INE/ENE. Sustainable Energy For All. Hydro Power Plants Rehabilitation

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1 INE/ENE Sustainable Energy For All Hydro Power Plants Rehabilitation October 12, 2011

2 Some background Nuclear 2% ER not Hydro 1% Thermal 40% Hydro 57% Hydroenergy has a dominant share in the power generation matrix in LAC

3 Some background and significant potential still to be developed

4 Some background Since 2005 the IDB takes an active role in hydropower projects Porce III Tocoma Brasil Central America Furnas Misicuni Tocoma Guri Peligre ENE, the Energy Division of the IDB builds upon recent experience in hydropower projects financing

5 Some background BID and ENE in the hydropower sector Porce III, 660 MW Tocoma, 2160 MW Peligre, 54 MW Misicuni, 80 MW Furnas and Luiz Barreto, 2266 MW Guri, 1215 to 2010 MW Centro América, 50 MW Santa Bárbara, 50 MW

6 Brasil Argentina Colombia México Chile Perú Costa Rica Guatemala Honduras Panamá Republica Dominicana Paraguay Ecuador Nicaragua Haiti Belize 6 Rehabilitation of Hydroelectric Power Projects Country Nominal Potential of Power (MW) Rehabilitation (MW) Brazil 41,392 16,557 Argentina 11,271 4,508 Colombia 6,848 2,739 México 5,053 2,021 Chile 3,332 1,333 Perú 2, Costa Rica Guatemala Honduras Panamá Rep. Dominican Paraguay Ecuador Nicaragua Haiti Belize Hydro TOTAL Power Plants Rehabilitation 73,113 43, Rehabilitation of Existing Hydroelectric Plants Potential of Rehabilitation [MW]

7 Q&A on Hydro Rehabilitation Why are projects that are obvious rehabilitation candidates not realized? Limited or defused liability of the owner/operator Lack of technical / financial resources for project preparation Restrictions to invest in CAPEX Priority to investment in new assets Possibility to defer investments Technical management far from decision making levels

8 Q&A on Hydro Rehabilitation Are rehabilitation projects more difficult to finance? Lack of prioritization analysis Weak or nonexistent economic feasibility studies Existing Socio Environmental liabilities Environmental issues Lack of project management skills in an plant operator Works Programs uncertainties Cost uncertanties

9 Q&A on Hydro Rehabilitation What are the hidden problems of replacing older hardware? Insuficient diagnostics Loose specifications Aditional works Restrictions to programmed stops Extended work periods Start up failures

10 Q&A on Hydro Rehabilitation What other opportunities arise from rehabilitation? Increase reliability Increase efficeincy Resolve environmental liabilities Improve water management practices Reinforce owners/operator technical capacities Upgrade related infrastructure

11 Perspective from the preparation of funding Rehabilitation Project Feasibility Procurement Execution Preparation of Financing

12 Evaluation Topics Economic/Financial Evaluation Technical Review Environmental Analysis Institutional Analysis Procurement analysis Sector status

13 The client s perspective Institutional Analysis Fiduciary analysis Sector status

14 The client s perspective Environmental Analysis Polluting technologies Mobilization of equipment Disposal of decommisioned material Original project's environmental liabilities Other environmental liabilities from associated activities

15 The view from the Bank team + The view from the Customer = The View from Project Team

16 Thank you! Alejandro Melandri Inter-American Development Bank /