In the world of hydropower two factors matter when considering the construction of a dam for electricity production: the movement of large quantities of water and rapid changes in altitude. In this context, China is a blessed country where the Himalayas, the roof of the world, provide the necessary resources. This month one of the country's last mega-dams was completed. While there are multiple projects in different stages of development, Chinese attention in the future will most likely reorient towards investments abroad and alternative technologies domestically.
The Dragon awakens China’s rulers have, for thousands of years, been aware of the country’s hydropower potential. Never before has a similar building spree been executed. With the completion of the massive 10.2 GW Wudongde hydropower facility in the mountains of Yunnan province, the country is running out of promising sites.
In two years the Baihetan project, about 170 kilometers (106 miles) downstream, will also start producing electricity. These two dams combined will produce more power than the entire hydropower sector of the Philippines.
China's 'hydro' ambitions are both a method for producing electricity and also a preventative measure against floods which will improve the navigability of rivers. The dam-building program took off in the nineties with the Three Gorges Dam. Work started in 1994 and was finished in 2012 after which the plant started producing 22.5 GW of electricity. The size of the dam dwarfs similar objects considering the world's no.2, the Itaipu dam in Brazil/Paraguay is a whopping 8 GW smaller.
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China’s dams are an essential part of the country’s power mix. While wind and solar have garnered much attention both domestically and abroad due to large investments in the renewables sector, hydropower is still the largest source of clean electricity. Currently, China’s dams produce 356.2 GW of electricity which is approximately 20 percent of the power mix.
China’s hydropower capacity is larger than the total production capacity of all countries except for the United States and India.
Changing gear
When the Baihetan dam is completed and starts producing power in 2022, all projects with production capacity above 10 GW will be completed. Also, five of the world's 10 largest dams will be located on the Jinsha or Yangtze rivers. Theoretically, there is room for a massive 38 GW dam in the Tibetan plateau, but the remote location and geopolitical sensitivities make it unlikely.
The continued lowering of costs for wind and solar projects puts even more pressure on the development of massive dams. The former is not only cheaper, but projects can also be split up while hydropower projects require years of construction and massive upfront investments.
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Instead, it seems more likely that Chinese policymakers and companies will prefer alternative smaller projects in the range of 1-2 GW. Also, pumped storages are increasingly gaining popularity as the installment of wind and solar projects keeps growing. The intermittent nature of renewables strengthens the need for pumped storage.
The Chinese market for large dams is slowly becoming saturated. After decades of massive investments in its infrastructure including dams, China’s hydropower sector is the largest in the world with almost a third of the global capacity.
From domestic to abroad
The Belt and Road Initiative is China’s most recent method of economic engagement with friendly countries. Under the umbrella of the BRI, Chinese companies have flocked to promising sites for hydropower where expertise and excess production capacity is put to use.
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Especially in the near abroad such as the Mekong Delta and Pakistan Chinese companies have been involved in the construction of the dams. Some of these projects, however, are not without controversy. In Laos, several multibillion projects are causing environmental damage and leading to the forced relocation of the local population.
Recently multiple large hydropower projects were announced in Pakistan as part of the Belt and Road Initiative. It came after skirmishes between the Chinese and Indian armies led to multiple casualties, which means that Beijing could have geopolitical motives due to the location of the dams in contested Kashmir.
Despite the environmental and political controversy around many hydropower projects in China and abroad, dams have been a big source of income and cheap electricity for developing countries. Considering the Asian giant’s massive emission of greenhouse gasses, dams have prevented even worse environmental pollution.
By Vanand Meliksetian for Oilprice.com
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However, hydropower projects have special importance in China’s BRI not only because of its vast experience in dam-building but also because dams provide cheap electricity, drinking water and water for irrigation to these countries.
China is blessed with great rivers fed by the Himalayas. China’s dam-building programme took off in the nineties with the giant ‘Three Gorges Dam’ the world’s largest which started in 1994 and took 18 years to finish after which it started producing 22.5 GW of electricity. It was followed with many dams the latest of which is the Baihetan dam which will start producing electricity in two years' time.
China’s dam-building was not only essential for the generation of cheap and clean electricity but also for the provision of water for irrigation and drinking and also tackling severe environments problems from coal-burning in addition to improving the navigability of rivers thus accessing the interior of the country and also preventing flooding.
Currently, China’s dams produce 356.2 GW of electricity accounting for almost 20% of its electricity generation mix.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London