Search Results: “” — Page 1
Now showing all 2 search results
This paper discusses the common environmental issues and requirements project lenders have when financing hydropower dam projects in developing countries. The environmental specialist’s role, as part of the Lender’s Technical Advisor team, is discussed throughout the main phases of project finance (credit approval, financial close, lending/construction and loan repayment/operation). Further, how environmental issues are reviewed and monitored, thereby minimising reputational risks to the lenders are outlined.Learn more
Lenders typically consider hydropower dam financing, especially reservoir schemes, as high reputational risk loans. Finance is usually syndicated and although most international lenders are Equator Principles signatories or use the International Financing Corporations (IFC) Performance Standards, some lenders have additional environmental guidelines and requirements to enable financing. These differences are discussed.
Common environmental concerns include loss of habitat of endangered and/or threatened species, changes to river flows, erosion and sediment control during construction, and the minimisation and disposal of project wastes.
These issues are discussed drawing on the author’s experience in monitoring environmental issues of hydropower projects in Asia Pacific and Africa, including both smaller run-of-river schemes and larger storage reservoir projects.
Keywords: Environment, impacts, project financing, concerns, lenders, lenders technical advisor.
This paper explores the role of the Lenders’ Technical Advisor (LTA) in identifying and mitigating risks in hydropower dam projects on behalf of the project lenders. It describes the LTA services that are required to manage the pre-financial close, construction and financing periods.Learn more
There are differing types of risk in both large and small hydropower projects (contractual, commercial, participant, completion, country, technology, reputational, environmental and social, etc.) and these are discussed with regard to how the lenders may be exposed if the risk eventuates either during dam construction or in operation.
Whereas a large dam for water supply would in its own right be a major project, the dam(s) associated with large hydropower will likely represent less than 25% of the total project cost and with this imbalance comes competing drivers for the other components (tunnels, waterways, powerhouse, M&E equipment, transmission lines, substations, etc).
The paper discusses the typical process whereby a hydropower developer has procured a feasibility study and is working towards financial close — covering both large and small types, i.e. storage dams and run-of-river diversion weir types, and the noticeable trend for fast-tracked developments to make a single large step from feasibility study through to engineer-procure-construct (EPC) contracting. This scenario presents some challenges for the initial due diligence when assessing in the pre-financial close stage.
The paper draws on case studies from the Asia Pacific region to illustrate the key elements in hydropower project financing from the LTA’s perspective, together with the author’s recent and current experience on multiple hydropower projects across Asia and Africa in the run-of-river, storage reservoir and pumped storage type of plants. It also brings together findings from the author’s own recent papers on the subjects of hydropower feasibility studies, the roles of lenders, owners and advisors, and tailored for an ANCOLD audience where the focus is on the dams component of hydropower.
Keywords: Lenders’ Technical Advisor, Dams, Hydropower.