Evaluation of economic rent of hydropower projects

Existing studies have mostly estimated the ex post economic rent of hydropower for the hydroelectric system of a province or a country as a whole and have ignored the site- or project-specific variations in the economic rent of hydropower plants. Further, most of the existing studies have used simplified methods to calculate the rent ex post. This paper presents a rigorous methodology for estimation of site-specific (i.e., project specific) economic rent of hydropower ex ante. It applies the methodology in the case of a hydropower project and analyzes the sensitivity of the rent to variations in some key parameters.