Smith Bell Mini-Hydro Corporation (SBMHC), a 70 percent Filipino-owned corporation, will construct and operate a mini-hydro energy plant in Solano, Nueva Vizcaya with a total capacity of 1800 kilowatts and project cost of P180 million.

The project was approved by the Board of Investments under Republic Act (R.A.) 9513 otherwise known as the Renewable Energy (RE) Act following an endorsement by the Department of Energy (DoE).

“The project is in line with the national policy of encouraging private sector participation in power generation to provide additional capacity as unveiled in the Power Development Plan of the energy sector,” said Trade and Industry Secretary and BoI Chairman Jesli A. Lapus.

SBMHC will install two units of hydro-generator equipment, each with a capacity of 900 kilowatts at Solano, Nueva Vizcaya. The generated electricity will then be sold to the Nueva Vizcaya Electric Cooperative, Inc. (NUVELCO) starting at P4.5/kWh on the first year upon the approval of the Energy Regulatory Commission (ERC).

This power project will improve the livelihood of farmers and further enhance the agri development of Nueva Vizcaya, an ideal site for agricultural development, Lapus said.

Expected to formally commence operations in December 2010, the project will give much needed relief to the province of Nueva Vizcaya and serve as a cushion against energy demands in the future. National energy self-sufficiency is increased with the utilization of inexpensive, renewable and indigenous resources.

Under the RE Act, the project will generate Carbon Emission Reduction (CER) credits estimated at P4.5 million annually. Proceeds from the sale of such credits are entitled to tax incentives upon the endorsement of the Department of Energy. The firm intends to sell its CERs to Europe or Japan.

Carbon credit is a value assigned to a reduction or offset of greenhouse gas emissions. Carbon credits and markets are key components of national and international attempts to mitigate the growth in concentrations of green house gases. One carbon credit is equal to one ton of carbon dioxide, or in some markets, carbon dioxide equivalent gases.

To date, there are over 130 RE projects registered with the DoE, 86 of which are in the hydro/ocean sector.

Recently, 112 RE projects with aggregate total of 2,260 megawatts, were signed by the DoE. These projects are expected to generate additional investments of US$1.5 billion.

Bolstered by sustained investor’s interest in the energy sector with the recent signings, the DoE is optimistic that it will be able to attract between $9 -$10 billion from RE projects within the next 10 years, which translates to increasing the total RE capacity to 9,000 megawatts