Small Hydropower Programme, Chile

  • Technology: Small run-of-river hydropower
  • Country: Chile
  • Carbon approach: CDM PoA
  • Job: CDM PoA registration cycle; facilitation of sales and financing of carbon program; carbon program strategy and operations
  • Sustainability: small, decentralized, environmentaly and socially friendly, renewable electricity generation; “democratization” of ownership structures in the Chilean electricity sector
small hydropower project in construction

Construction of an overflow dam: The impacts of run-off-river hydropower to the local environment are minimal.

Who

The APEMEC small hydropower PoA is a concerted initiative of the small hydro sector in Chile. APEMEC is the not-for-profit association of Chilean small hydropower producers. Since its foundation in 2008 APEMEC has experienced a rapid growth and strong political support in its quest to promote a paradigm shift in the Chilean energy sector towards decentralized, small-scale, renewable electricity generation with low impacts to the environment and local communities.

What

As a fundamental mean to achieve its mission APEMEC is developing a CDM PoA for the small hydropower sector. Through the PoA small hydropower developers gain access to APEMEC’s technical, legal and commercial expertise. More importantly the APEMEC PoA offers project developers a streamlined and one-stop-shop approach to realize the CDM potential of their project. Thanks to the joint CDM development of many projects under the same umbrella even smallest projects gain access to additional revenues from CDM. Furthermore, KfW Bankengruppe , the buyer of the generated CERs, is an AAA rated financial institution. Thus, CDM revenues are fully bankable and not only projects’ cash flows are improved but the PoA also assists projects directly in reaching financial closure.

Sustainability

The PoA promotes a paradigm shift in the Chilean energy sector towards decentralized, small-scale, renewable electricity generation with low impacts to the environment and local communities. Small run-of-river hydropower (installed capacity below 15 MW) today represents only a marginal share below 1% of Chile’s electricity generation. The bulk of the national electricity generation stems from fossil fuel fired plants (coal, diesel and natural gas) and large hydropower dams that each in its own terms are harmful to the environment and surrounding communities. Furthermore, the Chilean electricity sector is dominated by a hand full of large utilities. Projects promoted by the APEMEC PoA are generally too small and financially not attractive for these large companies. The typical owners and operators of projects under the PoA are small, new players. Therefore, the program strongly contributes to a diversification and democratization of ownership structures in the Chilean electricity market.

Bridge Builders’ Role

Our role in the APEMEC PoA is ample. We accompany and guide APEMEC through the entire carbon project cycle. Bridge Builders is responsible for PDD development, validation and registration of the PoA, as well as the development of all standard contracts and other PoA documents. We train and assist APEMEC personnel in the management of the PoA, e.g. with respect to monitoring, accounting and project inclusion. Furthermore, we assisted APEMEC in the identification of a suitable partner for the purchase of CERs and in the negotiation of a respective Emission Reduction Purchase Agreement (ERPA) and additional financial support agreements.