Hidromaule Project Hidromaule S.A. (Hidromaule or the company) is a start-up hydropower generation company owned by an Italian-Chilean consortium of professionals with substantial experience in the hydropower generation industry.  The companys initial project, Lircay, is a 20 Megawatt (MW) run-of-river hydropower project located along the Lircay River in the VII Region of Chile, approximately 30 km to the northeast of the city of Talca.  The project is expected to have a construction period of approximately 18-24 months.  The Lircay hydropower project takes advantage of water rights owned by the Canal Maule Association, a long-established irrigation group formed mainly by medium and small agriculturists and with approximately 2,200 shareholders.  The Association utilizes water in the Maule River that is stored upstream in the Maule Reservoir, diverted at the Armerillo intake and distributed through two primary canals  Maule Norte Alto and Maule Norte Bajo.  The Lircay project is made possible through a surplus of water during wet periods of the year and as a result of topographic relief at a point on the Maule Norte Bajo that over looks the confluence of the Corel and Lircay rivers.  Up to 28.20 m3/sec of canal flow and a head of 107 meters are available at this location.  During the season of irrigation (mid-September through mid-April) water is available for power generation only to the extent that flow exceeds irrigation requirements.  The rest of the year water is available up to the 54.32 m3/sec of water rights owned by the Association.  The company has used the 40-year period of record for flow in the Maule River to optimize the size of the Lircay plant for year-round operation.  Infrastructure required for the Lircay project includes a diversion structure on the Maule Norte Bajo canal, a 2,950 meter-long canal to bring the diverted water to a point overlooking the powerhouse, a 520 meter long steel penstock pipe to the powerhouse, and a powerhouse with two Francis-type turbine-generator groups with a 9.7 MW capacity each.  Water flow required for the powerhouse at full generating capacity is 22 m3/sec.  As part of the project the company will also construct a 25 km transmission line to CGEs Maule Substation in San Clemente. Chiles Central Interconnected System (SIC) has three generators: Endesa-Chile (owned by Endesa Spain), AES Gener (AES), and Colbun (Tractebel) - controlling more than 90% of the market.  Of existing generation capacity, approximately 42% is coal or gas-fired.  Over the last three years, there have been significant cuts in gas volumes imported from Argentina, especially during the critical winter months, because of limited production capacity in Argentina.  Although these reductions in gas volumes have not had an impact in the residential sector, they have created problems for generators and industry in general, who have on occasion experienced complete loss of gas volumes for several days, impairing their production capability.   Due to this problem, Chile has sought a number of possible alternative sources of fuel.  These efforts include: 

- exploration for gas in the southern region of Magallanes;
- importing LNG from Australia and Indonesia; and 
- development of new renewable energy plants, to include wind power and hydropower.  

Being a run-of-the river project, with a very low marginal cost of power, the project will lower the cost of electricity to its major offtakers and therefore help support a lower cost structure for industries in Chile.  Given that the hydrology of project site is very well studied, it will also be able to do so with a great degree of reliability, without burning fossil fuels.  The project will thus help reduce Chiles NO2 and CO2 emissions by displacing thermal power generation in the economic dispatch order.