Peru is favored by a stable and growingeconomy and the availability of indigenous sources of energyfor electricity generation, hydro and natural gas. Installedcapacity in Peru in 2006 was 6658 MW, of which 48 percentwas hydro-based. However, regarding new investment ingeneration, there is reason for concern. Demand growth overthe past five years has been 5-10 percent, with no signs ofslowing down. At the rate of 10 percent demand growth, 400MW of new generation capacity is necessary each year,representing at least US$250 million annually of newinvestment. The present study on small hydropower containsthe following sections: (i) introduction; (ii) technicalpotential for development of small hydropower in Peru; (iii)economic and financial viability of small hydro developmentin Peru; (iv) institutional and regulatory environment; (v)identification of barriers to small hydropower developmentand mitigation measures; (vi) international experience withsmall hydropower development; (vii) the potential impact ofthe Renewable Energy Decree; and finally, (vii) conclusionsand recommendations.
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