Peru : Overcoming the Barriers to Hydropower
Hydropower has been the major source of electricity in Peru, traditionally supplying more than 80 percent of electricity requirements, and serving as a source of independent generation for major mines and industries. With the development of natural...
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| Language: | English en_US |
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Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2010/05/12664773/peru-overcoming-barriers-hydropower http://hdl.handle.net/10986/17528 |
| Summary: | Hydropower has been the major source of
electricity in Peru, traditionally supplying more than 80
percent of electricity requirements, and serving as a source
of independent generation for major mines and industries.
With the development of natural gas in the early 1990s, and
the opening of the Camisea pipeline, the Government of
Peru's (GOP's) attention turned to providing
incentives for the use of natural gas in power generation.
This resulted in a virtual moratorium on hydropower
development as a result of the very low price of natural gas
(below economic cost). With the development of export
markets for gas and increased attention to the impacts of
climate change, the Government has recently begun to pay
renewed attention to hydropower. Recent developments
include: (a) introduction of accelerated depreciation for
hydropower investments; (b) introduction of a
"discount" to permit hydropower to compete with
gas-fired plants in auctions; and (c) announcement of a
special hydropower auction to be held in 2009 by
ProInversion, the state agency for promoting private
investment. The intention of this report is to assist the
GOP in assessing the potential role of hydropower in the
sector and the measures that could be taken to encourage its
continued development as appropriate. The study was done at
a particularly challenging time. First, there was
considerable volatility in energy prices and investment
costs, which needed to be incorporated into the analysis.
Second, financial markets were in disarray and it was
difficult to predict when conditions were likely to
normalize. Third, the GOP recently introduced many new
policies and regulatory measures through supreme decrees
that are changing the regulatory system and may interact in
unexpected ways. |
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