ENDESA to invest $837MM to build 400MW hydro plant in Colombia

Source: ENDESA

ENDESA, through its Colombian subsidiary Emgesa, is to start construction of the El Quimbo hydro plant for an investment of US $837 million. The plant will have installed capacity of 400 MW and generate around 2,216 GWh/year, enabling ENDESA to maintain its leadership of the Colombian generation market with a 20.1% share of installed capacity. Thanks to the output of the El Quimbo and Betania plants, both located in the department of Huila, ENDESA will meet 8% of the country's energy demands from this region.

Construction of the plant is expected to take around four years and it will cover more than 8,000 hectares. Emgesa will carry out two programs: an environmental compensation program entailing the restoration of 11,080 hectares of a tropical dry forest ecosystem (a key strategic initiative under the Colombian government's flora and fauna conservation policy) and a social compensation program. Under the latter program the company will resettle 450 families that need to be relocated, ensuring that they enjoy a quality of life equal to or better than the level prior to the transfer.

El Quimbo is ENDESA's biggest hydro project in Colombia since the development of the Ralco plant (690 MW), which came on stream in Chile in 2004. Another two hydro plants have been built since the Ralco plant: Palmucho (32 MW) and Ojos de Agua (9 MW), with further improvements made to plants already in operation (El Guavio in Colombia and Arroyito in Argentina). 

Award of the Project

In 2008 the Colombian government carried out Reliability Charge (firm energy) auctions to ensure electricity supply based on the estimated 3.4% annual increase in energy demand until 2020 and Colombia's significant hydro potential. A total of 9,290 GWh were auctioned (3,009 GWh in the first auction and 6,281 GWh in the second), mainly via hydro projects.

In the auction carried out in June 2008 Emgesa was awarded the El Quimbo hydro project, which represents a Reliability Charge contract of up to 1,650 GWh per year for a 20-year period from December 2014 at a price of USD 14/MWh. 

Importance to Colombia

The El Quimbo hydro plant will improve the security and stability of the Colombian electricity system, making the country more energy self-sufficient.

El Quimbo is a social and economic development project for the region and country as well as an energy generation initiative since it will provide significant economic resources and industrial and commercial opportunities during its construction and subsequent operation.

At the height of the construction work the project will generate some 3,000 direct jobs in the region with at least 60% of local services provided by companies or people from the area.

In addition, the department of Huila and the municipalities within its jurisdiction will derive economic benefit from the investment in infrastructure works, the use of local labour and the economic transfers made in accordance with Law 99 of 1993, which amount to around USD 3 million per year.

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