About:
Background, Approach & Outputs
The hydropower sector has been systematically misunderstood for decades. Social, environmental and economic impacts associated with large dams are often understated during project assessments, while at the cost of ecosystem health and livelihood security.
Poor project assessments enable approval of risky projects, which then often face ESG and operational delays, together with cost overruns and reputational issues.
These impacts are severe at the local level, but can be scaled to have national and regional implications as a result of the cumulative nature of multiple dams.
We therefore urgently need a better way to assess the true costs and benefits of hydropower.
This is the rationale for Riverscope.
Riverscope was developed to:
· Assess the ESG risks associated with real hydropower investments, based on quantitative and qualitative data;
· Demonstrate the impact of these risks on a project’s viability, as well as their potential broader implications;
· Compare risk-adjusted project financials with the financial case for alternatives;
· Provide a set of recommendations for relevant stakeholders based on the findings.
Riverscope assessment approach
Riverscope implements three interlinked layers of assessment
(see detailed methodology here):
Rapid Assessment
The Rapid Assessment compares projects across 17 subnational level ESG-related indicators, derived through a statistical assessment of 281 cases.
The process uses geospatial comparative statistical analysis to determine the ESG risk potential for a given hydropower project’s location.
Financial Assessment
We have developed an Expected Delays Model to predict the potential for project delays.
The model reflects an exponential relationship between ESG risk and delays where the higher the ESG risk score, the more likely a project will face delays.
We then have a Discounted Cashflow Model to determine the impact of these delays on the financial viability of a project, using metrics like NPV and LCOE.
Deep Dive
The final component is a qualitative review which investigates key project documents, academic journals, reports, local accounts and news articles, where appropriate.
This review process ensures the quantitative results are accurate while providing an additional layer of qualitative insight into issues that are difficult to capture through quantitative assessment alone.
Outputs
Riverscope provides outputs at different levels of assessment to inform effective decision-making processes for hydropower assets.
Four general options are described below, but if you don’t see what you are looking for then please contact us to discuss a different approach.
1. Rapid Assessment: A rapid quantitative assessment for a single project or multiple projects that provides 0-100 score for 17 locally specific environmental and social indicators that are statistically associated with financial risk.
Each Rapid Assessment includes brief commentary on indicator scores as well as an estimate of potential project delays and associated financial risk. See here for a sample of this assessment.
2. Full Assessment: A Full Assessment combines Rapid Assessment outputs with an investigation of key project issues and risks. This combination of approaches provides a comprehensive project-level assessment.
See this pilot project summary for a sample of a Full Assessment report. We also conduct collaborative Full Assessments: we provide Rapid Assessment results and collaborate with another organization on the subsequent investigation. This may be of interest to local consultants and NGOs with real area expertise.
3. Portfolio Analysis: A Portfolio Analysis provides a Rapid Assessment of each project in the portfolio, followed by an analysis of portfolio-level risk. This analysis ranks projects by risk exposure and provides information on key risk drivers at project or portfolio level.
This option is most suitable for companies or financial institutions exposed to several hydro projects. The analysis can cover the exposure of a single entity or multiple entities for cross-entity benchmarking. We can share a sample of this work, upon request.
4. Area Analysis: The area analysis covers projects within a specific area (e.g. within a district, country or wider region). At minimum, the analysis will present risk ranking by project and by area (e.g. districts within a country).
As with portfolios, Area Analysis can focus on key themes or client requirements e.g. climate change exposure, displacement risks or risks of social conflict. We can also make specific suggestions about alternatives to hydropower, providing comparative costs and benefits.
See our page on Current Work for an update on the latest Riverscope developments.