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Renewable resources concession-based funding mechanism for attaining large-scale power plants

Abstract:

The construction of electric power generation megaprojects involves enormous economic efforts that governments can hardly handle with their budget, and therefore it is necessary to consider the participation of whether public or private foreign investment. In this paper, the feasibility of a funding mechanism that would make possible the construction of a hydroelectric project-Río Santiago-is proposed and properly assessed. The study entails a methodology to receive funds from foreign investors (one or more companies that use permanently high amounts of electricity) in exchange for constant energy supply and firm capacity over a specified period. Also, by exploiting relevant economic performance indexes and taking into account technical parameters, it is obtained the optimal option to be applied in a real need observed in the Ecuadorian Electrical System. The obtained results show generality in the application of this mechanism by representing an enhanced opportunity for large consumers of electricity in any regional electricity market and also for countries pursuing to develop their electrical generation projects.