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China CTG, the world’s largest hydroelectric company, plans to double its size in Peru

Nearly four years ago, China Three Gorges Corp (CTG) made headlines in Peru. The world's largest hydroelectric company completed the purchase of Chaglla, the third-largest power plant in the country, for $1.4 billion, a transaction that garnered attention due to the seller being Odebrecht.

Now, with this asset under the control of its subsidiary Empresa de Generación Huallaga, CTG is pursuing new opportunities to double its local capacity through new energy projects, investments, and acquisitions.

To understand the details of the Chinese group's expansion strategy in Peru, Humberto Armas, Director of Marketing and Regulation at Empresa de Generación Huallaga, gave an interview to Gestión.

Four years after the acquisition of the Chaglla hydroelectric plant, how has this plant been operating?

Empresa de Generación Huallaga is a subsidiary of CTG, and Chaglla (Huánuco) is the third-largest power generation plant in the country with 456 MW (megawatts) installed and an annual production of 2,300 to 2,400 GWh (gigawatt-hours). It is half the size of the Mantaro Complex (the largest in Peru). Since it began commercial operation in 2016, following almost five and a half years of construction, it has operated normally, maintaining a close relationship with the surrounding community. It required an investment of $1.4 billion and accounts for approximately 7% of the national market during periods of water abundance.

How is the demand?

The effects of the pandemic have already been overcome. Demand continues to grow, and today we are at around 7,700 MW of national demand, with projections indicating an annual growth of 3% to 4% by 2026. However, this demand is relatively small considering the territory and resources we have. Our per capita demand is below the Latin American average.

In Peru, we have a large amount of natural resources, what we call RER, renewable energy resources, which is the new paradigm for all future energy developments worldwide. Peru is no exception, and we are already developing wind and solar projects.

Are you also considering wind or solar projects?

We are making efforts and developments to soon announce some projects as an expansion of our portfolio. The only operation we currently have is the Chaglla Hydroelectric Plant, which is 100% renewable but conventional. It is a dam hydroelectric plant, with a tunnel, generating energy conventionally. We are making efforts to obtain solar and wind projects, similar to what other companies in the industry are doing.

Would these projects come from your own developments or acquisitions?

We are making several efforts, but the quickest route will likely be acquiring a project that is already mature or even in operation. We have no limitations in this regard.

How many projects are you currently looking at as potential acquisitions?

We are looking at several, although unfortunately, I cannot provide many details due to confidentiality conditions. However, we are making progress and believe we could soon deliver good news to the country.

Interview with the Director of Marketing at EGH conducted and published by Diario Gestión on April 11, 2023.