Wednesday, April 21, 2010

Is Hydropower the future?

I have inaugurated a new "label" called hydropower. This is one of my new exciting research projects and the links between the environment and hydropower are fairly obvious. The World Bank is pushing hydropower as a solution to green energy and growth but is it all that it is cracked up to be?

Are all hydroelectric dams "environmentally hazardous money losers"?

Brazil Completes Controversial Amazon Dam Auction {planetArk]
Brazil awarded a domestic consortium on Tuesday rights to build the world's third-largest hydroelectric dam in the Amazon rain forest in a chaotic auction amid criticism the dam is an environmentally hazardous money loser.

President Luiz Inacio Lula da Silva likely faces a prolonged battle over the 11,000 megawatt Belo Monte dam that he has heavily promoted despite opposition from a range of critics including Hollywood director James Cameron.

Government leaders say the project, due to start producing electricity in 2015, will provide crucial power for Brazil's fast-growing economy, but environmentalists and activists say it will damage a sensitive ecosystem and displace around 20,000 local residents.

State power regulator Aneel said a consortium including state electric company Eletrobras and a group of Brazilian construction companies -- considered the weaker of the two consortia that participated -- won the bid.

Those results were blocked from being announced for more than two hours because a last-minute injunction trying to halt the project on environmental grounds.

The results of the auction are unlikely to affect overall electricity rates in Brazil because most of the electricity is already set aside for specific clients, with only a small remainder entering power markets.


Financial analysts say the government set an artificially low price for the power to be generated by the dam, adding it faces considerable risks including cost overruns and the likelihood that protests will frequently halt construction.

Native Indians in the area are already promising just that.

Luis Xipaya, a local leader speaking to Reuters from the city of Altamira near the proposed dam site, said 150 Xikrin Kayapo Indians will move to a new village on the construction site by Wednesday.

"There will be bloodshed and the government will be responsible for that," Xipaya said.

Environmental activist group Greenpeace organized an early morning dump of several tonnes of manure at Aneel's gate to visually demonstrate "the legacy that the Lula government is leaving by insisting on this project."

The auction has for weeks been a stop-and-start process that by Tuesday had already been halted twice by court orders that the government quickly overturned.

The winning consortium, known as Norte Energia, will sell the power for 78 reais ($44.5) per megawatt hour, below the maximum price of 83 reais established by the government as the maximum.

Earlier this month two of the country's biggest construction firms walked away from Belo Monte, saying it financial returns were too low -- threatening the leave only one consortium in the running.

The Norte Energia consortium was formed at the last minute after the government added sweeteners including a 75 percent income tax write off and longer-term financing from the state development bank BNDES, which will finance 80 percent of the estimated cost of the project.

Slack investor interest also created the unusual situation of Eletrobras bidding in both consortia, though authorities said this was allowed under the bidding rules.

Official estimates put the construction costs at 19 billion reais ($11 billion) though private sector estimates go as high as 30 billion reais ($17 billion) for the project.

Originally conceived 30 years ago, progress on Belo Monte has been slowed over the years by protests, including an incident last year in which Kayapo Indians armed with clubs and machetes attacked a state electricity official.


No comments: