The development of big-ticket hydroelectric projects in Peru seems to be on a collision course with both Brazilian financial backers and indigenous groups, who object to being displaced and having their land despoiled.

In the past several months, violent protests have stalled the development of two Peruvian hydroelectric projects being built by Brazilian interests. Local opposition to such projects is expected to grow with the introduction of a new law that increases the say of native groups in the development process.

Peruvian President Ollanta Humala won election last year with broad support from the country's indigenous groups. He recently signed a "prior consultation law" that requires regional project-development plans to include input from local communities.

"We believe that this law will allow for improving the communication channels and reducing social conflicts in the country," the United Nations Development Program representative in Peru, Rebeca Arias, told the Andina news agency.

Concerns about the effects of the legislation have centered on the country's highly profitable mining projects, which are often owned by foreign interests. The Yanacocha Mine, near Cajamarca in northern Peru, is the second-largest gold mine in the world. Owned by U.S.-based Newmont Mining, it is regularly the target of such protests.

The new law comes as the government is renewing plans to develop billions of dollars in hyrdroelectric projects across South America to meet the country’s growing energy demand, Brazil-based news outlets report.

Brazil is seeking to add 18 gigawatts to its electrical power grid by 2020 to handle expected demand and plans to develop 11 projects in five other countries to meet the shortfall, reported the Folha newspaper in São Paulo. Controversy surrounding several major domestic projects—such as the Belo Monte dam—has prompted officials to look at backing power projects in neighboring countries, including Peru.

In 2010, Alan Garcia, the former president of Peru, and Luiz Inácio Lula da Silva, the former president of Brazil, signed a 50-year bilateral energy agreement that required the Andean nation to produce up to 72,000 megawatts of hydropower.

The agreement stipulated that Brazil would supply the financial backing for five projects and, initially, receive the bulk of the power produced; over time, Peru would gain a larger share. Currently, four of those five projects have either been suspended or their future viability cast into doubt due to local opposition.

In October, Brazilian construction company Odebrecht announced it would end efforts to develop the 1,278-MW Tambo-40 dam project due to the objections of indigenous groups. In a letter to Peru's Ministry of Energy and Mines, the company said it would halt the project "out of respect for local populations."

The announcement was followed by reports in the Brazilian press that three other projects being developed by Eletrobras, headquartered in Rio de Janeiro, were in danger of being suspended due to public pressure.

Just four months earlier, the Peruvian government shelved the $4-billion Inambari Dam after a series of violent protests by local groups. Its Ministry of Energy and Mines ended the temporary concession—held by a Brazilian consortium, Empresa de Generación Eléctrica Amazonas Sur S.A.C.—for the 2,000-MW project.

Local groups were upset the project would flood as much as 175 sq miles of rain forest and force the displacement of at least 3,300 people. Last year, at least three people died in protests over the dam's construction. There was also strong opposition to the agreement that, when the facility came on line, all but a quarter of the plant's power would be sent to Brazil.

Yet some hydroelectric work not associated with the Brazilian pact has continued under Brazilian firms. In December, Odebrecht garnered a $150-million loan from the Inter-American Development Bank for the construction of the 406-MW Chaglla project in the Huanuco reigon. When the $1.2-billion project is completed in 2016, it will be the second-largest hydroelectric plant in the country behind the 1,008-MW hydroelectric complex on the Mantaro River in the central highlands.