In most emerging markets with the notable exception of China, power producing capacity has not kept pace with economic growth. Therefore most of these countries suffer from shortages and unmet demand.
Hydropower plants are a cost-effective, clean and durable way of producing electricity. Hydropower can compete against other conventional sources of power (nuclear and fossil fuels). Therefore Velcan Energy does not need any special sort of subsidy or preferential feed-in tariff as other new sources of renewable power do.
We sell our electricity on a commercial basis, either to big national companies, private power merchants or to industrial consumers. Medium to long-term contracts cover in excess of 90% of our sales. We do not enter the retail and distribution market.
In most countries, we operate under a concessional regime. This means that we develop the projects, build the power plants, operate them for the duration of the concession and then transfer ownership to the State. Concession durations are usually between 25 to 40 years.
In some locations, hydro power gets carbon credits as it replaces carbon intensive electricity and has a longer time to market than fossil fuel power plants. However, carbon credits are only a very minor part of our revenues.