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WSHPDR_2013_Final_Report-updated_version

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operate renewable energy projects according to the<br />

Act 81 of the Environment General Law. 7 It grants<br />

additional benefits such as tax exemptions in the<br />

forms of import duty and income tax, and<br />

improvements in Power Purchase Agreements (PPAs)<br />

signed with ENEE to operators who generate<br />

electricity from renewable resources,. 3<br />

In 2010, ENEE held a public bidding process for the<br />

first time, allowing bidders to purchase electricity<br />

from renewable energy sources. Honduras was one of<br />

the six Latin American countries to do so. 3 Forty-eight<br />

projects were awarded PPAs for a total of 108 MW of<br />

renewable energy and an estimated investment of<br />

about US$2.5 billion. 8 With all these initiatives, the<br />

Government of Honduras intends to reverse the<br />

structure of the electricity sector by 2022 to a ratio of<br />

60 per cent renewable and 40 per cent fossil fuel, thus<br />

complying with the provisions of the Country Vision<br />

and National Plan Law constituted into State Policy by<br />

Decree No. 286-2009. 3<br />

Legislation on small hydropower<br />

Following the energy crisis of 1994, the Government<br />

of Honduras negotiated with the European<br />

Commission (EC) in order to promote electricity<br />

generation from renewable sources and to encourage<br />

energy conservation. In January 1996, a financing<br />

agreement was established between the EC and the<br />

national electricity utility ENEE. After an initial<br />

two-year project, the EC donated €250,000 to create a<br />

revolving fund called Fondo de Preinversión<br />

Hidroeléctrica that grants loans to the private sector.<br />

Since 1999, this ENEE Pre-investment Fund has helped<br />

finance feasibility studies for small hydropower plants<br />

of installed capacity up to 5 MW. 9<br />

Barriers to small hydropower development<br />

The equity capacity by private investors in Honduras is<br />

concentrated in the larger, fossil-fuel-fired energy<br />

projects. It is not common for domestic commercial<br />

banks to provide equity to renewable energy projects.<br />

Market research indicates that given sound<br />

fundamentals (technical viability of project, good<br />

contracts, positive and adequate technical studies,<br />

competent sponsors) and a resulting reasonably low<br />

risk expectation, there are abundant international<br />

equity investors and sovereign investors that would be<br />

interested in providing equity to renewable energy<br />

projects in Honduras. 3<br />

Scaling-Up Renewable Energy in Low-Income Countries<br />

(SREP) Agenda Item 6: Investment Plan for Honduras.<br />

Paper presented at Meeting of the SREP<br />

Sub-Committee. Washington D.C., 1 November.<br />

4. International Journal on Hydropower and Dams<br />

(2011). World Atlas and Industry Guide 2011. Surrey:<br />

AquaMedia International.<br />

5. Bloomberg New Energy Finance and Multilateral<br />

Investment Fund (2012). Climatescope 2012: Assessing<br />

the Climate for Climate Investing in Latin America and<br />

the Caribbean. New York. Available from<br />

www5.iadb.org/mif/Climatescope/2012/img/content/<br />

pdfs/eng/Climatescope2012-report.pdf.<br />

6. Johnson, Amanda and Meisen, Peter (2012).<br />

Achieving 100% Reliance on Renewable Energy for<br />

Electricity Generation in Central America. Global<br />

Energy Network Institute. San Diego. Available from<br />

www.geni.org/globalenergy/research/renewable-ener<br />

gy-transmission-central-america/Central%20America%<br />

20Renewable%20Energy%20Resources.pdf.<br />

7. Government of Honduras (2007). Decreto<br />

No.70-2007, Ley de Promocion a la Generacion de<br />

Energia Electrica Con Recursos Renovales. La Gaceta, 2<br />

October. Available from<br />

www.tsc.gob.hn/leyes/Ley%20de%20Promocion%20a<br />

%20la%20Generacion%20de%20Energia%20Electrica%<br />

20con%20Recursos%20Renovables.pdf.<br />

8. Figueroa Rivera and Miguel Ángel (2011). Marco<br />

Legal de Energía Renovable en Honduras y<br />

Perspectivas de Desarrollo. Presentation to the XV<br />

Reunión Anual Iberoamericana de Reguladores de la<br />

Energía. Santo Domingo, 6-8 April. Available from<br />

www.naruc.org/international/Documents/HONDURAS<br />

%20-%20Figueroa%20SPANISH%20rev.pdf.<br />

9. Empresa Nacional de Energía Eléctrica (2011). Plan<br />

de Expansión De Generación. Honduras. Available<br />

from<br />

www.enee.hn/planificacion/plan_exp_2008_2022.pdf<br />

?rand=1350059800948&trust=232961737&format=0.<br />

References<br />

1. Central Intelligence Agency (2012). The World<br />

Factbook. Available from<br />

www.cia.gov/library/publications/the-world-factbook.<br />

2. Servicio Meteorológico Nacional de Honduras<br />

(2012). Homepage. Tegucigalpa. Available from<br />

www.smn.gob.hn/. Accessed December 2012.<br />

3. Climate Investment Fund (2011). Programme on<br />

169

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