RE firm to government: Prioritize mini-hydropower projects

by Lenie Lectura - May 24, 2016
http://www.businessmirror.com.ph/re-firm-to-government-prioritize-mini-hydropower-projects/A

renewable-energy (RE) developer on Tuesday said government investment policies should prioritize the development and construction of mini-hydropower projects, which, it said, are the most environment-friendly energy sources.

“We believe that there is a need to give greater importance and priority to small-scale hydropower projects. Energy producers share a common commitment to the potential and the need for rapid growth in the development of clean, efficient and low-risk energy solutions,” Victor Lee, Repower Energy Development Corp. (REDC) CFO, said.

Noting that the small hydropower sector is primarily driven by private investment, Lee highlighted the potential of mini-hydropower, and the steps should be taken to attract more investments in the small hydropower sector from public investors.

“With today’s improvements in technology, we can easily foresee turbines lasting for 100 years,” Lee said.

He added that financing mini-hydropower projects normally entails 70 percent to 80 percent in debt and 20 percent to 30 percent through equity; while there is also nonrecourse project financing available through government-owned-and-controlled banks, where a grace period on principal repayments during construction period is given.

His company, REDC, a subsidiary of Pure Energy Holdings Corp., has already broken ground on three mini-hydropower projects, one of which is the recently acquired oldest operating mini-hydropower plant of Philippine Power and Development Co. that stood since 1927. REDC’s upgrade is expected to have a 200-percent increase in nameplate power capacity and an 800-percent increase in the energy-generation output.

“Our run-of-river mini-hydro development projects all have service contracts with the Department of Energy [DOE] for 25 years, which may be extended for another 25 years. This could potentially last for 50 years, which is very attractive for investment,” he added.

Lee further noted that the incentive scheme for the sector is more attractive involving single-window clearances for such projects, including sites, clearances, survey and investigation of such projects to interested developers.

However, he also noted that the development of small hydropower infrastructure in the country has been less than satisfactory, and that there’s a need to expedite huge untapped potential of the infrastructure at a faster pace to meet the unmet energy demands of the country, as well as to balance clean energy with fossil fuel- generated energy.

“Our small-scale infrastructure investment in the country is not enough. REDC has strong project management, engineering and construction capabilities, and we can deploy capital rapidly to deliver high-quality mini-hydro assets to support the sustainable development of the country. We’re ready to provide this technology to the public,” Lee said.

Some sectors are showing signs of interest in small hydropower investments, he added, due to a feed-in tariff system and the government’s desire to cultivate its renewable sector and achieve its commitment in the 2015 United Nations Climate Change Conference.