World Small Hydropower Development Report 2013

Transcription

1 World Small Hydropower Development Report PERU

2 Disclaimer Published in 2013 by United Nations Industrial Development Organization (UNIDO) and International Center on Small Hydro Power (ICSHP) UNIDO and ICSHP All rights reserved This report was jointly produced by United Nations Industrial Development Organization (UNIDO) and International Center on Small Hydro Power (ICSHP) to provide information about small hydropower. The document has been produced without formal United Nations editing. The designations employed and the presentations of the material in this document do not imply the expression of any opinion whatsoever on the part of the Secretariat of UNIDO and ICSHP concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries, or its economic system or degree of development. Designations such as developed, industrialized and developing are intended for statistical convenience and do not necessarily express a judgement about the stage reached by a particular country or area in the development process: Mention of firm names or commercial products does not constitute an endorsement by UNIDO or its partners. The opinions, statistical data and estimates contained in the articles are the responsibility of the author(s) and should not necessarily be considered as reflecting the views or bearing the endorsement of UNIDO and its partners. While every care has been taken to ensure that the content is useful and accurate, UNIDO and ICSHP and any contributing third parties shall have no legal liability or responsibility for the content or the accuracy of the information so provided, or for any loss or damage caused arising directly or indirectly in connection with reliance on the use of such information. Copyright: Material in this publication may be freely quoted or reprinted, but acknowledgement is requested, together with a copy of the publication containing the quotation or reprint. Recommended citation: Liu, H., Masera, D. and Esser, L., eds. (2013). World Small Hydropower Development Report United Nations Industrial Development Organization; International Center on Small Hydro Power. Available from

3 2 Americas 2.3 South America Peru Lara Esser, International Center on Small Hydro Power Key facts Population 29,549,517 1 Area 1,285,216 km 2 Climate Coastal plain: desertic arid sub-tropical or arid tropical; Andes sierra: temperate to frigid Topography Western coastal plain; high and rugged Andes in centre (highest point: Nevado Huascaran 6,768 m); eastern lowland jungle of Amazon basin 1 Rain pattern Coastal plain: annual average up to 500 mm. Andes sierra: Annual average range 500-1,200 mm depending on altitude and location (above 3,800 m altitude as snow or hail). Wet season: December to April. Amazon basin: frequent rains all year long, especially January to April. Annual average 2,000 mm 3 Electricity sector overview Peru had, for a long time, successfully utilized hydropower, until natural gas was discovered and developed in the 1990s (Camisea project i ), causing hydropower development to slow down. The Government is taking renewed interest in development of hydropower of all sizes, including small hydropower, since it is seen as a national resource that can be developed by local entrepreneurs, with minimal social and environmental impact. 4 Generators Steam turbines Combined cycle Gas turbines hydropower 4.78% 5.40% 9.07% 24.30% 0.00% 25.00% 50.00% Figure 1 Electricity generation in Peru Source: Ministerio de Energía y Minas 5 Note: Data from % The electrification rate in Peru is about 78.7 per cent at the national level (2010). Mainly, scarcely populated areas lack electricity access, showing the need for electrification in rural areas. Of Peru s rural population (more than six million people), 60 per cent does not have access to electricity. This is one of the lowest rural electrification rates in Latin America. The access to grid electricity varies across the different regions: the Andean North and Amazon region have the lowest rural electrification rate (22 per cent and 18 per cent respectively) compared to the more densely populated and also more easily accessible Coastal Central and South regions (60 per cent and 71 per cent, respectively). 6 The effective electricity generation capacity in Peru reached 8,816 MW in 2011 and its electricity generation in the national electric market and for selfconsumption reached 38,509 GWh. 7 Deregulation coupled with privatization in the late 1990s allowed private sector participation in Peru s power market allowing private players to contribute to generation, distribution and transmission. 8 Small hydropower sector overview and potential Development of the hydropower resources of Peru started over a hundred years ago. Particular advantages for this development were the accentuated topography on the Pacific side of the Andean chain with its many rivers, and augmentation of the dry season flows by snowmelt. Hydropower plants were intended for the supply of local electricity demands and, increasingly, the requirements of the mining industry. In the second half of the last century, regional power networks emerged and hydropower development began to encompass large-scale schemes. In 2011, the total installed hydropower capacity in Peru was 3,453 MW. 7 According to the Ministry of Energy and Mining (MEM), in 2010, there were 136 small hydropower plants in 2010 with a combined capacity of MW and individual capacities up to 10 MW. 5 Out of the 136 small hydropower plants, 57 were connected to the grid and 78 were stand-alone plants. Additionally, 105 plants generated electricity for the national interconnected system and 30 plants generated electricity for self-consumption (mostly mining companies). Eleven small hydropower projects were under construction in 2011, adding 69.4 MW of small hydropower capacity. 4 6 The individual power capacities range between 1 MW and 10 MW. There have been three purchase auctions for electricity from renewable sources (including small hydropower below 20 MW, wind and biomass). In the case of small hydropower, the first auction has awarded approximately 170 MW of small hydropower with capacities below 20 MW which should start construction in The power purchase contracts run up to 20 years at rates higher than the regulated market and with an additional bonus for being renewable. More auctions are expected to promote renewable energies in the future. 9 1

4 There are possibilities for incorporation of small hydropower projects in existing hydraulic structures (at reservoir outlet works, canal drop structures, etc.). Assuming a similar ratio of total installed capacity to irrigated areas in Peru as in Chile, Peru possibly has a potential of 510 MW for small- to mediumhydropower plants that could be incorporated into existing irrigation infrastructure (figure 2). 4 The gross small hydropower potential (up to 20 MW) is 170,000 MW, while both the technical and economic potential is reported as 69,445 MW in a questionnaire by the Ministry of Energy (figure 2). 10 SHP installed capacity (up to 10 MW) SHP potential (up to 10 MW) SHP installed capacity (up to 20 MW) SHP potential (up to 20 MW) MW unknown 3, MW Figure 2 Small hydropower capacities in Peru 69,445 MW The Rural Electrification Project assisted by the World Bank will provide a more reliable assessment of the technical potential for small- to medium-sized hydropower development through a new Hydro-GIS study underway by MEM. It should be noted that the technical potential will not be necessarily economically or financially feasible. There is sufficient local capacity for project design, local topographic, geological and hydrometric investigations, and a number of firms that offer up-todate services. There are also a number of national and international consulting engineering companies that can carry out project design services. There is also sufficient capacity for environmental services, including EIA and a number of locally based companies offering services relating to the Clean Development Mechanism and the acquisition of carbon credits. With regard to equipment and manufacturing, there is technical capacity available in Peru for manufacturing small hydropower components and related piping. This helps lower the costs of small hydropower. 9 There is at present only one manufacturing company in Peru that manufactures Francis and Pelton turbines, suitable for small hydropower projects with medium to high heads. Other companies manufacture crossflow turbines of the Mitchell-Banki type. The maximum size of Pelton or Francis turbines currently manufactured locally is 5 MW. Projects with large unit sizes are therefore subject to the current rapidly increasing prices of turbines on the international market, as well as to the increasingly long delivery times. Most hydraulic steel structures (gates, valves, etc.) required in small hydropower projects can be manufactured in Peru, although equipment for opening/closing (servomotors) may need to be imported. Transmission lines at the voltages associated with small to medium sized hydropower projects, including towers and cables, can also be manufactured in Peru, with some components (e.g. insulators) being imported. 4 A few years ago, hydropower equipment manufactured from China was imported to Peru with acceptable technical quality and economic costs (compared to U.S. or European alternatives in the range between 0.5 MW and 5 MW). Power projects up to 20 MW are likely to use Chinese manufactured equipment. Renewable energy policy Rural electrification is promoted by the Law on Rural Electrification (Ley de Electrificación Rural y de Localidades Aisladas y de Frontera), enacted in It clearly states the objective of fostering socioeconomic development and establishes a fund for rural electrification, which is administered by the General Directorate of Rural Electrification (Dirección General de Electrificación Rural), a division of the MEM. After the implementation of the project, management is transferred to a public enterprise Electric Infrastructure Administration Enterprise (ADINELSA). 11 The funding for rural electrification projects is centralized at the National fund for Rural Electrification (Fondo Nacional de Electrificación Rural). Besides government support, funding is also acquired from the International Bank for Reconstruction and Development and the Global Environment Facility. Between 2007 and 2009, 4,000 households (20,000 people) were provided with grid access via the Energising Development Program, financed by the Netherlands Directorate General for International Cooperation (DGIS) and implemented by the German Technical Cooperation Agency. According to the Renewable Energy Rural Electrification Plan, the goal is to electrify about 260,000 households with PV and about 20,000 with small hydropower by On 2 May 2008, the Government issued a Renewable Energy Decree for the promotion of electricity generation using renewable energy (Decreto Legislativo de Promoción de la Inversión Para la Generación de Electricidad con el Uso de Energía Renovable). In this Decree, the Government has chosen to set a target ceiling for a share of renewable sources in electricity generation, in combination with a premium price. Although small hydropower will not be considered in the indicated ceiling it will benefit from the incentives in the law. It may be expected that 2

5 small hydropower projects would compete in the auctions for the premium mainly with wind based technologies. In addition, Peru has a clean energy mandate in place which requires a 5 per cent consumption of renewable electricity by 2013 coupled with reverse auctions to aid the capacity growth of clean energy. The period from 2009 to 2011 saw two main auctions yielding US$420 million for clean energy investment allowing Peru to achieve 588 MW clean energy capacity by However, the country has previously failed to meet its mandate of a 7.8 per cent ethanol and 5 per cent bio-diesel share which were implemented in Legislation on small hydropower To support small hydropower, the Peruvian Congress eliminated the import duty on hydropower equipment in December 2006, and the Ministry of Economy and Finance has permitted early recovery of the valueadded tax (IGV) for projects with construction periods of four years or more; however this does not apply to small hydropower projects, which on average need three years of construction. The MEM has simplified the permitting process for small hydropower projects. Barriers to small hydropower development With regard to financial barriers, development of small hydropower has not been financially viable in Peru, since the price of electricity is low due to the low price for natural gas from the Camisea project. i Carbon financing has improved the financial viability of projects. Finding access to long-term financing for small hydropower projects has been difficult for companies without strong balance sheets, especially considering the limited interest of commercial banks in project finance and/or small-scale projects. Other issues include unrealistic risk assessments by the commercial banks, high transaction costs, and lack of long-term loans. The present 100 per cent collateral/corporate guarantee requirements of the commercial banks will remain a major barrier to all but large corporate sponsors. Water rights difficulties have been cited as impeding the development of projects. Most developers indicated that the main problem in obtaining water rights is the unpredictable process. The lack of a specific Consolidated Text of Administrative Procedure (TUPA) is the main barrier. 4 Under current circumstances, companies are unable to get early VAT recovery from Government (e.g. if construction time is less than four years), which negatively impacts most small hydropower projects. Note i. The Camisea gas field is situated in the San Martín reservoir in the Amazon rainforest. The project is one of the largest energy projects in Peru, extracting and transporting natural gas. References 1. Central Intelligence Agency (2012). The World Factbook. Available from 2. World Bank (2010). Land area. Available from Accessed May Instituto Nacional de Estadística e Informática (2000). Peru: Estadísticas del Medio ambiente. Available from 1/cap2-5.htm. Accessed May Meier, Peter, Eduardo H., Zolezzi, Susan V. Bogach and others (2011). Peru Opportunities and Challenges of Small Hydropower Development, Formal Report 340/11. Washington D.C: The World Bank Group. Available from wwwwds.worldbank.org/external/default/wdscontentserv er/wdsp/ib/2011/08/11/ _ /Rendered/PDF/636680WP0Peru000Box B0P UBLIC0.pdf. 5. Peru, Ministerio de Energía y Minas (2012). Anuario Estadístico de Electricidad Available from tular= Meier, Peter, Voravate Tuntivate, Douglas F. Barnes and others (2010). Peru: national survey of rural household energy use. Energy sector management assistance programme (ESMAP). Washington D.C.: The World Bank Group. Available from ationalsurvey_web_0.pdf. 7. Organización Latinoamericana de Energía (2012) Energy Statistics Report. Quito. 8. Bloomberg New Energy Finance and Multilateral Investment Fund (2012). Climatescope 2012: Assessing the Climate for Climate Investing in Latin America and the Caribbean. New York. Available from www5.iadb.org/mif/climatescope/2012/img/content/ pdfs/eng/climatescope2012-report.pdf. 9. Ordoñez, Arturo (2012). Personal communication with small hydropower specialist from Peru. Hidroequipos Works Consulting SRL, Lima, Peru. 10. Vilchez León, Luis. Ministerio de Energía y Minas (2011). Survey by International Center on Small Hydro Power answered in December. 11. Deutsche Gesellschaft für Technische Zusammenarbeit (2009). Energy-policy Framework Conditions for Electricity Markets and Renewable Energies 16 Country Analyses. Eschborn. Available from www2.gtz.de/dokumente/bib/ pdf. 3

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