Rehabilitation of the hydroelectric of Machupicchu

The project “Rehabilitation of the hydroelectric of Machupicchu” is located left shore of the river Vilcanota, some hundreds of meters far from the intersection of the river with the canyon of Aobamba, and few kilometers from the Machupicchu ruins. This run of river project takes the advantage of the natural flows of the Vilcanota River and the existed reservoir of Sibinacocha. The project aims to rehabilitate the Hydroelectric of Machupicchu that was destroyed in 1998 by a flood produced by a mudslide. The project comprises two phases: the first phase, which entered in operation in mid 2001, is a 90 MW hydro with 719 GWh of annually energy production. The second phase is a 75 MW with 518 GWh of annually energy production that will enter in operation in 2008. The project’s owner is Empresa de Generación Eléctrica Machupicchu S.A. – EGEMSA.

Baseline Scenario

Which emissions are the proposed Clean Development Mechanism CDM project displacing?
“Machupicchu” project will displace GHG emitted by thermal power plants of the national grid using diesel, residual (bunker), coal and natural gas.
What would the future look like without the proposed CDM project?
The new additions in the future to the grid basically will be thermoelectric production with natural gas in combined cycle plants replacing most of the other plants with oil, of all types. National policies, sectoral policies and the new natural gas exploitation “Camisea” particular circumstance foster thermal technology against hydro-developments.
What would the estimated total greenhouse gas (GHG) reduction be with the project?
According to the Consolidated Methodology ACM0002, the World Bank Carbon Finance business in a study done in December 2004 got a Baseline Emission Factor of 544 tCO2e/Gwh for the national grid. Using that emission factor it is expected that “Machupicchu” project will displace around 391,136 tCO2e/year for the first phase and for the second phase 281,792 tCO2e/year which otherwise will be emitted by thermal power with diesel, residual (bunker), coal and natural gas.

Current Status

Earliest project start date
The first phase is already built and is in operation since mid 2001. The second phase is under development and it is expected to enter in operation in 2008.
Estimate of time required before becoming operational
First phase is in operation since 2001.
Second phase: 2 years
What is the project lifetime?
50 years
Current status or phase of the project eg: which of the following phases have been completed:
First phase have completed all phases less than application to the CDM. Second phase has:
• Authorisation for the use of the water resources was given
• Environmental study approved
• Definitive Concession granted by Resolución Suprema Nº 076-94-EM
• Feasibility Study completed
• Authorisation for the second phase project development (Oficio Nº 541/2005 PROINVERSIÓN, Nov. 17th 2005)

Estimated Emission Reductions

Phase One
Annual: an average of 391,136 tCO2e
• Up to and including 2012: 4,302,496 tCO2e
• Up to a period of 10 years: 3,911,360 tCO2e
• Up to a period of 7 years: 2,737,952 tCO2e
• Up to a period of 14 years: 5,475,904 tCO2e

Phase Two
Annual: an average of 281,792 tCO2e
• Up to and including 2012: 1,408,960 tCO2e
• Up to a period of 10 years: 2,817,920 tCO2e
• Up to a period of 7 years: 1,972,544 tCO2e
• Up to a period of 14 years: 3,945,088 tCO2e

Project Benefits

• The hydroelectric plant will bring new jobs during the construction phase for the local community.
• The project will increase the amount of taxes that the government receives. By law some percentage of the taxes have to invested in the area of the project.
• “Machupicchu” fulfil the environment norms through the approval of its Environmental Impact Study by the Ministry of Energy and Mines. The local farmers approved the project and have been well informed about the scope of the project

Project Participant and Financing

Total project cost estimate:
Phase II
• Total project costs: US$ 57,500,000
Sources of finance to be sought or already identified:
• Equity: 30% Own resources by EGEMSA
• Debt: 70%
• Carbon finance contribution sought: As much as we can have in advance.

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