VIP Shipper Club library – Hydropower and the Glory

ISSUE 3 / 2017

ISSUE 3 / 2017

HYDROPOWER AND THE GLORY Energy Project Not Without Opposition

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regional review

HYDROPOWER AND Energy Project Not Without Opposition

BY ALAN M. FIELD

ABOVE: The Hatch-led Oxec II

project is a unique cofferdam that will bring electricity to thousands of local Guatemalan residents in the highlands of the country.

Credit: Hatch

48 BREAKBULK MAGAZINE www.breakbulk.com

In the humid highlands of Alta Verapaz, a “department,” or province, in north central Guatemala, poverty and illiteracy are endemic and access to electrical power is anything but universal.

But Soleh Boneh, the oldest and one of the largest construction and civil engineering companies in Israel, is nearing the completion of Oxec II, a unique cofferdam that will bring electricity to thousands of local residents who often speak only an offshoot of the ancient Mayan tongue.

Owned by Energy Resources Capital, this greenfield hydroelectric project on the Cahabón River has been designed by Hatch Ltd., the Toronto, Canada-based engineering firm.

This is hardly Soleh Boneh’s first hydropower project in Guatemala. SBI Group has provided Guatemala with more than 260 megawatts of power, thanks to the construction of such projects as its El Canadá with 47 MW, Montecristo with 12.7 MW, Xacbal with 94 MW, Palo Viejo with 84 MW, and Oxec I – the first stage of the Oxec complex – with 26 MW. Why is there so much interest in hydroelectric power? One of the poorest nations in the Western Hemisphere, Guatemala lacks fossil fuels. Its per capita gross domestic product of only $3,050 in 2015 – about half the GDP per capita of China – is distributed highly unevenly.

Although Guatemala’s national minimum wage is 2,644.50 quetzales (US$346) a ISSUE 3 / 2017

THE GLORY month for agricultural and nonagricultural workers, some workers have reported that they receive as little as 600 to 700 quetzales (US$78.63 to US$91.74) a month.

For all the efforts by various governments and non-governmental organizations to provide Guatemala with technical expertise, its poverty rate rose from 64 percent to 67 percent between 2011 and 2014, according to the United Nations Development Programme. Most of the country’s poor are rural indigenous farmers who have faced land conflicts and competition with imported goods. All the while, funding for public services such as health care and education has dropped, making them inaccessible for the majority of the population.

GEOGRAPHICAL CHALLENGES

The mountainous climate is quite challenging for builders of energy and other infrastructure projects. “We proposed this design to address some very specific challenges and requirements that were unique to this project and the region’s climate,” said Hooman Ghassemi, Hatch’s project manager for Oxec II. “This solution had definite technical benefits and allowed us to maintain the project’s economic viability with respect to budget and schedule. We couldn’t be more pleased with its success.”

While Hatch is involved in a broad range of energy sectors, Ghassemi’s team specializes in renewable energy,

including hydropower and dams. Over the past 12 years, he and his co-workers have undertaken seven full-scale projects, including five hydro projects in Guatemala.

“The interesting part is that Guatemala is a developing country so there is still lots of potential for greenfield projects, as opposed to most of the projects in Canada and North America, which we call ‘brownfield’ – existing projects that are modified and extended. With greenfields, we just break ground in the project and start from zero.” He added that Guatemala is a challenging country for these kinds of construction, mostly because of the very unstable climate and the unstable ground. “You’re dealwww.breakbulk.com BREAKBULK MAGAZINE 49

regional review

Credit: Hatch

ing with seismic and volcanic activities, and also hurricanes,” he said. Ghassemi has been working on Oxec II since 2015 and has just finished the conceptual design for Oxec III.

FIRST OF ITS KIND

In April 2017, Hatch received the Ontario Consulting Engineering Award in the Industry, Energy and Resources category for its work on the cofferdam at the Oxec II project in Guatemala.

“The structure was the first of its kind built in Guatemala,” said Henri Assa, the Oxec II project manager for Solel Boneh in Guatemala. The dam was recognized by stakeholders as “a notable achievement” and the “owner’s preferred option for any future projects with a similar scope.”

What makes the Oxec II project so special? Ghassemi explained that Oxec II is comprised of concrete gravity dams; a spillway and intake with a maximum height from the foundation 50 BREAKBULK MAGAZINE www.breakbulk.com

of more than 40 meters; and overall crest length of more than 200 meters.

The powerhouse has three horizontal shaft S-type Kaplan units with an installed capacity of 56 MW. The first of its kind built in Guatemala, the cofferdam has 29 cells, is nearly 300 meters long, and consists of 2,000 tons of steel and Hooman more than 50,000 Ghassemi cubic meters of Hatch fill. According to Hatch: “The cofferdam resists fast flows, controls the release of sediment, and exhibited high reliability and safety during its installation and life in service, needing no remedial works after flood events.”

Ghassemi added: “On this project,

the owners realized that a conventional cofferdam was not a feasible scenario in terms of schedule and economy, so we proposed the concept of using a similar cofferdam for the diversion of the river.” As a result, “We had massive savings in terms of quantity of excavation for the project – and therefore the cost of concrete. We also managed to save four months out of the schedule; without this change, the project was unfeasible from schedule and cost.” That way, “they could minimize the release of spill, which provided an environmental advantage. And the safety and reliability we offered [was] a very robust option.”

High-magnitude flood conditions dictated a relatively large cofferdam. As such, the temporary diversion required a significant level of construction effort to be completed within a very compressed schedule. The concept had never been used before by the contractor, according to Hatch, so its staff did not have direct experience with it. And there were risks associated with the in-water works and the frequent large floods common to the region.

DEALING WITH OPPOSITION

For all that, not everyone in the region is pleased with Oxec II. In February 2017, the Constitutional Court of Guatemala upheld the suspension of the license for the Oxec II hydroelectric station for allegedly failing to consult indigenous peoples in the area before starting the projects. On the other hand, the Constitutional Court’s decision was viewed by the Guatemalan private sector as a threat to the essential principle of legal certainty in the country. According to press reports, some businesses argued that the fate of other hydropower projects had been placed at risk by the suspension of such an ambitious project as Oxec II. For her part, Ana Valeria Parado, director of sustainability for the Oxec ISSUE 3 / 2017

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projects, told a Guatemalan newspaper that the suspension by the Constitutional Court would “avoid risks to the community and any possible damage to the work that has already been achieved. We believe that the Constitutional Court

adopted a mature and responsible attitude in issuing the resolution.”

By March 2017, however, the situation had changed dramatically. The uncompleted portions of hydroelectric project Oxec II would soon be

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resumed, and then completed, it was announced. However, this authorization from the Constitutional Court to resume Oxec II did not formally involve the lifting of the original suspension, only permission to complete certain work in progress to “avoid damages both to the works that had already been worked on, and to communities,” said La Prensa Libre, a local publication.

In an interview with Breakbulk, Ghassemi said he had never been made aware of any such suspension in the first place.

“To be honest, I know as pretty much as you do. Our role is [that we are] the designers for the contractors. We are not involved in any legal aspects.” He said that Oxec II is still scheduled to be finished in 2018.

Canada-based Ghassemi added that such suspensions are neither strange nor uncommon. He likened this project to a large one in Newfoundland, Canada, known as Muskrat Falls. “Any hydroelectric project that I’ve been involved with, they’ve had issues with the communities, and at some point, there have been some temporary halts to the project. There were some project cancellations in Alberta [as well]. We’ve heard the same stories from British Columbia in indigenous communities.

There are always ongoing disputes over lands and resources, and that includes permits and environmental consultations. And usually [also] when the government changes, when the people in the same department change. I know they are working on the [Oxec II] site, so there is no permanent stop on the project.”

A TURBULENT POLITICAL LEGACY

Kirk Sherr, president of Clearview Energy Partners, a Washington-based energy consultancy, noted that for many projects in developing areas the issue is whether remote hydro projects that have a significant environmental impact are the best way to go. “Each case is something unto itself,” he said. “It is really difficult to make a blanket observation.” Some rural community groups in the Guatemalan department of Alta Verapaz argued that SBI did not engage in the community consultations that were needed to smooth the way toward completion of the project.

ISSUE 3 / 2017

For several months, residents of various local communities held demonstrations during which they argued that they were not consulted about the works. Some community leaders demanded community consultations before further construction could be carried out.

The social turbulence was not unexpected, given the instability that marked Guatemala’s recent year. January 2017 marked the 20th anniversary of the signing of Guatemala’s 1996 Peace Accords.

The agreement between the Guatemalan government and the Guatemalan National Revolutionary Unity (URNG) guerrilla organization ended one of Latin America’s longest-running armed civil conflicts. The Peace Accords also led to official recognition by the government of the rights of Guatemala’s indigenous communities for the first time in the country’s history, setting the stage for the subsequent government recognition of women’s rights.

For some indigenous communities, hydropower projects have become the most visible symbol of the struggle against the highly concentrated wealth of the private sector of Guatemala. In that country, as elsewhere in the developing world, “the issue with hydro is that even though the products are longstanding, the local social costs on the impact on the environment can be pretty high,” said Sherr. Moreover, he noted, the social and environmental causes of local groups that oppose such environmentally impact projects are often championed by non-governmental organizations (NGOs) that marshal a wealth of professional prepared analysis in support of the local group’s arguments.

“Historically, such conflicts would have been an almost 100 percent [battle between] a large local utility and a small indigenous or impoverished group hearing an argument that there will be many jobs, and everyone will be better off,” said Sherr. “In today’s world, with the Internet and all the sophistication that NGOs provide, there is a surprising amount of resistance to hydro plants, and an unusually strong capacity to bolster national arguments against them.”

He added: “Often, these are projects that are – as in Guatemala – governmentled projects, and therefore a lot of the contracting and benefits from over-

charges and other anomalies help sway the political decision-making process.

So, irrespective of the potential negative environmental impacts, the projects can acquire a lot of impetus because of corruption.” BB

Alan M. Field has reported on trade, logistics and related technologies from numerous countries in North America, Latin America and East Asia (Japan, Taiwan and Korea) over the past two decades.

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