This paper describes how social engagement with local and remote communities can become part of the very mission of hydro-power companies.

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NEW MISSION FOR HYDRO COMPANIES: THE GREEN & SOCIAL ECONOMY
Author and speaker: Lucas de Haro Izquierdo, Director of Sorgent.e Hydro Canada
Corporation.
Co-author: Daniele Boscolo Meneguolo, CEO of Sorgent.e Holding SpA.
1. Abstract
The Green and Social Economy is based on considering social and cultural topics as an
integral part of a project’s scope of work by a methodological (not standard) approach that
is more conducive to a profitable synergy focused on a global development.
The Green and Social approach considers three stages (Needs, Participation and Sharing
Needs) that convey Long-Term Developments.
The itinerary Needs-Participation-Sharing Needs-Long Term Developments is, in a practical
way, shown through three case studies located in different countries of the Americas that
deal with several stages of hydroelectric project development and face varied scenarios of
legal frameworks for local communities.
 Peru: analyzing the local communities’ topics in hydropower investments for a long-
term basis. Introduced in the country ‘the social due-diligence’.
 Chile: driving an agricultural community to the role of multi-purpose water users
through their irrigation channels. Implementing educational and cultural plans for the
members of the community.
 Canada: growing with the First Nations, from the royalties and equity agreements to
the long-term strategic alliances. Diversifying First Nations business fields: helping
them become a utility company.
This methodology brings specific dynamics and tools as the social due diligence, the study
of global needs, the informational period, the pre-negotiation training and the understanding
of the resources and improvement of sharing infrastructures. In turn, these instruments lead
to the following long-term developments: permanent educational plans, cultural and social
actions; shared management of resources and infrastructures; shared business risk; local
communities becoming a utility company.
As an appendix, the paper includes some considerations regarding new technologies that,
at the same time, follow and foster the Green and Social Economy.

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2. Introduction
When the business world started to talk about a ‘green economy’, Hydro naturally
anticipated the change. Now, Hydro should be the pioneer that leads the business world to
broaden its agenda from a ‘green economy’ to a ‘green and social economy’ for it is a long-
standing reliable partner of profit and success.
Working in very different countries and cultural environments is mandatory for international
corporations. The challenge is even greater for hydro companies investing in remote areas
populated and governed by aboriginal and local communities with unique customs and legal
frameworks.
The scope of this paper is to demonstrate two main points:
 Social and cultural topics are
o usually perceived as an issue to be solved. Meanwhile, the only way to
achieve an enduring high performance for energy production is to consider
them as an integral part of a project’s scope of work.
o variable depending on the dynamics of the individual local communities, thus
interacting with them can't follow a standard process. However, a
methodological approach is applicable in order to create synergies.
 A ‘green and social economy’ is profitable because it is focused on a global
development that increases the economics of hydro companies by multiplying the
potential business opportunities.
This paper firstly presents a general overview of the Green and Social Economy approach
and then conveys how this new proposal has been applied in three different case studies.

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3. The traditional approach and The Green & Social Economy (GSE) approach.
Constraints and Requirements. Needs
The local communities are recognized for having very unique and particular characteristics,
traditions and behaviours. It is a right assumption to consider that the identity and customs
for different groups that inhabit a defined region or country have multiple elements in
common; nevertheless any community needs its own approach.
Considering social topics as made out of immutable constraints and requirements can lead
to a wrong approach. Dealing with local communities indeed implies working with human
behaviour and groups’ dynamics. The groups have needs that are not static, what doesn’t
necessarily imply a random performance.
Plan and negotiation. Participation
It is quite evident that negotiations are required when there is more than one party.
Participation is the process that allows the developer to achieve a better understanding of
the community and its individuals’ needs. On the other hand, Participation is the stage in
which the investor has the chance to explain what the impact of its project will look like and
the benefits for the community that it will bring in the long term.
Hydroelectric projects are frequently built in remote areas where their impact may be
completely unknown and new to the local population. In some cases, the arrival of an
infrastructure investment is received as a mere vehicle of wealth. This short-term perception
is not necessarily favorable to the developer’s interest.
On the other hand, some bad images usually are associated with energy projects:
contamination, exploitation of resources, irreversible impact to the environment, long-term
problems, inequality in sharing benefits, etc. Using previous experiences is crucial at this
stage to dispel these ghosts.
An essential concept has to be highlighted when describing to a local community the impact
of the plant: run-of-river technology has the best compromise between production
performance and reduced environmental impact.
traditional
approach
constraints and
requirements
plan and
negotiation
plan
implementation
RESULTS
GSE:
new approach
needs participation sharing needs
LONG TERM
DEVELOPMENTS

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Sharing needs
The following pages will present three case studies where the communities have very
different levels of knowledge, background and understanding of hydroelectric projects. The
needs of a local group may vary considerably. Restricting our analysis to the Americas, we
have dealt with a wide variety of situations: primary needs, living conditions, urban
improvements, training and education development, manufacturing and agricultural plans,
business partnerships, etc.
In spite of this, regardless of the level of official titles or ownership the communities hold on
the projects’ lands, they have a common characteristic: they view that very territory as
theirs. For this reason, it is extremely important that the construction and operation of a
hydro project’s mirror the needs of the community.
Long term developments
Hydro projects usually have a lifespan of 10 to 40 years before major improvements or
relevant changes to their commercial basis require consideration. Since the agreements
with local communities have to be aligned with the duration of the investments, a superficial
or quick analysis and arrangements on the previous stages may imply significant changes
to the agreements during their lifetime. In order to obtain enduring agreements and
commitments, the local community might need an education period after the Participation
stage. This step is especially important when working with groups that lack experience in
dealing with infrastructure projects and big players.
Any kind of benefit for the community: employment, contributions, training, formation,
royalties, business partnerships, etc. shall consider, at least, the whole duration of the
project. Involvement and personal growth of the community’s individuals during the life of
the plant avoid the risk of the ‘subsidy culture’ and generates long term developments.

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4. Case studies. Introduction
The following case studies are located in three different regions of the Americas, deal with
three different stages in the development of hydroelectric projects and face three different
scenarios of legal frameworks for local communities.
All the cases are based on the experience of the authors of this paper working with
Sorgent.e Holding. For the Peru-Preliminary Feasibility Analysis and Canada-Pre
Construction Stage cases, names and numbers will be kept confidential.
REGIONS
DEVELOPMENT STAGES
LEGAL FRAMEWORK
PRELIMINARY
FEASIBILITY
ANALYSIS
PRE-
CONSTRUCTION
STAGE
OPERATION
CANADA
PERU
CHILE
Community area with no legal but actual rights.
Cooperative organizations with rights on the use of the resources.
Legal rights and titles on the lands.

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5. Case Study 1. Peru- Preliminary Feasibility Analysis – Actual rights.
In an informal way, when developing hydro projects in Peru, it is commonly said: “the
expertise to solve the technical issues is taken for granted; the real difficult challenge is to
work in a proper way with the local communities”. Actually, there are many well-known
cases of conflict and violence during the construction of mining and large hydro projects in
Central and South America.
In 2012, the Italian company Sorgent.e was assessing the possible acquisition of two run-
of-river developments in a rural area in the region of Lima, Peru. The claim of local
communities on the lands and resources in Peru is not strongly articulated within any legal
framework, it is rather a matter of fact. (There is, however, a legal distinction between local
communities and aboriginal groups). In order to make an investment decision on the
projects, other than the technical, economic-financial and legal due diligence, a study of the
projects under the social prospective was required. Notwithstanding the common practice
of approaching the communities as part of the legal or technical assessment, Sorgent.e
decided to hire a local NGO to carry out a ‘social due diligence’. The NGO, over time,
acquired the suitable experience and expertise working in developing projects for
depressed areas in the country during more than 10 years. The following paragraphs
summarize the findings of this social due diligence and how it has contributed to the GSE
approach.
Needs
Before describing the needs, let’s highlight a relevant consideration: the local communities
close to the projects’ location have very traditional organizations that pre-date the official
administrations that rule the districts. Actually, the administrative boundaries were
established in 1959 according to the peasant communities’ traditional areas.
Main access road to the communities. Peru.

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The project’s location is remote in a mountainous landscape six hours away by car for any
urban city. As a first step, the NGO carried out a site visit to the communities. Through
formal documentation analysis and informal meetings and conversations, Sorgent.e
achieved a detailed understanding of the composition of the communities, educational
needs, nutritional problems, poverty situations, etc. Accordingly, we became aware that
there wasn’t any extreme poverty situation in the community, but yet there were some
deficiencies in access to utilities, nutritional habits, educative system, etc.
Participation
The Participation was very limited because of the preliminary stage of the investment. In
any case, some very important notions emerged from the interviews with the community:
 They consider the impact of run-of-river projects much more beneficial than the
impact of mines, having had both types of infrastructure in their areas.
 The lands privately used by individuals belong to the community that manages and
assigns them to their members for their whole lifetime. This very profound sharing of
goods and properties shows that the negotiations of the hydro developer must be
honest and transparent with the whole community and not just with the leading
individuals.
 The community had a serious concern about the high drop-out rate among students
when infrastructure projects are under construction. They quit school to make some
money on the construction site.
 The community showed, as well, their interest in minimizing their dramatic economic
decline once the projects are built.
Sharing needs. Long term developments
Sorgent.e finally did not invest in those projects for reasons completely alien to the social
situation. In any case, we can hereby report the main advisable guidelines planned to be
implemented in order to share community needs and foster a long-term development:
 Communities’ leader’s education, sensitising and training before negotiation.
 Communication plan on project updates and changes.
 Job plans after construction stage.
 Contributions to the local development offices.
 Contributions to different local programs: economic development, nutritional safety,
tourism and social development.

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6. Case Study 2. Chile – Operation – Rights on the resources.
In 2003, working with a local partner, Sorgent.e started the development of a run-of-river
project in the Chilean region of Maule. The big challenge was to use the natural flow of
irrigation canals managed by peasant communities without creating major impacts on the
environment.
Needs
The Asociación Canal Maule is an irrigation organization incorporated in 1917. The
construction of their first irrigation channel started in 1918.
The intention in this case is not to explain the needs study methodology already exposed in
the previous pages, but to outline the situation in which Asociación Canal Maule was in
2003:
 Loss of efficiency in their aged irrigation structures.
 Interest in taking part in the booming renewables energy sector.
 Lack of own means to realize the previous interest.
Participation
The Participation with Asociación Canal Maule revealed that their needs and interests
weren’t only the irrigation and energy development but also to foster educational and
cultural activities for the youngest members of the community, to take care of their festivals
and traditions as well as to improve the safety of their infrastructures because of seismic
hazards.
Sharing needs
Without disregarding other needs, the synergy between Asociación Canal Maule and
Hidromaule (Sorgent.e’s local subsidiary) has been mostly focused on the efficient use of
the water.
Asociación Canal Maule needed to improve their irrigation infrastructures in order to
achieve a better performance of their agricultural activity, the main economic resource of
the community. Hidromaule detected a good chance to use the existing ditch that runs
throughout the local hills providing enough head for an efficient hydroelectric generation.
Under these circumstances, the investment of Hidromaule into refurbishing part of the
irrigation canals provided a shared benefit for a better irrigation and electrical production.
In the next paragraph, we will explain how sharing needs can become a long-term
development and not only an initial contribution.

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Long term developments
Probably one of the most innovative features of the alliance Hidromaule - Asociación Canal
Maule is the payment of royalties to the irrigation organization for an optimized use of the
water. A better management of the water by the association implies an improved irrigation
performance, a higher power production and bigger royalties. What usually works as a
water rental fee, paid by the power producer to the local government for the use of the
natural water flow, here has become an incentive for premium, agriculture and energy. It
was the choice of the partners to share, not the business risk, but the resources
management.
Following this partnership, Hidromaule has commissioned three run-of-river power plants in
the last years: Lircay (2008), Mariposas (2011) and Providencia (2013). The total installed
capacity of these three plants is 39 MW, and the power generation is 231GWh per year.
Lircay Hydropower Plant (19 MW) was included as one of the top 100 worldwide
infrastructures in Infrastructure100 (2010), a publication by KPMG and Infrastructure
Journal.
Lircay Hydropower Plant (19 MW). Chile
Other than its role as an independent power producer, owning and operating three plants,
Hidromaule is busy taking part in the public life of San Clemente community. Hidromaule
supports cultural and educational initiatives for children and the youth such as classical
music, theatre, ballet, while taking part in the traditional festivals of the area. These
activities help the development of the community and wards off social threats such as
drugs.

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Furthermore, Hidromaule has re-build a burnt school and some dwellings destroyed after
the 2010 earthquake.
Local theatre play sponsored by Hidromaule.
Scholar visit to Hidromaule’s run-of-river facilities.
The first case study approached a feasibility due diligence that outlined the long-term plan
to be implemented. This second case study shows an actual long-term action that brings
benefits to the communities and helps them reach their own development and
responsibility.
The initial contributions made by Hidromaule to refurbish the irrigation canals were only the
first stage of a permanent synergy that pays for the use of the natural resources, improves
management of the principal community economy’ driver (agriculture) and actively
participates in the educational, cultural and social life of the area.

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7. Case Study 3. Canada – Pre construction – Rights on the land.
Our exposition in this case will be focused on the Canadian First Nations. Undoubtedly,
Canada represents the most developed and structured framework on local communities out
of the three case studies.
Under a historical, sociological and legal point of view, the topic of First Nations in Canada
is such an extensive one, that we can only offer here some highlights:
 The Federal Government of Canada has a Ministry of Aboriginal Affairs and Northern
Development, so do the most important provinces of the country (under different
names).
 The legal framework of First Nations is ruled by the so called “Indian Act” initially
issued as "Act for the Protection of the Indians in Upper Canada" in 1839 and with
numerous amendments up to date.
 In 1992, the First Nations Finance Authority was born to provide all First Nations and
Aboriginal governments with the same financial instruments as other Canadian
government agencies.
 Government tax programs ease the access of aboriginal groups to clean energy
investments.
The number of training programs and university courses in Canada on First Nations is
just a sample of how developed this subject is. Many academic and technical references
have been published, but one especially remarkable work is a book issued in 2013 titled
“Aboriginal Power”. Clean Energy & The Future of Canada’s First People” by Chris
Henderson.
Cover of the book “Aboriginal Power”.

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Let’s focus our study in the province of British Columbia, which is home to 198 First
Nations, about one third of all the aboriginal communities in Canada.
By law, a consultation, with the related First Nations whose traditional territory a hydro
project lays on, is mandatory in order to obtain all the permits, authorizations and relevant
agreements. This consultation usually conveys an agreement between the developer and
the community, this agreement rules the participation of the First Nation in the hydroelectric
development.
There are many ways in which a Frist Nation can participate in a project. The following list
summarizes some of the most frequent agreements and benefits negotiated between
hydroelectric companies and First Nations in the last 25 years:
 Gross revenue royalties’ agreements.
 Community contributions.
 Jobs opportunities.
 Business opportunities.
 Equity investments.
 Transaction to transfer ownership in the long term.
As time has progressed, equity investments agreements have become more and more
frequent, thereby granting First Nations the chance to share the ownership of the private
infrastructures located in their traditional territories. In this sense, the case of the
operational project Canoe Creek Hydroelectric (5.5 MW), majority owned by Tla-o-qui-aht
First Nation is significantly relevant.
Canoe Creek Hydroelectric project’s powerhouse.
Vancouver Island, BC. Canada.
In such an advanced scenario for the participation of local communities and First Nations in
hydroelectric projects, this paper is limited to suggesting some new considerations that
could become a positive contribution to this rich and complex framework.

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Needs. Participation
The agreement that rules the involvement of a community in a project is usually called
“Impact Benefit Agreement” (IBA). The authors of this paper have the experience of dealing
with First Nations following existing agreements not negotiated by the authors. It has been
interesting to identify that, despite the detailed structure of contents that the IBAs have, the
needs of the local groups are not completely addressed. In this sense, we have to point out
that the fact of having an IBA doesn’t necessarily mean that the Participation stage is totally
completed.
For the purpose of this case study, we are considering two major needs revealed by the
communities during informal conversations:
 Concern over the disintegration of households resulting from family members
working on construction of the projects located in remote areas.
 Desire to diversify the local economy, traditionally focused on forestry and fishing.
Sharing needs. Long term developments
The first need reported above has opened an opportunity to analyze whether some of the
construction work could be executed in the communities’ areas; this would help reduce the
transfers of community members. Either alternatively or complementary, it might be
possible to involve several members of the same family on the construction site in order to
preserve the integration of the household.
The desire to diversify the businesses of the Nation demonstrates that, not all the
communities have had so far, the same opportunities to be part of the renewable energy
sector. The level of education, training and experience varies from Nation to Nation. Some
groups see how the neighbours grow in the energy business while they haven’t been able
to participate in any hydro project yet. The previously mentioned case of Canoe Creek
shows a good track for this implementation: a first project where the local group is involved
as an external party (either as a contractor, or subcontractor, or workforce supplier, or
taking advantage of training programs, etc..) provides the required knowledge and
experience to move step by step towards an equity investment in a further development.
The tendency in British Columbia is for the First Nations to become co-owners of the hydro
plants sharing business risk with an independent power producer.

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8. Conclusions
This paper is not intended to be a deep analysis on international relationships with
aboriginal groups and local communities, but rather, to highlight that a methodological
approach is applicable to create synergies. Since there is a variable depending on the
dynamics of the different local communities, the approach can’t be standard.
There are very wrong common practices usually bring along disastrous consequences for
the hydro projects. Some examples of these practices are: lack of participation of the
communities, an uncompleted training period before the signature of agreements, big initial
compensations, a poor analysis of the social needs of the community, etc. Consequently,
agreements may need to be continuously re-negotiated, construction work may be stopped,
post-construction stage may become dramatic for the community, etc.
As an alternative to those practices and consequences, the Green and Social Economy
proposed the following approach and dynamics:
GSE needs participation sharing needs
LONG TERM
DEVELOPMENTS
dynamics and tools
Social due diligence.
Global needs: economic,
business, social, etc.
Social due-diligence.
Informative period.
Formation pre-negotiation.
Understanding of the resources.
Improvement of infrastructures.
Permanent educational,
cultural and social actions.
Shared resource and
infrastructure management.
Shared business risk. local
community becoming a utility
company.

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9. APPENDIX. NEW TECHNOLOGIES FOR THE GREEN AND SOCIAL ECONOMY
The professional activity of the authors with Sorgent.e links them to the internationally
patented turbine VLH (Very Low Head). VLH is a compact solution that was conceived for
an efficient use of sites with low heads and high flows. Somehow, it is the turbine that fills
the gap left by the Pelton, Francis and Kaplan turbines in the right-down area of the chart
Head-Flow.
The performance of the VLH turbines conveys a series of features with a very positive
impact on local communities and aboriginal groups:
 Very low visual and acoustic impact.
 Fish friendly: respect for the traditional habitat and source of food to the
communities.
 Reduction of civil work and, accordingly, of construction debris.
 Islanded mode applicable to remote sites.
This and other new technologies offer a beneficial impact on the economy, environment and
electrical reliability in favour of local communities. There might be in the future, a feasible
solution for micro generation programs that are destined to grant local communities access
to clean energy investments, but that are facing serious implementation challenges.

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10. Authors’ short biographies
LUCAS DE HARO has a MSc. Industrial Engineering degree from the Technical University
of Madrid, Spain, where he was a Lecturer on renewable energies. For 10+ years, he has
worked as project manager, business developer and country manager for engineering and
energy companies for the EMEA and Americas regions. De Haro was Sorgent.e’s Head of
Investments for the Americas (2011-2013). He is currently based in Vancouver as Director
of Sorgent.e Hydro Canada. He is a PMP®.
DANIELE BOSCOLO. MSc. degree in Electrotechnical Engineering. His career started as
Operations Manager in a French multinational power plants construction company. In 1995,
he founded S.T.E. with colleagues from Padua, Italy. Boscolo is the CEO of Sorgent.e, a
holding that develops, builds and runs renewable plants worldwide and manufactures the
VLH turbines. He has been a member of different BoDs, participating in international
organizations and has contributed to draft renewable legislation in several countries.