PACIFIC HYDRO: Pioneering Investment in Renewable Energy

In Chile, Pacific Hydro found a country with attractive natural resources, primarily hydropower and wind.

Pacific Hydro, an Australian renewable energy company, is pioneering Australian involvement in Chile’s renewable energy sector, with investments in several existing and proposed run of river hydro plants in the country.

In 2002 the company secured an option to acquire 400MW of water rights in the Tinguiririca river valley in Chile’s 6th Region. And in June 2004 Pacific Hydro completed a joint venture agreement with SN Power of Norway for the joint development of the La Higuera and La Confluencia hydro projects in this valley. Construction of the La Higuera project commenced in November 2005, with a total investment cost of US$272 million.

The La Higuera project is the first (and largest) project in Chile to achieve registration to generate carbon credits under the Kyoto Protocol’s Clean Development Mechanism. In April 2004 the company also acquired 76MW of operating assets, being the Coya and Pangal hydro plants in the Cachapoal river valley, in Chile’s 6th Region. These assets were purchased from Chile’s state owned copper company, CODELCO, for US$75.6 million. In addition, Pacific Hydro acquired an option to purchase 600MW of water rights in the Cachapoal valley. These projects are also under development.

“In Chile we found a country with attractive natural resources, primarily hydropower and wind”, explains Janine Hoey, General Manager of Latin America. “Chile already had a high rate of foreign investment confidence and a clear regulatory system which provides a transparent market for doing business. All these characteristics make Chile an attractive country for Pacific Hydro to invest in”. All of Pacific Hydro’s run-of-river hydro investments are in Chile’s 6th Region, which is within two hours drive of Santiago.

Wind is also another cornerstone of Pacific Hydro’s business in Australia. Wind development has commenced in Chile and a wind monitoring mast was installed on Chiloe Island, 10th Region, in March 2006. Wind data is currently being collated and prospects for development of wind farms in Chile is under evaluation. In addition to its Chile operations, Pacific Hydro is also entering the Brazil wind market via the acquisition of a wind development company based in Natal, Brazil. There are a number of wind farm development opportunities for Pacific Hydro in this region and their intention is to use Chile as its base for continued growth in Latin America.