• August 20, 2014

August 20, 2014–An environmentally friendly, small-scale hydropower station in\r\nsouthwestern Ecuador will be producing clean electricity as soon as 2015, says Rafael Enríquez,\r\na Nathan Associates economist and engineer who is leading the group monitoring\r\nthe project for lenders.

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The objective of the project is to design, construct,\r\noperate, and maintain a 48 megawatt (with two Francis turbines)\r\nrun-of-the-river hydroelectric plant on the Río Negro, about 20 miles from the\r\ntown of Mendez. The plant, developed by Hidrosanbartolo S.A. (HSB), has an\r\nestimated investment cost of US$80 million. Lenders include the Inter-American\r\nInvestment Corporation, which is part of the Inter-American Development Bank, and\r\nthe Corporación Andina de Fomento\r\n(Andean Development Bank).

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Construction began in July 2013. By July 2014, when the\r\nNathan team visited the site, the concrete for a weir had been poured, the pipe\r\nrouting water to the turbines was almost laid and ready for pressurized tests,\r\nand work on the powerhouse had progressed substantially. The next crucial phase\r\nfor the project will be to return the river flow to its original path.

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How the Dam Works

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The weir, or low dam, harnesses the water?s force without\r\nhalting the river?s flow. The current drives the turbines, as opposed to big\r\nhydropower projects, where impounded water passes through turbines.

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The 48 MW to be generated by the HSB project compares with\r\n22,500 MW from China?s Three Gorges Dam, the world?s largest hydropower\r\nstation, and 14,000 MW from Brazil and Paraguay?s Itaipú dam, the largest\r\nhydropower station before Three Gorges was built. (Three Gorges and Itaipú\r\nproduce about the same total electricity in a year because of seasonal\r\ndifferences in the water supply, the U.S. Geological Survey says.)

Abundant rainfall and clear regulatory frameworks for\r\nhydropower production in several Latin American countries make them ideal for\r\nsmall-scale hydro projects sponsored by private investors. Besides being cost\r\nefficient, these projects cause less environmental disruption than big dams yet\r\ncontribute toward economic development.

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What the Nathan Team Does

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The Nathan Associates team that Mr. Enríquez leads is monitoring\r\nconstruction for the lenders in Ecuador. The Nathan team also approves\r\nquarterly loan disbursements in accordance with the loan agreement, and certifies\r\nthat plant construction is safe and prudent and complies with good engineering\r\npractices as well as the concession contract.

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Mr. Enríquez is Nathan?s managing director for project\r\nfinance. Project finance teams advise lenders and other parties on airports, ports,\r\nenergy, roads, telecom, and other infrastructure projects. Nathan?s services in\r\nthe energy sector typically begin with due diligence on virtually all aspects\r\nof a project, including the design, hydrology, commercial viability, regulatory\r\nframework, environmental impact, and financial arrangements. The Nathan team\r\nhas been involved in several energy projects in Brazil, Ecuador,\r\nEl\r\nSalvador, Guatemala,\r\nPeru,\r\nand Mexico.

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