Evaluation of economic rent from hydroelectric power developments: Evidence from Cameroon

Yris Fondja Wandji and Subhes Bhattacharyya
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Yris Fondja Wandji: AgroParisTech
Subhes Bhattacharyya: UNIS - University of Surrey

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Abstract: The exploitation of hydro resources for generating electricity at cheaper cost gives rise to significant economic rent to owners. Cameroon, which has a great hydropower potential is engaged in developing the resources. Thus, the main goal of this study is to calculate the potential economic rent that could be generated in the Cameroonian hydropower sector in order to meet the electricity needs and to achieve the "Cameroon 2035 Vision" promoted by the Government. In this study the hydropower rent is calculated for the whole country as the difference between optimized total costs of two hypothetical systems: one with hydropower and the other without hydropower. We also analyse the sensitivity of the rent estimation due to variations in some key parameters. Using the LEAP software system, our calculation gives a value of 16.937 Euro/MWh of hydropower rent for the Median scenario concerning the future demand trends. This rent is in the range of values found by Amundsen and Tjøtta (1993), Banfi et al. (2005) and Shrestha and Abeygunawardana (2009) for Norway, Switzerland and Nepal respectively.

Date: 2018-03-09
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Published in The Journal of Energy and Development, 2018, 42 (1 and 2)

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