Honduras Communities Explore Small Hydro Development

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No one knows for sure if the idea of a community-owned small hydropower project will work, but Lenca indigenous peoples in the Municipality of Tomalá in Honduras are not afraid to try. And they have nothing to lose.

A community surveyor on the Mocal.“Eighty percent of the region’s population lives in extreme poverty, and malnutrition rates are high,” said Fabricio Herrera from the Pro-Development Committee for the Mocal Hydroelectric Project. “We see this small hydroelectric as a way of getting out of poverty for our communities.”

The project is on the Mocal River, a tributary to the Lempa River, which is shared with El Salvador, and was developed communally by municipal organizations. According to Herrera, this 8MW run-of-river project won’t impact fertile lands or areas of high biodiversity because it is located in a desertification zone, and no people live in the area of the reservoir. The project is estimated to provide electricity to 10 municipalities, or about 100,000 people. Grid expansion to surrounding rural areas is also being considered.

Honduras’ Natural Resources Environmental Agency granted the site permit based on a project pre-feasibility study, prepared by UNDP. Communities are working on getting funding for the feasibility study, but the big hurdle will be obtaining financing for the project. “Several entrepreneurs have contacted us to offer to develop the project for us, but we want this to be a community-owned project,” said Herrera.

Privately developed medium-sized and small dams in Honduras receive tax breaks, and private electricity producers benefit from fiscal incentives, tax exemptions and the recognition of 10% of the short-term marginal cost per kWh as a premium.

“What is innovative about this project is that the profits generated by the electricity sales will be invested in social and economic development projects in the area, and on the conservation of the basin,” said Herrera. The community plans to set up a company responsible for the promotion, construction and operation of the plant. The company would be connected to a non-profit foundation, also comprised of community members, which would be responsible for investing the profits.