This bachelor’s thesis was conducted in collaboration with Arvika Kraft AB and its purpose was to improve their hydropower station that is located in Rexed. During the last couple of years this specific hydropower station has had vast amounts of mechanical problems, mainly with their gearbox. The result of this has been that the hydropower station has been stationary over long periods of time. At the same time this has resulted in that the hydropower station only opens their turbine’s vanes to 80% of its maximum capability to try to avoid the recurring mechanical problems. By only opening the turbine vanes to 80% the incoming water flow is reduced, which in turn also reduces the amount on electricity that can be produced.

The goal with this bachelor’s thesis has been to find a more economically beneficial solution than the one that is present in today’s hydropower station. It should also be noted that this thesis will only look into the possibility of changing the hydropower stations gearbox and generator. The turbine will not be dealt with in this thesis.

Historical- and hydrological data has been analyzed so that the efficiency and a possible increase in the production of electricity for the hydropower station in Rexed could be calculated. This result was then compared with alternative solutions that were offered by Transmissionsservice in Jönköping through several investment calculations.

The concept that was the most economically beneficial for the hydropower station in Rexed was exchanging the current gearbox for the one that Transmissionsservice in Jönköping had offered. This solution resulted in an increase of the produced electricity from 2 100 MWh up to approximately 3 000 – 3 400 MWh. With a price on electricity of 300 kr/MWh it generated an increase of income of 270 000 – 390 000 kr per year. The investment of 1 500 000 kr, for the new gearbox plus installation fees, is beneficial with an IRR of 5%. From the investment calculations it can also be found that an investment up to 5 000 000 kr still is economically beneficial, since the IRR is higher than the cost of capital, for Arvika Kraft AB.

Before Arvika Kraft AB decides if the investment will be made or not they should investigate the possibility of receiving a certificate for their hydropower station. By reconstructing this hydropower station they could receive this certificate, which would increase the income price of the electricity produced by 50% for 15 years (or until the year 2035 if the reconstructed after 2020). With 3 000 – 3 400 MWh of electricity produced this certificate would allow for an investment up to 8 500 000 kr and still be economically beneficial, with an IRR of 5%, for Arvika Kraft AB.