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French developer drops plans for eight Brazil hydro projects

France-based developer Velcan Energy has announced it is abandoning plans to develop up to eight hydroelectric projects on Brazil’s Claro River.

Velcan said June 11, 2009, that studies it has conducted since mid-2008 determined the eight projects, totaling up to 70 MW, are not economically viable.

Velcan had signed a partnership agreement in 2008 with Brazil utility CELG Geracao e Transmissao S/A to develop 25 MW to 30 MW on the Claro River in the Araguaia River Basin of Goais State. (HydroWorld 9/11/08) At that time, Velcan said a project inventory still had to be completed.

Now that the Claro River projects are determined to be unviable, Velcan said it would write off 150,000 euros (US$208,275) it expended in development costs.

Velcan’s agreement with CELG also calls for development of the 64-MW Pau d'Arco project on the Palma River in Tocantins State. Pau d'Arco is the biggest project to date for Velcan, whose strategy is to develop hydro projects in stable emerging countries having a high potential of undeveloped hydropower. It has two sources of revenue, power sales and sale of carbon credits.

Velcan announced another setback in May, noting Brazil’s national congress approved a bill granting preference to domestic companies in competition for concessions for small hydropower projects. (HydroWorld 5/26/09) Velcan said the legislation likely would make it impossible for the France-based developer to win such hydroelectric concessions, since most competitions include domestic bidders.

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