Study On The Development Of Hydropower Resources In Furong River Basin

Guizhou Beiyuan Power co. Ltd, set up ten years ago, has already invested morethan1.1billion RMB for hydropower development at Furong River, Guizhou. Thecompany plans to use the profit of built power stations to gradually develop the sixcascaded hydropower stations (with total capacity of213MW) in ten years at FurongRiver in a way of rolling development. Over the past ten years, Guizhou Beiyuan Powerco. Ltd has grown from a small company with a dozen employees into a large corporationwhich owes hundreds of employees and billions of yuan of assets. However, those builtprojects have run at a loss since the first station was put into operation. The company hadsuffered a loss of160million Yuan from the operation of Yutang Hydropower Station in2005to the end of2012and thus is facing tremendous pressure to survive. The variationsof the economic indicators for projects both have been or being constructed is studied inthis thesis, by which the following3conclusions can be made.1) Based on thecontrastive analysis between actual constitution of cost and approved budget, absoluteand relative variations of indicators, which includes overall investment, constructioninvestment and migration investment, was analyzed to reveal that the main factor leadingto the poor benefit is the significant increase of construction cost.2) Data of the annualaverage electricity production (actual and planed) of YuTang and QingXi hydropowerstation was collected and analyzed to compute the difference between actual and planedrevenue, which comes to the conclusion that the main factor affecting the revenue is thatelectricity production capacity of hydropower is overestimated.3) By studying the actualoperating cost of those constructed projects, conclusion that the increase of operating costcan result in business difficulty of the projects.According to the conclusions above, the following five suggestions should be takeninto account: First, the construction entity should pay more attention to the decision-making process, especially for the review and optimization process, to ensure the designbudget well reflect the real cost of the project, provide reliable basis for the investmentdecisions and avoid over-investment; Second, the corresponding favorable policiesimplemented by the local government play a crucial role in reducing the construction andoperation costs of the project, however, sometimes local government may fail to fulfill their promises, this situation should be avoided make their promises into legal documentsbefore the construction work starting. The third one is to cooperate with industryassociations and other organizations, so as to make joint efforts for making a reasonablepricing system for medium and small hydro-power station, and secure the steady increasein revenue. Fourth, to make full use of information technology, reduce the cost ofmanaging the project; The last one is to correctly understand the hydropower project’scharacteristics (e.g. long life cycle, stable operation), proper analysis and evaluation theproject’s economic indicators, introducing dynamic parameters in the whole economicevaluation process, avoiding miss the opportunity just because the short-term benefits cannot meet the requirements.