Environmental and social impacts of smallscale. Issues and Challenges. Glenn Morgan (LCSEN) World Bank Water Week February 18, 2009

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1 Environmental and social impacts of smallscale hydropower: Issues and Challenges Glenn Morgan (LCSEN) World Bank Water Week February 18, 2009

2 Presentation objectives Review the nature and scale of environmental and social impacts associated with small-scale hydropower Identify emerging issues with regard to small scale hydro especially for run-of-river and IPP projects Recommend good practices when preparing, appraising and supervising such projects

3 Why focus on small-scale hydro? Small-scale hydro may be a desirable and growth segment of the energy generation among some Bank clients (e.g. Honduras) Projects are assumed to represent *green* or *low-impact* energy alternatives Lower or more acceptable environmental and social costs than alternative fossil-fuel burning projects Environmental and social benefits outweigh the environmental and social costs Scale of works increases potential sustainability by reducing or eliminating risks normally associated with large scale hydro Projects can be brought on-line more rapidly and expect to benefit from a streamlined review and processing requirements

4 What is small scale? Definitions are somewhat arbitrary but generally considered to be up to 30 MW but may be as high as high as 50 MW Projects do not trigger the ICOLD criteria for large dams (15 m. / 1 million cum. storage etc.) Intended to supplement the existing grid and do not involve long incremental transmission lines They are typically run-of-river design and do not require reservoir storage capacity Typically do not involve large or complex resettlement or land acquisition

5 What is run-of-river? Typical configuration of a run-of-river project

6 Observations about small hydro In general, these projects function well and can provide electricity with low impacts when properly designed and managed However, there are some systemic issues which may occur even in the smallest hydro projects These issues - if not addressed - could create risks for the sustainability of the project as well as reputational or other political risks Companies are carrying out their responsibilities but face risks with respect to capacity and resources especially in dealing with host communities

7 Social and environmental impacts in small scale projects At and above the dams or barriers Below the dam especially in the diversion / dewatered river reaches From associated infrastructure access roads, borrow pits and transmission lines Operational impacts affecting timing and volumes of river flow Cumulative impacts with multiple dams and other projects in the same watershed Land acquisition or physical resettlement Land and resource tenure including access to water resources Community development, livelihood support or expectations of sharing in benefits

8 La Esperanza - Project Description 13.5 MW IPP developed in three phases Phase 1A 500 KW; Phase 1B 1 MW; Phase 2 12 MW Project involves construction of 4 small dams; 3 retention ponds; powerhouse; underground penstock; access roads; work camp site; project offices. Project has been operational (Phase 1A) since 2003 Now considering a fourth phase further downstream

9 La Esperanza - Project Context Located within the Intibuca River basin near towns of Intibuca and La Esperanza, Honduras Area of influence is sparsely settled with important existing environmental values. Populated by Lenca people Host communities experience high incidence of poverty Project situated on privately owned company lands Environmental license and ERPA specifies E&S requirements but government capacity to monitor or enforce is limited

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13 La Esperanza - Project E&S Issues Works undertaken in remote but sensitive location 10 km of the Intibuca river s upper catchment dewatered at various times of the year Mitigation plan heavily oriented to provision of community services and reforestation Limited characterization of construction impacts

14 La Esperanza - Project E&S Issues Project received environmental license and was required to develop EMP as part of ERPA but specific commitments are not well understood by the community at large NGO community is generally favorable towards the project but feel company lacks transparency Monitoring of management plans by local authorities is weak Riparian flows and water quality are not monitored Water use rights on tributary streams could become an important issue

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32 Summary Need to consider all impacts, especially construction related impacts of ancillary works such as roads Need for stakeholder involvement and improved communications. Specific requirements of EMP and CDP may not be well understood in the community at large Need to support capacity building of supporting agencies. Need to consider beyond the project counterpart. Local government units are often left to carry out monitoring and compliance tasks. Need for better coordination and dialogue. Project often require inter-agency coordination

33 Summary Need to limit project E&S liabilities. Importance of developing clear agreements with specific annual work plans, budget resources and monitorable outcomes specified. Need to clarify the process requirements. Companies are often unclear as to what is required due to lack of legal framework, regulations, clarity of institutional roles and responsibilities Desire for efficient review process. Project developers desire more rapid and efficient licensing procedures

34 Summary Project proponents, often small IPP, may not have sufficient experience or resources to successfully implement programs Construction and operational delays may threaten a company s financial viability and ability to meet E&S commitments Even small projects may face adverse local attitudes regarding transparency, communications, community development support. Managing community expectations can be difficult and challenging

35 Summary Social and environmental context of any project is important. No two small hydro projects are alike Installed capacity is generally a poor indicator of a project s potential impacts Small-scale and run-of-river does not necessarily mean *no* or even *low* impact Projects, though small to us, can be locally important and can raise controversies which need to be managed