A Cost-Benefit Analysis of Bakhtiari Hydropower Dam Considering the Nexus between Energy and Water

Abstract

Hydropower stations have supplied most of the green electricity in various parts of the world. Nonetheless, the economic profit of hydro-electricity lies beyond its social costs in many cases. Despite the short-term economic benefits of large dams, their sustainable pros and cons are doubted. This study aims to investigate the long-term profitability of large hydropower stations by considering the nexus between the environmental, economic, and social aspects. Much progress has been made in simplifying feasibility studies of hydropower stations by developing comprehensive software and models according to the United Nations Sustainable development goals. Developed by International Atomic Energy Agency (IAEA), the SimPacts has become one of the most frequently-used simple models to estimate the external costs of electricity generation since 2003. Hydropower’s Environmental Costs Analysis Model (HECAM) is a popular user-friendly version of the model that includes more details for benefits estimation. In the present investigation, sedimentation and evaporation effects of constructing hydropower dams are added to previous cost estimation factors to upgrade the HECAM model to HECAM II. Bakhtiari hydropower dam (located in Lorestan province in Iran) is employed as a case study to verify the new model. The results showed that the total cost and revenue, as well as the benefit to cost ratio, were 79.13 US$/MWh, 203 US$/MWh, and 2.57, respectively. The new HECAM II model showed that the operation of Bakhtiari Dam would alleviate the socio-environmental doubts through a long-term plan in the region.