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Small hydro boom in South America

Brazil is experiencing a boom in small hydroelectric dam construction projects, according to the country’s electricity regulatory body, ANEEL (Agencia Nacional de Energia Eletrica).

ANEEL is examining 65 small dam proposals with a total output of 800MW. Brazil currently has 350 operational small dams which produce 650MW. The proposed dams are much larger than these, averaging 13MW compared with 1.8MW. The difference is due to the fact the new dams are aimed at future open energy markets while the old ones were built mainly for the supply of agrobusinesses.

The rapid increase in small dam projects known by their Brazilian initials, PCH, (Pequenas Centrais Hidroeletricas) is a direct result of incentives offered by Law 9648 introduced in May 1998. This confers discounts of at least 50% on transmission and distribution charges as well as other fiscal benefits. ANEEL defines a PCH as one generating up to 30MW and whose reservoir area does not exceed 3km2. Fifty-four per cent of the proposed PCHs are located in Minas Gerais state, followed by Rio Grande do Sul (8%), Mato Grosso (7%), Goias (6%) and Rio de Janeiro and Parana (5% each). Companies interested in the development of PCHs in Brazil include alstom, Logus Energia, Coelba and Luz Cataguazes-Leopoldina.