POWER May 2014 - 10

Are Large Dams Unviable?
After a lull that spanned nearly two decades,
a hoard of new massive hydropower
projects are being developed around the
world. Some, like the 11.2-GW Belo Monte
dam in Brazil, the 4.5-GW Diamer-Bhasha
project in Pakistan, the Jinsha River dams
in China, the 6-GW Myitsone dam in Myanmar,
and the 1.8-GW Gilgel Gibe III dam
in Ethiopia are controversial for their supposed
environmental and social impacts,
but they are also unprecedented in scale
and cost. Nonetheless, according to researchers
from the University of Oxford, in
the vast majority of cases such large dams
are not economically viable, and policymakers
in developing countries should instead
seek out more prudent alternatives that
can be built over shorter time horizons.
Basing their data on 245 large dams in
65 different countries, Professor Bent Flyvbjerg
of the University of Oxford's Said
Business School and Dr. Atif Ansar, lecturer
at the University of Oxford's Blavatnik
School of Government, posit in a recent
study published in the journal Energy Policy
that three out of every four large dams
suffer a cost overrun in constant local
currency terms and that the construction
costs of large dams are on average 96%
higher than original budgets.
" By the same token, forecasts of costs
of large dams today are likely to be as
wrong as they were between 1934 and
2007, " they say. The researchers suggest
that the Itaipu Dam, which straddles a
border and provides 72% of Paraguay's
power and 17% of Brazil's, suffered a
240% cost overrun. China (Figure 1), Indonesia,
Pakistan, and other nations show
similar " amnesic " behavior regarding the
building of dams, they say.
At the same time, an overwhelming
eight of 10 large dams also suffered schedule
overruns, the study shows. Large dams
take an average of 8.2 years to build-and
often extend more than 10 years. The researchers
concluded that these long time
horizons leave dam projects particularly
ineffective in resolving urgent energy crises
and are especially vulnerable to currency
volatility, hyperinflation, political
tensions, and swings in water availability
and electricity prices. " The systematically
poor outcomes of large dams suggest that
'fools' and 'liars' have been at the helm, "
said Professor Flyvbjerg in a statement.
But for the International Hydropower
Association (IHA), which rebutted a number
of claims made by the authors, the
question that should be asked is: " Is the
project a good investment? " not " Does
the project overrun? " When all things are
considered, " hydropower can make a powerful
case as a long-term investment, by
delivering sustainable energy and water
services for multiple generations. Unfortunately,
the report's authors seem to have
completely ignored the multiple benefits
of hydropower, and so [present] an unbalanced
picture of the economic value
versus the investment risks, " says the
1. Worth a dam? China's 12th Five-Year Plan (2011-2015) foresees 285 GW of new hydro
capacity, including 41 GW of pumped storage, to boost its share of renewable power. That
means construction is ongoing at an estimated 60 projects to exploit 71% of the country's hydro
potential, many of which are large dams. In 2012, as well as installing the world's largest hydropower
generating turbine at the 6.4-GW Xiangjiaba station, the 22.5-GW Three Gorges complex
(shown here) entered full operation, generating an estimated 14% of the country's total hydro
power. Projects under construction include the 13.9-GW Xiluodu and the 5.8-GW Nuozhadu
projects. Courtesy: Harvey Barrison/Flickr
group, whose " platinum " members include
companies that build mega-dams, among
them, China Power Investment Corp., China
Three Gorges Corp., Itaipu Binacional,
RusHydro, and SinHydro.
Only about 20% of the world's dams
actually have any hydropower associated
with their reservoirs and yet hydropower
produces 76% of the world's renewable
power according to the IHA. " It is unaffected
by volatile and rising fuel prices,
which can have dramatic impacts on the
viability of fossil power technologies, not
to mention the avoided pollution. " The
organization admits that hydropower projects
do have high upfront outlays during
the construction phase, but also " very low
running costs and [they] operate for many
decades. " Not to mention, modern hydropower
operating efficiencies can reach
95% and " turbine availability for operation
can exceed this percentage, " it says.
" This is unmatched by any other source of
power generation. "
On the whole, the world's largest hydropower
projects are worth their while, the
IHA concludes. Itaipu indeed saw a cost
overrun during construction, but " all debts
will be paid by 2023 according to the 1973
binational Treaty that created the project, "
it says. The primary purpose of the Three
Gorges dam in China is for flood control-
not power generation-and since the project
was commissioned in 2007 (one year
ahead of schedule and RMB30 billion under
budget), it has significantly attenuated
peak flow and averted economic impacts
from floods, as well as increased navigation
by more than four times.
Because the technology is reliable, the
scale is considerable, and the resulting power
prices are economical and predictable, " At
a time when energy and water services are
at the forefront of policy agendas around
the world, hydropower is an investment that
makes a lot of sense, " the IHA says.
India's Nuclear Liability
Law: Breakthrough for
Russia, Stalemate Endures
for U.S.
India and Russia on Apr. 1 said they had
devised a significant deal that will allow
the first import of nuclear reactors in India,
despite India's 2010-passed nuclear
liability law that allows nuclear power
plant operators to hold a supplier responsible
for an accident if the cause is blamed
10
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POWER May 2014

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