2008年-世界发展银行全球_Peru___Institutional_and_Financial_Framework_for_Development_of_Small_Hydropower_134页_1mb

Summary of the Institutional and Financial Framework for the Development of Small Hydropower in Peru

Core Content

This document provides an in-depth analysis of the institutional and financial framework for the development of small hydropower in Peru, highlighting the country's potential, economic and financial viability, regulatory environment, barriers, and international experiences. It also evaluates the impact of the Renewable Energy Decree issued in May 2008.

Main Points

1. Introduction

• Peru has a stable and growing economy and abundant indigenous energy resources, including hydro and natural gas.
• Installed capacity in 2006 was 6,658 MW, with 48% hydro-based.
• Demand growth has been 5-10% over the past five years, requiring 400 MW of new generation capacity annually.
• The government is committed to increasing hydro investments and has introduced measures to promote renewable energy, including small hydro.

2. Small Hydro Potential

• Technical potential for small hydro is estimated at least at 1,600 MW.
• 100 MW is located at sites with existing infrastructure, and 1,500 MW is at greenfield sites.
• There is sufficient national technical capacity in both public and private sectors to develop small hydro.
• Technical assistance and training, particularly in design, contracting, and operation, are essential for successful small hydro development.

3. Economic and Financial Viability

• Most new generation in Peru is based on subsidized natural gas from the Camisea field, with a generation price of around 3.5 US cents/kWh.
• Small hydro projects face financial challenges due to low tariffs, high capital costs, and uncertain output.
• With a generation price based on the opportunity cost of gas (5.6 US cents/kWh), four out of nine analyzed projects have an economic rate of return above the required 14%.
• Including carbon benefits (US$15/ton), six projects meet the economic viability threshold.
• Financial viability improves with longer loan tenors (e.g., 15 years) and carbon finance, which can increase allowable capital costs to around US$1,000/kW.

4. Institutional and Regulatory Framework

• The Peruvian electricity market is regulated by OSINERGMIN.
• The Renewable Energy Decree (2008) mandates preferential tariffs and a premium system for renewable energy.
• The decree sets a 5% target ceiling for renewable energy (excluding small hydro), which will be achieved through auctions.
• Renewable energy plants receive a marginal price plus a premium, with the premium calculated based on technology and other factors.
• Transmission costs are included in the investment cost for premium calculation, and incremental costs are recovered through user charges.

5. Barriers and Mitigation

• Financial Barriers:
  • Low tariffs based on subsidized natural gas.
  • Limited long-term financing.
  • High transaction costs.
  • Unrealistic risk assessments based on large hydro projects.
• Regulatory Barriers:
  • Inadequate recognition of hydro storage in capacity payments.
  • Transmission cost disadvantages for hydro.
  • Complex connection requirements by distribution companies.
  • Unclear water rights and rights-of-way procedures.
• Technical Barriers:
  • Lack of detailed guidelines for studies.
  • Absence of clear environmental flow regulations.
  • Limited use of standardized design and contracting procedures.
• Mitigation Measures:
  • Reducing natural gas subsidies or setting preferential tariffs.
  • Introducing special finance facilities.
  • Simplifying permit systems for small hydro.
  • Promoting domestic manufacturing of ancillary components.
  • Providing technical assistance and training.
  • Implementing transparent water rights and rights-of-way regulations.
  • Developing clear guidelines and standardized procedures.

6. International Experience

• Successful small hydro development in other countries includes:
  • Feed-in tariffs (e.g., Germany, Spain).
  • Auctions for setting renewable energy prices (e.g., UK).
  • Long-term financing support (e.g., Turkey, Sri Lanka).
• These experiences show that setting tariffs at least at avoided cost levels and providing long-term financing are critical for small hydro development.
• Technical assistance and capacity building for risk assessment are also important in attracting commercial banks to invest in renewable energy.

7. Renewable Energy Decree of May 2008

• The decree sets a 5% target for renewable energy (excluding small hydro) and introduces a premium system.
• Small hydro is not subject to the ceiling but benefits from the incentives.
• Premiums are auctioned by OSINERGMIN, with a guaranteed rate of return of at least 12%.
• Transmission costs are considered in the premium calculation.
• The decree aims to improve financial viability and encourage investment in small hydro.

Key Information

• Potential: At least 1,600 MW of small hydro potential, with 1,500 MW in greenfield areas.
• Tariff: Current tariffs are based on subsidized natural gas, which undermines hydro viability. A preferential tariff of at least 5.6 US cents/kWh is needed.
• Financial Viability:
  • Projects with high load factors and carbon finance are more viable.
  • Loan tenors of 15 years can significantly improve financial feasibility.
• Regulatory Framework:
  • The decree introduces a premium system and sets a target ceiling for renewable energy.
  • It provides a framework for promoting small hydro development.
• Barriers:
  • Financial and regulatory constraints are the main obstacles.
  • Technical barriers are less significant and easier to address.

Recommendations

• Remove or reduce natural gas subsidies to ensure fair tariffs for small hydro.
• Provide long-term financing support and preferential tariffs.
• Simplify regulatory procedures for small hydro projects.
• Develop clear guidelines for environmental flows and project approvals.
• Encourage domestic manufacturing of ancillary components.
• Implement transparent water rights and rights-of-way regulations.
• Promote technical assistance and capacity building for project financing.

Conclusion

The document concludes that Peru has significant potential for small hydropower development, but current financial and regulatory frameworks hinder its realization. The Renewable Energy Decree of May 2008 represents a step forward in promoting small hydro, but further reforms are needed to ensure financial viability and attract investment. International experience suggests that feed-in tariffs, long-term financing, and technical support are essential for the successful development of small hydropower.