The move comes after Rurelec, which operates as an electricity utility solely in Latin America, acquired a 50% interest in Cascade Hydro, a newly formed hydroelectric power development company focused on run-of-river projects.
In addition to its existing 4 MW Canchayllo project, Cascade has this week agreed to acquire the 255 MW Santa Rita run-of-river hydro development project for US$10 million, plus an additional amount of up to US$5 million if development targets are reached.
The investment in Cascade, and expansion into Peru comes after Rurelec lost 538MW of electricity generation capacity to the Bolivian government in 2010 during the nationalisation of the energy generation sector.
According to Rurelec, foreign investment is actively encouraged in Peru, as the country is experiencing high demand growth for power.
Peter Earl, chief executive of Rurelec said: "I am delighted to announce further expansion in Peru, which has a well-developed and investor-friendly electricity sector. Santa Rita is a large and long term development project for Cascade and we look forward to playing an active role in its development.”
Cascade is planning a capital increase in order to fund the Santa Rita scheme, which could mean Rurelec’s interest in the company is diluted.
The US$600 million project will take 42 months to construct once financing is secured, with commercial operations scheduled for 2017. Cascade will transfer the bulk of the payment when the project reaches financial close, which will take place within 6 months of securing a power purchase agreement (PPA) for the project. A new round of PPA tenders is expected towards the end of this year.
Cascade’s other project under development, Canchayllo, a 4 MW hydro scheme located in the Junín Province to the east of Lima, was awarded a power purchase agreement (PPA) in the latest round of renewable energy tenders in Peru.
The US$8 million project is expected to begin commercial operation in 2013, after an 18 month construction period.
Rurelec owns and develops power generation facilities on the national grid in Latin America and in isolated areas, selling electricity on commercial terms. With power generation capacity in Argentina, the company is now targeting Peru and Chile.