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Chile: Chacabuquito Small Hydro
(Prototype Carbon Fund)

4 Project Documents

Project Photo 1
Chacabuquito canal in the Chilean Andes (Photo: World Bank)
From Planning To Results: The Project That Has Generated The First Verified Emission Reductions

The Chacabuquito run-of-river hydropower project, high in the Chilean Andes is delivering more than electricity. The project made history for the Prototype Carbon Fund, as the first PCF project to become operational, when it started generating electricity in July 2002. In 2001 the Norwegian firm Det Norske Veritas had validated the likely compliance of the project with modalities and procedures of the Clean Development Mechanism. In June 2003 the German firm TÜV Süddeutschland verified the first emission reductions from the project.

The Chacabuquito plant, near the little town of Los Andes, 100 kilometers northeast of Santiago, is a world away from Kyoto, where in 1997 representatives of 159 countries signed the Kyoto Protocol to reduce the greenhouse gases that cause climate change. The conference in Kyoto made the project possible when it established a Clean Development Mechanism, defining the rules under which the Chacabuquito Project receives financing from the PCF.

Chacabuquito's 26-megawatt, run-of-river plant near Los Andes is scheduled to deliver one million tons of emission reductions to PCF Participants. The project developer, a power company called Hidroelectrica Guardia Vieja S.A., will receive US$3.5 million in return. Concurrently with the PCF, Mitsubishi Corporation has independently contracted to purchase another 100,000 tons of greenhouse gas emission reductions. The project design was evaluated by two independent auditors.

Project Photo 2
PCF makes payments upon delivery of verified emission reductions (Photo: World Bank)
The Chacabuquito Project will be connected to a regional subsystem within the central system that accounts for about three-quarters of Chile's power generation. The project will generate power for industrial and residential consumers in the region. It will help to replace the coal that currently provides 25% of the region's power and causes pollution. Local people will be employed at the plant and roads and bridges built to service it will provide new access to small villages in the area.

Carbon finance was instrumental in the developer's decision to proceed with the project, even through carbon funds only cover a small part of the project's cost of US$37 million.

Chacabuquito is a model which shows how carbon finance opens new possibilities for Chile and other developing countries to implement renewable energy projects. The project demonstrates the potential and value of the Clean Development Mechanism as a powerful development tool for Latin America.


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