San Cristóbal – Galápagos wind re-powering project D R A F T

e7 Fund For Sustainable

Energy Development

San Cristobal - Galapagos

Wind Repowering Project

Draft Document

Terms of Reference
Environmental Impact Assessment
And Management Plan

Revision Revision 21

September 17thJuly 31, 2003

(DRAFT VERSION approved byIncludes comments from the Ministry of Environment and, CONELEC for Public Consultationand GNP)April 2003

This document has been prepared by:

HYDRO-QUÉBEC

Pierre Lamothe

Peter Leonard

and

American Electric Power

Jim Tolan

Paul Loeffelman

with

the collaboration

of

Luis C. Vintimilla

Nuria Bohigas

Allan Baer

The e7 Galapagos Project

Team members.

Terms of Reference

Environmental Impact Assessment and Management Plan

CONTENTS

1. Introduction and general data 3

2. Project background 4

3. Focus 6

4. Objectives and scope 6

5. Methodologies and techniques 7

6. Determination of areas of study and direct and indirect influence 8

7. Environmental base line description 8

8. General description of the project 9

9. Analysis of alternatives 12

10. Identification, Prediction and Evaluation of Environmental Impacts 13

11. Environmental Management Plan (EMP) 13

12. Environmental Legal and Institutional Referential Frame 15

13. Public Participation Mechanisms 16

14. Report 16

15. Time frame for the EIAD execution 17

Terms of Reference

Environmental Assessment and Management Plan

1. Introduction and General Data

The Wind Generating Project in San Cristobal, to be executed under the Memorandum of Understanding signed between the Government of the Republic of Ecuador and the e7 Fund for Sustainable Energy Development (e7 Fund), has as main objective to replace in the maximum amount as technically and economically feasible, the current electricity generating system burning diesel in San Cristobal Island – Galapagos, with a clean energy source based on wind turbines, in order to use this renewable resource in an optimized way and to avoid the environmental risks derived from the existing system. For the development of this project, a joint venture is being structured with the participation of the e7 Fund and Empresa Eléctrica Provincial Galápagos S.A. (Elecgalápagos S.A.), which is the project proponent for the purposes of the current document.

In general terms, the referred project has the following basic features:

·  Geographical location: San Cristóbal Island, Galapagos Province

·  Extension: the wind park of a rated capacity up to 2.7 MW and its associated facilities shall be developed in Cerro El Niño. From this site, a three-phase, 13.8 kV transmission line shall be constructed, of approximate 12 km length, following a route parallel to the existing road, ending at the existing step-up substation at the diesel power plant in Puerto Baquerizo Moreno, using the same right-of-way of the current line owned by Elecgalapagos S.A. Additionally, in a piece of land next to the Elecagalapagos S.A. diesel power plant, the complementary equipment shall be installed. Some improvements in such diesel generating system shall also be required.

The project is included in the renewable energy project for Galapagos, under the umbrella of the United Nations Development Program (UNDP), and is included in the list of priority projects of the Ecuadorian Government.

As a component of the project studies, the Definitive Environmental Impact Assessment (EIAD) shall be conducted, in accordance with the legislation currently in force in Republic of Ecuador.

The EIAD shall provide definitive informative data about the proponent, its legal representative, and information about the consultants to develop the studies; however, as a preliminary information and for the purpose of approval of these terms of Reference, following information is provided:

·  Project owner : the project shall be developed and operated by a Joint Venture between Elecgalapagos S.A and e7 Fund, currently in structuring process (in these documents it's designated as "the proponent")

·  Addresses:

à  E7 Fund, Secretariat Office:

§  155, Metalcalfe Street, Suite 1120

§  Tel.: (514) 392-8876 / Fax (514) 392-8900

§  www.e7.org

§  Montreal, Quebec, Canada H2B 2V6

à  E7 Fund, Local Project Management:

§  Miguel Burbano N48-236

§  Tel / Fax : 02 – 3300 397

§  E-mail:

§  Quito – Ecuador

à  Empresa Eléctrica Provincial Galapagos S.A.:

§  Calle Española y Juan José Flores

§  Tel / Fax : 05 – 520 136

§  Puerto Baquerizo Moreno, Isla San Cristóbal

§  Provincia de Galapagos - Ecuador

·  Legal representatives:

à  e7 Fund: Mr. Christian Stoffaës, Executive Director

à  Elecgalápagos S.A. : Ing. Wadih Dáher N., General Manager

·  Suggested composition of the Consulting Team: the selection of the consulting team for the EIAD is under process. The suggested team composition shall be approximately as follows: environmental engineer (team chief); biologist; anthropologist; archeologist. In any case, the final composition of the consulting team shall be presented before the initiation of the EIAD

·  Date foreseen for EIAD execution: the EIAD execution schedule shall be subject to the time estimations included in number 15 "Time Frame for the EIAD execution" in this document.

2. Project background

a.  The Ministry of Energy and Mines (MEM) of the Republic of Ecuador, has defined several strategic objectives for the energy sector, among them: to reduce the dependency on fossil-fuel for isolated and remote areas, to promote the private participation, to introduce measurements to promote the energy efficiency and the use of generation sources with renewable energy, especially in rural areas.

b.  In accordance with this, in 1995, MEM, through its Alternative Energies Department (DEA), (CCurrently designated as Direction for Renewable Energy and Energy Efficiency - DEREE) developed a small project for studying the renewable energy potential in the Galapagos Islands. The project was developed by DEA with the cooperation of the research community working in the islands with some support from UNDP, UNIDO and UNESCO. The study was finished in 1996 and it recommended to perform a detailed investigation of the barriers for the utilization of renewable energy in Galapagos.

c.  Continuing this initiative, the World Bank's Global Environmental Facility - GEF, approved in 1997 a Project Development Fund - PDF B, for the identification of such barriers.

d.  As a part of this PDF B the pre-feasibility studies were conducted for the development of the most appropriate hybrid systems Photovoltaic / Wind / Diesel, for each one of the inhabited islands in the Archipelago; i.e.: San Cristóbal, Santa Cruz, Isabela and Floreana. These studies were developed by the German consulting company Lahmeyer International, whose final report was delivered on December 2000.

e.  The Board of Empresa Eléctrica Provincial GalápagosGalapagos S.A. (Elecgalapagos S.A.), through Resolution N° A7-069, dated September 1st, 2001, requested UNDP assistance to get support for the project from GEF and other agencies currently helping to renewable energy programs. Additionally this Board, through Resolution A7-071-2001, dated September 1st, 2001, decided to ask to CONELEC for the corresponding permit to develop this project, based on the terms of its Concession Contract. CONELEC authorized through Resolution N° 0315/02, dated December 11, 2002.

f.  Additionally, Elecgalapagos Board, with Resolution N° A10-104-2001 dated November 23, 2001, confirms its decision for participating in the execution of the project and decides to notify this decision to INGALA, in order to get the corresponding support from this agency. INGALA included this project in the Regional Plan for Conservation and Sustainable Development of Galapagos.

g.  The PlaningPlanning Office attached to the Presidency of the Republic (ODEPLAN), trough letter N° ODEPLAN - O - 2002 - 721, dated July 22nd, 2002, declared it as a national priority project.

h.  On February 20, 2002, the Ministry of Energy and Mines, the Ministry of Environment and UNDP signed a Memorandum of Understanding for the development of the global project for re-powering with renewable energy the inhabited islands of Galapagos.

i.  Within the frame of this MOU, UNDP committed the participation of "e7 Fund for Sustainable Energy Development" (e7 Fund) for the development of the project in the part corresponding to San Cristobal Island. For this purpose a Memorandum of Understanding was signed on April 25, 2003, between the Ministry of Energy and Mines, the Ministry of Environment and e7 Fund.

j.  Within this frame, the e7 Fund continues performing several engineering and environmental studies, and is working together with Elecgalapagos S.A. for structuring the most convenient Joint Venture for the execution and the operation of this project in San Cristobal Island.

k.  One of these activities is the execution of the Definitive Environmental Impact Assessment (EIAD) for the project, whose Terms of Reference are the main objective of this document. The EIAD shall be developed on the basis of the concluded Project Feasibility Study.

3. Focus

The focus point of the Terms of Reference (TOR) is to determine in a precise and detailed way, the exact scope and the extent of the subjects to be treated within the EIAD, determining the scope, focus, methodologies and techniques to be applied during the study, and defining the deepness and detail level of the studies for the relevant parameters of the various environmental items: physical environment, biotic, socio-cultural and public health.

4. Objectives and Scope

The scope of the studies to meet the environmental requirements of the Republic of Ecuador are determined in Book VI " Environment Quality", Unified Text of the Secondary Environmental Legislation , as well as, in the Environmental By-Law for Electricity Activities, and especially in Art. 24.- Definitive Environmental Impact assessment and Art. 25.- The Environmental Management Plan. Furthermore, as indicated by the staff of the official agencies, the CONELEC's Guidelines for the Preparation of Definitive Environmental Impact Assessment (EIAD) for Wind Projects will be used to determine the approach, scope and content requirements for the environmental studies and commitments applicable to the project.

The EIAD shall focus all the project development stages, such us, studies, engineering, construction, operation, maintenance and dismantling of installations.

Previously, the e7 Fund has produced and collaborated in several studies that already contribute in part to the requirements of the impact study for the project. The main studies of interest which will be given to CONELEC and the Ministry of Environment, as a complement to the proposed EIAD are in sequence:

·  e7 Lahmeyer Report on Renewable Power Generation on San Cristobal Island, Pre-Feasibility Study for Repowering using renewable Energy, December 2001, 83 p.

·  Wind Farm Project, San Cristobal Island, Galapagos – Ecuador: Environmental Pre-Feasibility Study, 64 p, 2002.

·  "Final Report on monitoring of petrel from Galapagos population in the highlands of San Cristóbal Island" , 2003, 15p., prepared by Galapagos National Park for e7 Group.

The objective of the environmental study to be conducted is to complete the above mentioned studies in accordance with the Ecuadorian environmental regulations, based on the conclusions of the GNP mentioned in last place in the previous list of documents, which determine that Cerro El Niño is the most suitable site and therefore it’s acceptable for the installation of the wind park for this project.

In accordance with the requirements established by the Ministry of Environment and CONELEC, the items related with the wind park shall be independently treated than those related with its associated transmission system, as far as applicable, keeping common treatments in accordance with the nature of each matter.

5. Methodologies and techniques

In the EIAD the methodologies and techniques applied in the study shall be detailed.

Much of the information and analysis needed to meet Ecuadorian environmental requirements are already contained in the previous studies mentioned in the previous section. For the remainder the proponent wishes to emphasize the following:

First, studies shall be completed where there is an identified lack of data or analysis in order to make sure there is full compliance with the Ecuadorian environmental regulations.

Secondly, and overall, given the scope of previous studies, the emphasis will be in the development of a comprehensive Environmental Management Plan (EMP) as explicitly required by the Ecuadorian environmental legislation. Emphasizing the EMP will allow the project proponent to further reduce the projects potential environmental effects during the construction, operation and dismantling of installations. The EMP shall be prepared taking in consideration the criteria from the organizations and agencies having relationship with the development of the project.

Such an approach is in accordance with the Ecuadorian environmental legislation which is designed to provide an important role to the different components of the Environmental Management Plan resulting from the environmental assessment studies.

In general terms, the methodology for the execution of the components of the EIAD, shall comply with the following basic scheme:

Detailed inspection of sites for the works and activities of the project: collection of primary field information

Collection of existing general and historic secondary information, using public and private sources considered as potential sources for this kind of information

Analysis of collected primary and secondary information

Description and characterization of the environment where the works shall be implemented and/or the activities shall be performed

Identification and valuation of environmental impacts, by the development of an appropriate impact matrix

Preparation of corrective alternatives and impact mitigation measures

Preparation of the Environmental Management Plan (EMP)

Perform Public Audiences at different project stages as required by the current legislation

An important chapter within the EIAD is the investigation already performed and which is being completed together by the Galapagos National Park and the e7 Fund, about the “Petrel from Galapagos” (Pterodroma phaeopygia), in order to determine the influence of the wind project in the habitat of this bird specie.

The Pterodroma phaeopygia a member of the Procellariidae family, commonly known as ”petrel pata pegada” is one of the six endemics marine birds of the Galapagos Archipelago, their nesting areas are located in the highlands of Floreana, Santiago, Santa Cruz, San Cristobal and Isabela Islands, in sites with dense vegetation and excavation soils. In past decades the specie was seriously impacted by the expansion of land used for agricultural purposes and the presence of introduced mammals which have reduced the quantity of individuals causing the petrel to be considered as an endangered bird. The already performed study had the objective to determine the phenology and the reproductive success of the bird.