Investment Opportunity: Hydrokinetics

These run-of-river hydro projects are in various stages of approvals with several “shovel ready” projects to be built in 2014 and 2015 and all with final approvals within the next 24 months. The total output of the package is 68.2 MW. Looking at the economic viability of this group of projects, one needs to consider the following:

  • While intensely committed to renewable energy, Brazil’s rapidly expanding industrial base has the country struggling to meet its power generation goals;
  • The country derives 71% of its electricity from hydro plants it has in place currently, but new, large projects are extremely difficult to approve and construct and are located far from the population and industrial core of the country;
  • “Small” (<30MW) and especially “micro” (< 1 MW) projects, however, are much easier to permit, have minimal environmental impact, are generally located closer to the demand and within the boundaries of existing transmission grids. Additionally, “micros” are constitutionally exempt from many of the bureaucratic restrictions affecting larger projects;
  • Small hydro in Brazil works much like mining did in the old west of the nascent U.S.; claims are “staked.” The team in question is associated with 100+ such claims, 40 of which are in the permitting process; two of these are “shovel-ready,” and another 11 are close to that status.
  • The government of Brazil (through its development bank) provides attractive financing for construction of projects like these (some at rates of 3.5% fixed — not bad considering inflation is at 6% per annum).
  • These smaller projects stand in stark contrast to projects like the Belo Monte Dam in the far north of Brazil which, after 15 years of approvals and construction and costs of over US$ 16 billion, will become the third largest hydro electric project in the world (after Three Gorges in China and Itaipu in Brazil).

The group is seeking mezzanine funding to consolidate ownership and facilitate construction of this package from a small group of investors. This is a huge and quite lucrative opportunity for investors; the internal rate of return on equity capital is impressive.

13 comments on “Investment Opportunity: Hydrokinetics
  1. I do not understand mW unit used in article. Does it mean really miliwatt ? What economic viability would have miliwatt project ? I expect this is editor’s fault and unit should be Megawatt, i.e. MW ….

  2. M.Ashfaq paracha says:

    Yes we need the project we have a River in nowshera khyber pakhtoon khwa pakistan.
    My contect cell number is 00923428152111 e mail. Deltabiopharma@yahoo.com

  3. I have a client that this might fit very well. Int’l Hydro developer/owner
    can you please send me additional info and NDA if required at this point.
    Thanks

  4. Edgar Gerber says:

    Very interested, have the possibility of installing such a system in a river north of Peru (Piura River) and have the appropriate funding.
    Edgar Gerber (edgitar585@gmail.com) +(51)99791-5506 gmt-5

  5. I am interested. Why don’t they borrow at 3.5%

  6. Shane Adams says:

    Project financing program. We offer flexible financing for various projects by following the usual procedures. This funding program allows a customer to enjoy a low interest rate repayment for as low as 2% per year for a period of 2-30 years. We can approve a financing for up to EUR/$ 50,000,000.00 or more depending on the type of business. Reply us with the following email: medallionfinance@financier.com

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