The Inter-American Investment Corporation (IIC) has approved a loan of up to US$7.2 million to Empresa de Generacion Electrica Canchayllo S.A.C. (EGECSAC) to develop, build and operate a 5.26 MW hydropower plant on the Pachacayo River in Peru.
The $11 million hydroelectric project will operate under a concession agreement with the Peruvian government that will allow EGECSAC to sell the energy generated at a fixed price for a 20-year period.
"We are very grateful to have received IIC financing for this first renewable energy project," said Jose Garcia Herz, general manager of EGECSAC's majority shareholder, Cascade Hydro Power. "We have three projects of this type scheduled to begin construction in late 2013. With them, we hope to become Peru's leading renewable energy company."
IIC said energy demands in the South American country could increase by as much as 65% over the next six years. That increase equates to an additional 3,300-5,300 MW of power by 2018, according to IIC.
A recent study by Frost & Sullivan, however, indicates that Peru's potential for growth could actually be much higher.
HydroWorld.com reported in November that the Peruvian government was seeking expressions of interest from consultants to develop socio-environmental studies for small and medium-sized hydropower projects.