Hydropower plants (HEPs), unlike most generation technologies, have very long lifespans that often exceed 100 years. As capital-intensive assets with customised designs and extensive construction requisites, their development can take years and hold substantial long-term value due to their low-cost energy generation. To preserve this value, diligent operations and maintenance (O&M) strategies are needed. These help in sustaining longevity, enhancing operational efficiency and enabling plant safety while avoiding costly failures. An O&M strategy becomes particularly crucial when performance issues arise, owners seek to enhance efficiency and reduce costs, or funders and regulators require the assurance of the plants’ sustainable operations. Existing plants particularly need structured O&M strategies to ensure performance reaches targeted thresholds through assessments and phased interventions, while in the case of new projects, integrating O&M early in the development stage optimises future operations.
The lack of adequate and sufficient O&M can result in severe consequences for HEPs, including power plant shut-downs, performance losses, significant premature refurbishment costs, deterioration of equipment, and environmental and safety risks. Poorly maintained facilities not only lose value but can also undermine the security of the power system they serve. The restoration of a degraded facility back to reliable operation can take years, further underscoring the need for O&M strategies. To this end, implementing comprehensive O&M strategies ensures a high return on investment. Recognising the immense importance of adequate O&M strategies, the World Bank provides a structured, step-by-step methodology focusing on O&M strategy development and implementation in HEPs.
Step-by-step methodology
Before implementing an effective O&M strategy, a comprehensive diagnosis is necessary to evaluate the plant’s current performance, equipment conditions and major challenges. Hence, to inspect the state of major infrastructure and ascertain whether repairs or replacements are needed, a technical evaluation is carried out in the first step. Plant owners can identify areas requiring immediate intervention, long-term rehabilitation or modernisation by analysing key performance indicators (KPIs) such as plant availability, forced outage rates and maintenance efficiency. Additionally, a condition assessment of critical assets can provide information regarding the physical condition of all assets as well as the availability of essential replacement parts and equipment. In cases where an existing plant underperforms, a root cause analysis can help uncover the causes for the poor condition of assets and identify areas where improvements are needed. For greenfield projects, this step focuses on assessing the capability of the plant owner to establish a viable O&M strategy from the bottom up.
Once the diagnosis is completed, Step 2 involves outlining clear, measurable objectives for the O&M strategy, ensuring alignment with technical, regulatory and operational standards. These objectives should reflect the long-term vision for O&M and the strategic targets to be attained. The targets may be of a financial nature (budgets and revenues) or related to production (energy generation), human resources (capacity building and staffing), and technical and operational issues (plant O&M performance). Meeting these objectives may require multiple iterations, including operational adjustments and maintenance upgrades. Additionally, the objectives should be linked to KPIs established in Step 1, with target ranges set based on the facility’s nature, age, location and physical environment. The financial value of improved performance should be estimated through a high-level benefit valuation, reinforcing the strategy’s viability.
Based on the key root causes identified in the diagnosis conducted in Step 1 and the objectives defined in Step 2, Step 3 focuses on determining the core activities to be implemented by the O&M strategy. In addition to repairs and refurbishments, these activities include implementing maintenance strategies such as corrective, preventive, condition-based, and revenue- and risk-based maintenance, along with a holistic approach covering organisational management, training, corporate and social responsibility, monitoring and reporting. The list of activities also includes financial planning, personnel training and asset refurbishment to enhance the efficiency and longevity of asset life. Implementing modern technologies such as computerised maintenance management systems, remote monitoring and predictive analytics can also improve operations. Incorporating climate resilience measures, sediment management, and hybrid solutions such as floating solar can further strengthen plant performance.
Next, based on the findings of the previous steps, Step 4 explores different contractual models for O&M implementation. Model 1 places the entire responsibility of O&M with the owner, thus aligning interests but requiring strong in-house capabilities. Model 2 involves outsourcing O&M responsibilities, thus transferring risk to external parties but also increasing costs. In Model 3, the entire O&M is handed over to an independent operator. The selection of a specific model depends on factors such as the owner’s capacity, regulatory environment, availability of local and skilled workforce and the risks associated with contractual agreements with third-party operators.
Having selected and structured the O&M model, Step 5 comprises developing the required organisational structure by assessing workforce requirements, timing recruitment to align with plant needs, and formulating training programmes to enhance technical expertise and skills. A sustainable O&M strategy ensures that skilled technical and managerial personnel are in place to deliver O&M services efficiently and safely, while strengthening human resources, institutional capacity and corporate governance. Staffing plans should take into account the business environment, workforce capabilities for O&M, and the extent of reliance on external advisers or contractors based on the chosen O&M model. Regardless of the chosen model, it is crucial to build the capacity and skills of local personnel in order to reduce dependence on foreign staff and to lower labour costs. For new projects, training should ideally be planned before construction begins and implementation should start during the construction phase, at least one or two years before the start of commissioning.
Step 6 entails the estimation of O&M costs, and aims to ensure the availability of sufficient funds for routine maintenance, major refurbishments and unforeseen repairs. The O&M costs incurred for HEPs are categorised into opex, which covers daily operating expenses, and capex, which encompasses one-off activities such as major upgrades and replacements. These costs are influenced by various factors, including the complexity of the facility, age, condition, location, regulatory regime and the owner’s approach to staffing. In addition, before the O&M plan is implemented, a cost-benefit analysis should be conducted to establish the feasibility of the O&M strategy. Thus, in Step 7, some of the previous steps should be revisited to make adjustments if the analysis indicates that the strategy is financially or technically unviable. At this stage, the engagement of both internal and external stakeholders becomes crucial for further refining the plan.
Finally, Step 8 is the last and final step concerning the implementation of the O&M strategy. This step includes the documentation required for the implementation, including supporting contracts and agreements, a five-year capital programme, an annual operating plan and a monitoring plan, including the KPIs that will be measured and included in regular reports. The continuous monitoring of KPIs through monthly and quarterly reports is vital under this step to ensure alignment with targets in the strategy and with industry norms.
Conclusion
Even though hydropower offers a near-perpetual renewable energy option, a robust O&M strategy is crucial to ensure efficient and reliable operations. By following the outlined structured methodology in line with the best practices for designing O&M strategies, plant operators can enhance efficiency, extend asset life, minimise operational risks and ensure regulatory compliance. The integration of modern technologies such as remote monitoring, predictive analytics and climate resilience measures further enhances plant performance. Moreover, with hydropower increasingly complementing variable renewable energy sources, effective O&M strategies are becoming even more critical for grid stability and long-term sustainability. Going forward, continued investments in advanced technologies, development of the workforce and effective O&M strategies will ensure that hydropower remains a cornerstone of sustainable energy for generations to come.