This case study is featured in Better Hydro: Compendium of Case Studies 2017, which highlights examples of good practice in hydropower sustainability across all aspects of project development. You can download the full compendium here.

Key project features

Project stage: implementation
Developer/operator: Empresa de Generación Huallaga S.A. (EGH), a subsidiary of Odebrecht Energia S.A.
Capacity: 456 MW
Annual generation: 2,736 GWh
Reservoir area: 4.74 km2
Height of dam: 202 m

The Chaglla project is an example of thorough environmental and social risk assessment. All impacts of project construction and operation were comprehensively assessed, and there was excellent communication with local communities and environmental consideration.

There are no other hydropower plants on the Huallaga river, although a number of smaller plants are under construction in Huánuco.

Environmental management is highly regulated in Peru. An environmental impact assessment (EIA) is required before a concession can be awarded by the Ministry of Energy and Mines (MEM). The EIA and an environmental management plan (EMP) must be approved by a directorate within the MEM, with input from the agencies for water resources and protected areas. Another agency, the Agency for Environmental Assessment and Enforcement (OEFA), is responsible for overseeing compliance with the EMP.

The Chaglla project is financed by international institutions, so was also required to comply with international environmental and social performance standards.

Socio-environmental issues and risks were assessed in two EIAs and an environmental statement, and ongoing assessment of impacts and emerging risks is part of project procedures. The EIA covered associated facilities, such as access roads, quarries and borrow areas. A second, separately approved EIA addressed the transmission line. All impacts during construction and operation were comprehensively assessed.

The implementation of EMPs and project-specific management procedures guided the management of socio-environmental issues. A 'socio-environmental management system' was established and audited internally, and processes were verified by a third party.

Stakeholders were able to raise issues through a variety of means, and project-affected communities and regulators found the feedback to be thorough and timely.

The project regularly reported back to OEFA on the EIA requirements, and to lenders and their consultants. These measures were successful in avoiding, minimising or compensating for the project’s potential or actual adverse impacts. The project has enhanced pre-project conditions through project-related activities and partnerships, and thanks to Odebrecht’s corporate sustainability programmes.

Methodical reporting procedures ensure systematic mitigation of impacts

The Chaglla project established clear sustainability procedures and appointed a sustainability team to implement its environmental, social, health and safety management plan (ESHSMP). The procedures covered: management (identification of impacts, inspections and non-conformities); specific issues (waste management, potable water treatment, compensation for land acquisition); and risk and emergency response. For example, a procedure for the socio-environmental management programme described how the project would follow the corporate socio-environmental strategy and commitments. Procedures were regularly reviewed and modified.

Most of the socio-environmental programmes included ongoing monitoring of issues through investigations and analyses. The monitoring programme incorporated a range of new risks and opportunities that became evident during implementation.

The Chaglla project appointed a sustainability team to implement its environmental, social, health and safety management plan"

Monitoring and reporting systems deliver excellent contractor performance

The sustainability team supervised contractor compliance, undertaking periodic inspections and identifying opportunities for improvement. The EPC contractor identified and assessed impacts from each activity in a matrix format, linked to regulatory requirements. It reported on environmental and social management and sustainability indicators on a monthly basis. The regulator, OEFA, carried out annual environmental on-site inspections, and EGH sent OEFA an 'annual environmental management report'.

Independent third-party reviews promote high performance and innovation

At the time of seeking project finance, the original 2009/2010 EIA and EMP were subject to a gap analysis to ensure compliance with IFC performance standards. The developer prepared additional assessments on fish and ecology, water quality modelling, downstream flow modelling, a resettlement action plan, and analysis of the project’s carbon footprint. The EMP was updated to incorporate the results of the analysis.

A number of third-party review processes supported strong performance: lenders’ environmental and socio-environmental reviews; and an expert panel of three external environmental and social specialists with experience in hydropower and international standards.

Engaging with local communities and partners improves pre-project conditions

The project engaged community stakeholders through: ongoing meetings with the directly affected population, both general and issue-specific; circulation of a monthly community bulletin; an 'ethics line'; visits of EGH’s social officers; and community offices. Regulators (e.g. OEFA) and local government were able to raise issues directly with the project developers through inspections and direct communication. All stakeholders considered the feedback to be thorough and timely. Opportunities were taken for partnerships and support to local and regional institutions, such as to the Huánuco government for the protection of the Carpish forest, and a capacity-building programme for local workers.

The project achieved well beyond the management of its own impacts, by delivering improvements in a range of areas.

For example:

• new social services and agricultural extension services were established;
• a local capacity-building programme entitled 'Creer' trained 1,489 people, of which 800 (26 per cent women) worked on the project;
• a waste management centre was set up to sort, re-use, recycle and dispose of all types of waste, achieving 100 per cent composting of organic wastes;
• discovering and registering new species, and supporting national parks with the publication of biodiversity books; and
• facilitating the recognition of, and support for, protection of the highly biodiverse Carpish range of forest, a recognised 'important bird area'.

This case study is based on an official assessment of the Chaglla project using the implementation stage tool of the Hydropower Sustainability Assessment Protocol. This was conducted in 2015, with an on-site assessment in June 2015.

The case study is featured in Better Hydro: Compendium of Case Studies 2017, which highlights examples of good practice in hydropower sustainability across all aspects of project development. You can download the full compendium here.