Tag Archives: Alternative Energy

Dams in Guyana: Blackstone, China and the Secretive Government

Amalia Project plan, Guyana, image from  Sithe Global

The government of Guyana wants to move forward with an $840m project at Amaila Falls, deep in the forested interior. At full capacity of 165MW, it could supply more power than Guyana’s present needs.  The lead developer is Sithe Global, part of the Blackstone Group. Sithe wants a guaranteed 19% return on its equity stake, and plans to start construction this year. China Railway First Group signed an engineering contract in September. The China Development Bank will lend most of the money. The Inter-American Development Bank has been asked to chip in $175m; the World Bank was initially involved, but has pulled out.

Amaila’s supporters point out that it will flood less than 55 square km (21 square miles). No villages will be displaced and little wildlife will be disturbed. Guyana would no longer rely on fossil fuels for electricity. After two decades, ownership would pass to the government, construction costs paid off.

Opponents worry that clean electricity will not come cheap. Guyana Power and Light (GPL), the state-owned electricity company, will pay about $100m a year to the Amaila consortium. Electricity bills are unlikely to fall (three people were killed last year in protests over electricity charges). And Amaila’s power may not be reliable. The El Niño weather pattern can bring a year-long drought. In normal years, the plant will run below capacity between October and April. GPL will have to pay for backup thermal power. The IMF has urged “careful consideration of the [financial] risks”.

Plans to build Amaila date from 1997, though Sithe only got involved in 2009. The estimated cost has risen steadily. An access road is unfinished. There is as yet no economic feasibility study for the project; when completed, the study will remain confidential, as is GPL’s outline power-purchase agreement. Opposition parties complain that the government is being “secretive” about Amaila. On April 24th they blocked funds for a government equity-stake in the project. If Amaila is as beneficial as its backers claim, an open debate might generate broader support for the project, and cut its $56m bill for political risk insurance.

Hydropower in Guyana: Shrouded in secrecy, Economist, May, 4, 2013, at 39

The Belo Monte Hydroelectric Dam in Brazil: the need for a social pact

These dams [like the Belo Monte] harness the natural flow of the river to drive the turbines, so they do not require large reservoirs, and as a result, less land needs to be flooded – which means less of an impact on the environment and surrounding communities. However, it also means that during dry spells, they do not have the water reserves needed to continue generating electricity at a reasonable capacity.   “We are increasing the installed generating capacity, but water storage capacity has not grown since the 1980s,” which is a cause for concern, said Nelson Hubner, general director of the Brazilian Electricity Regulatory Agency.  The “stored energy” represented by the country’s reservoirs has not kept up with demand, which will make it impossible to maintain the necessary supply of hydroelectricity during a drought year, warned Hubner at the Second Hydropower Summit Latin America, held May 9-10 in São Paulo.  The summit, organised by Business News Americas (BNamericas), a business and economy news service based in Santiago, Chile, brought together dozens of executives from both public and private companies in the sector. Many were highly critical of the model chosen for the country’s new hydroelectric power plants, which they believe will result in greater energy insecurity in Brazil.  “Future generations will demand compensation for the fact that biodiversity was decreased and reservoirs were not created” in current hydropower projects, predicted Jose Marques Filho, assistant director of environment and corporate citizenship at Companhia Paranaense de Energia, a power company run by the government of the southern Brazilian state of Paraná.

By renouncing the use of this “long-life battery”, as another summit participant described reservoirs, Brazil will need to build more fossil fuel-powered thermoelectric plants, which are more polluting but “are not under attack from environmentalists,” complained the hydroelectric dam constructors and their supporters.

Construction began in 2011 on the Belo Monte hydroelectric dam on the Xingú River in Brazil’s Amazon basin. A total of 516 sq km of land will be flooded for the project, but this is only 42 percent of the area that would have been flooded for the reservoir planned in the original version of the project, drawn up in the 1980s.  However, because of this smaller reservoir, the plant will only reach its total generation capacity of 11,233 megawatts during the brief rainy season when the river is swollen to its highest level. During dry spells, output will decrease significantly, since the flow of the Xingú can drop from 30,000 cubic metres a second in March and April to less than 500 cubic meters in a dry month like October.

“We have to get used to hydroelectric dams without large reservoirs because the environment demands it,” said Mauricio Tolmasquim, president of the Energy Research Corporation, which provides advisory services to the Ministry of Mines and Energy. The Amazon region, where most of Brazil’s hydropower potential is concentrated, is primarily flat, which means there are few sites where water can be accumulated and stored without flooding large areas of forest, he explained.  Belo Monte, located at the end of a canyon, is one of these sites. A large reservoir there would flood two indigenous territories which are home to over 200 people. “That was a determining factor” for modifying its design and adopting run-of-the-river technology, Tolmasquim told Tierramérica.  This decision, however, did not spare Belo Monte from becoming the target of the most widespread opposition ever against an energy project in Brazil, with environmentalists, civil society activists, indigenous communities and even local soap opera stars and international celebrities joining forces to denounce its environmental and social impacts.

Tapping the rivers of the Amazon basin for energy production should begin “with smaller hydroelectric dams, with an output of around 500 megawatts,” said Goldemberg, a University of São Paulo professor who has headed a number of state-owned energy companies and was the national secretary of environment when the city of Rio de Janeiro hosted the Earth Summit in 1992…..

The conflicts that sometimes halt the construction of hydropower plants in Brazil pit a small local population of perhaps a few thousand people against a million people who will benefit from the electricity produced, but are far away and geographically scattered, commented Goldemberg.  What are needed are “good projects” that are transparent and attend to the potential social and environmental impacts. In addition, it is up to the government to “mediate and explain” to settle these conflicts, given the disproportionate ratio of opponents to beneficiaries of roughly “one per one hundred,” he said.

There are much more complex situations in Asia, where enormous numbers of people are affected because of the population density of countries like India, he added. Goldemberg learned a good deal about numerous cases like these as a member of the World Commission on Dams, which produced a report in 2000 detailing the damages caused by these projects and the requirements for their construction.

For those in the hydroelectric dam construction industry, the issue of the environment has become an obstacle to the expansion of hydropower in Brazil.  In the meantime, the wind power industry has experienced a significant boost, largely because their competitors in the hydropower sector have been unable to obtain permits from the environmental authorities for years, he observed.  According to Marques Filho of the Companhia Paranaense de Energia, overcoming this impasse will require a “social pact”, based on “a dialogue among all the stakeholders” that cannot be limited to environmentalists on one side and hydroelectric dam constructors on the other.

Excerpts, Mario Osava, Belo Monte Dam Hit by Friendly Fire, Inter Press Service, May 22, 2012

Nuclear Power: Japan and Germany

Responding to the nuclear disaster is even harder [for Japan]. Mr Kan had initially sought to stay in power until the Fukushima nuclear plant has stabilised its reactors and reached a state of “cold shutdown”. But the timetable for that may already have slipped into 2012, which is too distant for those trying to oust him.  Not only is Fukushima Dai-ichi’s owner, Tokyo Electric Power (TEPCO), struggling to keep the plant under control. It is also stretched by the demands for compensation from people whose livelihoods, at least for the time being, have been ruined by the disaster. The government has patched together a compensation scheme, but experts believe this may have been a sop to let the company’s book-keepers approve the end-of-year accounts. As fears of bankruptcy mount, TEPCO’s shares hit a new low on June 6th.

Tatsuo Hatta, an economist at Gakushuin University in Tokyo, believes TEPCO may have to sell off its power plants to international operators to remain solvent. That could set in motion what he and a few outspoken commentators consider a long overdue overhaul of the energy market in Japan, which could have an immense impact on national politics. He says that executives at TEPCO and the other oligopolistic electricity utilities have stifled argument about Japan’s nuclear-energy programme, both by pouring money into politics and by muffling the media through their huge advertising budgets…

The huge swathes of land destroyed by the tsunami or depopulated because of radiation could become wind, wave or solar farms.

Excerpt, Japan’s recovery: Who needs leaders?, Economist, June 11, at 27

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Everyone was horrified by the earthquake and tsunami that killed 24,000 Japanese and caused three nuclear meltdowns. But in Germany the feeling was laced with terror. Suspicion of nuclear power became mass revulsion. At a recent race in Berlin sponsored by Vattenfall, which generates nuclear power, many runners carried no-nuke flags.

The response of Chancellor Angela Merkel has been called the swiftest change of political course since unification. Only last year her government overturned a decade-old decision to phase out nuclear power by 2022. After Japan she suspended that policy and yanked seven of Germany’s 17 reactors off the electricity grid. On May 30th she completed her U-turn. The plan to keep nuclear plants operating for 12 more years was scrapped; the seven reactors will be shut for good. Germany will be “the first big industrial country to shift to highly efficient and renewable energy, with all the opportunities that offers,” Mrs Merkel promised. Industry is less thrilled about losing nuclear, which provides 23% of Germany’s electricity reliably and cheaply. It “fills me with worry,” said Hans-Peter Keitel, president of the Federation of German Industries.

The “energy transformation” is neither as revolutionary as Mrs Merkel suggests nor as hazardous as industry fears. Germany is returning to its policy of seven months ago. It has surplus generating capacity and low prices that are unlikely to rise much in the next few years, notes Mark Lewis of Deutsche Bank. Mrs Merkel’s shift was already under way. In 2000 30% of electricity came from nuclear. Since then, renewables like solar and wind have expanded their share from 6.6% to 16.5%.

The new plan is meant to make it easier to raise this share. But Mrs Merkel is also using Germans’ nuclear fears to smash their aversion to new infrastructure. The Bundestag is due to approve eight laws by the end of June to facilitate this. Yet the task depends also on citizens’ participation. “What is your contribution?” Mrs Merkel asks people…The nuclear reversal burnishes her credentials as a moderniser. Whether it will help Europe’s strongest economy is less clear. The rise in fickle solar and wind power increases the risk of instability in electricity supplies; with the closure of seven reactors, “we are really going to the limits,” says Christian Schneller of TenneT, a Dutch-German transmission company. Congestion on lines carrying power from north to south raises the risk of blackouts.

Germany promises neither to increase imports from nuclear neighbours nor to emit more greenhouse gases than planned. That will be hard. “You can’t have a liberalised energy market and close the border,” says Manuel Frondel of RWI, a research institute. Germany will emit an extra 370m tonnes of CO2 as it replaces nuclear with gas- and coal-fired plants. Europe’s emissions are capped by an emission-trading scheme, but the costs will now rise for everybody. Germany’s own goal is more ambitious: a 40% reduction from 1990 by 2020. This will not be met, says Mr Frondel.

Mr Schneller says the pace of progress on infrastructure must dictate the energy mix, not the other way around. Of the 3,500km (2,175 miles) of transmission lines that are needed to carry renewable power from (largely northern) sources to southern and western consumers, just 90km have been built. “Monster masts” provoke almost as much opposition as nuclear reactors. To shift fully to renewables, Germany needs to boost storage capacity by a factor of 500.

The government plans to speed up planning and licensing, as it did after unification. Progress is to be monitored, perhaps by a new parliamentary watchdog. The government may set up a “national energy transformation forum” to enlist citizens. If greenhouse-gas emissions rise faster than planned, says Mrs Merkel, conservation will have to improve.

Germany cannot do all this on its own, argues Ottmar Edenhofer of the Potsdam Institute for Climate Impact Research. Big efficiency gains will come only if Europe’s carbon cap includes housing and transport. Ramping up renewables would make more sense if Germany tapped into sunnier and windier parts of Europe, which requires a pan-European electricity grid. “Scaling up can only be done on a European level,” says Mr Edenhofer.

Excerpts, German energy: Nuclear? Nein, danke, Economist, June 4, 2011,at 62