CHILE - Chacabuquito Hydro Power Project

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The objective of the Chacabuquito Hydroelectric Power Project for Chile is to support development of the international market mechanism for the new commodity known as, Emission Reduction (ER), developed in the framework of the Kyoto Protocol. The project components include: as Prototype Carbon Fund (PCF) only buys ER and agrees to a payment schedule against the delivery of the certified ER, there are no project components to describe other than the production and sale of ER. The project is being developed by Hidroelectrica Guardia Vieja (HGV), a Chilean private company, and consists of a run-of-the-river power plant of 25 MW capacity that utilizes the waters of the Aconcagua River and will produce an average annual generation of 160 GWh. The project is located in the fifth region of Chile, near Los Andes, about 100 km Northeast from Santiago. The project's construction time is approximately 15 months and is expected to be completed in 2002. The construction is financed fully by HGV. The project will consist of hydroelectric generation that will displace thermal generation, therefore producing ER. For the purposes of the project, the Emission Reduction Purchase Agreement (ERPA) will be signed between PCF and HGV, the implementing party, (annex ten), accompanied by the Monitoring and Verification Protocol (MVP) (annex eleven) that will specify rules and procedures for calculation and certification of the actual ER produced. The quantity and price of ER are negotiated between the two parties, but the quantity is based on the estimates of the baseline study, implemented and verified by independent experts (annex eight).