Table of ContentsAbstract.......................................................................................................................................................1

Destination..............................................................................................................................................1

Keywords.................................................................................................................................................1

Current Conditions in Latin America.....................................................................................................2

Why Target Bottom of the Pyramid Nations.........................................................................................3

Current Latin American Power Sources.................................................................................................4

Peru.........................................................................................................................................................5

Chile.........................................................................................................................................................7

Economic Conditions............................................................................................................................9

Possible Energy Solutions.....................................................................................................................9

Coal........................................................................................................................................................10

Natural Gas............................................................................................................................................10

Nuclear..................................................................................................................................................11

Biomass.................................................................................................................................................12

Solar.......................................................................................................................................................12

Wind......................................................................................................................................................13

Large Scale Hydropower........................................................................................................................13

Micro-Hydro..........................................................................................................................................15

Pros...................................................................................................................................................16

Cons..................................................................................................................................................18

Physics of Micro-Hydro......................................................................................................................18

Ties to Public Utilities.........................................................................................................................21

Funding..............................................................................................................................................21

Credit.....................................................................................................................................................22

Government Assistance.........................................................................................................................23

NGO Involvement..................................................................................................................................23

Maintenance and Job Creation...........................................................................................................24

Case Studies.......................................................................................................................................25

Nepal.....................................................................................................................................................25

Bolivia....................................................................................................................................................26

Kenya.....................................................................................................................................................27

Peru.......................................................................................................................................................27

Conclusion and Evaluation.................................................................................................................28

Bibliography.......................................................................................................................................30

1

Abstract

One of the reasons rural communities are disappearing and squatter cities such as Port o

Prince, Haiti or Nairobi, Kenya are thriving is because those rural regions are powerless; they

have no reliable power source. Typically, many remote communities rely on shipments of

kerosene and diesel fuel to run their industry equipment and produce light. However, using

micro-hydroelectric power in rural settings not only creates a clean and environmentally

sustainable source of energy, but also provides electricity to thousands of citizens. In turn, this

energy can stimulate economic prosperity for many rural communities. This keeps residents

away from urban slums, while directly impacting new businesses and making the country just as

comfortable to live in as the city. Remote mountainous regions such as the Andes are ideally

suited, as villages there are typically off-grid and can use the natural height displacement to more

efficiently generate power from run-of-river hydropower. By diverting and creating a small

damming pool at the top of a hill, villagers can then make use of a controlled flow down to a

generator room, which encases a hydroelectric turbine and generator. Depending on water

volume, flow speed, water height, and generator capabilities, this can produce enough for a

single home or for an entire village, all while doing little to no ecological damage due to the

small scale of the dam. Across the globe, from Brazil to Kenya to the Philippines, there are

documented cases of rural communities seeing a positive effect from micro-hydropower. By

highlighting the relationship between rural hydropower and economic growth I suggest that the

new creation of micro-hydropower systems should be actively approached and encouraged by

your organization.

Destination: UN Development Programme; Engineers Without Borders - International

Keywords: micro-hydropower; sustainable energy; remote; hydroelectric; economic growth

2

Current Conditions in Latin America

Latin America is blessed with an abundance of power sources, both renewable and

traditional. Oil deposits in Central America, the second largest hydroelectric dam in the world,

dozens of geothermal energy sites, and the largest production industry of ethanol are all in Latin

America. Despite the abundance of so many energy sources, Latin American power is highly

centralized to the major population areas. Specifically in terms of electricity, outside of major

cities the grid falls apart. Due to their remoteness or geographical isolation it is impractical to

connect some villages to a main power grid. Many small villages (populations under 2,000) and

rural communities are left out of the public utility’s scope in terms of power; leaving these

communities to turn towards liquid forms of power (Small Hydroelectric Powerplants, 291).

Liquid fuel, such as gasoline, kerosene, natural gas, and other biofuels are the common sources

for energy in rural Latin America. Using liquid fuel to create electricity is inefficient and

expensive, making it almost impossible for rural areas to have electricity, either for residential or

commercial purposes. Being unable to have electricity, heat, or other benefits of a reliable energy

source leaves much of the rural population at a disadvantage, both economically and in terms of

quality of life.

Businesses, especially second tier development such as manufacturing or benefit adding,

all require some reliable form of electricity or power. Aside from simple cottage businesses and

agriculture, the rural communities are unable to progress up the economic development ladder.

Furthermore, towns deprived of electricity are at a functional disadvantage to those with

electricity. People rely on candle lights, lanterns, and fireplaces to illuminate their homes after

dark, while much of the town shuts down. Without electricity there is little a business or

commercial entity can do at night, turning these remote villages into ghost towns after sunset.

3

Why Target Bottom of the Pyramid Nations

In 2002 at the World Summit on Sustainable Development in Johannesburg, many

economists, social scientists, and energy experts came to the conclusion that energy consumption

and GDP are directly related. The figures below, published by the World Bank, are evident to

this trend. On the left is the correlation between Energy Consumption per Capita, measured by

kilograms of oil equivalent, and those country’s Human Development Index rankings as of 2002.

As the amount of energy consumption increases the state’s HDI score increases as well. More

importantly however, is that the marginal gains in HDI are greater when the value of energy

consumption is relatively low, and as the consumption rate increases the marginal improvements

to HDI decrease. Thus, targeting the improvement of rural and poor populations’ access to

electricity should reap higher benefits than improving electricity access in OECD countries. On

the right are the trend lines for global energy consumption and global GDP growth between 1980

and 2000, clearly showing a positive correlation. Therefore, by raising the amount of electricity

available for a population to utilize, the probability of utilizing that for economic gains is high.

4

Speaking specifically for hydroelectric generation, most OECD countries have already

maximized their potential capacity for electricity generation. However, much of Asia, Africa,

and South America

have utilized a small

amount of the vast

potential energy

available. Latin

America alone has an

estimated 682,373 MW

of potential

Source (Stockton)

Source: (Hens & Nath, 119) Source: (Hens & Nath, 117)

5

hydroenergy, mostly due to favorable geographical and climate conditions. (Wu, 5) This

misfortune can now be undertaken as an opportunity for some of the poorest nations in the world

to utilize their natural resources in hydropower potential to gain control over their energy

production and jump start their economies.

Current Latin American Power Sources

Currently in Latin America the main source of energy, both for generating heat and for

fuel is petroleum. As of 1991, petroleum products accounted for almost 60% of primary energy

sources in Latin America. (Wu, 1) Despite being a major source for use as transportation fuel and

heating, petroleum is rarely used to supply electric generators as it is inefficient to do so. The

major supplier of electricity production in the region include: natural gas, hydropower, coal, and

a limited amount of nuclear reactors in South America. The amount of electricity generated by

each source varies by state and is greatly based on geographical location, allocation of natural

resources, and availability of finance. The other sources listed in the graph below range from

biomass used as kindling to fuel fires to renewable power sources such as geothermal heating or

solar power.

59%16%

14%

6%4%

0%

Latin American Energy Sources (1991)

PetroleumNatural GasMiscellaneousHydroelectrictyCoalNuke

Source (Wu, 1)

6

Due to the vast diversity in energy generation and need, Peru and Chile will be looked into with

more detail.

Peru

Peru relies heavily on petroleum products for fuel, but utilizes hydropower for the

majority of their electricity generation. Unfortunately for Peru, it has one of the least developed

power infrastructure, specifically with regards to hydroelectricity. Utilizing 2,457 MW of power,

hydroelectricity made up for 59% of the total electricity generated in 1991, but this is only 3.9%

of Peru’s 62,530 MW of potential hydropower. (Wu, 176) Outside of hydroelectricity Peru relies

on natural gas and coal fired power plants to deliver electricity to their grid. In the rural regions

of the state, liquid fuels and biomass such as firewood are the main sources for generating

electricity, heating, and transportation.

Oil

Natural Gas

Coal

Hydroelectricity

Other

0 10 20 30 40 50 60

Peruvian Primary Energy Sources

200019911980

Source (Wu, 187)

Notice, as the years go by that the percentage share of Oil as a primary energy source has

fallen, while between 1980 and 2000 Hydroelectricity has grown dramatically. Utilizing

hydropower, from large to pico, should be a priority for the Peruvian government to improve the

7

livelihood of their citizens, create jobs and electricity, and lower their dependence on imported

oil. There are already signs of this as several Clean Development Mechanism, or CDM projects

have started during the last decade in Peru. As of 2008, more than 22 different CDM projects

have been registered. Clean Development Mechanism (CDM) projects are certified green energy

produces that are involved in a global carbon emissions trade platform, created as a by-product to

help signatory countries reach their Kyoto emissions levels. (Lokey, 3)

* As of 2008 none;

five wind study

concessions are in

the planning stages

while four different

wind power

companies are in the

start-up stage in

Peru.

Chile

Compared to its regional neighbors, Chile is not as well endowed with energy producing

natural resources, most of which are located in the far southern area of the state. As a result Chile

is the second largest energy importer after Brazil in South America, mainly in the form of liquid

fuels and petroleum products. (Wu, 212) Adding to this difficulty is Chile’s population far

reaching nature. Despite having a high urbanization rate for Latin America, it has the lowest

population density as well, making it difficult to connect everyone to energy grids. Currently

there are only three major electricity grids in Chile, each operating autonomously in different

048

1216

Registered CDM Projects Circa 2008

Source (Lokey, 282)

8

geographical locations: one in the industrial North, one near the capital Santiago, and one in the

populated South. (Energy Profile) As of 1991, Chile relied on imported oil, local firewood, and

biomass to supply the majority of their power. Imported natural gas is also on the rise, both for

heating and electricity generating purposes, while hydropower accounts for slightly more than

7% of Chile’s primary energy generation. (Wu, 213)

50%

20%

14%

9%

8%

Chilean Primary Energy Sources (1991)

PetroleumFirewoodCoalNatural GasHydroelectricity

Source (Wu, 212)

More recently however there has been a shift towards increasing hydropower’s role in

Chilean energy. Chile was able to grow throughout the last decade due to an energy agreement

with Argentina for cheap natural gas. But when Argentina decreased supply due to increased

regulation of hydrocarbons in 2004 Chile was forced to use diesel fuel, a more expensive

substitute. Since then Chile has shifted focus to large scale hydropower, resulting in roughly two-

thirds of Chilean electricity being generated from water. (Wharton) This is echoed by the amount

of registered Clean Development Mechanism projects, specifically the ten hydropower sites that

were ongoing in 2008. (Lokey, 180) Utilizing small scale, renewable power could be a solution

for Chile as it would not only reduce their reliance on energy imports, but better connect the

country to power sources.

9

Economic Conditions

Economically speaking, Latin America is a mixed bag. As a region it has one foot

moving forward with strong economies and international trade with Brazil, Argentina, and

Mexico leading the way. The other foot is still stuck in the past, trying to generating economies

and move beyond agricultural trade to propel their populations into the 21st century. Current

estimates show the region has a gross domestic product upwards of five trillion dollars US

(WEO Database) and is scheduled to have a growth rate close to 5% over the next few years.

(Regional Perspective) Major exports of the region include manufactured goods, raw metals,

coffee, beef, and other agricultural products. (CIA Factbook) Though imports vary between

countries greatly, petroleum, electronics, and technical equipment are common across the region.

(CIA Factbook) Highlighting Brazil as the largest economy in Latin America, it is also a member

of the informal BRIC group, a set of countries with rapidly expanding economies and middle

classes. Despite Brazil’s recent gains, much of the continent is considered part of the developing

world with high unemployment and relatively small GDP/capita figures.

Possible Energy Solutions

Growing and stabilizing the energy market is a goal for any state, regardless of size or

power. Focusing on those rural, remote communities with 2,000 people or less, there are several

0

8

16

Registered CDM Projects Circa 2008

Source (Lokey, )

10

possible energy sources to consider. These include traditional means of generating electricity

such as coal or natural gas as well as newer technologies such as solar and nuclear.

Coal

Coal, depending on availability, is the cheapest and easiest source

of generating electricity. Unfortunately for much of Latin America, there

are relatively few reserves and deposits of coal, forcing countries to

import from more abundant states such as Russia, China, and the United States. After including

the cost of transit and the amount necessary to generate electricity for their population, using coal

becomes much more expensive and not cost effective for many Latin American nations. As of

1991, less than 5% of the region utilized coal as an energy source. (Wu, 4) As well as not being

cost effective, coal has a poor efficiency rating as only forty to fifty percent of coal burned

generates electricity. (EN19) Also, coal is one of the highest greenhouse gas emitting energy

sources, which can do harm to the local environment and stakeholders, as well as create

additional costs for the plant to account for. With regards to small communities, coal fired power

plants are large sites and cannot be scaled down to economically provide power to a remote

village. Only if a community could link into an existing grid supported by a plant would coal be

an acceptable solution.

Natural Gas

11

Much of Latin America utilizes natural gas fired power plants to generate electricity; as

of 1991 it accounted for 15.3% of primary energy production. (Wu, 1) More plentiful in the

region than coal, it has been traded as a commodity between nations with higher deposits, such

as Venezuela and Argentina, to nations with less, such as Chile or Peru. Another positive aspect

to natural gas is its ease to transport. South America is covered with several natural gas pipelines

as, much of the natural gas imports come from regional neighbors. This reduces freight and

transit costs while moving natural gas efficiently across the continent. Finally, compared with

coal, natural gas burns cleaner and requires less action by plants and governments to regulate.

All in all natural gas is a suitable power source for Latin Americans, so long as they are

connected to the grid or are living in urban population centers. Just like coal, natural gas is

unable to scale down operations economically for remote or small communities to take

advantage of. Therefore natural gas, a fine source of energy for large populations, would not be a

suitable energy source for rural populations.

Nuclear

Nuclear reactors, somewhat common in the United States and

Europe, are more or less non-existent in South America. Many countries

cannot afford to build plants, due to extremely large initial capital

required for construction. As of 1992, there are just four operating

nuclear plants in Latin America, two of which are in Argentina and one in Brazil and Mexico.

(Wu, 5) All of these countries are worthy candidates as they boast large populations, many of

which are centered in the urban cities such as Buenos Aires, Rio de Janeiro, and Mexico City.

Also, each of these countries host large economies, and have the financial power to invest in

nuclear power. Other countries, particularly smaller and developing countries cannot afford, nor

12

require nuclear plants to generate power for their populations. Also, once again there is no ability

to scale down nuclear plants to be economically feasible for small, remote towns.

Biomass

Biomass refers to organic materials used as renewable energy

resources such as woods, crops, or waste. (Clean Energy Ideas)

Typically used for heating purposes, biomass is relatively inefficient in

generating electricity, at best only reaching 45% efficiency. (IEA Technology Essentials, 1)

Though abundant in developing countries through Latin America, specifically in the form of

firewood or animal/plant matter, it is an impractical source to use for generating electricity.

However, use of biomass is easily done on a small scale and is already widely used in remote

communities as a source of energy for generating heat, cooking, and other activities. Due to its

ease of use and wide availability, biomass accounted for roughly 14% of the regions primary

energy sources in 1991. (Wu, 1)

Solar

Solar energy, specifically the use of photovoltaic panels or

collection farms, has not been widely discussed throughout Latin

America. Most likely due to the high cost of construction and

maintenance, this source of energy is not cost effective for both

large populations and small ones. Due to its low efficiency of conversion (20% or less) and high

technological costs, it would require many panels or mirrors to collect enough sunlight to

generate stable electricity for a city and a cost effective price. (Stockton) Though scalable to

13

provide anywhere from 320 Watts to 97 Megawatts, solar is extremely expensive, far out of

reach for Non-OECD populations unless there is government support or subsidies to help fund it.

Also, since solar panels only generate electricity during the day there needs to be some form of

storage or battery to allow for electricity when it is dark. Finally, due to the humid and cloudy

climate of South and Central America the efficiency will drop dramatically from peak operating

ability. For these reasons small scale solar power is not a cost effective or sustainable source of

power for remote communities.

Wind

Compared to the other clean and renewable energy of solar

power, wind power is relatively inexpensive, mostly due to low

maintenance costs. Also, it is scalable to include wind farms able to

produce upwards of 700 MW to backyard windmills. (Lombardi, 1)

That being said wind energy is fickle and unreliable; fickle in the sense that it requires a steady

breeze of a certain mph to generate electricity and unreliable in the sense that wind is a

requirement for generating electricity. Relying solely on wind energy will put homes out of

power when the wind doesn’t blow, and in many parts of Latin America this is often. Overall,

wind is a good idea for Latin America to help diversify and bolster its energy market, but it

should not be used as the sole energy provider for small, remote communities.

Large Scale Hydropower

Already a main staple of Latin American power, large scale hydropower is a where many

countries turn to generate electricity. The Itapú Dam on the Brazil/Paraguay border is the second

Itaipú Dam (Brazil & Paraguay)

14

largest in the world, only falling behind the Three Gorges Dam in terms of total megawatts

generated. (Wu, 72)

In fact close to one-third of Latin American hydroelectricity is generated from three

electricity generating dams, two of which reside in Brazil. (Wu, 5)

11%9%

9%70%

Latin American Hydroelectricty Production by Dam

Itaipu Dam (Brazil/Paraguay)Itatuba Dam (Brazil)El Guri Dam (Venevuela)Others (Latin America)

Source: (Wu, 5)

Aside from small shifts in seasonal water availability, these dams provide many South

Americans with green and affordable electricity. That being said, large scale hydroelectricity has

some downfalls, specifically with regards to impoundment type dams. These dams create vast

reservoirs by blocking and controlling the flow of water through the dam. This type of dam can

have lasting effects towards many stakeholders through changing the river ecosystem, displacing

villages above the dam site, causing changes in the local watershed, and other detriments.

Also,

by

Source (Stockton)

15

utilizing large scale dams for generating electricity, the power needs to be routed into a grid for

consumption. Large dams cannot economically be used to generate electricity for small rural

areas as they are large in construction cost, maintenance cost, size, and generating power.

Micro-Hydro

According to C.C. Warnick’s book Hydropower Engineering,

“Microhydro power usually refers to hydraulic turbine systems having a

capacity of less than 100 kW.” (Warnick, 281) To add, the International

Energy Association defines small scale hydro to be systems generating

between 50 kW and 10MW. (IEA Small Hydro) Currently small scale hydroelectric projects

make up for roughly 10% of all hydroelectric generation, but are on the rise as more developing

nations seek energy autonomy. (Ren21) As of 2008 China, a nation known for drastically

increasing their energy sector, is the global leader in small scale hydroelectric projects. (Ren21)

Global90%

Small Scale10%

Global Hydropower

Source: (Ren21)

76%

4%4%

2% 14%

% of Global Small Scale Hydropower

ChinaJapanUnited StatesIndiaOthers

Source: (Ren21)

Small scale hydroelectric plants, though similar to large scale plants, have a much smaller

environmental and societal impact. Much like how civilizations utilized streams and rivers to

create waterwheels and aqueducts, micro-hydro seeks to generate electricity in a traditional

sense. Since most small scale systems are “Run of River” in design, there is no need for large

16

dams and great amounts of stored water. Instead “Run of River” designs take advantage of the

characteristics of the water source, either by applying stationary turbines to high velocity rivers

or by diverting a small amount of water and creating a height discrepancy to the turbine to create

velocity.

Pros

Though any form of hydropower can affect the river’s ecosystem, “Run of River”

systems do so less drastically than large scale dams. By not creating a large body of water above

the dam site, small scale dams do not displace communities and wildlife, nor do they erode the

terrestrial resources around the river. Also, as with large scale hydropower, small scale hydro

gives off no harmful emissions and requires no toxic chemicals. The source of power generation,

water, is also relatively consistent in Latin America. Aside from seasonal rises and falls for

monsoon or drought conditions the flow of water is constant, there are no freezing periods. Also

specific to Latin America is the abundance of hilly areas, specifically those with high

Source: (Practical Action)

17

concentration of running water (such as the Andes in Peru or Chile). (PA Technical Brief, 3)

Utilizing the nature height discrepancies in these mountainous areas makes small scale power

less complex to construct and more cost effective. By keeping the process small and simple,

communities can better afford these systems, despite having large initial capital required for

construction. Though large for developing nation’s standards, construction costs for small scale

projects typically run in the thousands and can be lowered by the availability of cheap, local

labor. One of the reasons these costs are so low compared to other forms of clean energy comes

from a long history of hydraulic technology. As one of the oldest forms of energy generation, the

ideas behind hydropower have been around for many years. According to a report published by

the National Rural Electric Cooperative Association in 1980, “Standard High Head Group for a

32kW facility would have an equipment cost of $98,640. (Small Hydroelectric Powerplants, 283)

The cost and capital recovery will be further discussed with regards to government or NGO

funding and business models later in the brief. (See Pg.

21) That being said, aside from finding a way to connect

remote communities to mainstream electricity grids, this

is the most cost effective means to electrify remote

areas, partially due to the long lifetimes small scale

dams have. A typical micro-hydro facility in Brazil can expect to reach upwards of 25 years if

treated and maintained well. (Vaz, 5) Along with generating power for rural communities, many

projects require additional construction or renovation of infrastructure, further benefiting locals.

Finally, compared to the majority of other primary energy sources, hydropower has the highest

efficiency of electricity conversion, nearly 80%. (Vaz, 5) This efficiency is especially impactful

18

for small scale operations as one gallon of water can generate much more electricity compared to

the same amount of petroleum, natural gas, or coal.

Cons

However, there are difficulties associated with small scale hydro power. Most impactful

for Latin American communities are the expensive and damaging effects of hectic weather.

Extreme rainstorms, hurricanes, and mudslides can all damage powerhouses, down power lines,

and destroy penstocks or water channels. Repairing these damages is made more difficult by the

remote and hostile nature of the local terrain. Finally, though typically less than large scale

plants, any distortion of a water supply can have affects on local health and water.

Physics of Micro-Hydro

Following a standard design criteria set forth by the Office of the Program of Applied

Technology (OPTA) in Peru, there are eight necessary pieces to a small scale, “Run of River”

hydroelectricity plant. (Small Hydroelectricity Powerplants, 146)

Diversion Dam and Intake – Either a complete or partial diversion dam disrupts the

steady flow of water through a river or stream and creates a minor pool. At this point the

water used for electricity is split from the natural river. At the diversion pool is the intake

point for the water used to generate electricity. Either as a function of the diversion dam

or intake point there is a control gate to regulate the flow of water to the forebay.

Canal and Spillways – The canal is the man made tract that carries the water from the

river to the penstock, and ultimately returns the water to the river. For safety precautions

against flooding operations between the river and the powerhouse, many canals are

equipped with spillways to mitigate water overflows.

19

Trash Rack and River Discharge – After the water is separated from the natural source,

but before it can go to the powerhouse is the trash rack. According to OPTA, “There

should be a trash rack built between the intake and the canal to prevent the entrance into

the canal of larger pieces of debris.” (Small Hydroelectricity Powerplants, 147) The trash

rack acts as a screen to prevent any damaging materials from entering into the power

turbine. Along with a trash rack there should be some way to discharge river bottom

sediment, dependent on the condition and quality of the turbine.

Sluice Gate – After all of the debris has been removed from the water and it is safe to

continue on to the turbine it needs to pass through the sluice gate, also known as a

penstock valve. Similar to the how the intake point behaves, the sluice gate controls the

amount of water to proceed to the turbine. This water needs to be regulated due to peak

power times and seasonal differences in water level.

Penstock – According to Warnick, a penstock is “the conduit that carries water from the

supply source to the turbine.” (Warnick, 122) Typically the penstock is separated from

the canal by a forebay tank and is traditionally a closed tube to the turbine due to the high

pitched angle used to increase water velocity. A forebay tank is the point in the canal

above the sluice gate, essentially a small reservoir for the headwater to gather. The

headwater refers to the water’s highest point above the turbine, while the tailwater refers

to the water exiting the turbine. While most developing nations’ projects utilize steel for

their penstocks, they can be made of wood, PVC, or concrete tubing. (Warnick, 123)

20

Turbine and Generator – The most important aspect of a hydraulic facility, the turbine

is the equipment that turns or spins as a result of the water impacting it. (Warnick, 11)

The turbine takes the water’s kinetic and gravitational potential energy and converts it

into mechanical energy. This spinning mechanical energy is thereby used by a generator

to create electricity. Both the turbine and electric generator are protected from the

elements, typically in a shed or building called a powerhouse. There are three different

types of turbines that can be used for small scale hydroelectric plants: Pelton, Francis, or

propeller. (Warnick, 12) For the purposes of this paper the focus will be on Pelton

turbines as they are the most versatile and common in micro-hydro sites.

Tailwater and Re-Integration – The final step in the hydropower process, the used

water needs to be returned to the river at some point. Most sites build their powerhouses

21

downstream on the banks of the same river they pulled the water out of in the first place.

If not, the tailwater needs to pass through an exit canal connecting the powerhouse an

acceptable water source at some point.

All together these pieces combine to create a small, green, and efficient means for

generating electricity for a home, a farm, or even an entire community.

Ties to Public Utilities

For the purposes of this paper, the focus will be on standalone projects, i.e. projects that

are not connected to a grid and only provide power to the immediate village or communities in

the area. Though small scale hydroelectricity plants can feed into larger electricity grids, it is

uncommon for them to, especially in developing nations. Furthermore, to explore the politics and

organization of Latin American public utilities would be a difficult and confusing task. That

being said, local governments will still be considered with regards to funding and regulating.

Funding

As with any project that aims to alleviate poverty, one of the major questions of its

sustainability is that of funding. On paper many projects appear too good to be true, but when

posed with the difficult task of finding capital for funding, they become impossible. However,

small scale hydroelectricity projects differ from most projects as they continue to provide a good.

This continuous product can be augmented to fit a business model, further stimulating the

economic activity of these remotes areas. By selling the electricity produced at a rate to cover

current costs, these instillations can behave independently. Furthermore, by slightly increasing

the rate the management can cover installation’s costs or even make a profit. This system of

22

generating revenues can typically be used to help reduce the impact of the high initial

construction costs plants need. Depending on payment

plans, micro-hydro plants can cover the entirety of their

construction cost with utility revenues. Other means to

reduce the cost of small scale hydro is to source locally,

utilize existing canals or dams, and be creative with

equipment. Using pumps or motors in reverse can

substitute for turbines or generators with less cost and

easier maintenance. (PA Technical Brief, 5)

Credit

Micro-credit or micro-loans are another option for funding small hydropower

instillations. As the typical micro-hydro plant has constructions costs anywhere from 10,000 to

100,000 dollars the aggregate value of small loans can be significant. Typically coming from

OECD countries, loans or lines of credit for relatively small amounts ($5 to $5,000 US) can

cover construction costs and training for operators and management. These loans are then paid

back either in full or in installments from the revenues generated by the sale of electricity. The

beauty of utilizing microloans as upfront capital is how their business models fit together so

cleanly. Microloans lend sums of money upfront for a higher return over time while micro-hydro

facilities require upfront capital and yield revenues overtime.

Source (Small Hydroelectricity Powerplants, 277)

23

Government Assistance

Also, special assistance from local or national governments can aid installations through

subsidies, tax exemptions, or extra funding. Government subsidies can help bulk up revenues

from kW/hrs by artificially lowering the cost to consumers and allowing for increased usage.

Subsidies can also generate free electricity in certain circumstances or help sustain power plants

during low usage periods. Tax exemptions, similar to how US laws exempt tax payments from

religious institutions, can help stimulate economic growth in energy sectors by allowing small

scale operations to exist tax free. Not paying taxes helps keep costs down for these remote

utilities, keeping their prices low and enhances the ability to provide electricity to rural

communities. Finally, creating extra funding for these

installations helps to keep prices low, costs covered, and

can even be used to help customers who typically may not

afford the electricity, such as Ecuador’s “Special Fund for

Connections for Low Income Consumers” or the “Rural

Electrification Fund.” (Small Hydroelectricity

Powerplants, 278-9)

NGO Involvement

These types of funds are not just limited to local entities. Many international

governments, non-governmental organizations, and inter-governmental organizations create,

fund, and manage similar accounts for the world’s poor. Most original developments of micro-

hydro power across the globe stemmed from actions taken by NGOs and charities, though

typically those funds come with certain conditions. One NGO in particular, Practical Action, has

been at the forefront of micro-hydro power in developing nations. Practical Action is a

“There are a host of new arrangements that bring together public and private resources to fund

new power projects” Hossein Razavi,

Ph.D

Source: (Razavi, 37)

24

development based charity that focuses on reducing poverty and vulnerability through

advancements in technologies and utilization of economic markets. (PA – About Us) Based out

of the UK, Practical Action was founded in 1966 and currently has more than 100 projects in

developing states across three continents. (PA – About Us) Focusing on a Practical Action

project in Sri Lanka, three conditions were agreed upon by the locals involved and the Practical

Action Consultants. (Ariyabandu, 4)

1) Developing a sustainable “institutional model” which involves all stakeholders

2) Understanding Micro hydro as a decentralized energy option

3) Strengthening and Capacity building of local manufacturers for hardware development

As the project progressed, both parties fell back on these conditions as a game plan for how the

site should proceed and be managed.

Maintenance and Job Creation

By providing electricity to communities that were powerless, small scale hydro can have

a substantial effect on local economies. Instead of relying on manual labor, people can now look

to automated means as a way of getting things done. Sewing, agricultural processing, and other

time and labor intensive activities can now be done easier and quicker. This can create more

leisure time for communities to enjoy,

or provide a more efficient and

productive means of doing business.

This gain in productivity has a

positive effect on local and national

markets, and in turn stimulating the

economy and eventually creating a better standard of living for remote populations.

Source: Ashden Awards

25

Not only do energy projects stimulate economic growth by providing power, but they are

active businesses themselves. Each site needs a manager, operator, maintenance engineer, and

employees to handle accounting and electrical connections to homes. Each of these jobs are

specialized and require training, something most rural careers lack. With this specialization

comes higher compensation for those with proper training and

education. This attraction of intellect and higher earnings can

have a trickledown effect on communities, not only benefiting

their economic activity but the quality of that work. It can also

help break the cyclical effect poverty has on small, rural

communities. By creating quality work in the countryside,

young people will have more incentives to stay put and not

venture into third world metropolises or urban slums looking

for work.

Case Studies

Below are four case studies that highlight the benefits and impacts that small scale

hydroelectricity plants can have on rural, remote communities.

Nepal

A joint project between the UN and the government of Nepal, the Rural Energy

Development Programme installed several plants in remote villages across the mountainous

region. The focus of the project was to bring electricity to underprivileged and remote

communities, while also including women in the process and giving women opportunities for

careers at the plants, as well as managing cottage industries that resulted. Benefits of the project

26

included skills training, higher income generation, environmental conservation, and the overall

improvement of standard of living, specifically for women. (Rana-Deuba, 73) For example,

Krishna Kumari Shahi, a Nepalese woman effected by the project, has seen improvements as

chores at night can be done more productively, her children can study at night easier, and they

spend far less time preparing their food as a business nearby now specializes in that. (Rana-

Deuba, 75) The free time has allowed Krishna and her husband to start a poultry business out of

their home. In three months she makes close to 100 US dollars, a large extra income her family is

grateful to the electricity plant for creating. (Rana-Deuba, 75)

Bolivia

The goal of this project was to alleviate poverty, utilize renewable energy, and to create

both technical and institutional capacity development. (UNDP-Bolivia, 1) Constructing a plant

generating up to 27 kW, partially for commercial agricultural processing, not only achieved all of

the objectives but also helped benefit the local population’s health. (UNDP-Bolivia, 1) By

providing clean electricity to homes and businesses locals did not need to rely on burning

kerosene for light, which in small and enclosed structures inhalation can be dangerous. Most

importantly however is the dramatic reach this project had in Bolivia. As a result of the plant

being constructed, a commercial food processing business was established to service the local

and surrounding communities’ farmers. Before the business was established these farmers could

only yield enough for substantive products and local business. Now these farmers are able to

send a higher volume and higher quality of product to market in La Paz. The income generated

from this increased the standard of living for not only the commercial entity, but more than 200

households in the surrounding 12 villages. (UNDP-Bolivia, 1)

27

Kenya

Similar to the objectives in Bolivia, a micro-hydro facility with a generating capacity of

18 kW was established in rural Kenya between 1998 and 2001. (UNDP-Kenya, 1) As a result of

the plant, the remote village of Mbuiru now boasts several agriculture processing businesses, a

beauty salon, a barbershop, a battery charging service, and a

welding unit. (UNDP-Kenya, 2) Not only can these services

be accessed by the local community, but by neighboring

residents as well. In addition to the economic development,

Mbuiru saw gains in health as the available electricity allowed

for proper refrigeration of medicines. (UNDP-Kenya, 2) Most

importantly however, were the national policy implications

that resulted after this project. The Kenyan government is now actively seeking out sites for

micro-hydro power, and in two of the neighboring communities of Mbuiru multiple pico-hydro

(sites with capacity less than 5 kW) installations have been constructed. (UNDP-Kenya, 1) Now

the Kenyan Ministry of Energy has taken lessons learned from this project and have built

manufacturing centers to create proper piping, turbines, and other necessary parts for micro-

hydro plants. (UNDP-Kenya, 3)

Peru

In the rural town of Chambamontera, located in Northern Peru, having a stable source of

electricity means a more stable way of life. Already the town had several small businesses, a

chapel, a health clinic, and both primary and secondary schools, but no electricity. By installing a

plant with capacity up to 15 kW Chambamontera went from having to drive two hours to find a

town with electricity to only having to walk two minutes. (Matthiesen Foundation, 2) The total

“It has transformed the lives of the community, because

people don’t have to go 7 km out of town to get their

batteries charged, so they’ve got more time here to do more

useful things”Adam Hart-Davis, Practical Action

28

cost of the project was 34,220 pounds, or roughly 53,950 US dollars. (Matthiesen Foundation, 6)

Though the project was undertaken as a joint venture between Practical Action and the local

community, the costs were spread out in a creative mix of credit, OECD donations, and user’s

payment. While the two-third of the money came from donations, user’s contributions covered a

substantial portion of the civil works of the site. (Matthiesen Foundation, 6) As a result the

community has been able to create an economically sustainable source of energy benefiting both

the professional and personal lives. Whether through increasing their businesses’ productivity by

utilizing automation or simply by leaving the lights on and the radio station playing, the 60

families of Chambamontera are grateful for their new source of electricity. (Matthiesen

Foundation, 5)

Conclusion and Evaluation

Overall, the utilization of running water as a source for clean, stable energy has shown to

be a major benefit for remote and rural communities. Not only does it affect economic stagnation

by increasing productivity but electricity profoundly affects the standard of living for remote

populations. Between the benefits on health, education, community empowerment and capacity

development, many communities have made leaps in forward progress as a result of micro-

hydro. Much of Latin America is ideal for this type of development as the region has high

capacity potential but low development of that potential. This hydropower potential is due to the

Source:(Matthiesen Foundation, 5)

29

vast amounts of hilly terrain and abundance in running

water across the region. Though there are difficulties for

developing nations in terms of funding, installation, and

regulation each can be overcome creatively and

sustainably. Having simple conditions and clear cut

policies help to create a mutual understand and agreement between development agencies and

locals affected. By looking to nations that have already developed their hydropower potential, as

well as NGOs like Practical Action, developing states can adapt effective and somewhat

standardized policies towards implementing micro-hydro. Nepal, Kenya, and Bolivia are all on

their way to realizing their vast hydropower potential and harnessing it to serve their

underrepresented populations. There is no reason why other developing states, such as Peru and

Chile, should not follow suit.

“One of the greatest

challenges faced by the micro

hydro sector is inconsistency in

policy” – Rajindra de S. Ariyabandu,

Practical Action

30

Bibliography

"About Us." January 4, 2010Web. <http://www.practicalaction.org/about-us>.

"Affecting Electricity Policy through a Community Micro Hydro Project, Kenya."Web. <http://sgp.undp.org/download/SGP_Kenya1.pdf>.

Ariyabandu, Rajindra de S. "Up Scaling Micro Hydro: A Success Story?" Web. <http://practicalaction.org/docs/energy/microhydro_scaling_up.pdf>.

"Biomass Definition." 2009.Web. <http://www.clean-energy-ideas.com/energy_definitions/definition_of_biomass.html>.

"Can Chile Recapture the Growth of its "Golden Decade"." October 1, 2010 Web. <http://knowledge.wharton.upenn.edu/10000women/article.cfm?articleid=6195>.

"CIA World Factbook." 2010. Web. <https://www.cia.gov/library/publications/the-world-factbook/>.

"EN19 Efficiency of Conventional Thermal Electricity Production." 2007. Web. <http://www.eea.europa.eu/data-and-maps/indicators/en19-efficiency-of-conventional-thermal>.

"Energy Profile of Chile." September 4, 2008 Web. <http://www.eoearth.org/article/Energy_profile_of_Chile>.

Hens, Luc, and Bhaskar Nath. The World Summit on Sustainable Development: The Johannesburg Conference. Netherlands: Springer, 2005. Print.

International Energy Agency. "IEA Energy Technology Essentials." January 2007 Web. <http://www.iea.org/techno/essentials3.pdf>.

International Monetary Fund. "Country and Regional Perspective." World Economic Outlook: Recovery, Risk, and Rebalancing.IMF, 2010. Web.

"World Economic Outlook Database." October, 2010 Web. <http://www.imf.org/external/pubs/ft/weo/2010/02/weodata/index.aspx>.

Lokey, Elizabeth. Renewable Energy Project Development Under the Clean Development Mechanism. London: Earthscan, 2009. Print.

31

Lombardi, Candace. "World's Largest Wind Farm Churns in Texas." October 29, 2009 Web. <http://www.cbsnews.com/stories/2009/10/02/tech/livinggreen/main5358287.shtml>.

"Micro Hydro Power for Agro-Processing in Rural Areas, Bolivia." Web. <http://sgp.undp.org/download/SGP_Bolivia1.pdf>.

"Micro-hydro." 2010. Web. <http://www.ashdenawards.org/micro-hydro>.

"Micro-Hydro Power Technical Brief." 2008. Web. http://practicalaction.org/docs/technical_information_service/micro_hydro_power.pdf

"Micro-hydro Scheme, Chamabamontera, Peru." March 2008 Web. <http://www.thematthiesenfoundation.org/docs/48285110431ec.pdf>.

Multiple Authors. Small Hydroelectric Powerplants: An Information Exchange on Problems, Methodologies, and Development. Washington, DC: National Rural Electric Cooperative Association, 1980. Print.

Professor Keith Stockton. Lecture in Sustainable Development. Leeds School of Business at University of Colorado at Boulder, 2010. Web.

Rana-Deuba, Arzu. "Nepal." Generating Opportunities: Case Studies on Energy Women. UNDP, 2001. Print.

Razavi, Hossein. Financing Energy Projects in Developing Countries. Oklahoma: Penwell Publishing, 2007. Print.

"Renewables Global Status Report 2006 Update." 2007. Web. <http://www.ren21.net/globalstatusreport/download/RE_GSR_2006_Update.pdf>.

Vaz, Francine Naegele. "Sustainable Development with Micro Hydro Schemes in Remote Areas in the Amazon Region." 2010. Web. <http://www.excelenciaemgestao.org/Portals/2/documents/cneg6/anais/T10_0242_1437.pdf>

Warnick, C. C. Hydropower Engineering. New Jersey: Prentice Hall Inc., 1984. Print.

"What Is Small Hydro?" Web. <http://www.small-hydro.com/index.cfm?fuseaction=welcome.whatis>.

Wu, Kang. Energy in Latin America: Production, Consumption, and Future Growth. Connecticut: Praeger Publishing, 1995. Print.