PERÚ - Observatory for Renewable Energy in Latin America and

NOVEMBER 2011
Observatory of
Renewable Energy
in Latin America and The Caribbean
PERÚ
Final Report
Component 1: Renewable Technological Base Line
Component 2: State of Art
C
http://www.otromundoesposible.net/wp-content/

PERÚ
This document was prepared by the following consultants:
THE CONSERVATION CENTER OF ENERGY AND ENVIRONMENT (CENERGIA)
The opinions expressed in this document are those of the author and do not necessarily
reflect the views of the sponsoring organizations: the Latin American Energy Organization
(OLADE) and the United Nations Industrial Development Organization (UNIDO).
Accurate reproduction of information contained in this documentation is authorized, provided
the source is acknowledged.

Perú- Products I and II
CASE OF PERU
Final Report
Product 1: Base Line of Energy Technologies
Product 2: State of the Art

Perú- Products I and II
CONTENTS
EXECUTIVE SUMMARY ........................................................................................................... 8
1. BASE LINE OF ENERGY TECHNOLOGIES.................................................. 13
1.1 Introduction ......................................................................................................... 13
1.2 Methodology ....................................................................................................... 13
1.3 General Energy Information of the country ........................................................ 14
1.3.1 Gross National Product (GDP) ............................................................................ 15
1.3.2 Energy Intensity................................................................................................... 15
1.3.3 Energy Consumption Per Capita.......................................................................... 16
1.3.4 Energy Potential................................................................................................... 17
1.3.5 Production of Primary Energy ............................................................................. 19
1.3.6 Final Energy Consumption .................................................................................. 21
1.3.7 Evolution of the Final Consumption by Sectors.................................................. 22
1.3.8 Evolution of the Final Consumption by Sectors.................................................. 23
1.3.9 Energy Consumption of the Electricity Sector in Peru........................................ 24
1.3.10 Installed Capacity of Power Generation by Type of Technology at a National
Scale .................................................................................................................... 24
1.3.11 Installed Capacity in the National Interconnected Electrical System.................. 25
1.3.12 Electricity Generation by Type of Technology at a National Level.................... 25
1.3.13 CO 2 Emissions ..................................................................................................... 29
1.3.14 Clean Development Mechanism (CDM) Projects ............................................... 33
1.3.15 Perspectives of Renewable Energies in Peru....................................................... 39
1.4 Legal and Institutional Framework of Renewable Energies ............................... 40
1.4.1 General Legal Framework of Electricity Activity ............................................... 40
1.4.2 General Tariff Regimen ....................................................................................... 43
1.4.3 Peruvian Electric Market ..................................................................................... 45
1.4.4 Legal Framework of Renewable Energies and Tax Incentives .......................... 47
1.4.5 Results and Analysis of the Application of the Legal Framework of Renewable
Energies............................................................................................................... 52
1.4.6 Institutionality...................................................................................................... 56
1.4.7 Process that Should be Followed to Develop a Renewable Energy Project........ 58
1.5 Generation Facilities with Renewable and Non Renewable Sources ................. 61
1.5.1 Information on the Most Relevant Facilities of Renewable Energies ................. 61
1.5.2 Information of the Most Relevant Facilities in the SEIN .................................... 89
1.6 Learned Lessons................................................................................................ 107
1.7 Conclusions ....................................................................................................... 109
2. STATE OF ART ............................................................................................... 110
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Perú- Products I and II
2.1 Introduction ....................................................................................................... 110
2.2 Methodology ..................................................................................................... 111
2.2.1 Sources of Information ...................................................................................... 111
2.2.2 Selection Criterias.............................................................................................. 113
2.3 H.P.S. “Santa Cruz II”....................................................................................... 114
2.3.1 General Description of the Project..................................................................... 114
2.3.2 Objectives of the Project.................................................................................... 114
2.3.3 Analysis of Stakeholders ................................................................................... 115
2.3.4 Legal Aspects..................................................................................................... 116
2.3.5 Technological Aspects....................................................................................... 118
2.3.6 Economic Aspects.............................................................................................. 119
2.3.7 Social Aspects.................................................................................................... 120
2.3.8 Environmental Aspects ...................................................................................... 121
2.3.9 Found Barriers ................................................................................................... 122
2.3.10 Factors of Success for Replicability .................................................................. 123
2.4 Bagasse-Fired Thermal Power Station “Paramonga I” ..................................... 124
2.4.1 General Description of the Project..................................................................... 124
2.4.2 Objectives of the Project.................................................................................... 125
2.4.3 Analysis of the Stakeholders.............................................................................. 125
2.4.4 Legal Aspects..................................................................................................... 126
2.4.5 Technological Aspects....................................................................................... 128
2.4.6 Economical Aspects........................................................................................... 129
2.4.7 Social Aspects.................................................................................................... 131
2.4.8 Environmental Aspects ...................................................................................... 132
2.4.9 Found Barriers ................................................................................................... 132
2.4.10 Successful Factors for Replicability .................................................................. 133
2.5 Interviews to the Representatives of the Projects: H.P.S. “Santa Cruz II”, T.P.S.
“Paramonga I”, H.P.S. “La Joya” and W.F. “Talara” ....................................... 134
2.6 Government Representatives Declarations about Renewable Energies
Projects .............................................................................................................. 145
2.7 Learned Lessons................................................................................................ 149
2.8 Conclusions ....................................................................................................... 151
ANNEXES:
Annex Nº 1:
Annex Nº 2:
Country’s File
Information of tariffs
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Perú- Products I and II
LIST OF CHARTS:
Chart N° 1: Renewable Energy Potential of Peru ..................................................................................... 18
Chart N° 2: Domestic Production of Primary Energy (TJ) ....................................................................... 19
Chart N° 3: Final Energy Consumption by Source (TJ)............................................................................ 21
Chart N° 4: Total Final Energy Consumption by Sectors (TJ) ................................................................. 22
Chart N° 5: Intalled Capacity in 2010 (MW) ............................................................................................ 24
Chart N° 6: Power Generation in 2010 (GWh) ......................................................................................... 26
Chart N° 7: Energy Consumption in The Sein by Sectors (2010)............................................................. 28
Chart N° 8: Variation of GHG Emissions in regard of the GDP Growth ................................................. 30
Chart N° 9: Current Price Structure up to 01 April of 2010*.................................................................... 30
Chart N° 10: Peruvian Projects that currently receive CER’s................................................................... 36
Chart N° 11: CDM Project Portfolio of Fonam– Electricity Sector.......................................................... 37
Chart N° 12: Ranking of CDM Host Countries......................................................................................... 38
Chart N° 13: Peruvian Projects That Currently Receive VER’s ............................................................... 39
Chart N° 14: Summary of the First RER Auction..................................................................................... 53
Chart N° 15: Effect of the First RER Auction in the Price at a Generation Level.................................... 53
Chart N° 16: Results of the Second Announcement of the First RER Auction ........................................ 54
Chart N° 17: Structure of The Second RER Auction ................................................................................ 54
Chart N° 18: RER Projects ........................................................................................................................ 62
Chart N° 19: “Purmacana” Hydroelectric Power Station.......................................................................... 63
Chart N° 20: “Roncador” Hydroelectric Power Station ............................................................................ 64
Chart N° 21: “Santa Cruz I” Hydroelectric Power Station........................................................................ 65
Chart N° 22: “Caña Brava” Hydroelectric Power Station......................................................................... 66
Chart N° 23: “Santa Cruz Ii” Hydroelectric Power Station ...................................................................... 67
Chart N° 24: “La Joya” Hydroelectric Power Station ............................................................................... 68
Chart N° 25: “Poechos II” Hydroelectric Power Station........................................................................... 69
Chart N° 26: “Carhuaquero IV” Hydroelectric Power Station.................................................................. 70
Chart N° 27: “Nuevo Imperial” Hydroelectric Power Station .................................................................. 71
Chart N° 28: “Yanapampa” Hydroelectric Power Station......................................................................... 72
Chart N° 29: “Shima” Hydroelectric Power Station ................................................................................. 73
Chart N° 30: “Huasahuasi I” Hydroelectric Power Station....................................................................... 74
Chart N° 31: “Huasahuasi II” Hydroelectric Power Station ..................................................................... 75
Chart N° 32: “Las Pizarras” Hydroelectric Power Station........................................................................ 76
Chart N° 33: “Chancay” Hydroelectric Power Station.............................................................................. 77
Chart N° 34: “Angel I” Hydroelectric Power Station ............................................................................... 78
Chart N° 35: “Angel II” Hydroelectric Power Station .............................................................................. 79
Chart N° 36: “Angel III” Hydroelectric Power Station............................................................................. 80
Chart N° 37: “Paramonga I” Thermal Power Station................................................................................ 81
Chart N° 38: “Huaycoloro” Thermal Power Station ................................................................................. 82
Chart N° 39: “Talara” Wind Farm............................................................................................................. 83
Chart N° 40: “Marcona” Wind Farm......................................................................................................... 84
Chart N° 41: “Cupisnique” Wind Farm..................................................................................................... 85
Chart N° 42: “Panamericana Solar” Solar Power Station ......................................................................... 86
Chart N° 43: “Majes Solar” Solar Power Station...................................................................................... 87
Chart N° 44: “Repartición Solar” Solar Power Station ............................................................................. 88
Chart N° 45: “Tacna Solar” Solar Power Station...................................................................................... 89
Chart N° 46: Most Representative Power Generation Stations Based on Renewable and Non Renewable
Sources in the Country................................................................................................................................ 90
Chart N° 47: “Santiago Antunez de Mayolo” Hydroelectric Power Station............................................. 91
Chart N° 48: “Restitucion” Hydroelectric Power Station ......................................................................... 93
Chart N° 49: “El Platanal” Hydroelectric Power Station .......................................................................... 95
Chart N° 50: “Ventanilla” Thermal Power Station ................................................................................... 97
Chart N° 51: “Kallpa” Thermal Power Station ......................................................................................... 99
Chart N° 52: “Chilca I” Thermal Power Station ..................................................................................... 101
Chart N° 53: “Aguaytia” Thermal Power Station ................................................................................... 103
Chart N° 54: “Oquendo” Thermal Power Station ................................................................................... 105
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Perú- Products I and II
Chart N° 55: “Ilo II” Thermal Power Station.......................................................................................... 106
Chart N° 56: Summary of Interviews to Entrepreneurs .......................................................................... 111
Chart N° 57: Summary of Interviews to Represntants of the Ministry of Energy and Mines ................ 112
Chart N° 58: Necessary documents to request generation authorization ................................................ 117
Chart N° 59: Availability of the water resource for the “Santa Cruz II” Hydroelectric Power Station.. 119
Chart N° 60: Necessary documents to request generation authorization ................................................ 127
Chart N° 61: Minimum values of Equivalent Electrical Efficiency (EEF) and Relation between Electric
Power and Useful Heat (C) ....................................................................................................................... 130
Chart N° 62: Summary of Interviews to Project’s Entrepreneurs ........................................................... 143
LIST OF GRAPHICS:
Graphic N° 1: Evolution of The GDP ....................................................................................................... 15
Graphic N° 2: Energy Intensity ................................................................................................................ 16
Graphic N° 3: Energy Consumption Per Capita........................................................................................ 16
Graphic N° 4: Location of the Camisea Deposit and Transport System of Natural Gas and Liquids ...... 17
Graphic N° 5: Proven Reserves of Commercial Energy to 2009 .............................................................. 19
Graphic N° 6: Structure of the Primary Energy Production (2009) .......................................................... 20
Graphic N° 7: Evolution of the Domestic Production of Primary Energy (TJ) from 1990 to 2009 ......... 20
Graphic N° 8: Final Consumption Structure by Source ............................................................................ 21
Graphic N° 9: Final Energy Consumption by Economic Sectors ............................................................. 22
Graphic N° 10: Evolution of the Final Energy Consumption Structure (1990-2009)............................... 23
Graphic N° 11: Evolution of the Final Consumption by Economic Sectors (1990-2009)........................ 23
Graphic N° 12: Evolution of the Consumption Structure for Power Generation from 1990 to 2009....... 24
Graphic N° 13: Effective Capacity in the SEIN (2011) ............................................................................ 25
Graphic N° 14: National Electricity Generation by Systems .................................................................... 26
Graphic N° 15: Electricity Generation by Source ..................................................................................... 26
Graphic N° 16: Energy Generation Structure in the SEIN (2010) ............................................................ 27
Graphic N° 17: Evolution of Energy Generation by Sources in the SEIN................................................ 27
Graphic N° 18: Effective Capacity Vs. Maximum Demand ..................................................................... 28
Graphic N° 19: Evolution of the Maximum Demand in the SEIN............................................................ 29
Graphic N° 20: Percentage Distribution of Total GHG Emissions by Category ...................................... 31
Graphic N° 21: CO 2 Emissions Generated by the Final Consumption of Commercial Energy................ 31
Graphic N° 22: CO 2 Emissions by Economic Sectors .............................................................................. 32
Graphic N° 23: Cycle of the CDM Project................................................................................................ 35
Graphic N° 24: Evolution of Registered CDM Projects ........................................................................... 36
Graphic N° 25: End–User Price Structure................................................................................................. 44
Graphic N° 26: End-User Price Structure (2010)...................................................................................... 44
Graphic N° 27: Peruvian Electricity Market ............................................................................................. 45
Graphic N° 28: Evolution of Spot Price and Bus-Bar Tariff in the SEIN (1990-2010)............................ 46
Graphic N° 29: Average Prices of Free Users by Economic Activity ...................................................... 47
Graphic N° 30: Remuneration Scheme ..................................................................................................... 50
Graphic N° 31: Prices Applied to Power Generation with renewable Sources in Different Countries ... 55
Graphic N° 32: Prices Applied to Solar Photovoltaic Power Generation ................................................. 55
Graphic N° 33: Agents of the Electricity Sub Sector ................................................................................ 56
Graphic N° 34: Development Process of a RER Project........................................................................... 58
Graphic N° 35: Powerhouse of “Santiago Antunez de Mayolo” H.P.S. ................................................... 92
Graphic N° 36: Powerhouse of “Restitucion” H.P.S................................................................................. 94
Graphic N° 37: Sand Trap of “El Platanal” H.P.S. ................................................................................... 96
Graphic N° 38: “Ventanilla” Thermal Power Station ............................................................................... 98
Graphic N° 39: “Kallpa” Thermal Power Station ................................................................................... 100
Graphic N° 40: “Chilca I” Thermal Power Station ................................................................................. 102
Graphic N° 41: “Aguaytia” Thermal Power Station ............................................................................... 104
Graphic N° 42: “Ilo II” Thermal Power Station...................................................................................... 107
Graphic N° 43: Selection Criteria of Study Cases................................................................................... 113
Graphic N° 44: Geographic Location of The Project.............................................................................. 114
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Perú- Products I and II
Graphic N° 45: Powerhouse of The “Santa Cruz II” H.P.S. ................................................................... 124
Graphic N° 46: Geographic Location of The Project.............................................................................. 125
Graphic N° 47: Project Diagram and Bagasse Disposal ......................................................................... 133
ABBREVIATIONS AND ACRONYMS
AIPSAA
ANA
BNE
CDM
CELEPSA
CER’s
COES
CPP
CTS
DGAAE
DGCCDRH
DGE
DGEE
DGER
DNA
DOE
ECL
EIA
ELECTROPERU
ENERSUR
EREF
FONAM
FONER
GDP
GHG
GTS
H.P.S.
HCFCs
HV
IGV
INDECOPI
INEI
IPCC
ISC
L.D.
“Paramonga S.A.A.” Agribusiness
National Authority of Water
National Energy Balance
Clean Development Mechanism
"El Platanal S.A." Electric Power Company
Certified Emission Reduction
Committee for the Economic Operation of the System
Citizen Participation Plan
Complementary Transmission System
General Directorate of Energetic Environmental Affairs
Director of the General Directorate of Climate Change:
Desertification and Water Resources
General Directorate of Electricity
General Directorate of Energy Efficiency
General Directorate of Rural Electrification
Designated National Autority
Designated Operational Entty
Electrical Concessions Law
Environmental Impact Assessment
"Electricidad del Perú S.A."
"Energía del Sur S.A."
Renewable Energy Fund
The National Environmental Fund
National Fund for Rural Electrification
Gross Domestic Product
Greenhouse Gases
Guaranteed Transmission System
Hydroelectric Power Station
Hydrochlorofluorocarbons
High Voltage
General Sales Tax
National Institute of Competiton and Intellectual Property Defense
Institute for Statics and Informatics
Intergovernmental Panel on Climate Change
Excise Tax
Legislative Decree
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Perú- Products I and II
MEM
MINAG
MINAM
MTS
OEFA
OGGS
OLADE
OSINERGMIN
PDD
PIN
PNA
PNER
RER
S.A.C.
S.D.
S.P.S.
SA
SDT
SEIN
SERNANP
SINERSA
STS
T.P.S.
TOR
TUPA
UHV
UN
UNFCCC
USCUSS
VER´s
W.F.
Ministry of Energy and Mines
Agriculture Ministry
Ministry of the Environment
Main Transmission Systems
Organism of Evaluation and Environmental Control
General Office of Social Management
Latin American Energy Organization
Supervisory Organism of Investment in Energy and Mines
Project Design Document
Project Idea Note
Protected Natural Area
National Plan of Rural Electrification
Renewable Energy Resources
Closed Corporation
Supreme Decree
Solar Power Station
Isolated Systems
Typical Sectors of Distribution
National Interconnected Electrical System
National Service of Protected Natural Areas
"Sindicato Energético S.A"
Secondary Transmission Systems
Thermal Power Station
Terms of Reference
Unique Text of Administrative Procedures
Ultra High Voltage
United Nations
United Nations Framework Convention on Climate Change
Land Use, Change in Land Use and Silviculture
Verified Emissions Reductions
Wind Farm
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Perú- Products I and II
EXECUTIVE SUMMARY
The present report shows and analizes renewable energy technologies and the most
relevant practices of electrical generation in Peru. The National Electricity Market is
described along with barriers that have limited the investment in Hydroelectric Power
Stations and other renewable energies. The legal and regulatory framework of
electricity is presented and the results of its application, as well as the information
about renewable energy projects and the experience of its implementation are analyzed.
Peru has over 30 million of inhabitants (INEI, 2011), a vast range of natural resources
and a great power potential. It has held its macroeconomic stability for several years
and its economy is in constant growth. The GDP during the 2000-2005 period has
grown at an average annual rate of 4.1 %, and during the five-year period of 2006-
2010, this rate was of 7.2 % with peaks of 7.7 % in 2006, 8.9 % in 2007, 9.8 % in 2008
and 8.9 % in 2010 (MINTRA, 2011). In order to achieve this growth rate, it is vital to
have an adequate power supply especially of electricity.
The total energy demand in 2009 was of 605 094 TJ, of which the 38 % corresponds to
transportation, 29 % to commercial, residential and public sectors, 27 % to industry,
mining, agricultural, agribusiness and fishing sectors and 3 % represents the non
energetic consumption. On the other hand, this energy demand was supplied with oil
by-products (58.5 %), natural gas (12 %), renewable energy (25.2 %) and coal (4 %)
(MEM, 2009a). The evolution of the energy consumption pattern by products in the
period 1990 – 2009, confirms the preponderance of fossil sources and it is visualized
the increasement of natural gas participation as an energy source since the year 2004,
when the “Camisea Gas” project got into commercial transaction. It can be said that the
Peruvian Energy Matrix has a previous and an after Camisea, especially for electricity,
transportation, industrial and residential sectors.
In the case of electricity generation, the contribution of natural gas increased from 5.9
% in 2003 to 35.4 % in 2010. (MEM, 2011i).
The total demand of electricity during 2010 was of 35 736 GWh, of which 7 %
corresponds to Isolated Systems and the other 93 %, to the National Interconnected
Electrical System (SEIN). (MEM, 2011i). The power demand in the SEIN during that
year was covered in 58 % by hydroelectricity, in 35.4 % by natural gas, in 3.3 %, by
coal, in 2.7 % by diesel and residual oil and in 0.2 % by bagasse biomass.
Hydroelectricity has reduced its participation in the demand coverage because the
increasements of the investment in hydroelectric projects and in the power demand
have not gone at the same rhythm. That is the reason why its contribution in power
generation decreased from 87.4 % in the year 2000 to 56 % in 2010. (MEM, 2011i).
The energy consumption has the second place of the total carbon dioxide (CO 2 )
emissions of the country. Up to 2009, carbon dioxide emissions (CO 2 ) from the
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Perú- Products I and II
different commercial energy sources1 1 reached 26.9 million tons, being the use of
liquid hydrocarbons the biggest emissions generator, accounting for 87 % of total
consumption. However, activities developed by transportation and industrial sectors,
are the ones that emit major quantities of CO 2 into the atmosphere, accounting for 82 %
of the total (MEM, 2009a).
To advance in the reduction of GHG emissions from the anthropogenic sources that
cause them and mitigate the climate change in Peru, during the last decade, there have
been stablished regulations devoted to promote the application of measures in the
different production sectors, including a complete change of the transportation
infrastructure, the improvement of solid waste management and the development of
renewable energy projects.
The Long Term Energy Policy approved by S.D 064-2010-EM establishes as a mission
having an energetic system that satisfies the national energy demand in a reliable,
regular, continuous and efficient way, promoting a sustainable development, based on
planning, investigation and technological innovation. One of the objectives of the
Energy Policy is counting on a diversified energy matrix with emphasis in renewable
sources and energy efficiency. To achieve this, on the Policy guidelines, there are
indicated projects and investments promotion based on conventional and
unconventional renewable energies and hydrocarbon, as they contribute to guarantee
the country’s energy safety.
In this framework, in order to attend the growth of the national electricity market, there
are being promoted and implemented private investments in renewable energies, for
which on the last years, it have been executed adjustments in the legal framework of the
power sector. In this regard, the most important events during the last 20 years, are
defined by: (i) The Electrical Concessions Law (Law Decree Nº 25844, enacted in
November, 1992); (ii) The Law To Promote the Efficient Electric Generation (Law Nº
28832, enacted in July, 2006); And, (IAII) The Law for Investment Promotion on
Electricity Generation with Renewable Energies (Legislative Decree Nº 1002, enacted
in May, 2008). Moreover, in order to ensure the coverage of the electricity demand in
the country, the Law for the Promotion of Natural Gas Use (Law Nº 27133, enacted in
June, 1999) and the development of the Camisea Gas project.
The ECL was an important advance for the sector. Among other aspects, it
disintegrated the vertical integrated public monopoly, by the disgregation of the
generation, transmission and distribution activities (that includes retail trade). On the
other hand, it laid the foundations for the private-sector participation, the rate regulation
in natural monopolies (transmission / distribution), and the promotion of competition in
power generation with variable production costs economic criteria. Here the generation
tariffs for the regulated market are fixed simulating the interaction between supply and
demand in competitive conditions.
However, the generation tariffs fixed by OSINERGMIN, at which generators had to
sell their production to the distributors for the regulated market, turned out to be
1 
There
are
not
considered
emissions
generated
for
non
commercial
sources
like
firewood,
dung,
yareta,
and
charcoal.
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Perú- Products I and II
insufficient to promote the investment in a new generation offer to cover the demand
growtht. Besides, on the spot market, there were marginal costs constantly higher than
prices fixed by the Regulator, discouraging generators to invest for increasing the
generation capacity and sign contracts with distribution companies.
To get over this situation, it was enacted the Law Nº 28832, designed to reduce the
intervention of the regulating body in the fixation of generation tariffs. It establishes the
mechanism of long-term tenders for the electricity supply to the regulated market with
resulting prices of that tenders. The supply contracts that the generators obtain could be
up to 20 years. In this law are established especial incentives for the hydroelectric
projects in order to make them competitive in front of the thermoelectric projects of
natural gas. With the same purpose, the Ministry of Energy and Mines has the faculty
of commissioning PROINVERSION the leading of long-term tenders for the electricity
supply, exclusively for hydroelectric projects.
In May of 2008, it was enacted the L.D Nº 1002, which encourage investments in
renewable technologies and the diversification of the electricity supply, establishing
economical incentives and the auctions mechanism to sell contracts of energy supply
for 20 years with the same guaranteed price to the sold proposal.
To date, the private sector in Peru is forging important thermoelectric, hydroelectric
and other renewable energies generation projects. There are included 6 hydroelectric
projects with a total capacity of 1 282 MW, which are going to get into commercial
transaction between 2013 and 2016. There are also included 18 projects of little
Hydroelectric Power Stations with a total installed capacity of 180 MW, 3 aeolian
projects of 142 MW, 4 photovoltaic solar projects of 80 MW and 2 biomass projects of
27 MW, all of which will be on commercial transection by the end of December of
2012. Additionally, it is in process the second auction of renewable energies, which
would result in commitments of investment for the implementation of nearly 480
additional MW, between small hydro, biomass, eolian and photovoltaic solar projects,
which have to get into commercial transaction before January 31 of 2015. All those
short and medium term projects add up a total of 2 191 MW, and constitute the result of
the new legal framework as an investment promoter of new supplies of conventional
and renewable energy generation, as it is detailed on the present report.
(OSINERGMIN, 2011a).
With the interest of sharing the gained experience regarding the development of
renewable technologies, it was proceeded to formulate a criteria to identify two study
cases which could represent the art status in Peru. Thereby, from a previous selection of
4 projects, there were selected for its development only two: The “Santa Cruz II” HPS
and the Cogeneration Station “Paramonga I”.
The “Santa Cruz II” Hydroelectric Power Station is located 2 104, 5 m.a.s.l. in the
northwest of Lima. It is part of the “Rio Blanco” basin (Santa Cruz) in the district of
Santa Cruz (Huaylas Province in the Ancash Department of Peru). It is a run-of-the
river hydroelectric station of 6 MW. The investment in the project rise to 10, 2 million
dollars approximately and got into in commercial transaction in June of 2010, with an
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estimated production of 33 GWh/ year. The total power generation is put in the SEIN
and settled at 55 US$/MWh (OSINERMIN, 2011a), which was the sale price of this
station at the first renewable energy auction. It is expected that the project displaces 21
082 tons of equivalent carbon dioxide (CO 2 e) per year and 147 574 tons of CO 2 e for
the first period of accreditation, generating an equivalent quantity of CERs (MINAM,
2011a).
The “Paramonga I” cogeneration station, its part of the production plant of the
Agroindustrial Company “Paramonga S.A.A” (AIPSAA) and it is located in
Paramonga District (Barranca Province, Department of Lima). The project consists of a
power generation station with extraction - condensation steam turbine, which has an
installed capacity of 23 MW, using the bagasse produced on its industrial procees as a
fuel. The thermal power station of Paramonga got into commercial transaction in
March of 2010, with an estimated annual energy production of 115 GWh / year. The
whole power generation is put in the SEIN and settled at the sale price of 52, 00
US$/MWh. (OSINERMIN, 2011a). Developers expect that the project will displace 85
300 tons of CO 2 e per year and a total of 170 600 tons of CO 2 e for the first accreditation
period, generating an equivalent quantity of CER's (MEM, 2011b).
After the analysis of the study cases, there were identified the barriers that have arisen
and the measures to get over them. Everything was expressed in a number of learnt
lessons to finally get the following conclusions:
• The private sector is investing with highly interest in the implementation of
renewable energy projects, due to the clearly game rules established by the
State.
• Projects tend to take advantage of the RER regulation through to the sale of a
percentage of the SEIN demand and the participation in “auctions of renewable
energies”. They are successfully meeting their objectives regarding this
commitment.
• The auctions mechanism is an effective instrument of investments promotion,
however some developers point out that there are some aspects that are still
need to be improved.
• Entities in charge of provide funding, for risk and guarantee reasons, tend to
finance only a part of the capital when the developer of the project is a little
investor.
• Because of the use of local resources, mostly all of the projects are in subject to
coordination with local population to examine the benefits and environmental
impacts that could take place.
• There is a temper of collaboration between companies that already count on
well-developed projects and the ones that are in the process of developing them
to provide assistance and information of the way forward.
Finally, the elements that determine the projects’s success and their replicability are
the following:
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• A clear and stable legal framework, which promotes the generation of energy
with renewable sources.
• The execution of a detailed analysis of the resource (in a technical level) and the
engineering required for the project’s implementation.
• Provide the communities located in the project’s area of influence with all the
required information to be on good terms with them.
• Mutual agreements between the projects’s developers and the community, so
the project brings additional benefits that contribute to the area’s development.
• Take advantage of emissions reduction to apply for CDM’s, so additional
income to the project could be guaranteed and this would lead into a
profitability improvement.
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1. BASE LINE OF ENERGY TECHNOLOGIES
1.1 Introduction
Due to the renewable resources perspectives of their greater use (hydroelectric and
other ones) and the improvement of the energy consumption pattern to encourage
the sustainable development in the country, this report describes the base line of
the most important technologies for the national energy system, the role that te
renewable energies are playing and their relevant practices in Peru. For it, it is
shown the current general energetic information, its problems, the legal and
institutional framework of renewable energies and the recent regulatory reforms
devoted to promote its development and use through the application of incentives
to promote the investment in renewable projects and technologies. Furthermore, it
is given information of the most relevant facilities that use renewable and non
renewable energy sources. Finally, it is explained the teachings derived from the
base line analysis of technologies and renewable energy facilities, emphasizing the
determination of the factors for its practice and contribution to the sustainable
development of the country.
The Peruvian electrical system has a production structure dominated by renewable
resources. Before the Camisea gas entrance, the contribution of hydroelectricity in
2000 was of 87 % but in 2010 this participation fell to 56 %, due to the growth of
the natural gas use in electricity generation. As for the installed capacity, in 2010
renewable technologies accounted for about 48 % of the total, being the remaining
percentage of fossil fuels technologies. (MEM, 2011i).
It is important to emphasize that with the entrance into commercial transaction of
the Camisea project, in August of 2004, it started an important change in the
consumption pattern of the energy Peruvian system. Nowadays, the gas reserves
exceed the ones of oil and its consumption shows a constant growth since then,
keeping the preponderance of fossil resources in front of the renewable ones in the
national energy supply.
The advantages of the presence of natural gas in the energy matrix are the
substitution of the oil by-products, reducing imports and improving the country’s
balance of trade. Besides, its price has benefited the electricity sector keeping the
electricity tariffs down. As a disadvantage we have that their production costs
continue being cheaper than the ones associated with renewable energies, favoring
their implementation.
1.2 Methodology
The information sources for the base line development of energetic technologies
and the art state can be grouped as follows:
a) Energetic source of information.
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Perú- Products I and II
b) Social, productive and economic source of information from the electricity
sector.
c) Legal and regulatory information.
d) Interviews with the actors of the electricity sector.
The employed sources of information come from the following institutions:
• The Ministry of Energy and Mines (MEM), through its several publications
like the “Energy balance”, “The electricity promoter document”, “The
referential plan of electricity”, “The rural electrification plan”, statistical
bulletins, as well as the legal framework of the electricity sector. All these
information is at the electronic portal of the MEM.
• The Energy and Mining Investment Supervisory Body (OSINERGMIN),
through its publications on electricity tariffs and reports on the auctions of
renewable energies. This information is at the electronic portal of the
institution.
• Committee of Economical Operation of the System (COES), through their
publications on the operation statistics of the SEIN, which can be visualized
through the electronic portal.
• The Ministry of the Environment (MINAM), through the “Second National
Communication” document that contains the inventory of greenhouse gases
(GHG) emissions and which is published on its electronic portal.
• The National Environment Fund (FONAM), through its publications and
information from its electronic portal about renewable energies and clean
development mechanisms.
• The social source of information comes from the National Institute for
Statistics and Informatic (INEI) through its publications.
• Interviews with the sector stakeholders, who facilitated information about
their companies and projects.
• Other sources of information are the national and international publications
and institution portals about energy that have been consulted.
1.3 General Energy Information of the country
Peru is one of the countries with major surface in South America after Brazil and
Argentina. Its territory has an extension of 1 285 216 km 2 and its population was
estimated in 29.2 million inhabitants by 2009, of which 73 % lived in urban areas
and 27 % in rural areas (INEI, 2009). In 2009, the GDP reached 95 977 million
dollars (values at constant prices of 1995) and the total exports were valued in 26
962 million dollars (MEM, 2009a).
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Perú- Products I and II
1.3.1 Gross National Product (GDP)
According to the INEI, the GDP of Peru has had a historic behavior characterized
by periods of stagnation and periods of great dynamism. During the 2001-2005
period, the GDP increased at an average rate of 4,2 % per year and during the
five year period of 2006-2010 that rate was of 7,2 % with peaks of 7,7 % in
2006, 8,9 % in 2007, 9,8 % in 2008 and 8,9 % in 2010. Only in 2009, the GDP
growth rate was of 0.9 % due to the negative impact of the international economic
crisis, see Graphic Nº 1 (MINTRA, 2010). It’s worth noing that the average
growth rate for the period 2006-2010 is one of the highest in the region.
Graphic N° 1: Evolution of the GDP
1.3.2 Energy Intensity
Energy intensity is a measure of the energy efficiency of a nation’s economy. It
could be defined also as the amount of energy it takes to produce a US$ of GNP.
In Peru this indicator has fallen from 9 129 kJ/US$ 1990 to 6 340 kJ/US$ 1990 in
the 1990 – 2009 period. It means it have been a constant decrease through this
period, but with a higher intensity since the year 2000. This is because the growth
rate of the energy consumption has been minor to the growth rate of the GDP,
which reflects an improvement in the country’s productivity, as it is shown in the
Graphic Nº 2 (MEM, 2009a).
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Perú- Products I and II
Graphic N° 2: Energy Intensity
1.3.3 Energy Consumption Per Capita
In 2009, the energy consumption per capita was 20.87 TJ/10 3 inhabitants. Its
evolution during the 2000 – 2009 period have had an irregular growth except for
the 2005 – 2009 period, on which this indicator presents a sustained growth,
following the economic growth trends of the country, as could be appreciated in
Graphic Nº 3(MEM, 2009a).
Graphic N° 3: Energy Consumption Per Capita
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1.3.4 Energy Potential
Peru has renewable and non renewable energy reserves. Of the last ones, it stands
out the natural gas and its liquids, but there are also reserves of oil and coal. The
entrance to the energy matrix of the natural gas from Camisea took place on
August 2004. This energy source is currently used in electricity generation and as
fuel in transportation, industrial and residential sectors (MEM, 2009a).
Camisea is the biggest deposit of natural gas under exploitation in Peru. It is
located in the Lower Urubamba, Echarate District, The Convención Province in
Cusco Region. See Graphic Nº 4.
Graphic N° 4: Location of the Camisea Deposit and Transport System of Natural Gas and
Liquids
In-situ proven reserves are 8.7 TCF (trillion cubic feet), and the probable proven
ones are estimated in 11 TCF. The expected final recovery is of 8.24 TCF of
natural gas and 482 million barrels of natural gas liquids. (PLUSPETROL, 2011).
As for the renewable energy potential, according to the information spread out by
the MEM, the country has an important hydroelectric potential estimated in 70
000 MW, of which it has been using only 5 %; (MEM, 2011a). On the other hand,
the wind power potential is estimated in 20 000 MW and the solar energy
potential, according to the Peruvian Solar Energy Atlas, has levels between 6,0 to
6,5 kWh/m 2 of yearly solar radiation in the coast, of 5,5 to 6,0 kWh/m 2 in the
highlands and of 4,5 to 5,0 kWh/m 2 in the jungle (MEM, 2011d). However, the
use of wind and solar energy started up recently with the installation of four solar
energy projects with a total installed capacity of 80 MW and three wind farms
with a total installed capacity of 140 MW. In addition, it is estimated a total
supply of 272 yearly million metric tons of biomass resources for electricity
generation, of which 256 million correspond to the average forests’s productivity
(natives and plantations) and 16 million to come from other sources like the
wastes of maize, rice, sugar cane, cotton, asparaguses and olive fields (FAO,
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Perú- Products I and II
2010). As for geothermal energy, Peru has a great geothermal potential which is
not completely known but the absence of reconnaissances and exploration surveys
which integrate appropriately geological-structural, geochemical and geophysical
information. Recently the INGEMMET updated the Geothermic Map of the
country, which has basically consisted on the re-definition of the geothermal
regions limits as well as the location of more than 400 thermal manifestations
distributed around the national territory. From this updating there were identified
six main geothermal regions which are: (i) Cajamarca – La Libertad; (ii) Callejón
of Huaylas; (iii) Churin; (iv) Central; (v) Eje Volcanico Sur and (vi) Cusco –
Puno (INGEMMET, 2011). Furthermore, the MEM have given authorizations to
make basic assessments in thirteen fields located in the departments of Arequipa,
Ancash, Ayacucho, Moquegua, Puno and Tacna, and if they have favorable
results, there will be executed deep perforations to accomplish the corresponding
feasibility studies. See Chart Nº1.
Chart N° 1: Renewable Energy Potential of Peru
Economic Sector
Potencial
Aprovechable
(MW)
Capacidad Utilizada (a)
(MW)
Hydropower 70 000 (b) 3 302
Wind power 22 000 (c) 142
Solar Power (d) 80
Coast 6.0 a 6.5 kWh/m 2
Highlands 5.5 a 6.0 kWh/m 2
Jungle 4.5 a 5.0 kWh/m 2
Biomass
272 tn (e) 27.4
Geothermal 3 000 0
Source: Propietary Production
(a) Some of them are currently operating; however, the majority will get into
commercial transaction before 2013.
(b) Source: MEM, 2011. General Directorate of Rural Electrification
(c) Source: MEM, 2008. Peruavian Eolic Map – Eolic Atlas.
(d) Source: MEM, 2003. Peruvian Solar Energy Atlas
(e) Source: FAO, 2010.
Commercial energy proven reserves up to 31 of December of 2009, were
approximately 26 471 442 TJ, of which the 45,1 % correspond to natural gas, 13,2
% to natural gas liquids, 11,7 % to crude oil, 22,5 % to hydropower, 4,25 % to
coal and 3,3 % to uranium (MEM, 2009a). See Chart Nº 5.
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Graphic N° 5: Proven Reserves of Commercial Energy to 2009
1.3.5 Production of Primary Energy
In 2009, the production of primary energy was 633 590 TJ, 10, 9 % higher than
the previous year. Hydrocarbons account for 67,1 %, hydropower 14,1%, biomass
(firewood, bagasse, dung and yareta) 17,2 %, coal 1,5 % and solar and wind
energy less than 1 %. The commercial energy production (composed by all energy
sources that can be easily sold or bought in a market) accounted for 82,7 % of the
total. (MEM, 2009a). See Chart Nº 2 and Graphic Nº 6.
Chart N° 2: Domestic Production of Primary Energy (TJ)
Commercial Energy
SOURCE 2008 2009 VARIATION (%)
Crude Oil 162 295 150 133 -7.5
Hydropower 85 637 89 523 4.5
Natural Gas and Natural Gas Liquids (*) 212 930 274 922 29.1
Coal 3 900 9 440 142.1
Subtotal 464 762 524 018 12.7
Non Commercial Energy
Firewood 77 029 80 149 4.0
Bagasse 18 870 18 823 -0.3
Dung and yareta 10 299 10 299 0.0
Solar and wind energy 302 302 0.0
Subtotal 106 500 109 572 2.9
TOTAL 571 262 633 590 10.9
Source: BNE 2009 – MEM.
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Graphic N° 6: Structure of the Primary Energy Production (2009)
In recent years the production structure of the primary energy has gotten modified
due to the bigger growth of the production of natural gas. This energy source has
displaced the generation of electricity with hydroelectric stations and it is used as
a fuel in the industrial, residential and transportation sectors. See Graphic Nº 7.
Graphic N° 7: Evolution of the Domestic Production of Primary Energy (TJ) from 1990 to
2009
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1.3.6 Final Energy Consumption
In 2009, the total final energy consumption was 605 094 TJ, 4,1 % higher than the
previous year, due to the increasement of liquid hydrocarbons and natural gas
comsumption. The final energy consumption’s structure by source type was as follows:
70,4 % hydrocarbons, 25,2% renewable energy and 4,4 % coal (MEM, 2009a). See
Chart Nº 3 and Graphic Nº 8.
Chart N° 3: Final Energy Consumption by Source (TJ)
SOURCE 2008 2009
Coal 21 957 22 949
Firewood 71 812 75 130
Dung and Yareta 10 299 10 299
Bagasse 12 248 12 201
Solar Energy 302 302
Coke 1 612 1 337
Charcoal 2 087 2 008
Liquified gas 43 622 47 397
Motor Gasoline 44 169 51 988
Kerosene - type jet fuel 27 156 27 660
Diesel Oil 161 781 172 046
Industrial Oil 35 861 30 845
Non-energy oil and y gas 10 612 11 884
Distributed gas 30 548 32 197
Industrial Gas 1 714 0
Electricity 105 247 106 852
TOTAL 581 028 605 094
Source: BNE 2009 – MEM.
Graphic N° 8: Final Consumption Structure by Source
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The final energy consumption structure by economic sectors, was as follows: 29%
Residential, commercial and public, 26,8 % industry and mining, 37,8 %
transportation and 3,2 % agriculture, agroindustry and fishing sectors. (BNE,
2009a) See Chart Nº 4 and Graphic Nº 9.
Chart N° 4: Total Final Energy Consumption by Sectors (TJ)
SECTOR 2008 2009
Residential, Commercial and Public 166 230 175 655
Transportation 341 322 228 789
Agriculture, agroindustry and fishing 22 888 19 364
Industry and mining 194 025 162 289
Non Energy Industry 18 344 18 997
TOTAL 742 809 605 094
Source: BNE 2009 – MEM.
Graphic N° 9: Final Energy Consumption by Economic Sectors
1.3.7 Evolution of Final Consumption by Sectors
In recent years energy consumption has been characterized by the predominance
of liquid hydrocarbons. However, since 2004, the consumption of natural gas
becomes important due to the entrance into commercial transaction of the
Camisea Deposit. On the other hand, electricity consumption has increased
mainly due to the consumption’s growth at the industrial sector, mining and
metallurgical sectors, services and residential sectors, as well as to the increase in
electricity coverage of the country. In the case of the firewood, which is an energy
source consumed in rural areas for cooking, its consumption has a downward
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Perú- Products I and II
trend due to its substitution by LPG. Similarly, the use of Kerosene has been
substituted by the LPG in urban and rural areas. See Graphic Nº 10.
Graphic N° 10: Evolution of the Final Energy Consumption Structure (1990-2009)
1.3.8 Evolution of the Final Consumption by Sectors
Recently, the final consumption structure by sectors shows the predominance of
the transport sector towards the consumption of the productive sector group
(industrial, mining - metallurgical, agroindustry, agricultural and fishing) and of
the group constituted by the residential, commercial and public sectors. This
could be explained by the growth of vehicles in the main cities of the country,
especially in Lima. See Graphic Nº 11. (MEM, 2009a).
Graphic N° 11: Evolution of the Final Consumption by Economic Sectors (1990-2009)
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1.3.9 Energy Consumption of the Electricity Sector in Peru
Energy sources used in the country for electricity generation mainly come from
national sources, which in 2009 accounted for 95 % of total consumption, while
the remaining percentage is coal which is mostly imported. As for national
sources, 45 % corresponds to renewable energies (hydroenergy and bagasse) and
the rest correspond to fossil sources: 41 % natural gas and 9 % oil-by products
(residual oil and diesel). In 1990, renewable sources had higher preponderance in
power generation (hydroenergy contributed with 61 %), however, nowadays it
accounts only for 41 % due to the displacement of the hydroenergy by natural
gas, as it is indicated in the Graphic Nº 12. (MEM, 2009a).
Graphic N° 12: Evolution of the Consumption Structure for Power Generation from 1990 to
2009
1.3.10 Installed Capacity of Power Generation by Type of Technology at a
National Scale
The total installed capacity (nominal capacity) in the peruvian electricity market
was of 7 057 MW in 2010, of which 3 363 MW (47,7 %) correspond to renewable
technologies and 3 694 MW (52,3 %) correspond to non renewable technologies
which represents 48 % of the total installed capacity, See Chart Nº 5.
Chart N° 5: Intalled Capacity in 2010 (MW)
Technology SEIN SA Total
Renewable 3,302 48.4% 61 27% 3,363 47.7%
Non Renewable 3,524 51.6% 170 73% 3,694 52.3%
6,826 100% 231 100% 7,057 100%
TOTAL 97% 3% 100%
Source: General Directorate of Electricity – MEM
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1.3.11 Installed Capacity in the National Interconnected Electrical System
In terms of installed capacity and electricity generation, the SEIN represents 97 %
and 93 % of the Peruvian electricity market, respectively; with isolated systems
covering the rest of the country. Therefore to analyze the Peruvian electricity
market it only would be necessary to mention the SEIN. The generation supply of
the SEIN is set in terms of effective capacity, considering the last one as the
nominal power in MW of the generating groups which is “punished” by a factor
that takes into account the operating conditions of the location like the
environmental temperature, the height above sea level where the station is
located, among others. To March of 2011, the effective power of the SEIN was
6 428 MW, of which 3 111 MW (48,4 %) correspond to renewable technologies
and 3 328 MW (51,6 %) to non renewable technologies. In this case, 2 519 MW
are generated by natural gas stations which represents 39,2 % of the total, as it is
indicated in Graphic Nº 13. In the low water period that shows up between May
and October of every year, the available hydroelectric supply decreases in 22 %
by the reduction in the water resource availability. (COES, 2010).
Graphic N° 13: Effective Capacity in the SEIN (2011)
1.3.12 Electricity Generation by Type of Technology at a National Level
The electricity generation is principally hydrothermic, this means that the energy
that covers the country’s demand comes from the use of hydraulic power and
fossil fuels. From the last ones, natural gas is used in higher rates. (MEM, 2009b).
In addition, there is a little fraction of the electric power that is generated from
biomass (bagasse) which is less than 0,2 % of the total country’s production
(MEM, 2011i) and is obtained of the productive processes of the sugar refineries.
Finally, in a smaller quantity, it is generated electricity with solar energy
(photovoltaic panels), which implementation has taken place fundamentally to
meet social commitments assumed by the State, with facilities dispersed through
the whole country and whose individual capacity does not surpass the megavatio.
During 2010, the total power generation in the electricity market was 35 736
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Perú- Products I and II
GWh, of which 19 864 GWh (56 % of the total energy at national level) haven
been generated by renewable energies and 15 872 GWh (44 % of the total energy
at national level) have been generated with non renewable energy. In Chart Nº 6,
and Graphics Nº 14 and 15, it is provided more details of the electricity
generation by type of technology.
Chart N° 6: Power Generation in 2010 (GWh)
Technology SEIN SA Total
Renewable 19,184 58% 680 26% 19,864 56%
Non Renerwable 13,892 42% 1,979 74% 15,872 44%
TOTAL
33,077 100% 2,659 100% 35,736 100%
93% 7% 100%
Source: General Directorate of Electricity – MEM
Graphic N° 14: National Electricity Generation by
Systems
Graphic N° 15: Electricity Generation by Source
1.3.12.1 Energy Generation the Interconnected National Electrical System
During 2010, the energy generation in the SEIN was 33 077 GWh, of which 58,4
% correspond to Hydroelectric Power Stations, 0,2 % to biomass (bagasse), 35,4
% to natural gas; and, the difference corresponds to generation from coal, diesel
and residual oil, as it can be seen in Graphic Nº 16. The electricity generation
based on renewable energies was principally hydroelectric; however, the
participation of this technology in the electricity matrix has decreased over the
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Perú- Products I and II
last years, due to the increment of investments in thermoelectric main stations of
natural gas like Camisea since 2004, as it is shown in Graphics Nº 17 and Nº 18,
where is presented the evolution of the electricity generation structure and of the
effective capacity in the SEIN. In order to reverting this situation since 2006, the
Peruvian State has given a bigger impulse to the investments in Hydroelectric
Power Stations through tenders for the long-term electricity supply, which tender
mechanisms and obtained results are shown in the numeral 1.4.1.2 (Measures to
Promote the Investment in New Generation Supply).
Graphic N° 16: Energy Generation Structure in the SEIN (2010)
Graphic N° 17: Evolution of Energy Generation by Sources in the SEIN
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Graphic N° 18: Effective Capacity vs. Maximum Demand
1.3.12.2 Final Consumption of Electric Power
During 2010 the consumption of electric power in the SEIN was 30 219 GWh, of
which 58,7 % correspond to industrial and mining-metallurgical sectors, 23,6 %
to the industrial sector, 15,3 % to the commercial sector and the 2,4 % to street
lighting, as it is detailed in Chart Nº 7.
Chart N° 7: Energy Consumption in the SEIN by Sectors (2010)
Economic Sectors (GWh) %
Industrial 17 753 58.7%
Commercial 4 610 15.3%
Residential 7 145 23.6%
Street Lighting 711 2.4%
TOTAL 30 219 100%
Source: General Directorate of Electricity – MEM.
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The maxim electricity demand he has been growing up since 2004, at rates
superior to 5 %, with the exception of 2009, in which, as a consequence of
contraction in demand due to the global financial crisis, it was of 2.9 %. In 2010
the maximum demand grew up to 6,3 % and reached 4 596 MW, as it can be
appreciated in Graphic Nº 19.
Graphic N° 19: Evolution of the Maximum Demand in the SEIN
1.3.13 CO 2 Emissions
Peru is a part of the United Nations Framework Convention on Climate Change
(UNFCCC) since 1992 and of the Kyoto Protocol since 2002, therefore it alines
with the Convention’s goals of stabilizing the concentration of greenhouse gases
to avoid they reach a level of dangerous anthropogenic interference. Through to
the Second National Communication presented in 2009, Peru fulfilled its
commitment to report to all countries Party of its emissions and capture levels of
Greenhouse Gases (GHG) and of the measures that have been adopted or is
considering adopting to apply the Convention. Peru assumes that this effort
should be along with a solid and ambitious international commitment. (MINAM
2009).
The inventory of Greenhouse Gases emissions (GHG) is the data base that lists by
sources the quantity of GHG emitted to the atmosphere in a determined area and
period. It is presented the National Inventory of GHG of 2000 which contains
information of GHG direct emissions: Carbon dioxide (CO 2 ), Methane (CH 4 ) and
Nitrous Oxide (N 2 O) by source. The total of emissions/removals of GHG has
been 120 023 Gg of equivalent CO 2 (CO 2 eq). At the same time, it was determined
that emissions per capita in 2000 were 2,5 tons of equivalent CO 2 per year and 4,7
tons of equivalent CO 2 if it is considered the land use, change in land use and
silviculture (USCUSS). (MINAM 2009). See Chart Nº 8.
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Perú- Products I and II
Chart N° 8: Variation of GHG Emissions in regard of the GDP Growth
CATEGORY
GHG EMISSION PER CAPITA
ton/inhabitant/year
1994* 2000*
VARIATION OF
NATIONAL
EMISSIONS
GROWTH OF
NATIONAL GDP
Energy 0.94 0.99 15% 21%
Industrial Processes 0.42 0.31 -20% 22%
Agriculture 0.97 0.88 -1% 43%
USCUSS 1.75 2.21 38%
Wastes 0.12 0.29 168%
TOTAL 4.20 4.68 0.21 0.23
(*) Population in 1994: 23 500 000; Population in 2000: 25 661 690
Source: Second National Communication of Peru to the United Nations Framework Convention on
Climate Change – MINAM 2009.
In addition, the main source of GHG emissions at a national scale is the
conversion of forests and pastures, attributed to the deforestation of the Amazon
Forest to change the land use with agricultural purposes. The second source of
GHG emissions is attributed to the energy sector, where the main responsible is
transportation, due to the use was of fossil fuels, the low rate of renewability of
cars and also to the price policy of fuels which does not favor cleanest ones and
which is implemented through tributary impositions applied to different types of
fuels, with smaller taxes burden to the most contaminating fuels, as it can be
appreciated in Chart Nº 9.
Fuel
Chart N° 9: Current Price Structure up to 01 April of 2010*
Price Ex-
Station
PETROPERU
RUNNING
IN
(8%)
ISC
GST
Price Ex-
Station
+ Imp.
Markup**
Price for
Users***
LPG (US$/Kg) 0.57 0.11 0.68 0.44 1.12
Gasoline 97 (US$/gal) 2.20 0.18 0.82 0.61 3.81 1.10 4.91
Gasoline 95 (US$/gal) 2.19 0.18 0.74 0.59 3.69 0.95 4.64
Gasoline 90 (US$/gal) 1.93 0.15 0.64 0.52 3.24 0.54 3.78
Gasoline 84 (US$/gal) 1.75 0.14 0.49 0.45 2.83 0.54 3.37
Kerosene (US$/gal) 2.13 0.69 0.54 3.36 0.54 3.90
Diesel 2 (US$/gal) 2.13 0.51 0.50 3.15 0.37 3.52
Industrial P.
(US$/gal) 1.70 0.36 2.25
6
* Own elaboration based on tha last prices list of PETROPERU valid till the last day of the
month.
** Latest Markup estimated as the difference between the price for users and the ex - refinery plant
plus tax.
*** Values reported to OSINERGMIN through the PRICE to March 28, 2010.
The third category that contributes to the total national GHG emissions is
represented by the Agriculture sector, whose most important source is the enteric
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Perú- Products I and II
fermentation, due to the poor work of genetic improvement and cattle
productivity. See Graphic Nº 20.
Graphic N° 20: Percentage Distribution of Total GHG Emissions by Category
For 2009, the CO 2 emissions from the use of the different commercial energy
sources 22 , climbed to 26,9 million tons, where the use of liquid hydrocarbons
generated the highest quantity of emissions representing 87 % of the total. In
order to determine these emissions it has been used the technologies method of
the Intergovernmental Panel on Climate Change (IPCC), that he is based on the
emissions calculation by contaminant, according to the request variables: Energy
source and energetic activity used in the process. (MEM, 2009a). See Graphic Nº
21.
Graphic N° 21: CO 2 Emissions Generated by the Final Consumption of Commercial Energy
2 
There
are
not
considered
emissions
generated
for
non
commercial
sources
like
firewood,
dung,
yareta,
and
charcoal.
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Perú- Products I and II
The activities developed in transportation and industrial sectors, are the ones that
generate higher quantities of CO 2 liberated to the atmosphere, as it can be
appreciated in the following graphic. These sectors concentrate 82 % of the total
CO 2 emissions. See Graphic Nº 22.
Graphic N° 22: CO 2 Emissions by Economic Sectors
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In order to advance in the reduction of GHG emissions from anthropogenic
sources and mitigate the climate change in Peru, over the last decade there have
been established regulations devoted to promote the incorporation of measures in
productive sectors that directly contribute to the mitigation of climate change,
which include the renewal of cars, the improvement solid wastes’s management
and the development of renewable energy projects.
In the different economic sectors there have been encouraging isolated
development initiatives that promote directly or indirectly the mitigation of
climate change, and which are in different stages of implementation or proposal.
For instance in the energy sector, it has been introduced initiatives, including tax
incentives, for the promotion of the natural gas use, generation of renewable
energy, biofuels production and energy efficiency. However, the primary energy
matrix is supplied mainly by oil, even after the execution of the Camisea gas
project. Furthermore, even though the electricity generation has a big
hydroelectric component and it exists the political intention to promote the
development of unconventional renewable energies, the generation of thermal
energy from fossil fuels is growing due to the fast increment of the demand on the
e incidence of the low water. Besides, there persist policies and tax incentives that
favor least clean energies, it is insufficient the coverage of natural gas that would
aid the substitution of the most contaminating liquid fuels and there is a low level
of environmental conscience and all contributes to the increase of GHG emissions
(MINAM, 2009).
In the transportation sector, the most important mitigation actions are the
normative and tributary efforts for the importation of new vehicles, the
construction of segregated corridors of high capacity in Lima, the use of natural
gas, the retirement of vehicles based on diesel, the imposition of higher taxes to
more contaminating vehicles and the application of technical vehicular
inspections and their limitations to pollution, even when among their initial
objectives there were not included the reduction of GHG emissions. It is
necessary encouraging in the sector a great planning of urban transportation,
reinforcing the importing politicy of vehicles with low emissions, increasing the
coverage of natural gas, among others. (MINAM, 2009).
In the industrial and fishing sectors there have been registered regulation efforts
that, in spite of their devotion to the improvement of competitiveness, efficacy
and clean production, they could generate GHG reductions. This is the case of the
promotion of technological innovation in the manufacturing sector, the technical
standards of boilers, and the environmental obligations in fisheries. (MINAM,
2009).
1.3.14 Clean Development Mechanism (CDM) Projects
The Clean Development Mechanism – CDM is one of the key components of the
Kyoto Protocol, which allows the countries that have goals in emissions reduction
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Perú- Products I and II
of Greenhouse Gases – GHG, may purchase Certified Emission Reductions
(CERs) of projects executed in developing countries. Peru could benefit from this
mechanism because it ratified the Kyoto Protocol.
The CDM recognizes the global environmental service of mitigation or absorption
that is taking place at the developing countries for which the eligible projects
should fulfill a series of basic requirements as: Contribution to the sustainable
development, permanence of reductions and additionality. The stages for the
development of CDM projects are shown in the Graphic Nº 23 and are detailed in
the following paragraphs:
1. Identification of the Project. It is usually prepared a profile for a previous
evaluation and determined if it is worth continuing with advanced studies.
2. Preparation of the Project Idea Note (PIN). Document with more detailed
information used to initiate negotiations of a future sale of CERs.
3. Preparation of the Project Design Document (PDD). It is presented
technical and organizational information of the activities of the project, being
the main input for validation, record and verification. It is described the base
line methodology, estimates of reductions and the protocol of the project’s
monitoring, as well as environmental impacts and comments of the
community that has been informed about the project.
4. The Approval Procedure of Host Country. It is managed by the Designated
National Authority (AND), which obtain information and summon an Ad Hoc
Committee to evaluate if the project contributes to the sustainable
development of the country. If the evaluation is positive, it is emitted the
Approval Letter of the Host Country.
5. The Validation. It is the previous step to the Registration in Executive Board
of the CDM of UNFCCC. It iscarried out by a Designated Operational Entity
(DOE) authorized in front of the executive board. Then the project is
registered by the Executive Board; however, it can be observed and passed to
a revision period, of which it would be registered or refused. Before emitting
the Validation Report of the executive board of the CDM, it is necessary to
count on the Approval Letter of the Host Country.
6. Implementation and Monitoring of the Project. It is realized by the
proponent of the project in the phase called “implementation” to facilitate the
later verification.
7. The Verification/Certification: A DOE accomplishes the verification of the
monitorings reports made by the proponent of the project and finally prepare a
Verification Report and a Certification Report to be sent to the executive
board of the Executive Board of the CDM. In such report it is established the
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verified amount of Emission Reductions for the corresponding emission of
CERs.
8. Emission of CERs
Graphic N° 23: Cycle of the CDM Project
In Peru, the Designated National Authority (DNA) is the Ministry of the
Environment (MINAM). The Director of the General Directorate of Climate
Change, Desertification and Water Resources (DGCCDRH), is responsible for
convening the Ad Hoc Committee and giving an answer for the conformity or non
conformity of the Project, for which it is followe the “The Evaluation Procedure
for the Approval of Projects of Greenhouse Gases Emissions’s Reduction and
Carbon Capture” Approved by Directive Nº 002-2009 MINAM.
The Carbon Market promoter entity in Peru is the National Environment Fund
(FONAM), which is a non profit institution of private rigth in charge of
promoting public and private investment in the development of priority
environmental projects; it also prepares and gives advice in the preparation of
CDM projects on its whole cycle.
The Peruvian CDM Project Portfolio that FONAM manages has had an important
growth as it is shown in Graphic Nº 24. In 2010, it was managed a portfolio of
190 projects with a total amount of investment of 11 400 million US$. Till April
of 2011 there were 223 projects, of which 51 count with the Approval Letter
granted by the MINAM, being 23 of them registered in the executive board of the
CDM. Of the registered projects, 10 receive 1 377 402 CER's and 6 of them
correspond to Hydroelectric Power Stations. See Chart Nº 10.
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Graphic N° 24: Evolution of Registered CDM Projects
Chart N° 10: Peruvian Projects that Currently Receive CER’s
N° Name Request Status of CER’s CER’s requested
1 “Santa Rosa” Hydroelectric Power Station
2 “Poechos I” Hydroelectric Power Station
3
Issued 22 801
Pending issue 19 547
Issued 179 018
Pending issue 40 643
Capture and gas flaring in the landfill
Issued 83 419
“Huaycoloro” Pending issue 288 719
4 Peruvian Project for the change of fuel source Issued 69 183
5
“Palmas del Espino” – Biogas recovery and
heat generation from effluents of palm oil mills
Issued 6 626
Review request 25 095
Pending issue 25 658
6
Gas Project in the landfill “Ancón” –
EcoMethane
Issued 20 512
7
Rehabilitation of the “Callahuanca”
Hydroelectric Power Station
Pending issue 10 129
8 “Carhuaquero IV” Hydroelectric Power Station Pending issue 12 004
9
Change of fuel source in the Cement Plant
“Atocongo” and extension of the natural gas
Issued 65 444
pipeline of “Cementos Lima”
10 “El Platanal” Hydroelectric Power Station Issued 508 604
TOTAL CERs REQUESTED 1 377 402
Source: FONAM, 2010.
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Of the 223 projects registered in the CDM Project Portfolio of FONAM, 171
correspond to the energy sector, which would generate a level of emissions
reduction valued in 26 180 875 tCO 2 per year, needing for their implementation a
total investment of 12 091 million dollars. From that portfolio, 75 are
hydroelectric and also there have been identified 34 projects with unconventional
renewable energies sources, which would generate emissions reduction of 2 890
tCO 2 per year with an investment of 1 490 million dollars. See Chart Nº 11.
Chart N° 11: CDM Project Portfolio of Fonam– Electricity Sector
Economic Sector
Emissions
Reduction
(tCO 2 e/year)
Investments
(US$ million)
N° of Projects
Hydroelectric Power Stations 15 417 953 7 222 75
Transmission Lines 38 330 105 5
Wind and Solar Power 889 302 1 009 10
Waste Management 1 461 137 608 20
Transportation 1 504 474 1 176 5
Biomass 1 567 776 201 22
Fuel source change 731 200 183 10
Cogeneration 24 668 11 4
Energy efficiency 4 097 224 1 296 18
Geothermal Energy 448 812 280 2
TOTAL 26 180 875 12 091 171
Source: FONAM 2010.
According to what we indicated previously, the tha majority of projects of the
CDM portfolio correspond to the electricity sector with renewable technologies
like wind farms, photovoltaic systems and Hydroelectric Power Stations, it means
that CDM projects based on renewable energies have a great potential of
development in the country.
It is important to stand out than the CDM Projects Portfolio that is currently
managed, is the result of actions taken for the promotion, implementation and
development of projects, which has enabled setting Peru in the 6 th place of the
raking of the most attractive countries for the CDM Market (FONAM, 2011), as it
is shown it the Chart Nº 12.
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Ranking
(Previous
Ranking)
Chart N° 12: Ranking of CDM Host Countries
Country
Valuation
Weather
Institutions
Weather
Investments
1 (1) India A- AA- B-
2 (2) China BBB+ BBB- BB
3 (3) Chile BBB A- BBB+
4 (4) Mexico BBB A- BB-
5 (7) Brazil BBB- BBB- BB-
6 (8) Peru BB+ A BB-
7 (11) Indonesia BB BBB- BB
8 (9) Malaysia BB+ A B
9 (5) South Africa BB A CCC-
10 (6) Korea BB BB BB+
Source: FONAM 2010
Projects rated as CDM, improve their profitability and financial statements with
the income of the CERs sale and also contribute to surpass the technological and
financial barriers that stop their implementation.
Worldwide, renewable energy technologies have been more benefited in number
with the CDM, so much so that in 2009, hydropower accounted for 20 %, wind
power 16 % and biomass 6 % (BM, 2010a). However, the development of
projects with renewable energy implies major investments and a smaller potential
for the generation of CER's, which causes that these kind of projects were
displaced by other ones linked principally to the destruction of HCFCs and N 2 O
and by projects inside the agricultural sector that require smaller investment and
generate a greater volume of CERs. (TECH4CDM, 2011).
It is important to mention, than the development of CDM projects also shows
barriers, as they require long, slow and complicated processes, high transaction
costs and risks of pre-implementation.
According to the World Bank, 2010 was a year of inflection, since the market
evidenced a slight decrease in relation to 2009, leaving behind five years of robust
growth due to several reasons like the continuous uncertainty regarding how will
be the market since 2012, year till when it will be valid the Kyoto Protocol.(BM,
2010b).
Parallel to the CDM market, it exists the voluntary market where there are
commercialized voluntary GHG emissions reductions or VER’s (Verified
Emission Reduction) which are similar to the CERs but they do not need the
certification of The United Nations (UN). The Voluntary Market provides
additional resources to the projects that: (MINAM, 2011l)
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‐ Obtained the CDM registry after the beginning of the operation.
‐ Are not eligible for CDM.
‐ With a very short window to 2012.
‐ With technologies / sectors that are not recognized in the regulated market
or are rejected technologies.
In Peru there are two projects that currently receive VER’s, which are presented
in the Chart Nº 13:
Chart N° 13: Peruvian Projects That Currently Receive VER’s
N° Name Request Status of VERs Requested VERs
1
Change of fuel source in the Cement Plant
“Atocongo” and natural gas pipeline of
Issued 297 615
“Cementos Lima”
2 Bagasse Project “Paramonga” Issued 370 412
TOTAL REQUESTED VERs 668 027
Source: FONAM, 2010.
1.3.15 Perspectives of Renewable Energies in Peru
It can be said that renewable energies will have each time a greater importance in
the national electricity market, due to the Long Term Energy Policy approved by
the government through the S.D. 064-2010 MS, which has as a mission, counting
on a diversified energy matrix, with emphasis in renewable sources and energy
efficiency, promoting projects and investments based on conventional and
unconventional renewable energies that will contribute to guarantee the energetic
certainty and the sustainable development of the country.
On the other hand, there is a vast experience in the country of the use of
hydropower potential, but in the case of unconventional renewable sources, their
development is much lower. For this reason, in recent years, there were made
efforts to count on a legal framework to promote their development. So it was
enacted the L.D Nº 1002, “Law for Promotion of Investment in Electricity
Generation” the 2 nd of March of 2008, that establishes a set of incentives for the
development of projects with renewable technologies like solar energy, wind
power, biomass, geothermal power, waves and Hydroelectric Power Stations with
a capacity below 20 MW.
In addition to the regulatory measures alredy established, there have been made
more activities to have a greater knowledge of the potential of hydropower, wind,
solar, geothermal and biomass resources that the country has.
What was indicated previously, constitutes a solid base for the greater
development of renewable technologies and its presence in the Peruvian Energy
matrix.
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1.4 Legal and Institutional Framework of Renewable Energies
In this section it is presented the legal framework of electricity activities, barriers
that had to be faced up for the hydroelectric development, measures to promote
the investment in a new generation supply, general tariff regime, characteristics of
the electricity market, legal framework of renewable energies, tax incentives and
the results of the application of the legal framework.
1.4.1 General Legal Framework of Electricity Activity
The General Regulatory Framework for the tariff / remunerative regimen is
established by L.D. Nº 25844 “Electrical Concessions Law” - ECL (enacted on
November of 1992), the Law Nº 28832 “Law to ensure the Efficient Development
of the Electricity Generation” (enacted on July of 2006) and its bylaws.
1.4.1.1 Barriers for the Development of Hydroelectric Power Stations
In Peru, an important part of the installed capacity through Hydroelectric Power
Stations in the SEIN was built by the State, most of which have been privatized
from the decade of 90. Since then, only three Hydroelectric Power Stations were
built by initiative of private investors. These are the Hydroelectric Power Stations
“Yanango” of 42.6MW and “Chimay” of 150,9 MW which entered into
commercial transaction in 2000, as well as the Hydroelectric Power Station “El
Planatanal” of 220 MW, which entered into commercial transaction in December
of 2010 33 . The main barriers for the development of hydroelectric projects
compared with other technologies like thermal plants of natural gas are:
a) Amounts of Investment
Hydroelectric Power Stations are characterized by having low production costs
(stage of operation), but very high investment costs compared with other types of
technologies. For instance, for each MW of installed capacity, it is required an
investment between 1.2 and 1.8 million US$, and for a natural gas thermal power
station with simple cycle, it is required an investment of 0.5 million US$'s.
b) Periods of Construction
The large-sized Hydroelectric Power Stations have construction periods of an
average of 4 to 5 years, while natural gas thermal power stations are built in a
year or a year and a half, approximately.
Larger periods imply higher financial expenses during the construction stage of a
Hydroelectric Power Station, which would have income over the sixth year while
a thermal power station would have them before the second year.
3 
In the case of the “El Platanal” H.P.S, its construction started on March of 2006, however the
final concession for this project was given on July of 2001. The iniciative of the prívate investor
was manifested in 1996, giving temporal concession on November of 1996, which shows that
since the first prívate iniciative til the execution of works it passed over 10 years, and adding the
4 years of construction, make a total of 14 years for the commercial transaction of the project.
One of the main difficulties that this project had was the financing.
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c) Financing
The main difficulty to obtain financing in Peru was not counting on long-term
contracts for the sale of energy at a fixed price, granting a flow of income that
guarantees the return of investment. This aspect, added up with the two previous
ones, has determined that private investment look towards the construction of
Thermal Power Stations based on natural gas instead of Hydroelectric Power
Stations, as they need smaller amounts of investment and shorter construction
periods which let them generate incomes 4 years before a Hydroelectric Power
Station.
d) Bus-bar tariffs and Prices of Natural Gas
In accordance with the dispositions established in the regulatory framework up to
December of 2004, bus-bar tariffs 4 (MEM, 1992) that generators could hire for
energy sales to the distributors of the regulated market were fixed considering the
promotional price of the Camisea natural gas for power generators. Thus
determined lower tariffs, that taking into account the barriers described
previously, made less attractive the investment in Hydroelectric Power Stations. It
is convenient to point, that the first Thermal Power Station based on the Camisea
natural gas, started its operation on August of 2004. Therefore, the price of
natural gas has been indirectly a limitation factor in the development of
Hydroelectric Power Stations.
In addition, it is important to specify that the price of natural gas from Camisea,
was fixed considering that it is a deposit discovered by Shell which was later
returned to the State without any retribution to this company, so the costs
accomplished in exploration were not considered to establish sales prices of the
natural gas in wellhead for electric generators and industries.
1.4.1.2 Measures To Promote the Investment in New Generation Supply
The Law Nº 28832 is an important advance over the ECL, but it has some aspects
that need to work in. This Law has as an objective improving the rules established
in the ECL, in order to assure the sufficiency of efficient generation supply. Thus,
it is reduced the exposition of the SEIN to the volatility of prices and the risks of
extended rationing for lack of energy, assuring the final user an electric tariff
more competitive.
That Law is devoted to the promotion of investment in new generation supply,
like hydroelectric power stations, through the mechanism of “electricity supply
tenders convoked by the distributors”. The objective is reducing the
administrative intervention in the generation price determination through market
solutions, in order to promote an effective competition and new generation
investments.
4 
Bus-Bar Tariffs are set based on basic prices, defined in the Article 47º of the “Electrical Concessions
Law”, Articles 125º and 126º of its Regulantions, and the “Toll for Connection to the Main Transmission
System”. Basic prices are constituted by the power and energy prices in the reference bars, from which
prices are expanded by loss factors.
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In each tender, the OSINERGMIN fixes a top price of awarding, which is not
known by the bidders after opening the envelopes. The power sales price is the
one offered by each bidder and awarded, and the power price corresponds to the
basic price of power (fixed by OSINERGMIN) valid till the day of the tender’s
announcement, both prices have a strong character, so they will keep on during
the term of validity established in each tender for the contracts of supply.
In the case of hydroelectric power station’s tenders, the law in mention establishes
a discount factor (currently 15 %) to the economic offers for their evaluation,
considering that those projects imply higher investmen costs in respect of thermal
ones. Discount factors are applicable only for effects of the evaluation of supply
in the tender process, because every awardee will always receive the price that
had offered in the tender. Over this frame it has been executing the hydroelectric
project “Quitaracsa” of 112 MW, which will get into commercial transaction on
April of 2014.
Additionally, the MEM could order PRO-INVESTMENT to convoke and conduct
tenders of electricity supply for a special technology, like hydroelectric power
stations, with the same characteristics that establishes the framework of the Law
Nº 28832. Thanks to the application of this mechanism the following
hydroelectric projects are under execution:
• H. P. S. “Santa Teresa” of 90 MW (October, 2013).
• H. P. S. “Cheves” of 168 MW (April, 2014).
• H. P. S. “Pucará” of 150 MW, H. P. S. “Chaglla” of 360 MW and H. P.
S. “Cerro del Águila” of 402 MW (January, 2016).
In accordance with the valid general legal framework, every generator can
commercialize its production under four (04) modes:
a) Contracts with distributors, through electricity supply tenders that are
convoked according to their power needs for the supply of their
regulated/free market, where the price has a fixed character and it is equal to
the price that offers each generator.
b) Contracts with distributors according to their requierements to supply the its
regulated market, where the price corresponds to the bus-bar tariff that the
OSINERGMIN fixes.
c) Contract with free users with a negotiated price.
d) Transferences on the short term market managed by the COES, where is
considerate the spot price or marginal cost.
It is expected that in very short term the total regulated market demand would be
supplied trough electricity supplying tenders. This is the best mode to viable the
investments in generation projects, because the long-term supply contracts (up to
20 years) have a fixed price for the energy supplied according to the needs of the
distributor and to the energy offered to cover up that needs.
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1.4.2 General Tariff Regimen
The Law Nº 28832 that reinforces the ECL, rephrase the rules of the activities of
generation and transmission, the tariff regimen in each activity and the tariff to
the end user (which is constituted by the price at a generation level), the costs of
transmission and distribution (that include the retail commercialization):
Price at a Generation Level.- It is determined annually by the average of the
generation price regulated by the OSINERGMIN and the resulting firm
generation prices tha result from the electricity supplying tenders that could
convoke the State or the distributors, and where generators could present their
offers. These tenders are maken in the frame of the Law Nº 28832 and the Tendes
Regulation approved by S.D. Nº 052-2007 MS. Nowdays, close to 80 % of the
demand of the SEIN is supplied through these tenders. The tendency is that all the
demand would be conver with this sort of contracts. These contracts are for at
least 20 years and prices have firm character during the contractual period, taking
into account the updating formulas.
Transmission Cost.- They are constituted by the costs of the main and guaranteed
transmission system (MTS and GTS), and for the costs of the secondary and
complementary transmission systems (STS and CTS).
The costs of MTS and GTS are paid by the whole demand and the costs of STS
and CTS are paid only by their users.
The costs of the guaranteed transmission system are determined annually at the
same time that the costs at a generation level, recognizing the return of the whole
amount of investment. This amount is the result of tender processes of
concessions of the transmission lines that constitute the guaranteed transmission
system. These tenders constitute a tool for the implementation of the transmission
plan which is elaborated by the Committee for the Economic Operación of the
System (COES) and which is checked and approved by the Ministry of Energy
and Mines (MEM). The tenders are announce and guided by the Private
Investment Promotion Agency (PRO-INVESTMENT) for the request of the
MEM.
The costs of the Complementary Transmisión System are determined every four
years, recognizing the return of the efficient amount of investment. This amount
is the result of tender processes of concessions of the transmission lines.
Distribution cost.- Are determined every four years, recognizing the efficient
costs in the development of the distribution and commercialization activities of a
model company. Thus the distribution electrical systems of the whole country are
classified by Typical Distribución Sectors (TDS), chosing a model company for
each TDS. In the Graphic Nº 25 it is specified the end user price structure
according to the each one of the concepts that has been specified above.
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Graphic N° 25: End–User Price Structure
The determination of the average weight percentage that all the costs described in
the tariff of end user have, indicates that in 2010, the generation costs have a
weight of 50,8 %, the transmission costs 12,8 % and the distribution ones 36,4 %.
See Graphic Nº 26.
Graphic N° 26: End-User Price Structure (2010)
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1.4.3 Peruvian Electric Market
The Peruvian Electricity Market is constituted by the regulated market, the spot
market and the free market. Its structure is shown in the Graphic Nº 27.
Graphic N° 27: Peruvian Electricity Market
1.4.3.1 The Regulated Market
The Regulated Market is formed by distribution companies, which are regulated
monopolies, and by the regulated customers. The distribution concessionaries are
bound to give service to everyone who requests it inside their concession zone or
to those who arrive to that zone with their own lines, in a period not longer than a
year. Also concessionaries are bound to have contracts with generating companies
that guarantee their demand of power and energy. Tariffs applicable in this market
are described in the numeral 1,4,2.
1.4.3.2 The Spot Market
The Spot Market is composed by all generating and transmitting companies that
operate inside the SEIN and have the COES as a coordinating entity of the
physical dispatch. In the economical operation of the electricity sector, there are
considerated “short-term marginal costs” and a mode of operation of “Pool”
Type. The electricity generation companies give the production of their
dispatched units according to an “order of merit”, based on their variable costs.
This dispatch order is determined by the COES. Through this market there are
executed power and energy transferences among generators. Energy is sold at the
so-called Instantaneous Marginal Cost (Spot Price), and the power transferences5 5
5 
The peak power is calculated as the difference between peak power demand and its firm power.
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are valued taking into account the power peak prices in the bar where the
transference is originated.
The short-term Marginal Cost is defined as the highest variable cost from among
all the generating units that are dispatched in a determined instant, being then the
cost of the dispatched energy the sames as the variable cost of the most expensive
thermal generator. Within this market there can be a great volatility in the energy
prices, due to the costs fluctuations in fuel oil and the supply of available
technologies with lower generation costs. On the other hand, the “Bus-Bar
Tariff” 6 represents the weighted expectation of the marginal price in a time
horizon, as its calculation interiorizes projections of supply and demand 7 and that
is why it does not follow the behavior of the marginal cost. The Graphic Nº 28
shows up the evaluation of the Spot Price and the Bus-bar tariff in the period
1999 – 2010.
Graphic N° 28: Evolution of Spot Price and Bus-Bar Tariff in the SEIN (1990-2010)
On the other hand, it is important to stand out that the Peruvian Hydric System
presents periods of low water among the months of May and November, so the
convergence of factors like reduction of hydric contribution, absence of low
operation costs projects, demand increase and high costs of fuels, could lead to an
increment of the marginal cost, which is transferred to the short-term market.
Moreover, the regulatory process may cause an increase in the marginal cost, as
sometimes it does not fulfill the operators’s expectations or does not interiorize
the real tendencies of the market, both in terms of demand projection and
incorporation of new projects, most of which do not materialize in many cases.
Generators that do not have contracted all their productive capacity with free
6 
It is applied to regulated market customers.
7 
Its calculation is based on information from the previous year, as a COES’s proposal, and is checked
and corrected with premises in accordance with the discretion of OSINERGMIN.
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customers could put their generation surplus in this market. The Spot Market is
only used to give value to the transferences between generators (differences
between dispatch and contractual commitments). Distributors cannot buy directly
into this market.
1.4.3.3 The Free Market
The Free Market is constituted by users that buy energy and power to the SEIN's
generators and/or distributors. Free users have bargaining power to fix prices and
the duration of these is set by means of bilateral contracts. Generally the
retirements of energy required to cover up their demand are made in High Voltage
(HV) and Ultra High Voltage (UHV). Generators inject and/or take energy from
the Spot Market to cover the sale contracts that they sign with their “free users”.
Average prices of free users from the economic activities corresponding to March
of 2011are shown in Graphic Nº 29.
Graphic N° 29: Average Prices of Free Users by Economic Activity
1.4.4 Legal Framework of Renewable Energies and Tax Incentives
The first regulation for renewable energies exclusivly was enacted on July, 1997,
Law Nº 26848 “Organic Law of Geothermal Resources”. However, the promotive
frame that establishes effective incentives for the investment in renewable
energies in Peru, was established on May of 2008 through the “Law to Promote
Investment in Electricity Generation with Renewable Sources”, L.D. Nº 1002 and
its Regulations approved by S.D. Nº 012-2011-EM of March, 2011.
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a) Law to Promote Investment in Electricity Generation with Renewable Sources.
This Law aims at promoting the use of the Renewable Energy Resources (RER)
of the country. On the following paragraphs there are summarized the main
aspects of this Law:
• RER are understood as energy resources like biomass, wind, solar,
geothermal and tidal. It is included hydropower when the installed capacity
does not surpass 20 MW.
• Electricity generation based on RER has priority for the daily dispatch of
load made by the COES, which need to be considered with variable
operation cost of zero (0).
• If there exists capacity in distribution and/or transmission systems, RER
generators have priority to get connected, till the maximum limit of the
objective annual percentage of the MEM.
• RER generators that have cogeneration or distributed generation features
pay for the use of distribution networks only the part of incremental cost in
which the operator of that networks incurs.
• The MEM will establish every five (5) years an objective percentage in
which it should take part, among the national electricity consumption, the
electricity generated based on RER. There are not considered Hydroelectric
Power Stations among this objective percentage, which means more space
for unconventional renewable energies. The Law establishes that the
objective percentage will be up to five percent (5 %) in each year of the first
five year period; it means, up to May of 2013.
• The participation of renewable energies is achieved through the Auction
Mechanism whic guarantees RER generators an Awarding Tariff (equal to
its corresponding price supply) for their energy production. Bidders offer
and annual energy quantity of and a monomic price 8 for that energy.
b) Regulations of the Law to Promote Investment in Electricity Generation with
Renewable Sources. The Regulations of the Legislative Decree Nº 1002,
establish the rules for the RER auctions and other remunerative details to the
RER generators. The following summarizes the relevant aspects of the
Regulation:
• The bases of the auction, on which the rules of the process are based, are
elaborated and approved by the MEM. The announcement and leading of
the auction process is in charge of OSINERGMIN. Every 2 years the MEM
evaluates the need to convoke a new auction.
• In the bases of the auction there is established the participation of every type
of RER technology to cover up the required energy.
• OSINERGMIN fixes in each auction a maximum awarding tariff by each
type of RER technology, considering 12 %'s discount annual rate established
in the Article Nº 79 of the Electrical Concessions Law (ECL).
8 
Is the price that includes the energy and power price expressed in US$/MWh
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• Bidders present their offer with the annual energy that they are committed to
give and the corresponding price for that energy (their awarding tariff).
Offers that surpass the maximum awarding tariff are dismissed. The
evaluation of offers and awarding, is executed independently for each
technology type (there is no competition among technologies), in function to
the offered price.
• The awardees are granted a supply contract of energy for 20 years, with a
guaranteed price equal to its offer (Awarding Tariff - AT -). Like
counterpart, the RER awardee must supply the annual compromised energy
(Awarded Energy - AE -) in its offer. If during a year it fails to supply the
100 % of the AE, its AT descreases (for that year) (Correction Factor)
proportionally to the breach of the contract.
• The RER awardee injects its energy in the short-term market at a marginal
cost and remunerated monthly (entrance to the short-term market).
Additionally, from the following year it perceives a monthly bonus (Income
for bonus) which aims to cover up the difference between: (1) the valuation
at the correspondent AT of its delivered energy (till the AE) and (2) the
income in the short-term market.
• The bonus is covered by a “Bonus charge” incorporated in the “Toll for
Connection to the Guaranteed Transmission System” that every user of the
National Interconnected Electrical System (SEIN) pays. That charge
includes the effect of the deferred payment (from the following year) of the
bonus, considering the monthly rate corresponding to the annual discount
rate (12 %) established in the Electrical Concessions Law.
• The energy injected “above” its AE (surplus of energy) is valued at marginal
cost of the system, which represents an extra income for the RER awardee
generator (income for energy surplus).
The way of remunerating RER generation, resulting of the auction described
previously is outlined in Graphic Nº 30, where:
• AE is the awarded energy committed to be injected annually;
• IE is the injected energy in default (d) or in excess (e);
• AT is the awarding tariff;
• ATa is the AT adjusted by the correction factor. In case the IE was less than
the AE, the correction factor is equal to IEd/AE;
• MC represents the short-term marginal cost.
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Perú- Products I and II
Graphic N° 30: Remuneration Scheme
c) Organic Law of Geothermal Resources. The Law Nº 26848 establishes that the
Ministry of Energy and Mines is the State’s entity in charge of the fulfillment of
this Law and of its Regulations and this work is executed through the General
Directorate of Electricity. The most relevant aspects are:
• For the exploration activity it is required an authorization, which is granted
with a validity of 03 years that could be extended for 02 additional years.
• For the exploitation activity it is required a concession, which is granted
with a validity of 30 years that could be extended in accordance with the
Regulations.
• In case it is exploted a geothermal resource with electricity generation
purposes, the concession contract will be extended automatically in the same
period of time of the concession or authorization of electricity generation.
Electricity generation activities are regulated by the Electric Concessions
Law.
• The authorization holders of geothermal resources are exonerated of every
tribute in the importing of goods and consumables required for the
exploration activity.
• The State guarantees that the current tax regime in the moment of grants
authorizations or subscription of the geothermal resources concession
contracts will remain invariable during the validity of such geothermal
rights.
d) Regulations of the Organic Law of Geothermal Resources. On April 08 of 2010
it was enected the S.D. Nº 019-2010-EM which approves the new Regulations
of the Organic Law of Geothermal Resources, hereafter Geothermal
Regulations. The most relevant aspects are:
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• The geothermal exploration activity is constituted by two (02) stages: (i)
Stage I, for the execution of studies previous to the perforation of
exploratory deep wells, which must not have a depth under 1 000 m; and (ii)
Stage II, for the perforation of exploratory deep wells, minimum three (03)
wells.
• The requested period for the Stage I will not be able to exceed the 02 years,
and for the Stage II will not be able to exceed a year.
• The holder that decides to continue with the Stage II must present to the
DGE, 30 days before the expiry of the Stage I, a guarantee equivalent to 5 %
of the budget for the Phase II with validity during the time of this Stage.
• According to the Geothermal Law, the extention of the validity of the
authorization will be granted only once by a period of to 02 years, and only
if the holder had not concluded with the program of exploration of
geothermal resources among the original period.
• If the requested extention is up to 01 year, the amount of the guarantee will
be equivalent to twice the value of the initial guarantee. For more than a
year, the amount of the guarantee will be three times the amount of the
initial guarantee.
• The request of concession is accompanied by a guarantee of an equivalent
amount of 1 % of the budget, valid till the subscription of the correspondent
concession contract.
• The concession contract will comprise the obligation of the holder of
presenting a guarantee for an equivalent amount to 5 % of the budget, with
validity till the work’s conclusion and verification by OSINERGMIN.
e) Regulations of Cogeneration. Approved by S.D Nº 037-2006-EM on June of
2006 and modified by the S.D. N 082-2007-EM on November of 2007, this
frame establishes the following:
• Technical criteria to consider in Cogeneration, as well as the requirements
and conditions for the participation of the cogeneration plants in the
electricity market.
• Free access for the connection to the grid and payment of the connection toll
without considering its power of self consumption.
• It is paid only the incremental cost for the use of secondary or
complementary transmission systems, or of the distribution systems.
• The electrical power is dispatched in a preferential way and does not
exclude.
• It assures the sale of the surplus of power and energy in the wholesale
market.
• Any energy’s transference is executed at marginal cost and gets paid for
dispatch power like other generators; it means, only if it is presented the
coverage of the maximum demand.
• They can sell their surplus through contracts with generators, distributors or
free users.
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Perú- Products I and II
f) Legal Framework for Tax Incentives. Investments in renewable energies could
make use of two regimens of tax benefits which are:
• Legislative Decree Nº 793 (March, 2007), that he establishes the Anticipated
Recovery Regime of the General Sales Tax or GST (IGV), whose
requirements are that the investment will not be minor of US$ 5 million
andwill have a period of pre-operativeness of 02 years.
• Legislative decree Nº 1058 (June, 2008), that establishes the benefit of the
accelerated depreciation of the assets for the payment of the Income Tax of
even 20 % yearly, for the investment in hydroelectric and other renewable
resources projects.
1.4.5 Results and Analysis of the Application of the Legal Framework of
Renewable Energies
As it has been indicated previously, measures in the legal framework of
renewable energies have been directed towards giving long-term and stability
signals for the holders of RER projects, in order to promote investments in a new
generation supply. An example of these measures is the application of the
tender’s mechanism or auction of electricity supply. Results of the first auction
are shown below:
The process of the first RER auction started on August of 2009. The Ministry of
Energy and Mines (MEM) elaborated the bases of the auction, while the the
OSINERGMIN was in charge of the conduction of the process; this institution
executed indeed the first national and international announcement on October 15,
2009.
The required energy was 1 314 GWh/year, of which 320 GWh/year were for wind
power technology, 813 GWh/year for biomass and 181 GWh/year to solar
photovoltaic. Additionally, there were considered 500 MW for Small
Hydroelectric Power Stations. The maximum awarding prices fixed by the
OSINERGMIN for the hydropower, wind, biomass and solar technologies were
74 US$/MWh, 110 US$/MWh, 120 US$/MWh, and 269 US$/MWh, respectively.
These prices were kept in reserve by the Notary Public and released at the
beginning of the public act of opening the economic envelopes and granting of
the award. On the other hand, the awarded prices (offered by the awardees
bidders) were the following: Hydro 60,33 US$/MWh; Wind 80,36 US$/MWh;
Biomass 63,45 US$/MWh and Solar 221,09 US$/MWh. (OSINERGMIN, 2011a).
That is, the average prices of awarded offers for hydroelectric, wind, biomass and
solar technologies have turned out to be less in 18 %, 27 %, 47 %, and 18 %,
respectively than the maximum awarding prices (limits) established by the
OSINERGMIN. That’s why, keeping in reserve such maximum prices has
promoted the competition, motivating bidders to make their best offers.
The awarded powers are 180.3 MW of hydroelectric projects, 142 MW of wind
power, 27.4 MW of biomass and 80 MW of solar photovoltaic, which gives 429.7
MW in total. The total awarded energy is 1 971.6 GWh/year, of which 1 084,3
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GWh/ year correspond to hydroelectric power stations and 887.2 GWh/year to
other unconventional renewable energies (wind/biomass/solar). The average
awarded price of the first RER Auction was 80,46 US$/MWh. In accordance with
what was established in the bases of the first auction and the contract that each
awardee has signed with the MEM, December 31 st of 2012 is the limit date for the
respective RER’s generation projects to initiate their commercial transaction
(OSINERGMIN, 2011a). See Chart Nº 14.
Chart N° 14: Summary of the First RER Auction
Required
Awarded Medium Awarded
Price
Average
RER Demand
Supply Awarded Price
Ceiling
Plant
Technology Power Energy
Power Energy Price Vs Price
(US$/MWh)
Factor
(MW) (MWh)
(MW) (MWh) (US$/MWh) Ceiling
Hydraulic 500 0 74 180.3 1084.3 60.33 -18% 69
Wind 0 320 110 142.0 571.0 80.36 -27% 46
Biomass 0 813 120 27.4 143.3 63.45 -47% 60
Solar 0 181 269 80.0 172.9 221.09 -18% 25
Total 429.7 1 971.6 80.46 Total 52
Total 500 1314 Without
Without
Hydraulic 249.4 887.2 105.06 Hydraulic 41
Technology
Technology
Source: General Directorate of Electricity – MEM.
Prices of the energy injected by RER projects awarded to the SEIN are expected
to increase in 2,6 % generation prices. So it has been considered that the total
energy production in the SEIN for 2013 will be 39 395 GWh and the monomic
price at a generation level will be 52,8 US$/MWh. In addition, the part of that
energy that corresponds to RER’s generation is estimated in 1 972 GWh with an
average pondered price of 80,5 US$/MWh. See Chart Nº 15.
Chart N° 15: Effect of the First RER Auction in the Price at a Generation Level
Parameter
SEIN
(2013)
Conventional RER Total
Annual Energy (GWh) 37 423 1 972 39 395
Participation (%) 95% 5% 100%
Price* (US$/MWh) 52.8 80.5 54.2
Price Increment (%) 2.6%
(*) Monomial Price at a generation level
Source: General Directorate of Electricity
The second announcement for the first auction took part in July, 2010. In this
opportunity it was considered an amount of energy to be auctioned of 428
GWh/year, of which 97,9 % was established for energy generated from biomass
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Perú- Products I and II
and 2,1 % from solar energy. For Hydropower it was of 338,3 MW. In this second
announcement, it was awarded only one hydroelectric project of 18 MW, other
participants were disqualified because the offered prices were higher than the
maximum prices established by the OSINERGMIN. See Chart Nº16.
Technologies
Chart N° 16: Results of the Second Announcement of the First RER Auction
Energy
Auctioned
(GWh/año)
Maximum
Price
(US$/MWh)
Nº
Awarded
Projects
Biomass 419 55 None
Solar 9 211
Awarded
Energy
(GWh/año)
Power
(MW)
Awarded
Price
US$/MWH)
None None None
None None None None
Hydraulic 338.29 MW 64 1 85.000 18.00 64.0
Source: OSINERGMIN.
On April 28 of 2011, the Ministry of Energy and Mines convoked the second
auction of renewable energies. This time the amount of energy to be auctioned
was 1 300 MWh / year, of which 45,6 % are oriented to projects that use
industrial waste, 18,1 % are for projects that use urban wastes, 33 % for wind
power projects and 3,3 % for photovoltaic solar energy projects. Additionally, it
will be auctioned an amount of maximum generation of 681 000 MWh/year for
hydroelectric projects. See Chart Nº 17.
Chart N° 17: Structure of The Second RER Auction
Technologies
Energy
(MWh/año)
Industrial Wastes 593
Urban Wastes 235
Wind 429
Solar 43
Hydraulic 681 000
Source: OSINERGMIN.
It is important to highlight that generation prices obtained in the Peru in the first
RER auction are still minor to RER generation prices in other countries of the
world. See Graphic Nº 31 and 32.
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Perú- Products I and II
Graphic N° 31: Prices Applied to Power Generation with renewable Sources in Different
Countries
Graphic N° 32: Prices Applied to Solar Photovoltaic Power Generation
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1.4.6 Institutionality
The institutional framework in the Peruvian electricity sector is established by the
Electrical Concessions Law enacted on November of 1992 (L.D. Nº 25844); the
Law to Ensure the Efficient Generation Development (Law Nº 28832), enacted in
2006; as well as for the rules that create OSINERGMIN, INDECOPI and the
Ministry of the Environment. See Graphic Nº 33.
Graphic N° 33: Agents of the Electricity Sub Sector
The institutions entrusted to promote, regulate and supervise activities of the
Peruvian electricity market are the following ones:
a) Ministry of Energy and Mines (MEM). It is the governing body which
establishes the policies of the sector, promotes energy activities, gives
electrical rights for the development of the electricity activity and regulates
the electrical market. In terms of renewable energies, is the entity that: (i)
Decides the opportunity to initiate an auction process, publishes the previous
announcement and approves the bases to decide the annual energy required by
each renewable technology; (ii) Sign the long-term electricity supply contracts
(20 years) with the awardees in the auction; (IAII) Approves the
environmental studies; and, (iv) Grants the final concession for the
development of the generation activity.
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b) Supervisory Organism of Investment in Energy and Mines (OSINERGMIN).
Is the governing entity of tariffs, supervisor and controler of the fulfillment of
the regulations of the sector (Law Nº 26734 enacted on December of 1996 and
the Framework Law of the Regulatory Agencies of Private Investment in
Public Services, Law Nº 27332 enacted on July of 2000). In terms of
renewable energies, it is the entity that: (i) Makes announcements of the
auctions at a national and international level; (ii) Conducts the auction process
from the announcement to the awarding, through a Committee designated for
each process, which is formed by two representatives of the OSINERGMIN
and for one of the MEM; (iii) Establishes in each auction process the
maximum awarding prices for each RER technology; (iv) Fixes the bonus to
each RER generator according to their offered prices, this bonus is included as
an additional charge in the Transmission Toll that is paid by all users of the
SEIN; (v) Supervises the fulfillment of the works execution’s schedule of
RER generation projects that resulted awarded; and, (vi) Controls the
fulfillment of the electricity supply contract signed by the awardees and
reports it the MEM.
c) Committee for the Economic Operationn of the System (COES). It is the
entity in charge of the coordination and technical and commercial operation of
the National Interconnected Electrical System (SEIN), under security and
supply quality criteria, which manages the transferences in the short-term
Market. In terms of renewable energies, it is the entity that: (i) in the case of
RER technologies that do not manage thier power, it elaborates the study on
the maximum injection capacity for each bar of the SEIN that these
technologies could inject; (ii) Approves the pre-operative studies of the RER
generation projects that will be connected to the SEIN, (iii) Approves the start
of commercial transaction of RER generation stations; (iv) Makes financial
settlements in the Short-Term Market and the corresponding bonus, through
which RER generators are paid; and, (v) Informs OSINERGMIN about the
fulfillment of the agreement of RER generators to inject in the SEIN the
annual awarded energy in the auction and about the economical liquidations
executed.
d) Organism of Evaluation and Environmental Control (OEFA) of the Ministry
of the Environment (MINAM). It is in charge of direct, evaluate, supervise
and control the fulfillment of the environmental regulations. Its tasks are
regulated for the Law of the National System of Environmental Assessment
and Control (Law Nº 29325, enacted on March of 2009).
e) National Institute of Competition and Intellectual Property Defense
(INDECOPI). It promotes and guarantees the loyal competition, customers’s
rights and intellectual property, promoting the well functioning of the market.
It is responsible for the application and fulfillment of the Law of Monopoly
and Anti-Oligopoly of the Electricity Sector (Law Nº 26876, enacted on
November of 1997).
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1.4.7 Process that Should be Followed to Develop a Renewable Energy
Project
The process to develop and implement a project for electricity generation based
on renewable resources, according to the regulatory framework in use in the
country, requires following some stages. Once the project is identified from the
knowledge of the characteristics of the energy resource and the execution of the
pre-investment studies, it should compete in a public auction in order to obtain the
awarding and the economic incentives that guarantee its implementation. Then, it
should be completed the environmental impact assessments (EIA), the permission
for the use of the resource and the obtaining of the final concession. In the
following stages it should be completed the engineering studies, financing for
works and equipment and the permissions for its setting in operation in the
National Interconnected Electrical System. What was described, is shown in the
Graphic Nº 34:
Graphic N° 34: Development Process of a RER Project
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Electricity supply contracts that the State awards represent the guarantee of
income to make economically viable each RER generation project. The
development of a RER generation project generally follows the process described
below in concordance with the RER’s legal framework and the ECL:
• Measurement of the renewable energy resource (RE-R) and elaboration of the
project at a perfil or pre-feasibility level. For this stage, the promoter should
request temporary concession to the MEM for the realization of studies, only
if it requires of servitude over any land area for the studies’s development.
• Based on previous studies, the promoter could take part in one of the RER
auctions that the State convokes every two years. In that auctions the
promoter should fulfill requirements such having RER measurements at least
for 12-month, RER generation projects at pre-feasibility level, guarantees
established in the basis and the commitment to present the approval of the
COES of its pre-operativeness study.
• After the signature of the electricity supply contract for 20 years, it is returned
to the generator its guarantee of seriousness supply (20 000 US$ for each
installed MW), the same one that should be replaced by the guarantee of
works execution (100 000 US$ for each installed MW) that is returned to the
promoter at the start of commercial transaction of the main RER generation
station.
• Three months after signing the electricity supply contract, the promoter
should present its pre-operativeness study approved by the COES to the
MEM, out of guarantees in case of default.
• The promoter should elaborate its RER generation project at a feasibility level
(that includes its environmental impact assessment) and then its respective
final study for the construction of the project.
• Request the approval of the Environmental Impact Assessment (EIA) to the
MEM, which in conjunction with the feasibility study, constitute the main
requirements for the request to the MEM of the final concession.
• Requested and approved the final generation concession, the promoter signs
with the State (MEM) the contract of final concession, with which it could
initiate the construction of the project.
• Once the execution of the project is concluded, the promoter should request to
the OSINERGMIN the approval of setting in commercial transaction its
RER’s generation station.
• After getting all the evidence, the OSINERGMIN emits the approval to put
the project into commercial transaction and from that moment it starts the
contract term for the electricity supply to the SEIN for 20 years.
In the environmental aspect, the Law of the National System of Environmental
Impact Assessment (Law Nº 27446) and its Regulations establish a mandatory
application of the Environmental Certification for the development of projects in
general, defining the following categories: Category I - Environmental Impact
Statement (EIS); Category II - Semi-detailed Environmental Impact Assessment
(EIA sd) and Category III – Detailed Environmental Impact Assessment (EIAd).
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In the case of electric power projects, the normative aspects of environmental
affairs are in charge of the General Directorate of Energetic Environmental
Affairs (DGAAE). The aspects of technical environmental control are
competition of the Organism of Evaluation and Environmental Control– OEFA,
belonging to the MINAM.
The EIA’s for the development of electric projects are reviewed and approved by
the DGAAE. The MINAM is not implicated directly with the procedures of
evaluation of Environmental Impact Assessments - EIA for projects in general.
However, the National Service of Protected Natural Areas (SERNANP), which is
a public agency attached to the MINAM, has the faculty of giving its technical
binding opinion on the EIAs that involve protected natural areas. In the same
way, the National Authority of Water (ANA), a technical specialized agency, and
the Ministry of Agriculture, have the faculty of giving their technical opinion on
the EIAs. In some cases it could also be required the technical opinion of
MINAM and of the National Institute of Development of Andean, Amazonian
and Afro-Peruvians (INDEPA).
The request of an EIA for the development of electric power projects is foreseen
in the L.D. Nº 25844, Electrical Concessions Law and its Regulations, enacted in
1993. The details for the EIA development are established in the S.D. Nº 29-94-
EM “Regulations of Environmental Protection in Electricity Activities”, enacted
in 1994.
According to what is established in the L.D. Nº 25844 and the L.D. Nº 1002,
(Law to Promote Investment in Electricity Generation with Renewable Energies),
the presentation of an EIA for electric projects depends on the energy production
capacity of the power station. For projects with higher capacity of 20 MW it is
required a detailed EIA. In projects of less capacity it has been applied the prequialification
mechanism and an affidavit in case the renewable energetic project
is not located in a Protected Natural Area.
Projects of 20 MW of power or more should be elaborated in accordance with
what it is established in the Law Nº 25844, Law Nº 27446 and the S.D. Nº29-94
EM. The procedures to follow for the EIA’s approval are described below:
a) Presentation of a Citizen Participation Plan (CPP) and Terms of Reference
(ToR) of the EIA (the ToR are sent to SERNANP, ANA and other interested
organisms when necessary).
b) Execution of workshops before the elaboration of the EIA (preparatory
phase) and during the elaboration of the EIA (intermediate phase).
c) Presentation of the EIA to the DGAAE-MEM and other interested
organisms (SERNANP, ANA, MINAG, DREM, district and provincial
municipalities, communities, small towns).
d) Evaluation and approval of the Executive Summary of the EIA and other
requirements of the TUPA.
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e) The publication of the EIA (in addition to its publication in the gazette “El
Peruano”, a local circulation newspaper and a local radio, the EIA's
document should be available for its consultation in the MEM, DREM and
offices of the municipalities involved).
f) Workshops to explain the EIA’s scope (phase of evaluation).
g) Technical opinion of the ANA, SERNANP and MINAG.
h) Previous diffusion for 7 continuous days, it is set the public hearing.
i) In case the EIA was observed, this would happen only once.
j) Approval of the EIA.
According to the DGAAE, the Citizen Participation Plan (CPP) and the Terms of
Reference (ToR) are prepared based on the opinions and the compiled
information of the interest groups. Workshops are held in the study area the main
participants are the residents of the local community. The EIA should reflect the
opinions of the interested party, including local residents. Then, the DGAAE
evaluates the EIA on its environmental and social aspects, while the MINAG and
SERNANP evaluate the aspects of their competition from the technical point of
view.
1.5 Generation Facilities with Renewable and Non Renewable Sources
In this numeral it is shown the information about facilities and projects of
renewable energies that are in operation and construction, as well as the
information of facilities and relevant projects that use non-renewable energy
sources and which operate inside the SEIN.
1.5.1 Information on the Most Relevant Facilities of Renewable Energies
Projects qualified as renewable in the frame of the L.D. Nº 1002, which are under
operation and construction, are shown in the Chart Nº 18. From that information it
is appreciated that the installed capacity of plants under operation is 76,2 MW, of
which 53,2 MW corresponds to hydroelectric power stations and 23 MW to
biomass power stations. The installed capacity of plants that are under
construction amounts to 353,2 MW, of which 126,8 MW corresponds to
hydroelectric power stations, 142 MW to wind farms, 80 MW to solar power
stations and 4,4 MW to biomassm power stations.
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Chart N° 18: RER Projects
Project Technology Departament Company
Hydroelectric Power
Stations
In Operation
Installed
Power (MW)
Starting
Commercial
Operation
H.P.S. Purmacana Hydropower Lima Eléctrica Santa Rosa S.A. 1.8 01/07/2011
H.P.S. Roncador Hydropower Lima Maja Energía S.A. 3.8 01/12/2010
H.P.S. Santa Cruz I Hydropower Ancash Hidroeléctrica Santa Cruz S.A.C. 6 29/05/2009
H.P.S. Caña Brava Hydropower Cajamarca Duke Energy GENOR S.A. 6 19/02/2009
H.P.S.Santa Cruz II Hydropower Ancash Hidroeléctrica Santa Cruz S.A.C. 6 01/07/2010
H.P.S.Joya Hydropower Arequipa Generadora de Energía del Perú S.A. 9.6 01/10/2009
H.P.S. Poechos II Hydropower Piura SINERSA 10 27/05/2009
H.P.S.Carhuaquero IV Hydropower Cajamarca Duke Energy GENOR S.A. 10 22/05/2008
Total 53.2
In Construction
H.P.S.Nuevo Imperial Hydropower Lima Hidro Cañete S.A. 3.9 01/05/2012
H.P.S.Yanapampa Hydropower Ancash Eléctrica Yanapampa S.A.C. 4.1 01/12/2012
H.P.S.Shima Hydropower San Martín Consorcio Energoret/Manufacturas Mendoza 5 30/09/2012
H.P.S. Huasahuasi I Hydropower Junín Hidroeléctrica Santa Cruz S.A.C. 7.8 01/10/2012
H.P.S.Huasahuasi II Hydropower Junín Hidroeléctrica Santa Cruz S.A.C. 8 01/04/2012
H.P.S.Las Pizarras Hydropower Cajamarca Empresa Eléctrica Rio Doble S.A. 18.8 31/12/2012
H.P.S.Chancay Hydropower Lima SINERSA 19.2 31/12/2012
H.P.S.Angel I Hydropower Puno Generadora de Energía del Perú S.A. 20 31/12/2012
H.P.S.Angel II Hydropower Puno Generadora de Energía del Perú S.A. 20 31/12/2012
H.P.S.Angel III Hydropower Puno Generadora de Energía del Perú S.A. 20 31/12/2012
Total 126.8
Biomass Power Stations
In Operation
B.P.S. Paramonga I Biomass Lima Agro industrial Paramonga S.A. 23 31/03/2010
Total 23
In Construction
B.P.S. Huaycoloro Biomass Lima Petramas S.A.C. 4.4 01/07/2011
Total 4.4
Wind Farms
In Construction
W.F. Talara Wind power Piura Energía Eólica S.A. 30 29/06/2012
W.F. Marcona Wind power Ica
Consorcio Cobra S.A./Perú Energías Renovables
S.A.
32 01/12/2012
W.F. Cupisnique Wind power La Libertad Energía Eólica S.A. 80 29/06/2012
Total 142
Solar Power Stations
In Construction
S.P.S Panamericana Solar Solar photovoltaic Moquegua
Consorcio Panamericana Solar 20TS/Solarpack
Corporation Technology S.L.
20 30/06/2012
S.P.S Majes Solar Solar photovoltaic Arequipa Grupo T-Solar Global S.A. 20 30/06/2012
S.P.S Repartición Solar Solar photovoltaic Arequipa Grupo T-Solar Global S.A. 20 30/06/2012
S.P.S Tacna Solar Solar photovoltaic Moquegua
Consorcio Panamericana Solar 20TS/Solarpack
Corporation Technology S.L.
20 30/06/2012
Total 80
From now on, there are presented the main characteristics of RER projects,
grouped by type of used technology, it means, water turbines, steam turbines with
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bagasse, internal combustion engines based on gas, eolian turbines and solar
photovoltaic.
1.5.1.1 Water Turbines
The projects that are shown below are the following: “Purmacana” H.P.S.,
“Roncador” H.P.S., “ Santa Cruz I” H.P.S., “ Caña Brava” H.P.S., “ Santa Cruz
II” H.P.S., “La Joya” H.P.S., “Poechos II” H.P.S., “Carhuaquero IV” H.P.S.,
“Nuevo Imperial” H.P.S., “Yanapampa” H.P.S., “ Shima” H.P.S., “Huasahuasi I”
H.P.S., “Huasahuasi II” H.P.S., “Las Pizarras” H.P.S., “Chancay” H.P.S., “ Angel
I” H.P.S., “Angel II” H.P.S. and “Angel III” H.P.S.
Chart N° 19: “Purmacana” Hydroelectric Power Station
Country
Station name
Location
Type of technology
Parameter Units Information
Peru
Purmacana
Supe, Barranca, Lima.
Water turbine
Date of Operation Start 01 of July, 2011
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Public
Private
Private
Eléctrica Santa Rosa S.A.C
Nº of Permission granted R.D. Nº168-2010-ANA-DARH
Reference year 2010
Nominal Power MW 1.8
Effective Power MW ---
Generated Power (produced) GWh/year 9
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 71.3
Efficiency % ---
Source of energy used
Power consumption in the reference year
Investment Million US$ 3.4
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 60
PJ
Hydropower
CO 2 Emissions that have been avoided Million ton/year 7 200
Brief description
It consists of an open adductor canal
length of 13 m (2.2 m 3 / s - nominal),
pressure pipe and powerhouse with
electromechanical equipment.
63

Perú- Products I and II
Parameter Units Information
MEM
Sources of information
SEIN
Chart N° 20: “Roncador” Hydroelectric Power Station
Parameter Units Information
Country
Station name
Location
Peru
Roncador
Barranca, Barraca, Lima
Type of technology
Water turbine
Date of Operation Start 01 of December, 2010
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited
Company/Public//Private)
Modality
Concessionary
Public
Private
Private
Maja Energía S.A.
Nº of Permission granted N° 499-2005-MEM/DM
Reference year ---
Nominal Power MW 3.8
Effective Power MW 3.48
Generated Power (produced) GWh/year 28.1
% of sold energy/delivered to the public
service
% 100
Capacity factor of the power plant % 70.5
Efficiency % ---
Source of energy used
Hydropower
Power consumption in the reference year PJ ---
Investment Million US$ 3
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 59.85
CO 2 Emissions that have been avoided Million ton/year 17277
Sources of information
MEM
SEIN
64

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 21: “Santa Cruz I” Hydroelectric Power Station
Parameter Units Information
Peru
Santa Cruz I
Colcas, Caras, Ancash
Water turbine
Date of Operation Start 29 of May, 2009
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Public
Private
Private
Santa Cruz S.A.C
Nº of Permission granted 026-2009-MEM/DM
Reference year 22 of January, 2009
Nominal Power MW 6
Effective Power MW 3.48
Generated Power (produced) GWh/year 35.8
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 65
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 7.5
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 55
Hydropower
CO 2 Emissions that have been avoided Million ton/year 18 150
Brief description
It is a Run-of-the-river Hydroelectric Power Station,
the purpose is to generate renewable electricity to be
delivered to the National Interconnected Electrical
System
Sources of information
MEM
SEIN
65

Perú- Products I and II
Chart N° 22: “Caña Brava” Hydroelectric Power Station
Country
Station name
Location
Type of technology
Parameter Units Information
Peru
Caña Brava
Llama, Chota, Cajamarca
Water turbine
Date of Operation Start 19 of February, 2009
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Public
Private
Private
Duke Energy EGENOR
Nº of Permission granted RM 068-2009-MEM/DM
Reference year 11 of February, 2009
Nominal Power MW 6
Effective Power MW 5.71
Generated Power (produced) GWh/year 38
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 41
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 9.5
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 70
Hydropower
CO 2 Emissions that have been avoided Million ton/year 22 622
Brief description
The station integrates the water of the
“Carhuaquero” Hydroelectric Power
Station and has a Kaplan turbine of
5,657 MW.
Sources of information
MEM
SEIN
66

Perú- Products I and II
Chart N° 23: “Santa Cruz Ii” Hydroelectric Power Station
Country
Station name
Location
Type of technology
Parameter Units Information
Peru
Santa Cruz II
Santa Cruz, Huaylas, Ancash
Water turbine
Date of Operation Start 01 of July, 2010
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Public
Private
Private
Santa Cruz S.A.C
Nº of Permission granted 092-2009-MEM/DM
Reference year 18 of February, 2009
Nominal Power MW 6
Effective Power MW 3.36
Generated Power (produced) GWh/year 42.5
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 66
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 10.2
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 55
Hydropower
CO 2 Emissions that have been avoided Million ton/year 21 082
Brief description
It is formed by a water inlet, has a
pressure pipeline which will lead
the water to the powerhouse and 2
Francis turbines.
Sources of information
MEM
SEIN
67

Perú- Products I and II
Chart N° 24: “La Joya” Hydroelectric Power Station
Country
Station name
Location
Type of technology
Parameter Units Information
Peru
La Joya
Joya, Arequipa
Water turbine
Date of Operation Start 01 of October, 2009
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited
Company/Public//Private)
Modality
Concessionary
Public
Private
Private
Generadora de Energía del Perú S.A (GEPSA)
Nº of Permission granted RM147-2009-MEM/DM (2009.04.02)
Reference year ---
Nominal Power MW 9.6
Effective Power MW 4.8
Generated Power (produced) GWh/year 54.7
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 65
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 17.6
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 59.95
Hydropower
CO 2 Emissions that have been avoided Million ton/year 41 987
Brief description
The plant has 2 sets of turbine-generator of
Francis-type which have vertical axis for a
steady flow.
Sources of information
MEM
SEIN
68

Perú- Products I and II
Chart N° 25: “Poechos II” Hydroelectric Power Station
Country
Station name
Location
Type of technology
Parameter Units Information
Peru
Poechos II
Sullana, Piura
Water turbine
Date of Operation Start 27 of May, 2009
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Public
Private
Private
Sindicato Energético S.A. - SINERSA
Nº of Permission granted RM 071-2010-MEM/DM
Reference year 11 of March, 2011
Nominal Power MW 10
Effective Power MW 10
Generated Power (produced) GWh/year 40
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 75
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 10.5
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 59.5
Hydropower
CO 2 Emissions that have been avoided Million ton/year 22 770
Brief description
The station integrates Poechos I and II,
and has 2 turbines.
Sources of information
MEM
SEIN
69

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 26: “Carhuaquero IV” Hydroelectric Power Station
Parameter Units Information
Peru
Carhuaquero IV
Llama, Chota, Cajamarca
Water turbine
Date of Operation Start 27 of May, 2008
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Public
Private
Private
Nº of Permission granted 150-2001-EM
DUKE ENERGY EGENOR S.A.
Reference year 31 of September, 2001
Nominal Power MW 10
Effective Power MW 9.98
Generated Power (produced) GWh/year 42
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 76
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 6.4
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Hydropower
Sold energy price US$/MWh 70
CO 2 Emissions that have been avoided Million ton/year 24 609
Brief description
Sources of information
The station integrates the hydraulic
infrastructures of the H.P.S. Carhuaquero for its
operation like collecting, conduction and pique,
using the water resources of the the area.
MEM
SEIN
70

Perú- Products I and II
Chart N° 27: “Nuevo Imperial” Hydroelectric Power Station
Country
Station name
Location
Type of technology
Parameter Units Information
Peru
Nuevo Imperial
Lima
Water turbine
Date of Operation Start 01 of May, 2012
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Public
Private
Private
Hidro Cañete S.A.
Nº of Permission granted N° 249-2009-MEM/DM
Reference year 3 of June, 2009
Nominal Power MW 3.9
Effective Power MW ---
Generated Power (produced) GWh/year 25
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 81.34
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 6
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 55.99
Hydropower
CO 2 Emissions that have been avoided Million ton/year 15 285
Sources of information
MEM
SEIN
71

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 28: “Yanapampa” Hydroelectric Power Station
Parameter Units Information
Peru
Yanapampa
Yanapampa, Ocros, Ancash
Water turbine
Date of Operation Start 01 of December, 2012
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Public
Private
Private
Eléctrica Yanapampa S.A.C.
Nº of Permission granted 525-2008-MEM/DM
Reference year 15 of November of 2008
Nominal Power MW 4.5(*)
Effective Power MW ---
Generated Power (produced) GWh/year 64.77
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 77.43
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 14.8
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 56
Hydropower
CO 2 Emissions that have been avoided Million ton/year 26 366
Brief description
Hydroelectric Power Station in its First
Stage. It has 3 turbines type Francis of 1.5
MW.
Sources of information
MEM
SEIN
(*)The project consists in the implementation of a Run-of-the-river Hydroelectric Power Station of 9
MW in 2 stages, the second stage would be operative 2 years afeter the first one.
72

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 29: “Shima” Hydroelectric Power Station
Parameter Units Information
Peru
Shima
San Martín
Water turbine
Date of Operation Start 30 of September, 2012
Type os service (Public, Non Public)
Public
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Private
Modality
Private
Consorcio Energoret Ingenieros
Concessionary
Consultores E.I.R.L /Manufacturas
Industrias Mendoza S.A.
Nº of Permission granted ---
Reference year ---
Nominal Power MW 5
Effective Power
MW
Generated Power (produced) GWh/year 32.9
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 75
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 9.6
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 64
Hydropower
CO 2 Emissions that have been avoided Million ton/year 20 129
Sources of information
MEM
SEIN
73

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 30: “Huasahuasi I” Hydroelectric Power Station
Parameter Units Information
Peru
Huasahuasi I
Huasahuasi, Tarma , Junín
Water turbine
Date of Operation Start 01 of October, 2012
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Nº of Permission granted ---
Reference year ---
Nominal Power MW 7.8
Effective Power MW ---
Public
Private
Private
Generated Power (produced) GWh/year 42.5
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 70
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 30.8
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 58
Hidroeléctrica Santa Cruz S.A.C.
Hydropower
CO 2 Emissions that have been avoided Million ton/year 60 613
Brief description
The station integrates two rivers,
two water inlets and two turbines
type Francis of 4.0 MW.
Sources of information
MEM
SEIN
74

Perú- Products I and II
Chart N° 31: “Huasahuasi II” Hydroelectric Power Station
Country
Station name
Location
Type of technology
Parameter Units Information
Peru
Huasahuasi II
Huasahuasi, Tarma, Junín
Water turbine
Date of Operation Start 01 of April, 2012
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Public
Private
Private
Hidroeléctrica Santa Cruz S.A.C.
Nº of Permission granted N° 044-2011-MEM/DM
Reference year 27 of January, 2011
Nominal Power MW 8
Effective Power MW ---
Generated Power (produced) GWh/year 42.5
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 70.5
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ ---
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 57
Hydropower
CO 2 Emissions that have been avoided Million ton/year 60 000
Brief description
The station integrates a water inlet, two
turbines type Francis of 4 MW, and could
be divided in three parts well differentiated
by the proximity and separation among
them.
Sources of information
MEM
SEIN
75

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 32: “Las Pizarras” Hydroelectric Power Station
Parameter Units Information
Peru
Las Pizarras
Cajamarca
Water turbine
Date of Operation Start 31 of December, 2012
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Public
Private
Private
Empresa Eléctrica Río Doble S.A.
Nº of Permission granted 521-2009-MEM/DM
Reference year 17 of December, 2009
Nominal Power MW 18.8
Effective Power MW ---
Generated Power (produced) GWh/year 104
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 67
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 21
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 64
Hydropower
CO 2 Emissions that have been avoided Million ton/year 63 585
Sources of information
MEM
SEIN
76

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 33: “Chancay” Hydroelectric Power Station
Parámetro Unidades Información
Peru
Chancay
Lima
Water turbine
Date of Operation Start 31 of December, 2012
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Nº of Permission granted ---
Reference year ---
Nominal Power MW 19.2
Effective Power MW ---
Public
Private
Private
SINERSA
Generated Power (produced) GWh/year 108.1
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 85
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 153.5
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 58.5
Hydropower
CO 2 Emissions that have been avoided Million ton/year 284 143
Sources of information
MEM
SEIN
77

Perú- Products I and II
Chart N° 34: “Angel I” Hydroelectric Power Station
Country
Station name
Location
Type of technology
Parameter Units Information
Peru
Ángel I
Puno
Water turbine
Date of Operation Start 31 of December, 2012
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Nº of Permission granted ---
Reference year ---
Nominal Power MW 20
Effective Power
MW
Generated Power (produced) GWh/year 131
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 75
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 123
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Public
Private
Private
Sold energy price US$/MWh 59.97
Generadora de Energía del Perú S.A.
Hydropower
CO 2 Emissions that have been avoided Million ton/year 80 620
Sources of information
MEM
SEIN
78

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 35: “Angel II” Hydroelectric Power Station
Parameter Units Information
Peru
Ángel II
Puno
Water turbine
Date of Operation Start 31 of December, 2012
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Nº of Permission granted ---
Reference year ---
Nominal Power MW 20
Effective Power MW ---
Generated Power (produced) GWh/year 131
% of sold energy/delivered to the public service %
Capacity factor of the power plant % 75
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 123
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Public
Private
Private
Sold energy price US$/MWh 59.98
Generadora de Energía del Perú S.A.
Hydropower
CO 2 Emissions that have been avoided Million ton/year 242 674
Sources of information
MEM
SEIN
79

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 36: “Angel III” Hydroelectric Power Station
Parameter Units Information
Peru
Ángel III
Puno
Water turbine
Date of Operation Start 31 of December, 2012
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Nº of Permission granted ---
Reference year ---
Nominal Power MW 20
Effective Power
MW
Generated Power (produced) GWh/year 131
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 75
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 123
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Public
Private
Private
Sold energy price US$/MWh 59.99
Generadora de Energía del Perú S.A.
Hydropower
CO 2 Emissions that have been avoided Million ton/year 242 674
Sources of information
MEM
SEIN
1.5.1.2 Steam Turbine Generator with Bagasse and Internal Combustion
Engines Based on Biogas
Regarding projects with biomass, it should be standed out that in the country there
is experience in the use of this renewable resource, in the generation of electric
power through cogeneration technologies for self-consumption in agroindustrial
plants. On the following paragraphs there is shown information of the
“Paramonga I” Thermal Power Station, which uses bagasse. Also it is presented
information of the “Huaycoloro” Thermal Power Station, which uses biogas
generated in a landfill and will start its operation in July, 2011.
80

Perú- Products I and II
Chart N° 37: “Paramonga I” Thermal Power Station
Country
Station name
Location
Type of technology
Parameter Units Information
Peru
Paramonga I
Paramonga, Lima
Steam Turbine Generator
Date of Operation Start 31 of March, 2010
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Public
Private
Private
Nº of Permission granted N° 344 – 2009-EM
Reference year 2009
Nominal Power MW 23
Effective Power MW 20
Generated Power (produced) GWh/year 115
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 57
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 5.4
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 52
Agro Industrial Paramonga S.A. (AIPSA)
Cane bagasse
CO 2 Emissions that have been avoided Million ton/year 85 300
It has a steam turbine which generates energy
replacing Residual Oil with a new system base
Brief description
don sugar cane bagasse, changing the existant
cauldrons for new bagasse.
MEM
Sources of information
SEIN
81

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 38: “Huaycoloro” Thermal Power Station
Parameter Units Information
Peru
Huaycoloro
Lima
Steam Turbine Generator
Date of Operation Start 01 of July, 2011
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Nº of Permission granted ---
Reference year ---
Nominal Power MW 4.4
Effective Power MW ---
Public
Private
Private
Generated Power (produced) GWh/year 28.3
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 73
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 2
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 110
Petramas S.A.C.
Solid Wastes
CO 2 Emissions that have been avoided Million ton/year 298 996
Sources of information
MEM
SEIN
82

Perú- Products I and II
1.5.1.3 Wind Turbines
Below there is presented information about “Talara”, “Marcona” and
“Cupinisque” Wind Farms, which will start to operate in 2012.
Chart N° 39: “Talara” Wind Farm
Country
Station name
Location
Type of technology
Parameter Units Information
Peru
Talara
Piura
Wind turbines
Date of Operation Start 29 of June, 2012
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited Company/Public
Limited Company/Public//Private)
Modality
Concessionary
Nº of Permission granted ---
Reference year ---
Nominal Power MW 30
Effective Power MW ---
Public
Private
Private
Generated Power (produced) GWh/year 119.7
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 46
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 63
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 87
Energía Eólica S.A.
Wind power
CO 2 Emissions that have been avoided Million ton/year 80 620
Sources of information
MEM
SEIN
83

Perú- Products I and II
Chart N° 40: “Marcona” Wind Farm
Country
Station name
Location
Type of technology
Parameter Units Information
Peru
Marcona
Ica
Wind turbines
Date of Operation Start 01 of December, 2012
Type os service (Public, Non Public)
Public
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Private
Modality
Privatw
Concessionary
Consorcio Cobra S.A. / Perú
Energías Renovables
Nº of Permission granted ---
Reference year ---
Nominal Power MW 32
Effective Power MW ---
Generated Power (produced) GWh/year 148.4
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 59.93
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 60
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 65.52
Wind power
CO 2 Emissions that have been avoided Million ton/year 99 958
Sources of information
MEM
SEIN
84

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 41: “Cupisnique” Wind Farm
Parameter Units Information
Peru
Cupisnique
La Libertad
Wind turbines
Date of Operation Start 29 of June, 2012
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited
Company/Public//Private)
Modality
Concessionary
Nº of Permission granted ---
Reference year ---
Nominal Power MW 80
Effective Power MW ---
Publlic
Private
Private
Generated Power (produced) GWh/year 303
% of sold energy/delivered to the public
service
% 100
Capacity factor of the power plant % 43
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 150
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 85
Energía Eólica S.A.
Wind power
CO 2 Emissions that have been avoided Million ton/year 204 090
Sources of information
MEM
SEIN
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Perú- Products I and II
Country
Station name
Location
1.5.1.4 Solar Photovoltaic
Below there is presented information about “Panamericana Solar”, “Majes Solar”,
“Repartición Solar” and “Tacna Solar” Solar Power Stations, which will start to
operate in June, 2012.
Type of technology
Chart N° 42: “Panamericana Solar” Solar Power Station
Parameter Units Information
Peru
Panamericana Solar
Moquegua
Photovoltaic
Date of Operation Start 30 of June, 2012
Type os service (Public, Non Public)
Public
Legal Situation (Public Company/Limited
Company/Public Limited
Private
Company/Public//Private)
Modality
Private
Consorcio Panamericana Solar
Concessionary
20TS /Solarpack Corporación
Technology S.L.
Nº of Permission granted ---
Reference year ---
Nominal Power MW 20
Effective Power MW ---
Generated Power (produced) GWh/year 50.7
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 28.9
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 80
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 215
Solar energy
CO 2 Emissions that have been avoided Million ton/year 34 140
Sources of information
MEM
SEIN
86

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 43: “Majes Solar” Solar Power Station
Parameter Units Information
Peru
Majes Solar
Arequipa
Photovoltaic
Date of Operation Start 30 of June, 2012
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Nº of Permission granted ---
Reference year ---
Nominal Power MW 20
Effective Power MW ---
Public
Private
Private
Generated Power (produced) GWh/year 37.6
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 21.5
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 80
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 222.5
Grupo T- Solar Global S.A.
Solar Energy
CO 2 Emissions that have been avoided Million ton/year 25 350
Sources of information
MEM
SEIN
87

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 44: “Repartición Solar” Solar Power Station
Parameter Units Information
Peru
Repartición Solar
Arequipa
Photovoltaic
Date of Operation Start 30 of June, 2012
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited
Company/Public//Private)
Modality
Concessionary
Nº of Permission granted ---
Reference year ---
Nominal Power MW 20
Effective Power MW ---
Public
Private
Private
Generated Power (produced) GWh/year 37.4
% of sold energy/delivered to the public
service
% 100
Capacity factor of the power plant % 21.4
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 80
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 223
Grupo T- Solar Global S.A.
Solar Energy
CO 2 Emissions that have been avoided Million ton/year 25 222
Sources of information
MEM
SEIN
88

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 45: “Tacna Solar” Solar Power Station
Parameter Units Information
Peru
Tacna Solar
Moquegua
Photovoltaic
Date of Operation Start 30 of June, 2012
Type os service (Public, Non Public)
Public
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Private
Modality
Private
Consorcio Panamericana Solar
Concessionary
20TS /Solarpack Corporación
Technology S.L.
Nº of Permission granted ---
Reference year ---
Nominal Power MW 20
Effective Power
MW
Generated Power (produced) GWh/year 47.2
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 26.9
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ 80
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh 225
Solar Energy
CO 2 Emissions that have been avoided Million ton/year 31 795
Sources of information
MEM
SEIN
1.5.2 Information of the Most Relevant Facilities in the SEIN
Within the electricity generation market of the SEIN there are operating 23
companies, of which 5 are state-owned and the remaining 18 are private. In
addition, there operate 83 self-producers 9 . Electric power is transmitted by three
private corporations and it is distributed by 24 distribution companies.
9 Companies that inform to the MEM and develop productive or extractive activities (mining,
manufacturing, industrial, etc.).
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Perú- Products I and II
Regarding stations of supirior capacity to 20 MW, Peru has 45 stations with a
total installed capacity of 6 294 MW. This group consits of: 21 Hydroelectric
Power Stations and 24 Thermal Power Stations with a total capacity of 2 927 MW
and 3 367 MW, respectively. Of the thermal power stations mentioned previously,
9 operate with natural gas (2 443 MW), 1 with coal (142 MW), 1 with bagasse
(23 MW) and 13 with liquid fuels (759 MW) 10 . (MEM, 2009b).
The Chart Nº 46, shows the most representative power generation stations that
operate in the SEIN.
Chart N° 46: Most Representative Power Generation Stations Based on Renewable and Non
Renewable Sources in the Country
Project Technology Departament Company
Installed
Power
(MW)
Starting
Commercial
Operation
Hydroelectric Power Station
Mantaro Hydroelectric Huancavelica ELECTROPERU 798 1979
Restitución Hydroelectric Huancavelica ELECTROPERU 210 1985
El Platanal Hydroelectric Lima CELEPSA 220 2010
Thermal power station with natural
gas
Ventanilla Thermal Lima EDEGEL S.A. 492 2006
Kallpa Thermal Lima
KALLPA
GENERACIÓN 629 2010 11
S.A.
Chilca 1 Thermal Lima ENERSUR S.A. 556 2009 12
Aguaytia Thermal Ucayali TERMOSELVA 171.16 2001
Oquendo Thermal Lima
SDF ENERGIA
S.A.C.
31 2009
Coal-fire power station
Ilo2 Thermal Moquegua ENERSUR S.A. 142 2000
1.5.2.1 Water turbines
From now on, it is shown the information corresponding to the Hydroelectric
Power Stations “Santiago Antúnez de Mayolo”, “Restitución” and “El Platanal”.
These are Hydroelectric Power Stations that operate on basis. The Hydroelectric
10 Information up to 2009.
11 The third turbine started its operation with simple cycle. Nowadays, it has been developed the
convertion project of the station into a combined cycle power station, thus expects to increase its total
capacity on about 850.70 MW and enter into commercial transaction with this new technology before the
second quarter of 2012.
12 The third turbine started its operation with simple cycle. Nowadays, it has been developed the
convertion project of the station into a combined cycle power station, thus expects to increase its total
capacity on about 800 MW and enter into commercial transaction with this new technology before the
second quarter of 2013.
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Perú- Products I and II
Country
Station name
Location
Type of technology
Power Station “Santiago Antúnez de Mayolo” has the highest installed capacity
of the SEIN.
Chart N° 47: “Santiago Antunez de Mayolo” Hydroelectric Power Station
Parameter Units Information
Peru
Date of Operation Start 1979
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Santiago Antúnez de Mayolo
Huancavelica, Junín and Pasco
Hydroelectric
Public
Private
Private
ELECTROPERÚ S.A.
Nº of Permission granted 035-2009-EM
Reference year 27 of June, 2009
Nominal Power MW 798
Effective Power MW 670.7
Generated Power (produced) GWh/year 5356.55
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 91.18
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ ---
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh ---
Hydropower
CO 2 Emissions that have been avoided Million ton/year ---
Brief description
It integrates 7 turbines type Pelton
of vertical axis. Has the highest
installed capacity of the country
with 22 single-phase transformers.
Sources of information
MEM
SEIN
91

Perú- Products I and II
Graphic N° 35: Powerhouse of “Santiago Antunez de Mayolo” H.P.S.
Source: Web site of ELECTROPERU (ELECTROPERU, 2011).
92

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 48: “Restitucion” Hydroelectric Power Station
Parameter Units Information
Peru
Date of Operation Start 1985
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited
Company/Public//Private)
Modality
Concessionary
Nº of Permission granted ---
Reference year ---
Nominal Power MW 210
Restitución
Huancavelica, Junín and Pasco
Hydroelectric
Public
Private
Private
Effective Power MW 215.37
Generated Power (produced) GWh/year ---
% of sold energy/delivered to the public
service
% 100
Capacity factor of the power plant % ---
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ ---
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh ---
ELECTROPERÚ S.A.
Hydropower
CO 2 Emissions that have been avoided Million ton/year ---
Brief description
The station integrates 3 turbines
type Pelton of vertical axis and 6
injectors.
Sources of information
MEM
SEIN
93

Perú- Products I and II
Graphic N° 36: Powerhouse of “Restitucion” H.P.S.
Source: Web site of ELECTROPERU (ELECTROPERU, 2011).
94

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 49: “El Platanal” Hydroelectric Power Station
Parameter Units Information
Peru
El Platanal
Zúñiga, Cañete, Lima
Hydroelectric
Date of Operation Start 24 of April, 2010
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Public
Private
Private
CELEP S.A.
Nº of Permission granted 032-2007-EM
Reference year 25 of July, 2007
Nominal Power MW 220
Effective Power MW 217.38
Generated Power (produced) GWh/year 1063
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % ---
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ ---
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh ---
Hydropower
CO 2 Emissions that have been avoided Million ton/year 501 814.35
The station has 2 turbines pelton of
Brief description
vertical axis with generators and
axuxiliary equipment.
Sources of information
MEM
SEIN
95

Perú- Products I and II
Graphic N° 37: Sand Trap of “El Platanal” H.P.S.
Source: Web site of CELEPSA (CELEPSA, 2011).
1.5.2.2 Open Circuit Gas Turbine and Combined Cycle Gas Turbine with
Natural Gas
The most representative thermal power stations that operate in the SEIN are: The
thermal power station “Ventanilla” located in Lima (being the first natural gas
combined cycle power station that operates with the Camisea gas), the thermal
power station “Kallpa” and the thermal power station “Chilca I”. The last two
ones are located south of Lima and they use natural gas of Camisea. Both stations
are in process of becoming combined cycle power stations, and are expected to
start their operation in 2012 and 2013, respectively. Also we are considering the
thermal power station “Aguaytia”, located in the Ucayali Department and the
thermal powert station “Oquendo”, located south of Lima.
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Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 50: “Ventanilla” Thermal Power Station
Parameter Units Information
Peru
Ventanilla
Ventanilla, Callao, Lima
Thermal
Date of Operation Start 2006
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Public
Private
Private
EDEGEL S.A.
Nº of Permission granted RM N° 298-2007-MEM/DM
Reference year 22 of June, 2007
Nominal Power MW 492
Effective Power MW 492.75
Generated Power (produced) GWh/year 3 214.06
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 74.46
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ ---
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh n/d
Natural Gas
CO 2 Emissions that have been avoided Million ton/year 375 051.11
The station integrates 2 gas
turbines and 1 steam turbine. It is
Brief description
the first Combined cycle plant in
Peru.
MEM
Sources of information
SEIN
97

Perú- Products I and II
Graphic N° 38: “Ventanilla” Thermal Power Station
Source: Web Site of EDEGEL (EDEGEL, 2011).
98

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 51: “Kallpa” Thermal Power Station
Parameter Units Information
Peru
Kallpa
Chilca, Cañete, Lima
Thermal
Date of Operation Start 2010*
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Public
Private
Private
KALLPA GENERACIÓN S.A
Nº of Permission granted N° 125-2006-MEM/DM
Reference year 2006
Nominal Power MW 629
Effective Power MW 565.77
Generated Power (produced) GWh/year 1321.08
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 42
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ ---
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh n/d
Natural Gas
CO 2 Emissions that have been avoided Million ton/year 600 000
Brief description
Thermal power station of natural
gas. It has 3 turbines, the third one
started to operate in 2010.
Sources of information
MEM
SEIN
(*) The third turbine started its operation with simple cycle. Nowadays, it has been developed the convertion
project of the station into a combined cycle power station, starting on 2012.
99

Perú- Products I and II
Graphic N° 39: “Kallpa” Thermal Power Station
Source: Web site of Kallpa (KALLPA, 2011).
100

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 52: “Chilca I” Thermal Power Station
Parameter Units Information
(*) The third turbine started its operation with simple cycle. Nowadays, it has been developed the
convertion project of the station into a combined cycle power station, starting on 2013.
Peru
Chilca I
Chilca, Cañete, Lima
Thermal
Date of Operation Start December, 2006
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Public
Private
Private
ENERSUR
Nº of Permission granted N° 179-2010-MEM/DM
Reference year 2010
Nominal Power MW 556
Effective Power MW 535.9
Generated Power (produced) GWh/year ---
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 42
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ ---
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh n/d
CO 2 Emissions that have been avoided Million ton/year ---
Brief description
Sources of information
Natural Gas
Thermal Power Station with natural
gas. It has 3 turbines, the third one
started its operation in 2009.
MEM
SEIN
101

Perú- Products I and II
Graphic N° 40: “Chilca I” Thermal Power Station
Source: Web site of ENERSUR (ENERSUR, 2011)
102

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 53: “Aguaytia” Thermal Power Station
Parameter Units Information
Peru
Aguaytia
Ucayali
Thermal
Date of Operation Start December, 2001
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited
Company/Public//Private)
Modality
Concessionary
Public
Private
Private
TERMOSELVA
Nº of Permission granted No. 187-2001-EM/VME
Reference year ---
Nominal Power MW 172.59
Effective Power MW 156.62
Generated Power (produced) GWh/year ---
% of sold energy/delivered to the public
service
% 100
Capacity factor of the power plant % ---
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ ---
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh n/d
CO 2 Emissions that have been avoided Million ton/year ---
Natural Gas
Brief description
Has 2 turbines of natural gas
Sources of information
MEM
SEIN
103

Perú- Products I and II
Graphic N° 41: “Aguaytia” Thermal Power Station
Source: Web Site of AGUAYTIA (AGUAYTIA, 2011)
104

Perú- Products I and II
Country
Station name
Location
Type of technology
Chart N° 54: “Oquendo” Thermal Power Station
Parameter Units Information
Peru
Oquendo
Lima
Thermal
Date of Operation Start 2009
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited
Company/Public//Private)
Modality
Concessionary
Public
Private
Private
SDF ENERGÍA S.A.C.
Nº of Permission granted N° 005-2009-EM/DGE
Reference year 2009
Nominal Power MW 31
Effective Power MW 29.38
Generated Power (produced) GWh/year 203.6
% of sold energy/delivered to the public
service
% 100
Capacity factor of the power plant % 79.1
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ ---
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh n/d
Natural Gas
CO 2 Emissions that have been avoided Million ton/year ---
Has 1 turbine with natural gas
Brief description
(cogeneration). It’s the first cogeneration
plant that operates with natural gas.
MEM
Sources of information
SEIN
105

Perú- Products I and II
Country
1.5.2.3 Coal-fired
In the country, since 2000, it is operating the thermal power station “Ilo 2”, which
is the first installed generation station that uses imported coal.
Chart N° 55: “Ilo II” Thermal Power Station
Parameter Units Information
Peru
Station name Ilo 2
Location
Type of technology
Moquegua
Thermal
Date of Operation Start 2000
Type os service (Public, Non Public)
Legal Situation (Public Company/Limited
Company/Public Limited Company/Public//Private)
Modality
Concessionary
Nº of Permission granted ---
Reference year ---
Nominal Power MW 142
Public
Private
Private
Effective Power MW 141.87
ENERSUR S.A.
Generated Power (produced) GWh/year 1 066.92
% of sold energy/delivered to the public service % 100
Capacity factor of the power plant % 85.85
Efficiency % ---
Source of energy used
Power consumption in the reference year PJ ---
Investment Million US$ ---
Operation costs and fixed maintenance Million US$ n/d
Operation costs and variable maintenance Million US$ n/d
Operation and maintenance cost Million US$ n/d
Sold energy price US$/MWh n/d
CO 2 Emissions that have been avoided Million ton/year ---
Brief description
It integrates a steam turbine and
boiler Is the only plant that
operates with coal in the SEIN.
Sources of information
MEM
SEIN
Coal
106

Perú- Products I and II
Graphic N° 42: “Ilo II” Thermal Power Station
Source: Web site of ENERSUR (ENERSUR, 2011).
1.6 Learned Lessons
In 1992 came into effect the “Electric Concessions Law”, L.D. Nº 28544, which
modernized the Peruvian electricity market. Then this frame was modified by the
“Law to Ensure the Efficient Development of Electric Power Generation”, Law
Nº 28832, enacted in 2006. Later in 2008, it was approved the L.D. Nº 1002,
“Law to Promote Investment in Electricity Generation with Renewable Energies”.
Therefore, it has passed over two decades to achieve a regulatory framework on
renewable energies in the country.
Even though the country has an important potential of renewable energy
resources, it only has experience in the application of hydroelectric technologies
and in the use of thermoelectric technologies to generate electricity with sugar
cane bagasse. In addition, before the entrance in force of the current legal
framework of renewable energies in May 2008, one of the barriers that have
stopped the development of renewable energies was the application of tariffs that
did not make viable the projects of electric generation with RER. Furthermore, a
disadvantage for renewable energies is that these require the acceptance of higher
tariffs to make them economically viable, which causes an impact in electricity
tariffs for end users.
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Perú- Products I and II
In order to surpass these barriers it has been established a legal framework for
renewable energies which provides economic incentives for the development of
projects based on these technologies, like the awarding trough public auctions of
energy supply contracts for 20 years with firm price equal to bids, as well as tax
incentives like the early return from the general tax to sales (IGV), accelerated
depreciation of assets for the payment of the income tax, and zero tariff on
imports of capital goods.
The auction mechanism established in that legal framework has proven to be an
efficacious instrument to promote the investment in electricity generation based
on RER, and at the same time, enables obtaining efficient results based on the
competition of RER investors. An example of it is that up to this date, there have
been awarded 1 971.5 GWh / year, of which 1 084.3 GWh (55 %) correspond to
Small Hydroelectric Power Stations, 571 GWh (29 %) to Wind Farms, 172,9
GWh (8,8 %) to Solar Photovoltaic Power Stations and 143,3 GWh (7,3 %) to
main stations that use biomass (OSINERGMIN, 2011). It is true that the injection
of that energy (generated with RER) to the SEIN will have an impact increasing
the generation price in 2,6 % and in 1,3 % at the level of end users in the period
2011 – 2013 13 (See Chart Nº 18 of the numeral 1,4,5.); however, this impact will
be compensated with the positive effect to have a greater supply in the SEIN, the
GHG emissions will decrease and it will be improved the technical capacity for
the management of this technologies in the country. In the near future it is
expected that prices for electricity generation with renewable energies will be
reduced due to the decrease on investment costs of such technologies.
Geothermal energy is a RER that has not been taken advantage for electricity
generation. This type of technology has not taken part in the auction because the
identified projects can not yet compete with the other technologies due to the lack
of basic studies. Furthermore, there have not been executed drillings that increase
the knowledge of geothermic reservoirs characteristics that enable determining
the feasibility of this kind of projects and reducing the risks of their
implementation. In order to surpass this situation, the MEM during the first
semester of 2011 has granted 13 authorizations for the realization of explorations
and studies of that resource with the intention of electricity generation in fields
located in the departments of: Arequipa, Ancash, Ayacucho, Moquegua, Puno and
Tacna (MEM, 2011e). It should be standed out that geothermal energy allows
guaranteeing greater continuity in the electricity generation (high in-house factor)
and this option can play an important role among renewable energies in the SEIN.
In the country there are required bigger efforts to reduce CO 2 emissions, which
have risen steadily in recent years due to the increment of the consumption of
liquid hydrocarbons by the industrial sector (23 % of total emissions) and in
greater scale of the transportation (59 % of total emissions), that she is plaintiff of
diesel and gasolines. This situation should change in the future with the use of
compressed natural gas and the electrification of public transportation. In the
other hand, CO 2 emissions from the generation of electric power have increased
13 Source: General Directorate of Electricity, MEM.
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Perú- Products I and II
due to the greater use of natural gas of Camisea. It is expected that this tendency
changes in the future this with the bigger development of renewable energies.
Finally, it can be said that in the country there is a bigger consent on the
importance of the use of renewable energies due to their advantages as they allow
diversifying the electricity generation supply with local resources, they reduce the
reliance on natural gas and the consumption of other hydrocarbons which
resources are finite. Furthermore, they will contribute to the energy security while
reducing the negative impact of electricity generation in the environment.
1.7 Conclusions
• The Energy Policy approved by the government through the S.D. 064-
2010-EM, point guidelines to promote investments in projects with
conventional and unconventional renewable energies, in order to cover
the demand and contribute to guarantee the energy security and the
sustainable development of the country.
• The current regulatory framework established by the Legislative Decree
Nº 1002 has proven to be effective, as nowadays there are implementing
a set of projects of generation with renewable technologies which will
allow diversifying their energy matrix. One of the key factors of this
advance is the bonus given to RER generators to recover their
investments, which is contributed by the electricity market.
• The country has an important potential of renewable resources that
requires to be evaluated permanently for its better and bigger use.
• The evolution of the energy consumption structure of the country
confirms the preponderance of fossil sources and points out the
increasing participation of the natural gas of Camisea as an energy
source since 2004, so it can be said that the energy matrix has a previous
and an after Camisea.
• Even though, the presence of natural gas in the energy matrix is
contributing to the substitution of oil by-products and to the reduction of
imports improving the trade balance of the country while maintaining
low electricity tariffs for its price in the electricity sector, it is a strong
competitor for renewable energies because the costs of generation with
these technologies are still greater than the generation costs with natural
gas.
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Perú- Products I and II
2. STATE OF ART
2.1 Introduction
In Peru, the use of the renewable energy sources started on the 70's, being
encouraged for the oil crisis. At first, the development of projects was in charge
of institutions of training and technological development, like universities. The
first developed applications correspond to water pumping windmills, solar water
heaters and solar driers of agricultural products.
In 1993 the electrification coefficient in Peru was the lowest in South America:
56,8 % at a national scale and 7,7 % in rural areas, being nowadays 86 % at a
national scale and 65 % in rural areas. (MEM, 2011j). The acces to electric power
of the communities located in rural areas is very complicated due to the varied
geography and the low population density.
The Ministry of Energy and Mines of Peru, due to the necessity of electrification
coverage, unroll different programs to provide rural population of electric power.
For its achievement, it executes the implementation of isolated generation
systems, principally with small Hydroelectric Power Stations and Solar
Photovoltaic Plants, as the country has little waterfalls and elevated levels of solar
radiation that makes these systems the cheapest. Electrification projects
developed by the government through the Ministry of Energy and Mines mainly
reflect a social commitment and the individual capacity of these projects has not
yet exceeded a megawatt.
At present, it can be seen that the most important projects developed with
renewable sources are in private hands, encouraged, as it was detailed in chapter
1, by the legal framework that regulates and promotes investment in that kind of
projects. In this section there will be described 2 projects, which have been
selected based on the degree of “success” achieved in the inside market, being
their main characteristic the sustainability.
The first project analyzed in this study is the Hydroelectric Power Station “Santa
Cruz II”, which uses water from the “Rio Blanco” river to generate electricity.
The second project turns out to be the Cogeneration Station “Paramonga I”. This
station uses residual biomass as fuel, resulting from the the use of sugar cane, in
order to generate thermal and electric energy for the processes of its area of
influence and to inject in the SEIN the electricity surplus.
Just like other renewable sources, the projects in mention contribute to the
sustainable development of the involved populations and help the country to
improve the trade balance of hydrocarbons, displacing the electric power
generation of thermic plants that use fossil fuels and contributing to the reduction
of the importing of oil for electricity generation.
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2.2 Methodology
2.2.1 Sources of Information
Primary Sources. Interviews to persons in charge of the development of
renewable energy projects, in order to identify the barriers they have to face
during their implementation like normative, social, technological or financial
barriers. For these interviews it was used the methodology of polls for which it
was designed a format remitted previously and filling together with them during
the interviews. In Chart Nº 56 it is shown the list of interviewees who are the
holders of the projects involved.
Chart N° 56: Summary of Interviews to Entrepreneurs
Interviewee Company Project Position
Fernando
Urquiza
Hidroeléctrica
Santa Cruz S.A.
H.P.S. Santa Cruz II General Manager
Efraín Salas
Valverde
Agroindustrial Paramonga
(AIPSA)
H.P.S. Paramonga I
Project Manager
Javier Lei
Suicho
Generadora de Energía del Perú
(GEPSA)
H.P.S. La Joya.
Gneral Manager
Juan Coronado
Lara
Energía
Eólica S.A.
H.P.S. Talara
General Manager
Source: CENERGIA
The questions asked are listed below:
• Which were the objectives to achieve
• What was the main reason to implement the project
• Which were the barriers to face to in the development of the project and
how could they be overcome
• Which positive aspects of the normative-regulatory frame were determining
for the decision to develop the project
• Which investment percentage was financed and what was its financing
source, interest rate and period
• Would the project could be qualified as successful and why
• What do you think it is necessary to reply the project somewhere else
• Which one or which ones do you consider were the strategic aspects for the
development of the project
• How do you think that the project is benefiting the community of its
influence area
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• Does the project injects energy to the SEIN only or it also counts on supply
contracts with private customers
• What do you think the Government and its stratums should do to promote
projects like the one that was executed
In addition, there were conducted interviews with authorities related to the
regulatory framework of renewable energies, both in the electricity market
immersed in the interconnected system, likie the one developed in rural areas. The
Chart Nº 57 shows the list of interviewees.
Chart N° 57: Summary of Interviews to Represntants of the Ministry of Energy and Mines
Interviewee Position Body
Ismael Aragón
Castro
General Director of Electricity General Directorate of Electricity - MEM
Luis Torres
Casabona
Project Director of
FONER*
General Directorate of Rural
Electrification - MEM
(*) Project: Improvement of Rural Electrification trough the Appplication of Competitive Funds.
a) Secondary Sources. Secondly, it was compiled relevant information
concerning the projects of various documents. Such information includes
technical data, energy production, emission reduction and social impact. The
documents consulted are listed below:
• Technical sheet of the Hydroelectric Power Station “Santa Cruz II”.
• Authorization Request File for the generation of the H.P.S. “Paramonga I”,
found in the General Directorate of Electricity of the Ministry of Energy and
Mines.
• Authorization Request File for the generation of the H.P.S. “Santa Cruz II”,
found in the General Directorate of Electricity of the Ministry of Energy and
Mines.
• Project Design Document Form (PDD), of the H.P.S. “Santa Cruz II”.
• Simplified Project Design Document (SPDD), of the project implementation
of boiler with bagasse in the company “Agroindustrial Paramonga”.
• Coal Opportunities in Peru - Project Portfolio 2010 (FONAM, 2010).
• Coal Opportunities in Peru - Good Business Sustainable Development with
2010 (FONAM, 2010).
• Information from the First Renewable Energy Auction contained in the web
site of OSINERGMIN (OSINERGMIN, 2011a).
• Ministry of Environment (MINAM), 2011j. Cauldron Bagasse CDM project
“Paramonga” (13.6 MW) – Technical Sheet. [On line] Available at:
http://cambioclimatico.minam.gob.pe/proyecto-del-caldero-bagacero-mdlde-paramonga-13-6-mw/
[Accessed 23 June 2011].
• Informative web sites indicated in the references.
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2.2.2 Selection Criterias
The selection of the study cases was executed based on the following criteria:
a) Project in operation. The projects taken into consideration must be in
operation and meet at least a year of commercial transaction.
b) Economical sustainability. In order to guarantee the operation during its
technical periods of life, projects should cover up their operating and
maintenance costs, generating additional profitability for developers.
c) Acceptance and Social Benefit. Projects must possess a high degree of
social acceptance from local stakeholders; generating benefits for the
community that can be translated in concrete.
d) Environmental sustainability. The environmental impact of the projects
will have to be minimal, having as their main characteristic the saving of
CO 2 equivalent emissions, by means of the direct displacement of fossil
fuels or of the electricity generation with these sources.
e) Project’s Replicability. The main characteristic to qualify a project as
successful, from the point of view of this study, should be that in addition to
fulfill the previous criteria, the project could also be executed in other places
with similar characteristics.
Graphic N° 43: Selection Criteria of Study Cases
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Of the projects awarded in the First Auction which fulfill the selection criterias
mentioned before, there have been chosen the following for the analysis of cases:
‐ The Hydroelectric Power Station “Santa Cruz II”.
‐ The Cogeneration Plant “Paramonga I”.
The following is a description of these projects.
2.3 H.P.S. “Santa Cruz II”
2.3.1 General Description of the Project
The Hydroelectric Power Station “Santa Cruz II” is located northwest of Lima, 2
104,5 meters above sea level, in the basin of the river “Blanco” (Santa Cruz), in
the district of Santa Cruz, Huaylas's province, Ancash's department. It is a Runof-the-river
Hydroelectric Power Station with 6 MW of installed capacity which
takes advantage of the “Blanco” river waters. It entered into commercial
transaction in June of 2010 with an estimated generation of 33 GWh/year. The
generated energy is placed in the short-term market and liquidated at Awarded
Tariff for being a RER generator. The price of the energy that was bid by this
station in the First Auction of Renewable Energies was of 55 US$/MWh.
(OSINERGMIN, 2011a)
Graphic N° 44: Geographic Location of the Project
Source: CENERGIA
2.3.2 Objectives of the Project
The Hydroelectric Company “Santa Cruz”, is a company especially created for
the construction and starting of the Hydroelectric Power Station “Santa Cruz I”,
which has 5,9 MW of installed capacity and got into operation in May of 2009.
During its construction and starting, it was noticed the existence of an additional
hydroelectric potential untapped. From the confirmation and evaluation of the
resource, it was determined that the additional potential could be used to generate
other 6 MW. In consequence, the developers of the project put forward the
implementation of another Hydroelectric Power Station: “Santa Cruz II”. This
will consolidate the two main objectives of the project, namely:
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‐ Build a main station that makes good use of the existing hydraulic potential in
the zone which was determined while it was been executed the buildind of
“Santa Cruz I”.
‐ Applying for the CDM to improve the profitability of the project.
2.3.3 Analysis of Stakeholders
Promoters of the Project
The Hydroelectric company “Santa Cruz S.A.C”, is a Peruvian-owned company
created for the development of the hydrological potential existing in the “Blanco”
River. It is empowered to perform the operations of generation, transmission and
distribution of electricity.
“GCZ Ingenieros S.A.C,” is major shareholder of “Hidroeléctrica Santa Cruz
S.A.C” and is in charge of the development, construction, operation and
maintenance of all its main stations.
The existing potential in the zone, has led the company to project the installation
of other stations (6 in total), which are expected to have a potential of 40,6 MW
of generation. These projects are intended to be executed in stages while
obtaining the necessary financing.
Beneficiaries
The lot of land where the project is located belongs to the Colcas's community
(Santa Cruz District, Huaylas Province, Ancash Region), who never has used this
land for its great height and difficult access. The project benefits directly the
population of this community, which concentrates on a small town of the same
name, with approximately 350 inhabitants and which is situated 2,5 km from the
project. Around this, there are located several rural villages and family homes.
The community has received the installation of the generation station with great
acceptance because it does not represent great impacts in the currently use of
water and because there is an antecedent in the Station “Santa Cruz I”.
In the area of influence of the project, there are developed agriculture and cattle
raising activities, putting on the front the potato, corn, alverjitas, quinoa and
kiwicha plantations. Agriculture has limited productivity and it is characterized by
low technological level in the cultivation’s management at plots level and the
poor agricultural planning, predominating the use of the gravity irrigation. The
income of the zone is very low and there is scarcity of drinking water in some
areas.
Financiers
The design and construction of the Hydroelectric Power Station and of the
substations of medium and high voltage was in charge of “GCZ Ingenieros SAC”
who are also associates of “Hidroeléctrica Santa Cruz SAC” and contributed with
great part of the capital and the engineering required for the execution of the
project.
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In addition, in the financing of the project participated INTERBANK, finance
entity belonging to the local banking system, which financed the project through
the Leasing mechanism. It is important to stand out the currently INTERBAK has
a line of financing with SECO (State Secretariat of Economic Affairs of Swiss
Confederation) directed to Peruvian companies that want to invest in
environmental technologies. The objective of this financing method is the
improvement of the environment.
Additionally, the H.P.S. “Santa Cruz” qualified as a CDM project, having as
counterpart in the purchase of certificates of emissions reduction the company
“Endesa Carbono S.L.” which contributions helped to improve the cash flow of
the project and to give it sustainability.
2.3.4 Legal Aspects
The H.P.S. “Santa Cruz II” is a project of hydrological use that starts its
construction in January of 2009 and enters into commercial transaction in June of
2010. During the development of the project, the frame that regulated the market
of the generation of electric power was governed basically by the principles
contained in the Electric Concessions Law (1992), its regulations (1993) and the
Law to Ensure the Efficient Development of Electric Power Generation (2006).
Later the project would be benefited by the Law to Promote Investment in
Electricity Generation with Renewable Energies L.D. Nº 1002 and its Regulations
(2011).
The Electric Concessions Law established that from a superior power of 0,5 MW,
projects require authorization to develop activities of electricity generation. Then,
with the enactment of the L.D. Nº 1002 and its Regulations, it was established
that hydroelectric projects up to 20 MW require concession to receive a right that
facilitates the obtaining of servitudes that belong to third parties. By having an
installed capacity of 6 MW, the hydroelectric company “Santa Cruz S.A.C.” fell
within the requirements of this standard.
The Hydroelectric Company “Santa Cruz S.A.C.” requested definite concession
of electricity generation with renewable energy resources through a document
presented on September 10 of 2008. For the obtaining of that concession, the
company requested the Ministry of Energy and Mines composed by the following
documents:
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Chart N° 58: Necessary documents to request generation authorization
N° Requirement
Application according to format, detailing the RUC number, addressed to the General Directorate of
1
Electricity, signed by the legal representative.
2 Payment of TUPA (40% of UIT)
Document (Public Act with a seal on which figures registration, sheet or electronic certificate) proving
3
registration in the Public Records of Incorporation of the company
Document (Sheet or electronic certificate) proving registration in the Public Records of the company's
4
legal representative
The following maps and diagrams:
• Delimitation of the concession area in UTM coordinates (DATUM PSAD 56) with signature and
5 seal of the responsible professional.
• Poligonal Map with vertex in UTM coordinates (PSAD 56).
• Single-line diagram with signature and seal of the professional.
Affidavit of compliance with technical standards of environmental and cultural heritage of the Nation
6 conservation (Applicable only for final concessions for Renewable Energy generation whose installed
capacity is less than or equal to 20 MW).
Statement with project’s studies with signature and seal of the legal representative (at least at a
7
feasibility level).
Schedule of work’s execution, indicating the beginning and putting into comercial transection (in case of
8
new works) with signature and seal of the legal representative.
9 Project Budget, with signature and seal of the legal representative.
10
Technical information for statistical purposes: installed capacity of the station, number of generation
units, type of each generation unit, model, design flow, specific fuel consumption, fuel type. In the case
of electricity generation stations that are in use or repowering there will also be presented the historical
records of operation and relevant information that supports an adequate operating performance
(Applicable only for final concessions for Renewable Energy generation whose installed capacity is less
than or equal to 20 MW).
11 Current Skill Certificate of the engineer in charge of maps.
Verifiable support of investor’s commitments for the supply of capital in the execution of works in case
12
of generation concession.
Favorable report issued by a qualified Risk Rating Entity with respect to the financial solvency of the
13 petitioner or potential investor (Recognized by the Superintendency of Banking and Insurance, AFP or
CONASEV).
Guarantee of loyal fulfillment for execution of works, equivalent to 1% of the project budget with a
19 ceiling of 500 UITs in benefit of the Ministry of Energy and Mines, valid until the start of commercial
transaction of the project.
Source: MEM –TUPA.
For the request of final concession, in addition to the payment of 50 % of the
TUPA 14 and, it is demanded the presentation of the following documents:
‐ Specification of the required servants.
‐ Authorization of the use of owned natural resources of the State, emitted by
the competent authority of water that approves the hydrological study at final
level.
14 Tax Unit
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‐ Approval certificate emitted by the COES, supported with a Study of Pre-
Operativeness (which must be introduced before the expedition of the
Supreme Resolution of granting of the final concession).
The final concession was granted to the Hydroelectric “Santa Cruz S.A.C.”
through Ministerial Resolution 092-2009-MEM/DM of February 18, 2009.
On the other hand, the Water Resources Act (Law Nº 29338), aims to regulate the
use and integrated water management, the performance of the state and
individuals in such management, as well as in the goods associated with this. In
this context, the National Authority of Water (ANA) is the governing body and
the highest technical standards authority of the National Water Resources
Management and is responsible for conducting the necessary actions for
multisectoral and sustainable use of water resources by watersheds.
The National Authority of Water, was created in March 13 of 2008 by Legislative
Decree Nº 997 - Law on Organization and Functions of the Ministry of
Agriculture. It is a Technical Specialized Organism (S.D. N 034-2008 PCM),
attached to the Ministry of Agriculture, becoming budgetary sheet with legal
personality of public law.
After the corresponding negotiations, the Directorial Resolution D.R. Nº 0302-
2010-ANA-DARH of the National Authority of Water (ANA) grants the
Hydroelectric Company “Santa Cruz” licensing of water use for energy purposes.
2.3.5 Technological Aspects
Technical and of Interconnection Features
The project consists of a water inlet with an average water flow of 6,5 m 3 /s to a
maximum of 8 m 3 /s. The river water is perceived at 2 226 m.a.s.l. through a
driving canal of 1 598.42 m long with a slope of 1.5/1000, before being
discharged at 2 223.79 m.a.s.l. through a pressure pipe of 397 meters that lead
water into the powerhouse with nominal net height of 113 m. After being
turbined, the water is returned to the river through a channel of 43.2 m, at an
altitude of 2104.5 m.a.s.l. (MEM, 2011f).
The powerhouse consists of 02 Francis turbines of 3.17 MW nominal capacity
each one, coupled to its respective generator of 3 750 kVA. The station is
connected to the SEIN by the “Santa Cruz” substation at a voltage of 66 kV,
which is interconnected to the distribution line “Huallanca – Caraz” that belongs
to the company “Hidrandina”.
As for water turbines, they were given by a local supplier (GCZ Ingenieros), who
has over 20 years of experience in developing this equipment. In regard to
electromechanical equipment, they were purchased from recognized suppliers in
the international market, which was a condition for granting the funding.
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Availability of the Resource
According to the technical report Nº 252-2010-ANA-DARH/ORDA/JAH-ACF, it
was granted the license to use water from the “Blanco” river to the Hydroelectric
Power Station “Santa Cruz II” for a yearly volume of 110,94 MMC, distributed in
the following way:
Chart N° 59: Availability of the water resource for the “Santa Cruz II” Hydroelectric Power
Station
Water
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Availability
Q (m³/s) 5.43 6.83 5.74 4.69 2.81 2.31 1.81 1.75 1.77 2.22 2.95 4.15
Total
V (MMC) 14.54 16.52 15.37 12.16 7.53 5.99 4.85 4.54 4.74 5.95 7.65 11.62 110.94
2.3.6 Economic Aspects
Financing
The investment in the project increased to 10,2 million dollars approximately.
The project was implemented through “Leasing”, with a participation of equity
capital that amounted to 30 % of the investment, in a period of 10 years and a
discount rate less than 10 %. All this was done through the INTERBANK, entity
belonging to the local banking system (HSCSAC, 2011).
Economical Sustainability
The RER regulation framework gives a number of benefits to renewable energy
projects (MEM, 2008). The most important are detailed below:
‐ The priority for the daily load dispatch made by the COES.
‐ An energy supply contract for 20 years, guaranteed price equal to its supply
(Awarding Tariff).
‐ The injected energy “above” the awarded energy (committed through a
contract with the state) is valued at Marginal Cost of the system, which
represents an extra revenue for the awardee RER generator (income for
energy surplus).
These mechanisms reduce the uncertainties in front of the volatile costs that exist
in the interconnected system, guaranteeing for a period of 20 years a minimal
income that after being evaluated by the company makes attractive the investment
in renewable projects. It could be said that if tehere has been executed an
exhaustive study of the resource, the cash flow of the project is guaranteed too.
Moreover, in order to improve its cash flow and ensure the profitability of the
project, the “Hidroeléctrica Santa Cruz S.A.C.” proceeded to accomplish the
necessary steps to apply for the CDM. This objective was achieved having as
purchaser of emitted CER’s the company “Endesa Carbono Limited Company”.
This company is in the whole valuable chain of the CO 2 market, identifying and
investing in CDM projects of other promoters, purchase and sells the generated
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CER's in projects CDM (own and from others), collaborates in joint projects,
intermediates in processes of purchase- sale, provides consultory and advisory
services for projects managed by other agents and negotiate Endesa's
participations in Carbon Funds.
Tariffs
The H.P.S. “Santa Cruz II”, was one of the 18 projects awarded in the first
auction of renewable energies (convoked in October 2009 and whose awarding
took place in February 2010). The price of the energy that was offered by this
station in the auction of Renewable Energies amounted to 55 US$/MWh.
(OSINERGMIN, 2011a). That price corresponds to the awarding tariff arranged
by the OSINERGMIN.
Regarding the energy surplus that could be injected after fulfilling its contractual
commitments, this will be liquidated at the Instantaneous Marginal Cost of the
SEIN. For referential values, the minimum marginal cost recorded during 2010
amounted to 16.60 U.S. $ / MWh, the maximum marginal cost to 24.55 U.S. $ /
MWh and the annual average marginal cost to 21.44 U.S. $ / MWh (COES,
2010).
2.3.7 Social Aspects
As part of the elaboration process of the Environmental Impact Assessment
(EIA), several informative workshops were orgized with local communities
(UNFCCC, 2006).
The process of local consultation began when the developer of the project
organized a meeting on September 12, 2008 in the community of “Colcas”, with
the participation of the local authorities and public in general. The attendance list
to this meeting includes: The president of the community of “Colcas” and more
than two thirds of the community.
For the developer of the project, these consultations are fundamental to establish a
communication channel between local stakeholders, like the members of the
community of “Colcas” and the authorities of the Ministry of Agriculture.
Consultations were aimed at meeting the interests of the developer of the project
with the interests of the local community. With this in mind, the project developer
explained to the community the objectives, scope and commitments of the project
regarding local stakeholders and the environment.
Initially, the community was concerned that the current Peruvian Legal
Framework would not allow the locals could sell the land that would be used for
the Project. Likewise, the community expressed its concern that some irrigation
channels could be affected, consequently resulting in decreased supply of water
for local crops.
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As it can be verified with the developers of hydroelectric projects, one of the main
worries of the inhabitants who live in the area of influence of the project is the
economic benefit that the community could get from the project.
In response to restlessnesses and requests of the population located in the area of
influence of the project, the promoter of the project and the community got to the
following agreements (UNFCCC, 2006):
‐ The community would sell 3 ha of land to the promoter of the project at US$
30 000.
‐ The promoter of the project would give a contribution of US$ 10 000 per year
during the life of the project for social investments in the community. This
payment will be managed by a committee formed by the leaders of the
community and agents of the company that develops the project.
‐ The promoter of the project would have special preference in hiring local
labor during the construction of the Project.
‐ The promoter of the project would give a tractor for the development of the
agriculture in the zone.
‐ The promoter of the project is committed to respect irrigation channels.
‐ The community is committed to contribute to the development of the Project.
All these agreements were discussed and accepted by the community, so it has
come to have a good deal with this, helping to implement works identified as
viable and beneficial to the community. As an example we have the construction
of a fish farm to generate income and contribute to the utilization of biological
resources in the zone.
2.3.8 Environmental Aspects
In accordance with the Electric Concessions Law of 1992, an Environmental
Impact Assessment it not necessary for hydroelectric projects that generate less
than 20 MW. In spite of that, the EIA was elaborated voluntarily for the developer
of the project as part of its commitment with the sustainable development of the
area, and with the aim of establishing an environmental management plan to
mitigate the negative potential impacts of the project. The execution of an EIA
facilitated also the procedure for obtaining the Host Country Letter of approval,
required to qualify for the CDM (UNFCCC, 2006).
The EIA determined that the project does not jeopardize the water requirements
of the local actors at all, it means that the project does not affect the water supply
for irrigation of agricultural lands and respect the program of normal irrigation
established by the Ministry of Agriculture. Likewise there is no alteration of the
quality of water for consumption.
The project presents positive environmental impacts like the emissions reduction
of CO 2 , NOx, SO 2 and particles, which proves to be beneficial for the global air
quality. Furthermore, because of the operation requests, the project contributes to
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the purification and cleanliness of the water that is taken of the river and thatlater
is returned to this.
Only because of the existence of the project, there are offered direct and indirect
employment opportunities for the nearby population, which could be verified with
the fact that both, for the construction of the main station, as well as for its current
operation, local population is employed.
We have also benefits at a macro-level for the country, as it will be displaced a
percentage of electricity generation from thermal power plants that consume
fossil fuels. This will contribute to the emissions reduction of greenhouse gases
and to the assurance of power supply due to the increase of the installed capacity
of the SEIN.
It is expected that the project displaces 21 082 tons of equivalent carbon dioxide
(CO2e) per year and 147 574 tCO2e for the first period of accreditation,
generating an equivalent quantity of Certified Emission Reductions (CERs)
(MINAM, 2011a).
Regarding the cultural environment, the H.P.S. Santa Cruz II is not located inside
a Natural Protected Area (NPA) nor in its buffer zone.
The main activities of maintenance and operation of the project that could
originate potential environmental impacts, come from the use of water of the river
for the electricity generation, operation, equipment maintenance and elimination
of solid wastes. These negative impacts for local people and project’s workers
will be negotiated by means of the measures proposed in the EIA.
The higher potential of negative environmental impacts and risks, are in terms of
health and the worker’s security, local residents, fauna and flora. All that caused
by noise, electric risk and probability of water overflowing from the channel.
Thanks to an adequate design of facilities and the prevention measures executed,
these environmental impacts become of low probability and intensity.
2.3.9 Found Barriers
During its development, the project has not shown a lot of barriers, because there
were factors that facilitated the process. The two most important factors were
related to the existence of antecedents of the development of a similar project (the
H.P.S. Santa Cruz I) in the zone, which had been executed by the same company.
In addition, they have the previous experience gained by the designer.
One of the barriers was of financial type, because the project was eligible for
financing by the national banking system, however, this one could only provide a
percentage of the capital costs. This circumstance took place due to the fact that
the developer of the project was a local little investor. This barrier was surpassed
because the developer of the project participated with a percentage of the missing
investment making use of his own capital.
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Regarding possible barriers that are surrendering at present, developers hold that
it should be checked everything concerned to the monomic price, because in the
RER rules it is established that energy is liquidated at Marginal Cost, while the
power payment serves as an advanced guarantee. The last statement could
contradict the definition of the monomic price creating uncertainty in its
application.
Also, regarding the CER's tributary rules, this is not very clear as it does not fit in
the definitions of good or service, being these ones the only options that presents
the Peruvian taxation system. The lack of clarity in the tributary regulation
regarding the service of validation of displaced emissions also generates
difficulties. In all cases the validation is done by means of foreign institutions,
which lead to the tax payment in duplicate (in Peru and in the home country of the
validator entity), which harms the developer of the project.
In addition, the developers of the project maintain that the regulation relative to
the anticipated recuperation of the general sales tax do not benefit little stations,
because it is not designed to benefit stations whose construction periods are less
than 2 years. Also hold that the process for the obtaining of this benefit should be
simple and expeditious.
2.3.10 Factors of Success for Replicability
Developers of the H.P.S. “Santa Cruz II”, consider the project successful, as the
objectives initially set are reaching progressively. However, in order to determine
adequately if the project will have the esteemed profitability it is is needed a
couple of periods more. To that time, there will have charged the CER’s, which
have become an important instrument of support for the project.
In order to insure the success of the project, developers coincide that the basis is
an exhaustive study of the resource and of the implicated engineering, which must
guarantee the viability of the project in terms of costs. The technical capacity of
developers was very good, as the greater part of the work was in charge of the
company “GCZ Ingenieros”. During the development of the project, good
relations with the community in the area of influence played an important role.
Most of the projects developed among the country have as an initial characteristic
the difficulties generated because of the worry of the implicated communities for
the use of resources and mainly when the project involves the use of water.
However, this was not the case of the H.P.S. “Santa Cruz II” because it was given
plenty of information about how the project would benefit them and the minimal
environmental impacts that would take place.
Another important aspect was that both parts coincided in celebrating economic
agreements to benefit local population, identifying and executing viable and
sustainable projects in time. On the other hand, the population seemed more
receptive when agreeing that it would be preference to local labour during the
construction and operation of the station.
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The developers of the project consider also that the application of the CDM is
vital to guarantee the sustainability of the project because the economical benefits
obtained by the sale of CER's improve the cash flow of the project.
As a result of the gained experience with the projects “Santa Cruz I” and “Santa
Cruz II”, the company is implementing two new stations: “Huasahuasi I” and
“Huasahuasi II”. This is a clear demonstration that if the factors examined
previously take place, a new project has great possibilities of being successful.
Graphic N° 45: Powerhouse of The “Santa Cruz II” H.P.S.
Source: MINAM- Climate Change website – Technical Data Sheet of the “Santa Cruz II”
H.P.S. Project
2.4 Bagasse-Fired Thermal Power Station “Paramonga I”
2.4.1 General Description of the Project
The bagasse-fired thermal power station “Paramonga I” is part of the production
plant of the company “Agroindustrial Paramonga S.A.A” (AIPSAA) and it is
located at the Paramonga District, Barranca Province, Lima Department.
The project consists in a generation station with extraction - condensation steam
turbine with 23 MW of installed capacity. For its features the generation station
performs as a cogeneration system which injects electric power into the grid and
supplies steam for the productive processes of the company.
The thermal power station of Paramonga entered into commercial transaction on
March 17 of 2010, with an estimated annual production of 115 GWh/year. The
whole power generated by the station, is put in the short-term market and
liquidated at the Awarded Tariff as it is a RER generator. The price of the energy
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that was offered by this station in the First Auction of Renewable Energies was of
52,00 US$/MWh. (OSINERGMIN, 2011a)
Graphic N° 46: Geographic Location of the Project
Source: CENERGIA
2.4.2 Objectives of the Project
The main objective of the project was improving the efficiency in production
through the use of a cogeneration station of 23 MW that allowed the company
generating electric power and enough steam to be used in the productive process
of sugar elaboration, using all the bagasse and wastes of the sugar cane crop as
fuel.
As an additional objective, the sale of energy to the SEIN came into question,
which makes more efficient the use of the thermal power station. Also, as a
consequence of the implementation of the project, it was sought the improvement
in social and environmental responsibility affairs.
2.4.3 Analysis of the Stakeholders
Promoters of the Project
The Agroindustrial Company was created in colonial times as the “Hacienda
Sociedad Agrícola Paramonga” (S. XVII), however, is the transnational
corporation “Grace and Co.” who acquires the property (1927) and introduced a
new technology, diversifying the production turning the company into the first
Chemical-Paper Manufacter- Agroindustrial Complex. During military
Government of the General Juan Velasco Alvarado (1968 1975), the complex was
divided into 2 companies: “Sociedad Paramonga” Limited Company, public
enterprise for the production of paper and chemical products, and the
“Cooperativa Agraria Azucarera Paramonga” Limited Company Nº 37, which
transferred its ownership to its employees (AIPSAA, 2011c).
On the early 90’s, there were established regulations to relaunched sugar
companies that had collapsed, after 20 years of cooperativism. In 1994 the
company became a Public Limited Company and in 1996, the society “Rio
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Pativilca” took the control of it. In 1997, the group “Wong” acquired the
company and introduced a modern management implementing a continuous
improvement system until now (AIPSAA, 2011c).
Beneficiaries
Direct beneficiaries of the project are the inhabitants of Paramonga, which is a
city located around the production plant of AIPSAA and which existence and
sustainability depend on the company.
The presence of the sugar company in the zone has been modifying progressively
the landscape and the city organizing, as it propitiated the creation of new sectors
in the city which were clearly designed to keep a specific function among people
that worked at the plant.
Because its productive nature, the company benefits not only local people, but
also surrounding communities sugar cane-producers, which is a raw material not
only for industrial production, but also for obtaining bagasse from cane that
serves as fuel.
Regarding Financiers
The project was executed through the mechanism of financial leasing or
“Leasing”. The entity that took part in financing was the “Banco Interamericano
de Finanzas” (BIF) (MEM, 2011b).
The BIF is part of the Spanish business group “Ignacio Fierro” (Group IF), which
counts on experience in Spain, United States, Central America and South
America. In the Peruvian case, the the BIF keeps important investments on
industrial, agroindustrial, commercial, real-estate and of financial services sectors.
These businesses have been developed for 50 years in Peru.
2.4.4 Legal Aspects
The company “Agro Industrial Paramonga S.A.A.”, within its business
development plans and improvements in efficiency and use, began the
implementation of its Cogeneration Station in January 2009, and enter into
commercial transaction on March 17, 2010.
As in the case of all the generation stations based on renewable and non
renewable resources, the Article 4º of the ECL, point out that it is required the
authorization to develop thermal generation activities, when the installed power
was superior to 500 kW. The requirements to access to this authorization are
shown in the Chart Nº 60.
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Chart N° 60: Necessary documents to request generation authorization
N° Requirement
Application according to format, detailing the RUC number, addressed to the General Directorate of
1
Electricity, signed by the legal representative.
2 Payment of TUPA (40% of UIT)
Document (Public Act with a seal on which figures registration, sheet or electronic certificate) proving
3
registration in the Public Records of Incorporation of the company
Document (Sheet or electronic certificate) proving registration in the Public Records of the company's
4
legal representative
The following maps and diagrams:
• Delimitation of the concession area in UTM coordinates (DATUM PSAD 56) with signature and
5 seal of the responsible professional.
• Poligonal Map with vertex in UTM coordinates (PSAD 56).
• Single-line diagram with signature and seal of the professional.
Affidavit of compliance with technical standards of environmental and cultural heritage of the Nation
6 conservation (Applicable only for final concessions for Renewable Energy generation whose installed
capacity is less than or equal to 20 MW).
Statement with project’s studies with signature and seal of the legal representative (at least at a feasibility
7
level).
Schedule of work’s execution, indicating the beginning and putting into comercial transection (in case of
8
new works) with signature and seal of the legal representative.
9 Project Budget, with signature and seal of the legal representative.
Technical information for statistical purposes: installed capacity of the station, number of generation
units, type of each generation unit, model, design flow, specific fuel consumption, fuel type. In the case
of electricity generation stations that are in use or repowering there will also be presented the historical
10
records of operation and relevant information that supports an adequate operating performance
(Applicable only for final concessions for Renewable Energy generation whose installed capacity is less
than or equal to 20 MW).
11 Current Skill Certificate of the engineer in charge of maps.
Verifiable support of investor’s commitments for the supply of capital in the execution of works in case
12
of generation concession.
Favorable report issued by a qualified Risk Rating Entity with respect to the financial solvency of the
13
petitioner or potential investor, in case of generation concession.
Guarantee of loyal fulfillment for execution of works, equivalent to 1% of the project budget with a
19 ceiling of 500 UITs in benefit of the Ministry of Energy and Mines, valid until the start of commercial
transaction of the project.
Source: MEM –TUPA.
For the request of generation concession, in addition to the payment of 50 % of
the TUPA, it is demanded the presentation of the following documents:
‐ Specification of the required servants.
‐ Approval certificate emitted by the COES, supported with a Study of Pre-
Operativeness (which must be introduced before the expedition of the
Supreme Resolution of granting of the final concession).
On January 19 of 2010, the Ministry of Energy and Mines, by Supreme
Resolution Nº 002 – 2009 – EM, gave the final generation concession based on
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renewable energy resources to AIPSAA to develop the electricity generation
activity in the facilities of the thermal power station “Paramonga I”. Such
concession was granted through the Definite Concession Contract of Generation
with Renewable Energy Resources Nº 344 2009.
2.4.5 Technological Aspects
Technical and Interconnection Features
“Agro Industrial Paramonga” generates electric and thermal power with a
sugarcane byproduct: The bagasse. These wastes have a high calorific value, so
when they are burned-out, they cause energy with smaller impact to the
environment.
The watertube boiler that runs on bagasse of sugar cane, produces 115 Ton/h of
with a temperature of 400º C and 42,5 bar of pressure. This steam circulates for a
pipe of Ø12” sch. 80, and is connected to a SIEMENS’s turbine which is located
in the housepower (MEM, 2011b).
The turbine delivers extraction steams in a temperature of 126º C and 2,39 bar of
pressure, collected in a pipe of Ø36” sch.10, that is conducted to the ship of mills.
The steam flow that was no extracted for the process of elaboration of sugar will
continue expanding in the turbine until a maximum vacuum pressure of 0,16 bar
generating the additional electric power.
Also count on a steam reducing station that works when in a determined moment
the turbine stops delivering steam. In this station it is reduced the entrance
pressure of 42,24 bar to 1,38 bar, and at the same time the steam is saturated to be
able to deliver it to the system.
The electric substation has 2 transformers. The first one is a three-phase
transformer of 1 250 kVA of power and 13.8/0.480 kV and the second one is a
three-phase transformer for lighting of 35 kVA 480/230 V.
The interconnection with the SEIN is executed in the bars of 13,8 kV of the
“Paramonga” Substation of 138/13.8 kV property of the concessionary company
“SN POWER” (CAHUA).
Availability of the Resource
The supply of energy and power is related to the stock of fuel for the
Cogeneration Station, it means bagasse. Before the project’s execution, the plant
of “AIPSAA” had a surplus of bagasse that justified its implementation.
By 2009, the bagasse production amounted to 29 thousand Ton/month, with an
average consumption in the boiler of 26 thousand Ton/month, generating a
bagasse surplus of 3 thousand Ton/month (MEM, 2011b).
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The bagasse production generated as a consequence of the productive process was
of 41 Ton/hour, considering the historical return of production of the boiler CBS
of 2,23 tons of steam per ton of bagasse. With that bagasse production capacity,
they would be generated 91,5 tons per hour of steam and at the same regimen and
estimating a steam extraction for the process of 80 Ton/hour, the power of the
generator in terminals would reach 12,6 MW (deducting the auxiliary services of
the station), delivering 6,0 MW for the station and 6,6 MW for the SEIN. So it
was detrmined that there could be generated 36 792 MWh required by the station
and deliver the interconnected system 40 471 MWh (MEM, 2011b).
With the entrance in service of the cogeneration station increased the steam flow
in the admission of the turbine up to 120 Ton/hour, raising the performance with a
considerable increase of the bagasse production. Considering the ratio of the
indicated steam production and an extraction of steam from the process of 80
Ton/hour, it could be obtained a power of 20 MW (deducting the auxiliar services
of the station), being feasible the injection to the SEIN of 14 MW (MEM, 2011b).
2.4.6 Economical Aspects
Financing
The project’s development needed other implementations like the modernization
of the plant: Installation from a bagasse boiler and electrification of the sugar mill
(change of steam turbines by electric motors). All this to make viable the steam
availability for the project, which was done in stages and turning to the national
financial system.
The “Banco Interamericano de Finanzas” (BIF) was the counterpart of “AIPSAA”
in the financing of the project. The used mechanism was “Leasing”. 93 % of
investment was financed with BIF funds at an annual rate of 8 % and a period of
six years for its return (AIPSAA, 2011a).
Economical Sustainability
The project started as a thermal generation project intended to apply for the rules
that regulate cogeneration, however, as in most of renewable projects, is the RER
normative the one that is finally accepted as an alternative to use for the
commercialization of the energy surplus that was generated.
The benefits granted by RER regulations, like priority in the dispatch, a supply
contract for 20 years and an extra income for energy surplus injection to the
system, exceed by far the ones which can be obtained choosing the qualification
as a cogeneration station. Furthermore, to obtain this qualification it is required
fulfilling certain requirements of heat consumption and electric power production.
The parameters demanded by cogeneration regulations are shown in the Chart Nº
61.
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Chart N° 61: Minimum values of Equivalent Electrical Efficiency (EEF) and Relation between
Electric Power and Useful Heat (C)
Technology/ Fuel EEF C = E/V
Internal Combustion engines 0.55 0.60
Combined cycle gas turbine 0.55 0.50
Simple cycle gas turbine 0.55 0.40
Extraction steam turbine 0.58 0.30
Steam backpressure turbine 0.70 0.5
Biomass (*) 0.30 - - -
Source: Cogeneration Regulations.
Where the Equivalent Electrical Efficiency is calculated through the following
formula:
E :
V :
Q :
Electric power measured in generator terminals and expressed
in MWh.
Is the amount of useful heat from the cogeneration station
exclusively, expressed in MWh.
Power given by the fuel used, calculated in MWh based on its
lower calorific value
Even when the cogeneration station “Paramonga I” was qualified to take that
mechanism, the senior management though it was more convenient to choose
taking part in the first RER Auction and being awarded with a portion of the
energy offered. This action guaranteed in a large extent the economical
sustainability of the project.
On the other hand, in order to insure the profitability of the project, the
cogeneration station “Paramonga I” has qualified to apply to the CDM. This and
the benefits granted by the awarding of the RER auction, made the project
sustainable in time.
Tariffs
The cogeneration station “Paramonga I” was one of the two projects with biomass
which were awarded in the First Auction of Renewable Energies (February,
2010). The offered price for this energy was of 52, 00 US$/MWh and this is the
same tariff that is awarded by the OSINERGMIN (OSINERGMIN, 2011).
Like all cases of RER stations, net injections of energy up to the limit of the
Awarded Energy are remunerated at the Awarded Tariff., while net injections of
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energy surplus are remunerated at the corresponding Marginal Cost which could
generate additional income.
2.4.7 Social Aspects
From its beginnings, “AIPSAA” has performed an important role in the
development of the community of Paramonga, principally for the generation of
direct and indirect work that derives from its activities.
In November of 2006, the company opened a window for communal relations,
devoted to attend the community, receiving its consultations and suggestions to
strengthen the relation between the company and the population. Thereby it
propitiates a space of dialog, participation and transparency, key aspects to
achieve the success of social responsibility (AIPSAA, 2011c).
The company also takes actively part in the development of civic activities and
distrital committees. Through its bulletin “Paramonga al día” it gives information
to the population and institutions about the various communal activities and
environmental matters that it develops.
As part of the support to the community, every month it is set the delivery of
supplies to the infantile dining room “Corazón de María” of the Parish Church of
Paramonga. At the same time, it is set the delivery of sugar to 51 “vaso de leche”
committees to the human settlements of Paramonga, benefiting more than 1000
people among children, old men, pregnant and suckling mothers (AIPSAA,
2011c).
In order to improve the educational quality, AIPSAA develop the program
“Construyendo Escuelas Exitosas” or “Building successful schools”, executed
through the Peruvian Institute of Business Administration (IPAE). This program
allows the students in a period of five years, to improve their abilities related with
the reading compression, logical reasoning, communicative skills, social skills
and the autonomous learning. With an investment of S/. 1 500 000 Soles, it
benefits 23 educational institutions of rural and urban of Paramonga and Pativilca,
constituted by 1 909 students, 87 teachers and 23 directors.
As part of its contribution to improve the quality of life of people on its area of
influence, AIPSAA develops oral health campaigns, doing diagnoses and
teaching pertinent practices for hygiene and dental maintenance.
As it can be observed, the project generates additional resources to the company
in a completely different category than the conventional for a sugar mill
(generation of electric power), which allows diversifying the production and
guarantees the permanence of company in the zone, offering employment stability
to 1 400 people that labor in the different productive stages. Collaterally, there is
generated greater economic activity in the area and are destined investment funds
in projects of social good.
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2.4.8 Environmental Aspects
As part of the contribution to the sustainable development, the company Agro
Industrial Paramonga S.A.A. makes a control of its environmental aspects so that
operations develop without generating negative impacts in the environment and
over the populations of the area of influence.
The project does not affect agricultural lands of the area or its production, because
the used fuel is obtained as a waste of the productive activity.
From the setting in operation of the watertube boiler, that uses as fuel exclusively
bagasse, there has been a significant pollution reduction in comparison to what
was generated before the implementation of the project when the two boilers that
consumed oil and bagasse were used for the production of energy. This change of
technology contributes to the improvement of the air quality, fundamentally, by
the reduction of particles in emissions, which at the same time has influence in
the problem’s reduction perceived by the contiguous population.
AIPSAA has also a program of environmental monitorings that are executed to
compiling information of the behavior of variables that determine the
environmental performance of its operations, in order to take preventive, control
and corrective necessary measures.
The most important variables that are monitored are the air quality and emissions.
This task is entrusted to a specialized and prestigious consultant that performs the
trimestrial monitoring using four stations of high volume and isokinetic
measurements. The results of the executed analyses have demonstrated that the
implementation of the cogeneration station with bagasse has had a significant
repercussion in the improvement of the air quality. So much so that currently
meets the national environmental quality standards. For the knowledge of the
population, the results of these analyses are published in the bulletin “Paramonga
al día” (AIPSAA, 2011c).
At a macro level, the station “Paramonga I” displaced a percentage of the
expensive electric generation as the generation with bagasse present lower cost
than the generation based on fossil fuels.
The project is expected to move 85 300 tCO2e per year and a total of 170 600
tCO2e for the first period of accreditation, generating an equivalent quantity of
certified emissions (MINAM, 2011j).
2.4.9 Found Barriers
During the project’s development there were changes in the rules for
cogeneration, which delay the obtaining of generation concession with renewable
energy resources (RER). This change in rules was referred specifically to
Equivalent Electric Efficiency values and the relation Electric Power – Useful
Heat, registered in Cogeneration Regulations.
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Even though cogeneration was remunerated as an activity of electricity
generation, situation that did not benefit the project in a large extent, it was the
RER normative the one that become the project of electricity generation with
bagasse profitable.
Nowadays, the project’s developers point out that the state should continue with
the bids to promote generation with renewable energy resources (RER) mainly
giving priority to the technology that uses industrial residual biomass, as in spite
of its limited potential it has a defined production volume.
In addition, they consider that generation costs for technologies that use biomass
should be evaluated again, fixing a price that includes greater incentives, this held
in the direct impact on the nearby communities. Acting this way would give an
economical sign that would lead to executing safer investments.
2.4.10 Successful Factors for Replicability
The first and most important factor for the project’s success is held mainly in the
use of modern technologies that are more efficient and allow taking advantage of
the caloric potential existing in the cane bagasse.
Another factor is holding a close relation with the community, organizing joint
actions for the locality’s benefit and by this way improving the conditions of life
of the labour used for the “fuel” production.
The continuous improvement process executed in every space of the productive
activity have also played an important role in the project’s success, achieving
thanks to it the obtaining of the certification ISO 9001:2000, consolidating the
company as a leader in the national market.
The success of this kind of projects can be felt in the fact that other agribusiness
companies that produce sugar or cane alcohol, are thinking or are already
replicating the project. Among them it can be mentioned companies like
Casagrande, Pomalca, San Jacinto, Cartavio, Laredo and Tuman.
Graphic N° 47: Project Diagram and Bagasse Disposal
Source: AIPSAA.
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2.5 Interviews to the Representatives of the Projects: H.P.S. “Santa Cruz
II”, T.P.S. “Paramonga I”, H.P.S. “La Joya” and W.F. “Talara”
In the present section of the report, there are compiled interviews to various
project’s developers.
Fernando Urquiza
Hydroelectric Power Station “Santa Cruz S.A.C.” –General Manager
1. Which were the objectives to achieve
Objectives were basically to construct a station that takes advantage of the
existing hydraulic potential of the zone that was determined when building the
Hydroelectric Power Station “Santa Cruz I” and applying for the CDM to make
the project profitable.
2. What was the main reason to implement the project
The main reason is related to the objectives mentioned previously.
3. Which were the barriers to face to in the development of the project and how
could they be overcome
Economical and Financial
Firstly, the financing of this sort of projects is not very simple; however, this did not
constitute a barrier as such.
Normative and Regulatory
The tributary rules regarding to CERs is not so clear; it does not fit in the
definitions of good or service.
The validation service of the displaced emissions is also subject to tax, which
generates difficulties because the tributary rules are not clear.
The normative regarding the anticipated returning of the IGV is not designed to
benefit little stations, whose construction periods are in most of cases less than 2
years.
Technological
In this point there were not identified barriers, because the technology used
regarding water turbines was supplied for GCZ Ingenieros and the
electromechanical equipment was acquired by suppliers recognized in the
international market.
4. Which positive aspects of the normative-regulatory frame were determining
for the decision to develop the project
- The RER normative that grants a set of benefits, like, the priority in the
dispatch, fast obtaining of licenses, etc.
- Also the possibility of accessing to CER’s.
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5. Which investment percentage was financed and which were its financing
source, interest rate and period
The project was implemented through Leasing, with a participation of equity
capital that amounted to 30 % of investment, in a period of 10 years and at a
discount rate of 10 %. All this was done through the local banking system.
6. Would the project could be qualified as successful and why
Definitely, because the objectives initially set are being achieved. However, in
order to determine exactly if the project has been successful it is required a couple
of periods, for that time the CERs will have been already charged, which are very
important for the project.
7. What do you think it is necessary to reply the project somewhere else
- It is necessary maintain a good relation with the community, applying for
the CDM and this should be viable in terms of costs.
- The project is already being replied with the implementation of the stations
“Huasahuasi I” and “Huasahuasi II”.
8. Which one or which ones do you consider were the strategic aspects for the
development of the project
- Good relations with the community.
- The technical capacity of the developers of the project: GCZ Ingenieros.
9. How do you think that the project is benefiting the community of its area of
influence
- It has been achieved good relations with the local community, helping to
implement works identified as viable and which benefit the community.
- It has been implemented a fish farm to generate economical income and
contribute to the use of the area’s biological resources.
10. Does the project injects energy to the SEIN only or it also counts on supply
contracts with private customers
It only injects energy to the SEIN.
11. What do you think the Government and its stratums should do to promote
projects like the one that was executed
- It should check everything regarding to the monomic price, cause in the
RER normative it is established that the energy is liquidates at marginal
cost, while the payment for power serves as an advanced guarantee, which
could contradict the definition of the monomic price.
- It should check the normative regarding the anticipated recuperation of the
general sales tax or IGV, as it does not benefit little stations. Also the
process for the obtaining of this should be simple and expeditious.
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Efraín Salas Valverde
Agro Industrial Paramonga S.A.A. – Project Manager
1. Which were the objectives to achieve
Having a cogeneration station that allows generating 150 000 MWh per year of
energy, delivering enough steam for the elaboration of sugar and using all the
bagasse and wastes of the sugar cane crop as fuel.
2. Which was the main reason to implement the project
The original purpose of the project was being self-sufficient in the generation of
electric power and having electricity surplus to commercialize it in the national
electricity market.
3. Which were the barriers to face to in the development of the project and how
could they be overcome
Economical and Financial
The implementation of the project needed other implementations like the
modernization of the plant: Installation of a boiler based on bagasse in the plant,
electrification of the sugar mill (change of steam turbines by electric motors) to
make viable the steam availability for the project, which was done in stages and
turning to the national financial system.
Normative and Regulatory
During the development of the project there were changes in cogeneration rules
that delay obtaining the generation concession with renewable energy resources
(RER).
Cogeneration was remunerated as an activity of electricity generation which was
improved with the RER concession.
Technological
Adaptation to change, it have been replaced in the plant equipment of a technology
of 50 years ago, in order to use state-of-the-art technologies at beginning of the
XXI century.
Other barriers (specifying)
In the country there is no experience of consultant companies that develop this kind
of projects, specifically with the use of biomass as a fuel for steam production.
4. Which positive aspects of the normative-regulatory frame were determining
for the decision to develop the project
During the development of the project it was created the normative frame for RER
generation promoting it trough incentives. In terms of the project, it will improve
the return of investment.
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5. Which investment percentage was financed and which were its financing
source, interest rate and period
93 % of the investment was financed with the national banking system funds, at a
rate of 8 % per year and in a period of six years for its return.
6. Would the project could be qualified as successful and why
The project is fulfilling its initial objectives, and it is in process to reaching the
foreseen generation levels.
7. What do you think it is necessary to reply the project somewhere else
The project is being replied in other agribusiness companies that produce sugar or
cane alcohol.
8. Which one or which ones do you consider were the strategic aspects for the
development of the project
The project is held by the use of modern and more efficient technologies that allow
taking advantage of the heat energy that had been lost towards the environment,
and also in improving the efficiency of the plant’s processes, summarizing being
more competitive.
9. How do you think that the project is benefiting the community of its area of
influence
The project generates additional resources to the company which are different from
the ones generated in conventional processes of a sugar mill. This allows the
diversification of the plant, guaranteeing its permanence in the zone, giving employ
to 1 400 people and collaterally generating higher levels of economic activity in the
zone.
10. Does the project injects energy to the SEIN only or it also counts on supply
contracts with private customers
Currently the project is delivering all its energy to the SEIN, there is no supply
contract with private customers.
11. What do you think the Government and its stratums should do to promote
projects like the one that was executed
- Going on with bids which promote electricity generation trough renewable
energy resources (RER), specially the biomass technology, increasing the
amount of covering.
- On the other hand, we consider that the costs of electricity generation using
biomass technology should be evaluated and moreover, it should be fixed
the price that includes incentives, which would give an economic signal that
allows making safer investments without having to submit bids.
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Leí Siucho Javier
Generadora de Energía del Perú S.A – Gerente General
1. Which were the objectives to achieve
- The first one was developing a project that serves as a pilot scheme, very
complete regarding the constitution of a Hydroelectric Power Station, as it
has a transmission line, open driving, closed driving (tunnel), collecting,
channel and other works that have been developed without affecting the
users downstream.
- The second objective was the use of waterpower which is available 70 years
ago, contributing to the development of a project based on a clean,
competitive, economic and of significant investment energy.
- Finally, the project seeks for achieving the generation efficiency valued in
the feasibility studies.
2. Which was the main reason to implement the project
Initially, it was the profitability that offered energy tariffs for the rising demand and
the existence of a supply request in the electricity market, in other words the
company bet for the demand.
The company was one of the few ones who bet on this kind of projects, because the
existing juncture favored conventional generation with fossil fuel, specifically
natural gas.
3. Which were the barriers to face to in the development of the project and how
could they be overcome
Economical and Financial
In the financial field, local and foreign banking systems are very demanding with
the studies of hydraulic use and engineering quality of the project, in terms of
guarantee the estimated amount of electricity generation.
Another barrier that showed up was the existence of volatile costs of materials for
the construction of the project and the lack of suppliers’s offers of equipment, not
only at a national level but abroad.
Normative and Regulatory
Regarding normative affairs it was found that existed and continue existing a lack
of clarity of ministries’s competitions in terms of the use of multisector resources
like water, item that should be in charge of the Ministry of Energy and Mines and
the Ministry of Agriculture, which in many instances causes delays in the project.
Another barrier, not least important, was that during the project’s operation, it was
changed the normative that determined the marginal cost based on the generation
using diesel fuel by the generation using natural gas, which affected strongly the
investment’s return of the project and its economical cash flow.
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Technological
As for technological affairs, a barrier was the scarcity of local suppliers for
equipment that have experience and enough capacity to give guarantees. It was
also observed that there are restrictions regarding the procedence of equipment’s
manufacture.
Other ones (specifying)
But perhaps the stronger barrier was the social order. With this we refer to the lack
of knowledge of the population that in some cases used to request benefits that not
always are matter of the private company but of the State. Additionally, we could
found the lack of support and authority absence of state-owned entities in front of
difficulties caused by the lack of information and actions of dirigential groups that
with complete knowledge control the population, with the aim of obtaining personal
benefit thorugh clandestine negociations.
4. Which positive aspects of the normative-regulatory frame were determining
for the decision to develop the project
- Initially the energy tariffs and the stability of the normative and juridical
frame.
- Later, during the project’s operation, the modality of auctions in renewable
energies is the one in charge of returning the profitability to the project.
5. Which investment percentage was financed and which were its financing
source, interest rate and period
70 % of the project’s investment was equity capital of the company; the remaining
30 % was financed through the local banking system at an average rate of 8 % in 7
years.
6. Would the project could be qualified as successful and why
Yes it would, because of three aspects:
- Firstly, the generation levels estimated in the studies were reached.
- RER regulations contributed to encourage the profitability of the project.
- Finally, it was obtained a valuable experience in terms of water use
projects.
7. What do you think it is necessary to reply the project somewhere else
I think that the project’s engineering studies in terms of the use of the resource,
should be entrusted to companies with experience that make a detailed and
meticulous analysis at a technical level seeking for the decrease of the financial
risk.
8. Which or which ones do you consider were the strategic aspects for the
development of the project
- The abundant information about the resource availability which was wellknown
and studied.
- The commercial aspect of the electricity market.
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- The chances that the project had due to the existence of road, electric and
hydraulic infrastructure, among others.
9. How do you think that the project is benefiting the community of its area of
influence
- Benefit the local municipality through the energetic canon.
- Economical benefits received by the bonds of the certification of emissions
reduction, are conducted to benefit graduates of secondary school of local
high schools.
- Gives opportunity for agribusiness development and energetic supply
guarantee.
- It also applies the Law to promote works by taxes.
- It has been generated a reduction of the maintenance cost of the stretch of
the existing hydraulic work that is used by the project, because this is
currently part of the generation budget of the company.
- It has developed an improvement in potentially vulnerable places of the
ancient infrastructure.
- There is the possibility of fast answer in case of collapse of the work of
hydraulic canalization, which reinforces the State’s response capacity.
There is also the possibility of contributing voluntarily with the local
infraestructure.
10. Does the project injects energy to the SEIN only or it also counts on supply
contracts with private customers
The project only injects energy in the SEIN.
11. What do you think the Government and its stratums should do to promote
projects like the one that was executed
- Firstly, improving the normative regarding the right of Temporary
Concession, evaluating with greater criteria the financial soundness and the
commitment of currently concessionaries to develop a project, otherwise,
this could generate speculations.
- The temporary concession should be exclusive while it lasts and should have
commitments, guaranteeing the audience of the project.
- Distinguish the demanded requirements that should be presented to apply
for a temporary concession, on the basis of each clean generation
technology in particular.
- It should be improved the state’s intervention when there are generated
social problems, giving priority to the project when it is of public interest.
- It should be well delimited the attributions and interinstitutional
competitions regarding the use of resources, avoiding the overlap of
functions, normative vacuums and therefore the project’s delay.
- The legislation should be more flexible when checking files that in many
cases have generated delays and expiration of financial deadlines problems
and contracts with the state and third parties.
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Coronado Lara Juan Teodoro
Energía Eólica S.A. – Gerente General
1. Which were the objectives to achieve
Being pioneers in the introduction of the technology of wind power generation,
contributing with the diversification of the energy matrix.
2. What was the main reason to implement the project
Participate in the electricity sector with a profitable and sustainable project.
3. Which were the barriers to face to in the development of the project and how
could they be overcome
Economical and Financial
In the financial field, the uncertainty of the resource and unknowledge of the
goodnesses of technology generated distrust and caused the rise in of guarantees
and risk coverage.
Normative and Regulatory
During the phase in which the project took part in the RER auction, the normative
had not yet clear the applicability of some conditions, specifically regarding the
Correction Factor that applies as a hardship over the RER generator, when this
does not fulfill its duty of supplying part of the Awarded Energy, which results in a
double hardship, that due to the uncertainty of the renewable resources could cause
a serious damage to the profitability of RER projects.
Technological
In the technological aspect, it can be seen that there is a lack of adaptation from the
SEIN to the entrance of generation stations with renewable sources, being observed
deficiencies of infrastructure (transmission), control (improvement of information
systems) and training (ignorance of technology).
Other ones (specifying)
Another found barrier was the existence of excessive institutional procedures that
cause delays in the commitments assumed by the project. This becomes evident in
the lack of a specific procedure by type of generation, that he guarantees that times
for the revision of the documents not exceed from a reasonable time. Regarding
this, it should be speeded up what concerns to the environmental and archeological
themes, than in most of cases that involve this technology they do not have greater
relevance.
4. Which positive aspects of the normative-regulatory frame were determining
for the decision to develop the project
The fundamental aspect was the signature of long-term contracts at a flat rate,
which guarantees in some way the profitability of the project and the return of
investment.
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5. Which investment percentage was financed and which were its financing
source, interest rate and period
Granted that the project is still under implementation, the own investment is
valuated in 20 to 25 %. A part of the remaining percentage was financed by the
national banking system and the other by the international banking system.
The information of the interest rate and the period of financing is confidential.
6. Would the project could be qualified as successful and why
- Yes. Because it achieved its main objective of introducing the use of wind power
for electricity generation.
- Because the project is not currently in operation, it is expected its success in
achieving the estimated electricity generation.
7. What do you think it is necessary to reply the project somewhere else
It is required adjusting the existent normative to each project according to the
generation technology, being wind, solar, geothermal, etc.
8. Which or which ones do you consider were the strategic aspects for the
development of the project
- Firstly the existence of an abundant resource with excellent quality of
potential energy, with around 3500 to 4000 equivalent hours per year.
- Secondly, the ability of the specialists involved in the project.
9. How do you think the project is benefiting the community of its area of
influence
- Firstly, the plot of land where the project is being developed is being rented
to the local community, which guarantees them an economical income for
the whole concession period of the project.
- As being one of the first large-capacity plants in South America, there will
be generated business related to tourism by the generation station.
- It is offered employment to the local population that has qualified labour for
the maintenance of the existing infrastructure.
10. Does the project injects energy to the SEIN only or it also counts on supply
contracts with private customers
The project injects energy in the SEIN only.
11. What do you think the Government and its stratums should do to promote
projects like the one that was executed
Fundamentally checking what concerns to the applicable Correction Factor when a
RER generator does not fulfill with giving the whole awarded energy, as it punishes
the generating company doubly.
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Chart N° 62: Summary of Interviews to Project’s Entrepreneurs
Project Name Main goal Most important barriers
Positive aspects of
the policy and legal
framework
Needed to
replicate the
project
How it benefits your
community
What government
should do
H.P.S. “La
Joya”
Javier Lei
Suicho
Develope a pilot
scheme of efficient
electricity generation
which takes advantage
of the energy available
70 years ago.
Lack of support and
absence of state-owned
entities regarding
problems generated by the
lack of information of the
population.
Initially, the energy
tariffs and the
stability of the legal
and normative
framework and then
the modality of
auctions.
A detailed
analysis at a
technical level in
order to reduce the
finantial risk.
Energy Canon
energético. The bonds
of CERs are conducted
to benefit graduates of
secondary school of
local schools.
Improve its intervention
on social problems,
specify its attributions
and interinstitutional
competitions and
optimize the time to
check the documents.
T.P.S.
“Paramonga
I”
Efraín Salas
Valverde
Having a cogeneration
station that allows
generating enough
steam for production
using all the bagasse
and wastes of the sugar
cane crop as fuel.
During the development of
the project there were
changes in cogeneration
rules that delay obtaining
the generation concession.
The normative frame
for RER generation
promoting it trough
incentives, which
allows the return of
investment.
The project is
being replied in
other agribusiness
companies that
produce sugar or
cane alcohol.
Diversification of
incomes of the plant,
guaranteeing its
permanence in the
zone, giving employ to
1 400 people and
generating higher
levels of economic
activity.
Expand the biomass
coverage in RER tenders
or fixing Price that
guarantees the
investment.

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Project Name Main goal Most important barriers
Positive aspects of
the policy and legal
framework
Needed to
replicate the
project
How it benefits your
community
What government
should do
W.F.
“Talara”
Juan
Coronado
Lara
Being pioneers in the
introduction of the
technology of wind
power generation,
contributing with the
diversification of the
energy matrix.
During the participation in
the RER auction it was no
clear the aplicability of the
Correction Factor that
applies as a hardship over
the RER generator, when
this does not fulfill its duty
of supplying part of the
Awarded Energy
The fundamental
aspect was the
signature of longterm
contracts at a
flat rate, which
guarantees in some
way the profitability
of the project and the
return of investment.
It is required
adjusting the
existent normative
to each project
according to the
generation
technology, being
wind, solar,
geothermal, etc.
It generates income by
the rent of the plot land
to the local community,
serves as touristic
attractive and will
generate employment
to the population.
Fundamentally checking
what concerns to the
applicable Correction
Factor when a RER
generator does not fulfill
with giving the whole
awarded energy.
H.P.S.
Santa Cruz
II.
Fernando
Urquiza
Build an hydroelectric
power station, generate
electricity and apply to
the CDM.
The tributary rules
regarding to CERs is not
so clear; it does not fit in
the definitions of good or
service.
The RER normative
that priorizes the
dispatch and
guarantee the
incomes.
A good relation
with the
community,
applying to the
CDM and
viability in terms
of costs.
Annual expenditures to
implement works of
social benefit.
Implementation of fish
farms and farms.
Redesign
the
mechanism of
anticipated recuperation
of the general sales tax
or IGV to make it
applicable to small
stations.
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2.6 Government Representatives Declarations about Renewable
Energies Projects
In this section there are compiled comments obtained from interviews to the
General Director of Electricity and to the Manager FONER’s project of the
Ministry of Energy and Mines regarding the development of renewable energies
in our country.
Engineer Ismael Aragón Castro.
General Director of Electricity – Ministry of Energy and Mines.
Which initiatives have been taken or are being taken by the Government in
order to promote renewable energies
As promoter mechanisms, they have been enacted The Law to Promote Investment
in Electricity Generation with Renewable Energies (L.D. Nº 1002) and its
Regulations (S.D. Nº 050-2008 MS) and as executing mechanism there have been
implemented the auctions.
Do you think that in recent times it is given greater importance to the inclusion
of renewable sources in our energy matrix Which do you believe is the reason
for this
From a conceptual point of view yes I do, for its great potential and for being a
clean source of energetic provisioning.
However, from the economical point of view, there is certain resistance to
incorporate them, due to its negative influence on the energy tariffs.
According to your appreciation, which are the barriers presented in the
development of projects based on renewable sources
One of the main barriers in terms of financing could be that national investors do
not have financial backing, so they turn to big companies of foreign capital and
associate with them to execute projects. Another barrier is the requirements
demanded by the local finance entities to grant credits. However, the present-day
outlook shows a bigger opening of the financial bench in terms of attention of
energetic projects.
We could say that there are not normative barriers, but it could be consider a
regulatory barrier the limited penetration capacity given to generation's
technologies based on renewable sources inside auctions. This is sustained by its
impact inside the National Interconnected Electrical System.
As for barriers or technological limitations, geothermal power presents more
difficulties, because explorations have not been well developed in terms of
perforations to determine with certainty the resource which is basic for the
project’s development.
In addition, the technology based on the use of the solid urban wastes (garbage),
shows an unclear a frame to be developed. And also the availability of the

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resource (energetic potential of wastes) is not well defined as there are not
classifying programs of wastes for its exact use in the electricity generation.
What can be said with certainty is that wind power technology presents a
limitation defined by the capacity of our Interconnected System to incorporate it
without provoking distortions due to the variability and uncertainty of the
resource.
Perhaps the stronger barrier is constituted by the requests stipulated within the
Environmental Impact Assessment (EIA), for which there are not a detailed
procedure and therefore generate delays in answers.
What positive or promoter aspects of the normative – regulatory frame do you
believe that were determining to promote the investment in projects based on
renewable sources
The legal framework was the most important. Inside this, the two key aspects
were guaranteeing the income to the investors and signing long-term contracts.
In the case of geothermics, it was the Regulations of the Organic Law of
Geothermal Resources (S.D Nº 019-2010-EM), which boosted investments to
determine the potential of that sources, since the exploratory projects were
disintegrated in two: A field work of previous analysis, where the investor can
withdraw his bonds for the project if he did not find it viable; and a exploration
work, where the investment considered perforations.
Would you qualify as successful the use of auctions as a promotional
mechanism of investment in generation with renewable sources Why
Yes. And this can be proved in the fact that offers have exceeded the expectations
they had, in spite of that in the second auction the awarding tariffs ranked below
the expected by the bidders.
However, I believe that it can be improved the offered price if it is taken effect an
electronic mechanism auction as it was adopted by Brazil.
According to your appreciation, which is the renewable technology that should
be developed more exhaustively in our country Why
Geothermics, as it has one of the lowest production costs, a higher capacity
factor from the beginning raised and its energy production does not depend on
the resource’s variability as it happens with wind and solar power technologies.
Another technology with great potential is the one based on agribusiness solid
wastes, mainly bagasse of cane that is used to generate energy and heat in sugar
mills, in spite of the absence of enough crops to generate a great supply.
Which generation technology based on renewable sources do you consider will
be difficult to develop in our country and why
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Tidal power due to the configuration of our coastline. Another one that could also
have problems is the generation based on solid urban wastes for having
difficulties in the supply.
Projects that have been implemented are planned to be inserted in the SEIN.
Within the energetic development policy, has the promotion of investment in
isolated rural systems been planned too
Of course, it has. Moreover, there have been done and continue being
implemented programs that consists in the installation of photovoltaic systems
kits in rural areas’s houses of determined parts of our territory.
The Euro – Solar program, foresee the installation of hybrid systems: solar –
wind, in order to supply electric energy to communal sites that offer services.
The detail of every implemented project can be obtained from the General
Directorate of Rural Electrification (DGER).
In your opinion, which are the most relevant projects based on renewable
sources
Wind and solar projects, for the magnitude of their installed capacity, as they are
going to be the greatest projects of South America.
Engineer Luis Torres Casabona
Director of FONER*- MEM
(*) Project: Improvement of Rural Electrification by the Competitive Funding
Application.
Which initiatives have been taken or are being taken by the Government in
order to promote renewable energies
We have been working on the basis of the General Law of Rural Electrificación,
which have allowed opening a window for the income of distributors as managers
of rural electrification projects.
Do you think that in recent times it is given greater importance to the inclusion
of renewable sources in our energy matrix Which do you believe is the reason
for this
Yes, I do, because the legal framework has gotten better in recent times, allowing
compensating the distribution companies that manage projects with renewable
sources, if they wil lose in their operation in any case.
This has taken place to improve the management system of the projects and
giving them continuity through time, as is the distribution company who is in
charge of all the aspects that are related to its operation, maintenance and
administration.
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According to your appreciation, which are the barriers presented in the
development of projects based on renewable sources in rural areas
Firstly, there is not yet a cut line that defines the costs that separate the projects’s
implementation from the installation of transmission lines of electric power or
electrification systems with renewable sources, like photovoltaic panels.
There does not exist a way to know with certainty the demand, which does not
allow elaborating plans or strategies. Therefore, there is not a procedure that
enables the fastest selection of projects, which is an urgent need.
On the other hand, there is required the standardization of numbers used in the
different institutions that show progress in terms of rural electrification with
renewable sources.
What positive or promoter aspects of the normative – regulatory frame do you
believe that were determining to promote the investment in projects based on
renewable sources
The General Law of Rural Electrification was and continue being the basis we
are working on. It has allowed advancing progressively in terms of the rural
electrification.
Would you qualify as successful the use of auctions as a promotional
mechanism of investment in generation with renewable sources Why
It seems that the mechanism works for greater capacities, however in the
projects’s scale managed for rural electrification, there are required other
mechanisms like the ones that are currently executed.
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2.7 Learned Lessons
As a result of the projects’s analysis and the interviews that were executed, it has
been found that there are some important factors that have contributed to
guarantee the projects’s success, but there are still issues to be discussed and
improved, as described below.
The success of the developed projects depends in great amount of an adequate
evaluation of the resource, as well as of the quality of studies and of the
engineering of each project. That is why is of great importance that the studies
are carried out by qualified consultant companies with vast experience.
Regarding the information of the resource availability and the developed
engineering, it is basic that developers consider that during the stage of financing,
these aspects will be exhaustively reviewed by banking entities.
Measures taken by the State in order to have a regulatory framework that
implicates renewable technologies give chances to complete permissions and
authorizations, and establish the application of economic incentives that guarantee
incomes for the recuperation of investments. They are factors that also have
contributed in a large extent to promote the investment in projects with renewable
sources and to making them profitable.
Another aspect that determines that a project comes to the profitability expected
ratios is the stability of the rules. For instance, in the case of the cogeneration
station “Paramonga I”, changes in the cogeneration normative meant some
problems that later were solved turning to RER’s regulations.
Good relations with the social environment are fundamental for the execution of
the project, above all, when the project involves taking advantage of resources
that are also used by the communities of the zone. In this case, it is advisable than
the State, through the Ministry of Energy and Mines, increase its participation and
support. The authority of the state-owned entities is of great importance, as they
can prevent difficulties caused by the lack of information of the population. That
is the case visualized in the development of the activities to implement the project
H.P.S. “La Joya” and of most of hydroelectric projects. It is worth noting that the
larger the hydroelectric project is, and whether it involves the damming of water
resources, the greater the population’s concerns about its benefits are.
Agreements of mutual benefit with the communities involved in the project’s area
of influence constitute a good mechanism for its acceptance and to surpass social
difficulties. Cases of the H.P.S. “La Joya”, H.P.S. “Santa Cruz II” and the
cogeneration station “Paramonga I” are examples that the establishment of
commitments for the execution of works of social benefit, have contributed to the
successful implementation of the project.
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The valid regulatory framework of the country, based on the development of
awarding auctions for energy through generators that use renewable energies, has
turned out to be a good promotional mechanism, allowing for the first time the
implementation of wind and solar projects and the increase of hydroelectric
projects of small scale (minor to 20 MW), whose energy will be dispatch in the
SEIN.
In order to give a major boost to the development of projects with renewable
energies, attributions and interinstitutional competitions should be described in
detail. A problem generated by this cause, shows up in the case of water use
(requirement to obtain generation's authorization), where the Ministry of Energy
and Mines and the National Authority of Water overlap functions that in some
cases originate delays in the attention of files and authorizations for the projects’s
execution; as it has happened with the H.P.S. “La Joya” and the H.P.S. “Santa
Cruz”.
Some awardees, as the ones of the project W.F. “Talara”, show their worry and
advise checking aspects that improve the mechanisms established in the current
legislation, for instance with regard to the applicable correction factor to the
awarding tariff, when a RER generator does not fulfill its commitment of giving
the whole awarded energy.
In the case of the H.P.S. “Santa Cruz”, it has been observed that the mechanism
of anticipated recuperation of the general sales tax or IGV has to be redesigned in
order to make it applicable to renewable energy projects whose periods of
implementation are minor to 2 years.
For the case studies that have been presented in this document, the application to
the CDM improved the cash flow of the project. This has become a practice more
and more used by projects based on renewable energies. In some cases like the
one of the H.P.S. “La Joya”, part or the whole amount of bonds generated by the
sale of the CERs are conducted to benefit the community.
There is a temper of collaboration in regards to information about how to execute
similar projects, among the ones that have already made it and the ones that are in
the process of accomplishing them, as in the case of “Agroindustrial Paramonga”,
who has welcomed other interested sugar companies'representatives.
As it has been indicated previously, in the country is being working with success
the development of renewable energies. However, there still are some aspects to
be discussed and improved.
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2.8 Conclusions
As a consequence of the development of the present study, we came to the
following conclusions:
‐ The private sector is investing with greater interest in the implementation of
projects of renewable energies, due to the clarity of the rules established by
the State.
‐ Projects matter of study have gone towards the awarding of a percentage of
the demand taking advantage of the RER’s normative through their
participation in renewable energy auctions. Developers also acknowledge that
this normative is an efficacious instrument of investment’s promotion,
however, they point out that there are aspects that still require improvement.
‐ Entities entrusted to supply financing, in terms of risk and guarantee, tend to
finance only a part of the capital when the developer of the project is a little
investor.
‐ The analyzed projects are fulfilling their objectives regarding the commitment
established with the state of covering part of the demand awarded to them in
the First Renewable Energy’s Auction.
‐ Projects are delivering energy to the SEIN only. They do not have contracts
with other customers for the supply of electric power because they prefer to
fulfill firstly with the commitment set in the auction.
‐ Because of the use of local resources, almost all projects are subject to
coordination with the local population to examine the benefits and
environmental impacts that can take place.
‐ The projects shown in the present report are being replicated by other
companies and there is a temper of collaboration as to offer information
between the companies that already have well-developed projects and the
ones that have projects in process of implementation.
Finally, the factors that determine the projects’s success and their replicability are
the following:
‐ A legal framework clear, stable and which promotes electricity generation with
renewable sources.
‐ The execution of a detailed resource analysis at a technical level, as well as the
engineering required for the implementation of the project.
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‐ Putting at the disposal of the communities located within the project’s area of
influence, the whole necessary information in order to keep good relations with
them.
‐ Mutual agreements between the project’s developers and the community, so the
project could provide additional benefits that contribute to the development of
the zone.
‐ Taking advantage of the emissions reduction to apply for the CDM, so it could
be guaranteed extra income to the project and this redound in the improvement
of its profitability.
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07.pdf [Accessed 14 June 2011].
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line] Available at: http://dger. minem.gob.pe/atlassolar [Accessed 07 June 2011]
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June 2011].
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Exploration. [On line] Available at:
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cas/AutorizacionesGeot%C3%83%C2%A9rmicas.pdf. [Accessed 28 June 2011].
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generation of the H.P.S. “Santa Cruz II”. [Accessed 28 June 2011].
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of FONER. [May, 2011].
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[Accessed 07 June 2011].
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[Accessed 07 June 2011].
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Sheet. [On line] Available at: Ministry of Environment (MINAM),
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no+TALLER+REGIONAL+%e2%80%9cEL+MERCADO+DE+CARBONO+CO
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LA+REGION+LA+LIBERTAD%e2%80%9d [Accessed 15 July 2011].
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157

Perú- Products I and II
ANNEXES:
158

Perú- Products I and II
Annex Nº 1: Country’s File
159

Perú- Products I and II
Annex N° 2: Information of Tariffs
160

Parameter
Unit Number Year Source of Information
Surface
km² 1 285 215,6 2009 Institute for Statics and Informatics (INEI)
Population
Rural areas Mpp 7.7 2009
Especial Bulletin N° 19: Peru: Estimates and Projections of Urban and Rural Population by Sex for
Urban areas Mpp 21.4 2009
Five-Year Periods, according to Departments, from 2000 to 2015 (INEI)
Total Mpp 29.2 2009
Gross Domestic Product (GDP)
US$ 95,977,371,884 2009 MEM - BNE: Values at constant prices of 1990
In rural areas % 56.0% 2009
Degree of Electrification
In urban areas % 97.0% 2009 According to the National Household Survey, 2009 (ENAHO)
In the country % 84.0% 2009
Total supplied fuel for electricity generation: GWh/y 60,692
Fosil fuels GWh/y 33,664 2009 Graphic N° 58 BNE 2009
Renewable Sources GWh/y 27,028 2009 Graphic N° 58 BNE 2009
Electricity Balance
International exchange of electricity (Export) GWh/y -63 2009 Pg 92 COES Statistical Yearbook 2009 (november, december)
Total generated energy: GWh/y 32,945 2009 Electrical Statistical 2009 32 945
Conventional generation GWh/y 13,040 2009 Statistical Yearbook MEM 2009 (Chart 3.5.2.1.). It have been considered renewable the existing
Generation with renewable sources GWh/y 19,905 2009 hydraulic power stations
Final total energy consumption GWh/y 29,110 2009 Chart N° 10.12 : Electric power consumption (Statistical Yearbook MEM, 2009)
Total supplied fuel for heat generation:
Fosil fuels GWh/y 157,353 2009 National Energy Balance, 2009. Graphic: Energy Flow. It is considered heat production everrything
Renewable Sources GWh/y 28,531 2009 that is not used in electricity generation.
Heat Balance
Generación total de calor
Conventional generation GWh/y 110,709 2009
Generation with renewable sources GWh/y 27,778 2009 Calculated from the Chart N° 10 ofBNE 2009 (Final Energy Consumption by Sources)
Final total energy consumption GWh/y 138,487 2009
CO2 total emissions Mt CO2/y 26,976,700 2009 Item 7.1 Carbon Dioxide Emissions (BNE 2009)
CO2 Emissions
FONAM, currently there are managed 34 projects which will produce an emission's reduction of
Emisiones evitadas por las energías renovables
Mt CO2/y 2 905 890 2010 2905890
Public investment in generation plants: 88,849,000
Conventional generation US$/y 25 114 2010 General Directorate of Electricity - MEM
Generation Investment
Generation with renewable sources US$/y 0 2010 General Directorate of Electricity . MEM
Private investment in generation plants: 359,534,000
Conventional generation US$/y 533 520 000 2010 General Directorate of Electricity - MEM
Generation with renewable sources US$/y 861 520 000 2010 - 2011 General Directorate of Electricity - MEM
Public Investment (I&D):
Conventional generation US$/y NDI 2011
Investment in Investigation and Development (I&D)
Generation with renewable sources US$/y NDI 2011
Private investment (I&D):
Conventional generation US$/y NDI 2011
Generation with renewable sources US$/y NDI 2011
NDI:
Non
available
informa1on
ANNEX
Nº
1

TJ
Petróleo 351641
30000
Gas 190607
y
=
‐0.3129x 2 
+
429.34x
+
13384
Leña 80149
25000
R²
=
0.99998
Urbana Rural Carbón 23866
0 1990 13379811 8384704 13380 8385 Bosta
Yareta
Bagazo 22499
20000
3 1993 14654182 8418968 14654 8419
Series1
5 1995 15514678 8411622 15515 8412 15000
TOTAL
CALOR 668762
Series2
10 2000 17687119 8296469 17687 8296 Fósiles 566114
15 2005 19782408 8028132 19782 8028 Poly.(Series1)
10000
Renovables 102648
17 2007 20594600 7887301 20595 7887
Poly.(Series2)
20 2010 21805837 7656096 21806 7656 5000
 y
=
‐9E‐05x 5 
+
0.0077x 4 
‐
0.1684x 3 
‐
1.6475x 2 
+
17.482x
+
8384.5
ENERGIA
ELECTRICA 32367 GWh
25 2015 23893654 7257989 23894 7258
R²
=
0.99998
30 2020 25993220 6831138 25993 6831
0
35 2025 28037517 6374876 28038 6375
0
 5
 10
 15
 20
 25
 30
 35
 40
19 21429
7747
Energía
total
SEIN 29807.3 GWh
Hidro 18752 62.91%
Gas
natural 9267 31.09% PCI
Bagazo 7533 kJ/kg
Carbón 930 3.12% CombusQble 10 6 
kg
D2
‐
Residual 858 2.88% No
convencional 2 GWh
Otros 3 0.01%
TJ GWh
CombusQble 218353 60692
Fosil 121114 33664
Renovables 97239 27028
Hidro 89523
Gas 89048
P.
Industrial 13721
Carbón 10810
INVERSIONES
1 Diesel
D2 7535 GWh
Bagazo 7716 2145
Privado Estatal
359534000 88849000
Generación
convencional
(US$)
GWh
No
convencional Factor
de
transf. 13% 278.8
INVERSIONES
2
CONVENCIONAL TOTAL
EE 32949 GWh
Tipo (US$) Privado Estatal
p Electricidad
Andina 365.29 1449940000 0
p El
Platanal 200
p Cheves 160.44
p Macusani 145.69
p EGECUSCO 136.4
p Quitaracsa 108.65
p H.
del
Marañon 78
p EMGHUANZA
 56.2
p Peruana
de
Energía 54.89
p Cementos
Lima 128
p CORMIPESA 3
p Aguas
y
Energía
Perú 13.38
Fuente:
Documento
promotor
2009
No
convencional
(US$) Privado Estatal
58660000
Pizarras 21000000
Joya 9570000
Naranjos
II 10800000
Sant
Cruz
II 9100000
Yanapampa 3930000
Nuevo
Imperial 4260000
Fuente:
Documento
promotor
2009

29110 GWh
Consumo
total
de
EE
Producción
EE Hidro Térmica Eólica Bagazo
Mercado
eléctrico 19419.22 11501.45 1.23 COES
Uso
Propio 484.55 1538.28 0
Convencional 13040
Renovables 19905
TOTAL 32945 Ok

ANNEX Nº 2
INVESTMENTS IN ELECTRICITY AND ELECTRICAL TARIFFS
INVESTMENTS IN ELECTRICITY
Investment in the Peruvian electricity sector in 2010 have been of 1 368 Million US$, of
which 223 Million US$ were designated to rural electrification mainly executed by the
State. The difference is due to investments in activities like generation (96% private and
4% state-owned), transmission (100% private) y distribution (45% private and 55%
state-owned). Such information is presented in the following chart.

Regarding investments in electricity generation base don RER, as a result of the First
RER Auction there are expected investments up to 2012 by a total amount of 862
Million US$, of which 268 correspond to 18 little hydraulic power stations, 279 to 03
wind farms, 260 to 04 photovoltaic solar power stations, and the remaining number to
02 biomass power plants. That is summarized in the following chart:
ELECTRICAL TARIFFS
Tariffs applied in the country for the residential sector are greater than the ones applied
in the commercial and industrial sectors. This is related to the level oh voltage supply,
as it can be seen in the following chart:

AWARDED PRICES FOR RENEWABLE ENERGIES
The awarded generation prices for renewable energies are greater than the tariff at
generation level in the SEIN.