%

and 5%)

•Time horizon variation

Set time horizon (concession

period: 20 years)

Compare with a dismantlement

scenario


Serviços de ecossistemas considerados

22

Provision Services

•Water consumption •Irrigation • Electricity generation •Food •Wood

Regulation services

• Fire control •Avoided emissions

Cultural Services

•Recreational fishingTurismo de verão

Biodiversity •Habitats, espécies e diversidade genética


Ecosystem services considered

23

Ecosystem Services

Main uses of the

watershed by local

communities

Notes

Dependences Impacts Dependences

Provisioning

Livestock + Local workshop

Wood + Local workshop

Capture fisheries ● +/- +Good access to lakes; measures to minimize impacts on fisheries in

place.

Sand ? Downstream not studied

Fresh water ● ● + +Electricity generation; Irrigation; water consumption. Improves access

to water. Local workshop

Regulating

Air quality regulation ● + NOx and SOx Emissions avoidance

Global Climate regulation ○ ● + CO2 emissions avoidance

Water regulation ● ● +/ - Water storage. Local workshop

Erosion regulation (fire risk

avoidance)○ ● + +

Erosion increases operational costs; facilitates the good access to

water; local workshop

Cultural

Recreational ● + + Lakes used for summer recreation; local workshop

Others

Biodiversity(1) ● - + Flodded areas and water cycle changes; local workshop

(1) studied as a non-use value

Key ● High + Positive impact ○ Medium - Negative impact

Low ? Don't know

Hydropower System in

Serra da Estrela


Valuation Techniques

TEV Type Ecosystem Service Valuation Methods Formulation

Use

Va

lue

Pro

vis

ion

ing

Se

rvic

es

Water human consumption

Market Price Pumped water (m3/yr) * (water tariff-costs) (€/m3)

Irrigation Opportunity Cost Pumped water (m3/yr) * electricity net value (€/m3)

Power generation Market Price Annual Power generation (Gwh/yr) * (selling price – generation costs) €/Gwh

Emissions Avoided (NOx and SO2)

Benefit Transfer* Electricity generated (kwh) * [(Avoided Emissions of Nox (t/kwh)* CAFE NOx range values (€/t)) + (Avoided Emissions of Sox (t/kwh) * CAFE NOx and SOx range values (€/t)]

Food Market price Meat (kg/yr)* [price (€/kg) - costs (€/kg)] Cheese (kg/yr) * [price (€/kg) - costs (€/kg)]

Wood Market Price Extracted wood (€/quinquennium) – operational costs (€/quinquennium)

Re

gu

lati

on

Fire Risk Avoidance Market Price Avoided burned area due to dams presence (ha)* fire prevention costs (€/ha/yr)

Cu

ltu

ral

Recreational Fishing

Travel Cost Number of fisherman * [General fishing license value (€/yr)] + Number of annual visits * (Special daily license value + average travelling costs (€/yr)]

Recreation

(swimming and aquatic sports)

Travel Cost Number of stays during summer time in Serra da Estrela Region*

average daily expenses for independent touring estimation

Non Use Value

Biodiversity Shadow project; Benefit transfer Market Price

“Priority” habitats x habitat value (compensatory payments; CAOF Matrixes; Life Projects)


4,7%

6,1%

0,3%

0

20

40

60

80

100

120

140

160

180

200

NPV (20 years) C2 Dismantlement

€

Milh

õe

s

3,1%

0,2%

0

20

40

60

80

100

120

140

160

180

200

NPV (20 years) C1 Dismantlement

€M

illio

ns

Power generation* Emission Avoided Water related tourism**

Water supply Biodiversity Wood

Recreational fishing Food Fire risk avoidance

TEV Results Hydropower system watershed in Parque Natural of Serra da Estrela

* Includes CO2 emissions remuneration ** Dismantlement scenario not valued. [C1–C2] Range scenarios. Contribution from “emissions

avoided” and “Biodiversity” methodologies

0,46%

0,67%

0,04% 0,03%0,01%

% of TEV C1

0,76%

0,05% 0,04% 0,01%

% of TEV C2

% of TEV C2 % of TEV C1

~130 M€

~192M€

~15 M€ ~28 M€


FOREST MANAGEMENT

SCENARIO

Biophysical characterizati

on

3 National Authorities

Forest management

Scenarios

Ecological Modelling

Hydrological modelling

Wildfire risk analysis

Second Stage: Land management effects on TEV

26

Implications for hydropower activity

1

2

3

4

Biodiversity valorisation

model


Hydrological Modeling Outputs for hydropower generation, considering different forest management scenarios

100

101

102

103

104

105

106

107

Current Conservation Protection Silvopatoral

Reservoir Flow for each scenario [hm3]

2020 2050 2080

0

2000

4000

6000

8000

10000

12000

Current Conservation Protection Silvopatoral

Reservoir Sediments for each scenario [t/year]

2020 2050 2080

All Scenarios contribute slightly to flow decreasing

There is no strong evidence of less erosion


NPV Forest Management Scenarios Within the hydropower system watershed

Due to high investments estimated, current management

scenario is the most efficient 109

-109

99

92

103

177

-106

165

159

171

244

-103

234

230

240

-150 -100 -50 0 50 100 150 200 250 300

Current Management

Dismantlement

Conservation Scenario

Protection Scenario

Silvopastoral Scenario

Million €

Average NPV for different Forest Management

Scenarios

NPV 40 years NPV 20 years NPV 10 years

Not included CO2 sequestration


• Water availability for electricity generation came out as the most valuable service

• Food and fishing ended up having a smaller contribution, although perceived by local stakeholders as important services of the region

• Biodiversity values ranged significantly according to the different methodologies used

Ecosystem services

• Under this TEV methodology there is no economic rational for a dismantlement scenario.

• There were not found any opportunity costs to invest upstream and reduce siltation

Hydropower system

• No significant NPV differences were obtained, although water flow would be slightly decreased with potential negative implications for hydropower generation

Forest management scenarios

Wrap-up


• Dismantlement scenario for Biodiversity was conservative: considered the instantaneous conversion of total flooded areas into priority habitats

• Dismantlement scenario for water related tourism was not made. From a conservative approach, the economic value was considered to be maintained although it was expected to be reduced.

Caveats

Wrap-up


In short: some applications

• Baseline land characterization is done inside the watershed

• Economic valuation useful for future renegotiations of mandatory financial securities.

Assessing Liability

• Strong support for decision making at local level

Stakeholder engagement

• Training kit for internal use, helping the company to scale up this ES approach.

Advocacy

• Could there be new market advantages? Demonstrate to potential RECS buyers the overall benefits of the water-system beyond CO2 emissions avoidance

Enhancing

Revenues

• Biodiversity valuation results can be used to help decision making in new in new EIA processes

Decision Making in future investments

• What about National Authorities? Will these results be useful for future hydropower concessions?

Strong tool for future concessions renegotiations?


Sustainability Contacts Visit EDP Website

Sustainability:

E-mail: [email protected]

Sara Carvalho Fernandes

[email protected]

Site: www.edp.pt

Link Sustainability:

http://www.edp.pt/en/sustentabilidade/Pages/

HPSustentabilidade.aspx

Link Results & Presentations:

http://www.edp.pt/pt/investidores/resultados/Pages/

Resultados.aspx

Thank you!

mailto:[email protected]

mailto:[email protected]

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Total Ecosystem Valuation of an hydropower system ... · Total Ecosystem Valuation of an hydropower system watershed in Serra da Estrela, ... Total Ecosystem Valuation of an hydropower