Coya and Pangal Hydro Projects

Although the Coya and Pangal power plants started operating in 1911 and 1921 respectively, when Pacific Hydro took a close look at the operations, we saw an opportunity to make a difference.

The two power plants are located in the sixth region of Chile, in the basin of the Pangal and Cachapoal Rivers, approximately 30 km east of Rancagua, a city 90 km south of Santiago. Given our experience working in terrain like this, and building and operating energy generation schemes that ideally reflect the local geography, the needs of local powers users, and our own company, we quickly saw the potential of expanding into this region of Chile.

A closer look

When looking at both businesses, a couple of key factors were highlighted.

First, these power plants were consistent with Pacific Hydro's strategy of investing in renewable energy, utilizing the skills, expertise and experience that we have developed as a clean energy company across the world. Secondly, we saw an opportunity to increase the efficiency of the plants, consequently boosting the supply of electricity to the local community, increasing returns for our company, and offering Pacific Hydro's customers a more secure and efficient source of renewable energy.

Pacific Hydro took over operation of the plants from the Chilean state-owned copper company CODELCO in April 2004, an acquisition that included the related transmission infrastructure and upstream water rights in the Cachapoal River Basin. Now owned and operated by Pacific Hydro, the Coya and Pangal power plants sell energy produced to CODELCO under a long term Power Purchase Agreement. CODELCO uses the output from the plants to power its EI Teniente copper mine with surplus power generation being sold directly into the deregulated national electricity market.

Electricity, Chile, and Pacific Hydro

Coya, Pangal, and Pacific Hydro are helping to meet the particular needs of the Chilean electricity market. With Chile looking for ways to expand its renewable energy base, Pacific Hydro is well placed as a leading supplier of renewable energy technologies to help Chile meet that goal.

Further, our Chilean expansion comes at a time of rising domestic energy demand and prices. Early on, our hydro experts identified opportunities to reduce operating costs and upgrade facilities to increase capacity, which again offers all those involved with Coya and Pangal, a beneficial outcome.

The bottom lines

Of course, in any operation like this there are two bottom lines: that of the people who use the energy we create and whose environment we share, and our own.

To begin with the former, Pacific Hydro's ownership and management of the Coya and Pangal plants is bringing jobs to the local community and, as with all of our renewable energy projects, we're helping to cut the creation of greenhouse gases.

For Pacific Hydro, taking on the Coya and Pangal power plants has been a valuable addition to our business. As well as complementing our existing hydro development activity in Chile, we now have greater hydro expertise in our Chilean office to draw on. It diversifies our international hydro portfolio and, unique to this project, Pacific Hydro has enjoyed immediate earnings in excess of our target hurdle rate of return.

Just as creating renewable energy is important to the future of the global environment, taking on Coya and Pangal gives our company a significant launching pad for the future development of our business in Chile and Brazil