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Risk management of hydropower projects for sustainable development: a review

Author

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  • Anuja Shaktawat

    (National Institute of Technology)

  • Shelly Vadhera

    (National Institute of Technology)

Abstract

Hydropower projects are site specific which require huge investment and have long gestation periods. These characteristics expose hydropower projects to various uncertainties and risks such as economic, environmental, social, geological, regulatory, political, technological, financial, climate, natural, and safety. These risk factors, if not managed in time, lead to schedule and cost overruns which ultimately cause delays in the availability of power that too at a higher cost and in extreme cases lead to project failures. Sustainability has also become a critical and unavoidable issue in hydropower development due to associated environmental and social impacts. Sustainable development is related to techno-economic development along with preserving the environment. Hence, to assure this equity and manage the critical risks more efficiently, there arises a strong need for comprehensive risk management in hydropower projects. This paper presents a systematic review of risk management in hydropower projects with a specific focus on sustainable development. The paper discusses various risk assessment techniques and recommends sensitivity analysis as a primary method to evaluate the significant risk factors. The construction phase of hydropower projects is identified as the most critical phase associated with uncertainties and involves considerable cost. Thus, the review highlights the need for incorporation of risk analysis in the cost estimation process and the provision for finance with sufficient margin on the ex-ante base cost to account for uncertainties, especially for developing countries. For future research, the use of fuzzy hybridized with artificial neural network and genetic algorithm is suggested for risk assessment of hydropower projects.

Suggested Citation

  • Anuja Shaktawat & Shelly Vadhera, 2021. "Risk management of hydropower projects for sustainable development: a review," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(1), pages 45-76, January.
    • Handle: RePEc:spr:endesu:v:23:y:2021:i:1:d:10.1007_s10668-020-00607-2
    DOI: 10.1007/s10668-020-00607-2
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