Peru is the third-largest country in South America, after Brazil and Argentina. Its diverse terrain includes an arid coastline, high-altitude Andean mountains, and tropical rainforest in the Amazon basin.
Many of the Amazon River’s most important tributaries originate in the Peruvian Andes, such as the fast-flowing Marañón – identified as a major ‘energy artery’ by the government, with over 20 projects currently in the planning stage. The total hydropower potential in Peru is estimated to be approximately 70 GW, of which only 3.8 GW have been tapped so far.
2014 saw considerable progress on the planned Marañón developments. The government granted final and definitive concessions for both the Veracruz (730 MW) and Chadin 2 (600 MW) projects to respective developers Enersis and AC Energia, a subsidiary of Odebrecht.
Other recent developments include completion of the Huanza project, which brought 92 MW of installed capacity online in September 2014. The USD 1.2 billion Chaglla plant (406 MW), currently undergoing the Hydropower Sustainability Protocol Assessment, is expected to commence operations in 2016.
While sustained economic growth in Peru averaged over 6 per cent per annum in the last decade, extreme poverty and a lack of access to modern water and energy services continue to present considerable challenges, particularly in remote areas.
Sustainable hydropower projects are nonetheless contributing to wider social and economic development, bringing jobs, investment, and improved infrastructure to rural areas.
For example, two new hydropower facilities (totalling 27 MW), currently under construction in the Monzόn valley, are expected to bring benefits and further opportunities to the local economy, following a recent government-led coca eradication programme.
According to the International Renewable Energy Agency (IRENA), demand for electricity is expected to grow at an average rate of 8.8 per cent per annum until 2017, necessitating investment of more than USD 5 billion in electricity generation and infrastructure by 2016.
These investments will contribute a further 4,300 MW to the country’s power mix, including 1,400 MW of installed hydropower capacity.
Last year, Peru finalised its National Energy Plan 2014 – 2025, which calls for the electricity mix to include 60 per cent renewables by 2025 (54 per cent hydropower and 6 per cent other renewables). Both large- and small-scale hydropower projects will form part of the country’s strategy to meet this pledge.
Since 2010, the government has signed power purchase agreements (PPAs) for no less than 44 small hydropower plants (less than 20 MW each) amounting to a total 391 MW of installed capacity.
In order to ensure the participation of renewables in the future energy mix, the government has announced it will promote an auction to buy 1,200 MW of firm energy from new hydropower plants.
Peru has also become a regional leader in renewable energy auctions, promoting biomass, wind, solar and small hydropower projects.
The first two auctions, held in 2009 and 2011, awarded 281 MW of small hydropower contracts to developers. The results of the third auction were announced in December 2013, and included the awarding of 16 hydropower projects which will contribute 1,278 GWh per year upon their completion.
This country profile was last updated in August 2015. You can find all our latest country profiles and regional overviews in the 2016 Hydropower Status Report, which you can download here.