WSHPDR_2013_Final_Report-updated_version
WSHPDR_2013_Final_Report-updated_version
WSHPDR_2013_Final_Report-updated_version
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In addition, Peru has a clean energy mandate in place<br />
which requires a 5 per cent consumption of<br />
renewable electricity by <strong>2013</strong> coupled with reverse<br />
auctions to aid the capacity growth of clean energy.<br />
The period from 2009 to 2011 saw two main auctions<br />
yielding US$420 million for clean energy investment<br />
allowing Peru to achieve 588 MW clean energy<br />
capacity by 2014. However, the country has previously<br />
failed to meet its mandate of a 7.8 per cent ethanol<br />
and 5 per cent bio-diesel share which were<br />
implemented in 2007. 8<br />
Legislation on small hydropower<br />
To support small hydropower, the Peruvian Congress<br />
eliminated the import duty on hydropower equipment<br />
in December 2006, and the Ministry of Economy and<br />
Finance has permitted early recovery of the valueadded<br />
tax (IGV) for projects with construction periods<br />
of four years or more; however this does not apply to<br />
small hydropower projects, which on average need<br />
three years of construction. The MEM has simplified<br />
the permitting process for small hydropower projects.<br />
Barriers to small hydropower development<br />
With regard to financial barriers, development of<br />
small hydropower has not been financially viable in<br />
Peru, since the price of electricity is low due to the low<br />
price for natural gas from the Camisea project. i Carbon<br />
financing has improved the financial viability of<br />
projects.<br />
Finding access to long-term financing for small<br />
hydropower projects has been difficult for companies<br />
without strong balance sheets, especially considering<br />
the limited interest of commercial banks in project<br />
finance and/or small-scale projects. Other issues<br />
include unrealistic risk assessments by the commercial<br />
banks, high transaction costs, and lack of long-term<br />
loans. The present 100 per cent collateral/corporate<br />
guarantee requirements of the commercial banks will<br />
remain a major barrier to all but large corporate<br />
sponsors.<br />
Water rights difficulties have been cited as impeding<br />
the development of projects. Most developers<br />
indicated that the main problem in obtaining water<br />
rights is the unpredictable process. The lack of a<br />
specific Consolidated Text of Administrative Procedure<br />
(TUPA) is the main barrier. 4<br />
Under current circumstances, companies are unable to<br />
get early VAT recovery from Government (e.g. if<br />
construction time is less than four years), which<br />
negatively impacts most small hydropower projects.<br />
transporting natural gas.<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. World Bank (2010). Land area. Available from<br />
http://data.worldbank.org/indicator/AG.LND.TOTL.K2.<br />
Accessed May 2012.<br />
3. Instituto Nacional de Estadística e Informática<br />
(2000). Peru: Estadísticas del Medio ambiente.<br />
Available from<br />
www.inei.gob.pe/biblioineipub/bancopub/Est/Lib0351<br />
/cap2-5.htm. Accessed May 2012.<br />
4. Meier, Peter, Eduardo H., Zolezzi, Susan V. Bogach<br />
and others (2011). Peru Opportunities and Challenges<br />
of Small Hydropower Development, Formal <strong>Report</strong><br />
340/11. Washington D.C: The World Bank Group.<br />
Available from wwwwds.worldbank.org/external/default/WDSContentServ<br />
er/WDSP/IB/2011/08/11/000333037_20110811021558/<br />
Rendered/PDF/636680WP0Peru000Box0361524B0PU<br />
BLIC0.pdf.<br />
5. Peru, Ministerio de Energía y Minas (2012). Anuario<br />
Estadístico de Electricidad 2010. Available from<br />
www.minem.gob.pe/descripcion.php?idSector=6&idTi<br />
tular=3903.<br />
6. Meier, Peter, Voravate Tuntivate, Douglas F. Barnes<br />
and others (2010). Peru: national survey of rural<br />
household energy use. Energy sector management<br />
assistance programme (ESMAP). Washington D.C.: The<br />
World Bank Group. Available from<br />
www.esmap.org/sites/esmap.org/files/ESMAP_PeruN<br />
ationalSurvey_Web_0.pdf.<br />
7. Organización Latinoamericana de Energía (2012).<br />
2012 Energy Statistics <strong>Report</strong>. Quito.<br />
8. 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 />
9. Ordoñez, Arturo (2012). Personal communication<br />
with small hydropower specialist from Peru.<br />
Hidroequipos Works Consulting SRL, Lima, Peru.<br />
10. Vilchez León, Luis. Ministerio de Energía y Minas<br />
(2011). Survey by International Center on Small Hydro<br />
Power answered in December.<br />
11. Deutsche Gesellschaft für Technische<br />
Zusammenarbeit (2009). Energy-policy Framework<br />
Conditions for Electricity Markets and Renewable<br />
Energies 16 Country Analyses. Eschborn. Available<br />
from www2.gtz.de/dokumente/bib/04-0110.pdf.<br />
Note<br />
i. The Camisea gas field is situated in the San Martín<br />
reservoir in the Amazon rainforest. The project is one<br />
of the largest energy projects in Peru, extracting and<br />
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