Project Description
Hidroeléctrica La Higuera (HLH or the project) is a 50:50 joint venture formed in May 2004 by Pacific Hydro Limited (PHL) and Statkraft Norfund Power Invest AS (SNPI), collectively, the Sponsors.
HLH will build, own and operate a 155 MW run-of-the-river hydro power plant located in the Tinguiririca Valley 60 km east of the city of San Fernando in Region VI of Chile and about 150 km south of Santiago. The project diverts some of the waters of the Tinguiririca River and its major tributary Azufre just upstream of their confluence. At a gross head of 372 meters and a design flow of 50 m3/s, the installed capacity is 155 MW in two generating units equipped with vertical Francis turbines in a surface powerhouse. Firm capacity is estimated at 128 MW and average annual energy production at about 840 GWh. A 38 km long transmission line will be built to connect with Chile’s central grid at San Fernando. In addition, a 145 MW upstream project called La Confluencia is likely to be developed by the sponsors at a later stage.
Land for the project is privately owned and is used in the summer for vacation homes and for livestock grazing. The closest established settlement is Puente Negro (population of 600), about 30 km downstream of the powerhouse. There are no indigenous people in the area. The project site is already accessible by road from San Fernando.
This is an environmental and social review category A project. The following aspects of the project were analyzed: public consultation and disclosure, development impact of the project, impact of the project on climate change, water rights and uses (including cumulative and downstream impacts), population/land use, impact of the project on recreation, management of quarries and tunnel spoil disposal, and consistency with IFC''s policies on involuntary resettlement, safety of dams, international waterways, natural habitats, and cultural property.
An EIA for the project was completed for HLH by a local firm, M&P Ltda., in June 2002. As a result of subsequent modifications to the project, HLH elected to resubmit a new EIA in February 2004. CONAMA and HLH engaged in several rounds of comments and responses. Following initial sign-off by CONAMA, the project was reviewed by the COREMA (Comisión Regional del Medio Ambiente), an intersectoral group in each Region that coordinates environmental management. CONAMA approved the project on August 31, 2004.
The Chilean environmental process does not require a full EIA for the 38 km transmission line. A DIA (Declaración de Impacto Ambiental) to be filed with CONAMA is in progress. There do not appear to be significant environmental or social issues associated with the development of the transmission line.
HLH has reached an agreement with PSEG Generation to fill any gaps in HLH''s generation during periods of very low river flow or other situations whereby HLH cannot fully meet its obligations. PSEG will provide this backup capacity through the installation and operation of a 50 MW natural gas fired turbine (open cycle, diesel fuel backup) in the Industrial Park of Colonel, VIII Region of Chile. Based on the DIA filed by PSEG at CONAMA for a similar turbine at the same location, impacts from the installation and infrequent operation of the gas turbine will be minor.
- Public consultation and disclosure
CONAMA has conducted four public meetings for the project (two meetings in the towns of San Fernando and Puente Negro in 2002, and two in the same locations in 2004). The most recent was in April 2004. The various concerns raised at the meetings, as well as the responses of HLH, have been compiled in three addenda to the Environmental Impact Assessment (May 2004, June 2004, July 2004). Additional information on consultation activities are attached (see Plan de Participacion Ciudadana).
Consultations to date show that the project enjoys public support. CONAMA is also supportive of the project, at both the regional and headquarters levels.
- Development impact of the project
The project will generate 500-800 direct jobs during construction and about 10 direct jobs during operation. HLH will require the EPC contractor to hire at least 30% of the workforce locally during the construction period, which will last approximately three years. This requirement will be made in the Contractor’s Manual (Manual del Contratista) IFC recommended to the project sponsors to maximize local employment by keeping local communities informed about the project’s labor needs and training opportunities. IFC was informed that the government offers training in construction trades. Therefore, the opportunity exists to take advantage of these training programs that could make residents of Puente Negro and other local communities eligible for construction jobs.
The project will improve private roads used by local landowners. Some of these roads are likely to become public in the future. The project will also deliver free energy and telephone infrastructure to landowners of the area (the services are being offered as part of the negotiations to acquire land and easement rights).
- Impact of the project on climate change
The project will provide 155 MW of renewable energy to the grid in Chile, operating as a peaking plant in the winter and a base load plant in the summer. Because its water source is mainly snowmelt, La Higuera will operate when other hydroelectric plants that utilize storage reservoirs or rely on rainfall runoff produce less. Thus, La Higuera''s summer base load operation also coincides with the period when the system has a higher dependency on thermal generation. Chile''s thermal generation fuel mix has been trending toward natural gas (from coal); however, recent gas supply issues may result in a resurgence of coal use in the medium term. The potential impacts of La Higuera''s displacement of thermal generation on climate change will be positive, more so to the extent that coal is displaced.
- Water rights and uses
Pacific Hydro''s operations in Chile focus on the Cachapoal and Tinguiririca Rivers, which are two adjacent drainage basins that together drain to Rapel Lake, a reservoir for the Rapel Hydroelectric Project. Pacific Hydro has recently (April 2004) completed the purchase of two existing hydro plants on the Cachapoal River, the 39.3 MW Coya plant and the 37.0 MW Pangal plant, which it plans to modernize and expand. It has also identified other potential locations for new plants in both basins.
The Rapel hydro plant commenced operation in 1968. As part of the development of Rapel, all consumptive water rights in the two basins that had not previously been assigned were obtained by the plant''s operator, Endesa, to ensure adequate water supply for power generation. Thus, there are currently no consumptive water rights available to potential new users in the basins except through purchases of existing rights not held by Endesa. This has the positive effect for HLH of reducing future competition for water for non-consumptive generation. It also reduces the risk that downstream flow variations from HLH''s operation could, in the future, detrimentally effect consumptive water users downstream from the plant.
In January 2002, Pacific Hydro acquired an option for the non-consumptive water rights of the upper Tinguiririca River from elevation 640 m to 1700 m and in the Azufre River to elevation 1800 m. HLH has applications pending that would extend these rights to elevation 2200 m. Once these approvals and sales are finalized, HLH will have the 50 m3/sec flow required for the project.
Ecological flows for the La Higuera project (both phases) have been negotiated with CONAMA. However, CONAMA''s process does not require analysis of other development in the Rio Tinguiririca drainage basin. At the request of IFC, HLH has prepared a separate analysis of cumulative and downstream impacts.
Appraisal found that transfer of water from the Helado and Azufre Rivers to the Tinguiririca River will occur only short distances upstream from the river confluences. Thus the effects of inter-basin transfers are minimal.
- Population/land use
Year-round population in the site area is limited to a few households and a small monastery. The closest established settlement (600 population) is Puente Negro, about 30 km downstream of the powerhouse. About 15 km further downstream is San Fernando (population 70,000), the closest town with services, lodging, etc. There are no indigenous communities in the project area or near by areas. As a result of the consultation process, HLH has agreed that at least 30% of project employment during construction will be staffed from these nearby areas.
Land in the site area is privately owned, mostly in large parcels, and is used in the summer for vacation homes and for livestock grazing. A variety of seasonal buildings can be observed along the valley, including herders'' huts, restaurants, etc. Some are established with owners'' permission, some are not. Much of the summer community at Termas del Flaco is reported to be squatters. The transmission line will affect smaller properties, including agricultural units near San Fernando.
The project''s construction crews will not move into existing communities (except for the 30% local hires). A maximum of about 800 people will be employed during the peak construction period. HLH is proposing that non-local hires will be housed in three temporary construction camps located along the Rio Tinguiririca. Locations of these camps were finalized during the consultation process.
- Impact of the project on recreation
IFC''s Internet research indicated that there is some use of the Rio Tinguiririca by both informal and organized rafting and kayaking. However, landowners on the north side of the river downplayed the significance of this river use, as did CONAMA Region VI staff. HLH staff noted that use of the river for water sports only happens in summer (when river flows are highest), and occurs downstream of the powerhouse. Sportfishing in the Rio Tinguiririca (and in the Rio Clarillo) is also focused in the reach below the proposed powerhouse.
- Management of quarries and tunnel spoil disposal
HLH indicates that construction materials will be obtained from the headrace tunnels and from the streambed of the Rio Tinguiririca. Thus, there will be very little development of quarries in the project area.
The project will include five tunnels that total over 18,000 m in length. There will also be over 1,500 m of canals, 8 km of new road, and 20 km of road rehabilitation. Although some excavated material will be needed for other construction and for concrete aggregate, spoil dumps will be required for the remainder. The size and location of the spoil dumps was negotiated between HLH and CONAMA.
- Roads/land acquisition – consistency with IFC''s policy on Involuntary Resettlement
The project site is accessed via a public road (I-45) that originates in San Fernando. From San Fernando the highway is paved, and from Puente Negro to near the powerhouse it is open year-round. Above the powerhouse to Termas del Flaco, the road is mostly one lane and only open in the summer (November through April). A dirt track extends farther to Argentina. HLH plans to upgrade about 20 km of existing roads in the project area and construct about 8 km of new roads; all are assessed in the EIA. HLH intends to ensure continued public use of roads during and after construction.
Chile''s Electricity Law extends expropriation powers to private electricity concessionaires such as HLH that meet certain regulatory requirements. HLH expects that it can negotiate arrangements for the plant facilities, including both land purchases and easements, and will not need to resort to expropriation. Most of the project''s electricity generating facilities will be within two properties: Fundo Los Corrales (52,000 hectares) and Fundo Las Mulas (9,000 hectares). Fundo Los Corrales is on the north side of the Rio Tinguiririca and includes much of the drainage basins of the Rio Helado and Rio Azufre. The property is privately owned and not open to the public except by permission. The owners will receive road improvements as part of the negotiated package, and public access will continue to be restricted. There are six dwellings within the property, but none will be affected by the project.
Fundo Las Mulas is on the south side of the river, and although privately owned, the property is accessible to the public. Problems with I-45 led the property owner to construct several kilometers of parallel road at a higher elevation. This more favorable location will also be used by HLH. The property owner wants to develop his property and is also the main operator at the Termas del Flaco, and thus has a strong interest in facilitating road improvements. About 50,000 people visit the Termas every year and the number would be much higher with a better road.
The above two groups own most of the land in the project area. A third group of smaller land holders is located closer to the powerhouse, and includes farmer/ranchers, summer recreational homes, and a religious group. Impacts on these properties are expected to be relatively minor, and compensation such as provision of electricity will be provided by HLH. All of the groups will experience inconveniences during construction; however, access to the properties will not change from the current situation. Except for specific parcels to be occupied by project facilities, access by the general public will not be reduced.
HLH also expects to negotiate land arrangements for the transmission line (58 owners), including with two owners whose houses will need to be relocated within their properties. The prices being offered by HLH to acquire land and easement rights are based on a study of land prices in the area. The document Plan de Adquisiciones de los Terrenos (attached) describes the procedures followed to complete land transactions.
- Seismicity & water impoundments – consistency with IFC''s policy on the Safety of Dams
The project area is seismically active, with sizeable earthquakes (Magnitude 7) occurring in the region in the past. Seismic risk for the project was addressed in the EIA and EPC feasibility study and also verified by the Independent Engineer.
The project will include three water intakes that have dam heights of 9m, 10m, and 11m, respectively. Although relatively tall, these are all small structures with little storage. There will also be an offstream headrace pond that will be 5 ha in size and hold 540,000 m3 of water. At its highest point, the pond embankment will be 39 m high and impound 25 m of water. Because this embankment is >15 m in height the IFC dam safety policy applies. IFC''s Independent Engineer is reviewing the design of the embankments as part of its work scope.
- Consistency with IFC''s policy on International Waterways
The continental divide on the Andes mountains forms the boundary between Chile and Argentina to the east of the project site. Thus the Rio Tinguiririca drainage area is entirely in Chile and the IFC International Waterways Policy does not apply. Although the project is close to the border (<20 km) no transboundary impacts are expected.
- Forest management & protected species – consistency with IFC''s policy on Natural Habitats
The EIA contains a Forest Management Plan and a Fire Prevention Manual. The plans were revised as part of CONAMA''s review. Baselines surveys for the project disclosed the presence of a protected parrot species (loro Tricahue). The initial project design was changed to avoid the parrot''s habitat.
- Historic & archeological resources – consistency with IFC''s policy on Cultural Property
The Rio Azufre basin was the location of a sulfur mining and ore processing operation in the 1890s, and various ruins are present. Baseline surveys for the project also identified five archeological sites in the project''s area of direct influence, and three additional sites in the site proximity. Surveys also indicated three sectors with a high potential for finding archeological remains during construction. These sites will be protected or excavated as agreed in the project''s Cultural and Archeological Patrimony Handling Plan.