HRW Briefings

Southeast Asia’s largest hydro facility inaugurated

Vietnamese Prime Minister Nguyen Tan Dung inaugurated the 2,400 MW Son La project in December. Located on the Da River in north Vietnam, the plant is the largest of its kind in the region.

The facility boasts a 453 feet by 300 feet concrete dam and six turbines. The project was constructed to generate power for the Vietnamese grid, serve as a domestic water source during dry seasons and a diversion bay in the rainy seasons, and provide an economic boost for the northwestern region of Vietnam.

The first turbine at the US$2.5 billion project came online in 2010, five years after construction began. All six Francis-type turbines were online by October 2012, marking completion three years ahead of schedule.

The prime minister stated that the plant, which was constructed and designed by Vietnamese engineers, is a significant milestone in Vietnamese power development. He also took the opportunity to encourage investment and development of the nearby 1,200 MW Lai Chau project. Lastly, Dung prompted leaders of Son La and surrounding provinces to provide farm land and employment opportunities for the more than 20,000 households displaced during construction.

For more on this facility, see the article on page 24.

The 2,400 MW Son La project was inaugurated by the Vietnamese Prime Minister in December 2012.
The 2,400 MW Son La project was inaugurated by the Vietnamese Prime Minister in December 2012.

Nepal approves Upper Trishuli 3A capacity increase

A recently approved plan to increase the capacity of Nepal’s Upper Trishula 3A hydropower project has not come without controversy. Upper Trishula 3A was being constructed as a 60 MW run-of-river project on the Trishuli River, but a decision approved at a meeting of Nepal’s Council of Ministers in early January will see capacity increased to 90 MW.

The proposal had already been rejected by the country’s Ministry of Energy and the Nepal Electricity Authority, although the expansion plan – officially endorsed by Prime Minister Baburam Bhattarai – trumps their disinterest.

Opponents argue the additional capacity is unnecessary as Upper Trishula 3A could only provide the extra 30 MW of capacity during Nepal’s wet season, meaning it couldn’t help relieve power shortages when needed most in the dry seasons.

The project is being developed by China Gezhouba with funding from the China Export-Import Bank. Compared to a cost of US$89 million for 60 MW, the Nepal government said it will spend $132 million for the 90 MW version.

Work progresses on Ethiopia’s Grand Renaissance

Alstom has signed a US$406.32 million contract with Metals & Engineering Corporation to supply turbines and generators for Ethiopia’s 6,800 MW Grand Renaissance, known as both “Project X” and the “Millennium Project” before Ethiopia’s Council of Ministers renamed it in 2011. The project will be owned and operated by the Ethiopian Electric Power Corporation.

Alstom says it will supply and supervise the installation of all electromechanical equipment, including eight 375 MW Francis turbines and eight generators. The contract also includes engineering and commissioning, which will start in late 2013 and continue in phases through 2016.

Once complete, Grand Renaissance on the Abay River will be the largest hydroelectric complex in Africa. Alstom said Ethiopia has the potential for more than 35,000 MW of additional hydro capacity, making development of hydro a government priority.

In other news in Ethiopia, the African Development Bank signed a loan agreement in December with the government of Kenya to finance a electricity highway between the two countries that will transfer power from hydro facilities.

The US$115 million loan will finance the construction of about 1,068 km of high-voltage direct current (HVDC) 500 kV transmission line and AC/DC converter stations. The line will have a power transfer capacity of up to 2,000 MW and is due to be commissioned in November 2017.

The loan agreement was signed by Gabriel Negatu, AfDB’s East Africa Regional Director, and Kenya’s Finance Minister Robinson Githae. Negatu says the “Energy Super Highway … will facilitate energy trading within the East Africa region. It is also the first step to enabling affordable energy from the region to be traded through the East Africa Power Pool, as far north as Egypt and as far south as SADC [Southern African Development Community] countries.”

AfDB says electricity demand in East Africa has risen, leading to severe power shortages. Integration of the systems of the East Africa Power Pool will enable development of Ethiopia’s large hydro resources, to be exported and address power shortages.

Development in Brazil at three plants; Sao Luiz do Tapajos delayed

Brazil’s Norte Energia SA received the first installment of a US$10.8 billion financing package in early January from the Banco Nacional de Desenvolvimento Economico e Social (BNDES) for the Amazon’s Belo Monte project.

The $2.54 billion credit is part of a deal BNDES approved in November 2012. This latest loan includes a $1.54 billion package earmarked to address social and environmental issues caused by Belo Monte’s construction.

BNDES said that to qualify for the release of funding, Norte Energia had to present approved and up-to-date environmental licenses. Norte Energia says it received about $1.5 billion, with the remainder credited to agent Caixa Economica Federal and investment bank BTG Pactual.

The $13 billion, 11.2 GW Belo Monte plant on the Xingu River will be the world’s third largest hydroelectric complex when completed. Belo Monte’s first units are expected to be operational in February 2015, with the last to be online by January 2019.

In December, the 361 MW Maua project began operating on the Tibagi River in Parana State. The US$675 million plant is owned by consortium Energetico Cruzeiro do Sul, consisting of utility Companhia Paranaense de Energia Electrica (Copel) and Eletrobras subsidiary Eletrosul. Two units are online, with an additional three to begin operating in January.

Maua was granted permission to operate in October 2012, more than a decade after a permit application was submitted. Permitting was delayed due to requests from the Institute of the Environment and Natural Resources (IBAMA), the federal public prosecutor’s office and the Instituto do Patrimonio Historico e Artistico Nacional (Iphan) for further impact studies.

Parana’s environmental regulator, Environmental Institution of Parana, says Energetico Cruzeiro do Sul must complete several conditions to maintain the license, including monthly operational reports, analyses of wetland restoration efforts and a clear definition of the reservoir’s legal boundaries.

Another plant operating in Brazil is 1,087 MW Estreito. Developer GDF Suez owns a 40.7% share in Estreito via its subsidiary, Tractebel Energia. Estreito is also owned by Vale (30%), Alcoa (25.49%) and Intercement (4.4%), although Tractabel Energia is responsible for the plant’s operational management on behalf of the consortium.

Estreito – located on the Tocantins River between Tocantins and Maranhao states – is downstream of Tractabel Energia’s 243 MW Sao Salvador and 450 MW Cana Brava hydro projects.

GDF Suez says the project fell under Brazil’s Program for the Acceleration of Growth (PAC), which allowed it to benefit from favorable finance conditions. Debt financing for the US$2.75 billion plant was funded through 24-year loan agreements provided by BNDES and others.

However, a Brazilian federal court blocked an environmental license for 6,100 MW Sao Luiz do Tapajos in November 2012. Sao Luiz do Tapajos, the largest in state-owned power company Eletrobras’ planned 10,600 MW Tapajos complex, was denied licensing after Judge Jose Airton de Aguiar Portela ruled the project did not provide an adequate appraisal of environmental impacts. The ruling also said Sao Luiz do Tapajos fails to respect concerns of indigenous tribes in Brazil’s Amazonian north, where more than 10,000 could be affected by the complex.

“The government cannot disregard laws that it itself implemented, irrespective of the urgency of the country’s energy demands,” Aguiar said in a statement.

The Tapajos complex also includes the planned 2,300 MW Jatoba, 528 MW Cachoeira dos Patos, 881 MW Jamanxin and 802 MW Cachoeira do Cai plants in the state of Para.

To help finance hydro projects in Rio Grande do Sul state, the Inter-American Development Bank (IDB) has approved a US$88.7 million loan to Brazilian utility Companhia Esadual de Geracao e Transmissao de Energia Eletrica (CEEE).

The sovereign guaranteed IDB loan will help finance CEEE’s Pro-Energia program, which includes the expansion, rehabilitation and modernization of its generating and transmitting assets to improve service reliability. Hydro projects mentioned in an IDB release are expansion of 1 MW Ijuizinho 2, which is to see capacity increased to 15 MW; and rehabilitation and modernization of the 500 MW Itauba and 158 MW Passo Real plants.

The IDB loan is for 25 years, with an interest rate based on the London Interbank Offered Rate. IDB’s financing will be complemented by a $59.1 million French Development Agency loan. In all, the projects are expected to cost $147.8 million.

The height of Roseiris Dam in the Sudan was increased by 10 meters to boost generating capacity from its powerhouse as well as the 1,250 MW Merowe project downstream.
The height of Roseiris Dam in the Sudan was increased by 10 meters to boost generating capacity from its powerhouse as well as the 1,250 MW Merowe project downstream.

Sudan completes expansion of 1,800 MW Roseiris

A US$441.5 million expansion of Sudan’s Roseiris project is complete, the Dams Implementation Unit (DIU) announced.

The four-year project – which added 10 meters to the dam’s height and extended its length from 13 km to 25 km – increases Roseiris’ capacity 50% to 1,800 MW and expands the reservoir’s storage capacity from 3 billion m3 to nearly 7.5 billion m3.

“The Sudanese have waited for this project for 42 years, and now the time has come to gain the fruits of our patience and dedicated work,” DIU General Director Mohamed Hassan Al Hadari said at a recent inauguration ceremony.

According to Sudanese officials, the dam’s reservoir is now capable of providing year-round irrigation for more than 5 million acres of farmland and will also help improve production at the 1,250 MW Merowe project, which is located downstream along the Blue Nile River.

The project was executed by the China International Water & Electric Corporation with backing from Kuwait, Saudi Arabia and other Arab countries.

Hydro sector activity in Chile

In Chile, Duke Energy International has acquired the Chilean assets of CGE Group, including two hydro projects with a total capacity of 140 MW, in a $415 million transaction. And a consortium led by German group Hochtief AG has received a US$277 million contract to build the 531 MW Alto Maipo project

CGE’s Chilean subsidiary, Ibero-americana de Energia Ibener S.A., owns the 75 MW Peuchen and 49 MW Mampil projects on the Duqueco River. In 2009, Spanish utility Iberdrola sold its 94.74% stake in Ibener to Compania General de Electricidad S.A.

Duke has been operating in Chile since July 2012, and Chile is now the fourth largest country in terms of generating capacity for the company’s international operations.

Citigroup and Banchile Citi acted as advisors to Duke Energy International on the transaction. In the first quarter of 2013, the company expects to close on secured financing from a group of local banks for about half of the purchase price.

With regard to the Alto Maipo plant, Hochtief says work is to begin in 2013 and will encompasses two construction lots in the Andes, about 30 km southeast of Santiago.

The company says it will build intake structures, complete 18.5 km of tunnels, and install a 5 km-long steel pipeline. The group will also take over execution planning.

The Alto Maipo project includes two plants: 264 MW Alfalfal 2 and 267 MW Las Lajas. The Alfalfal 2 project will be in the Colorado River sub-basin downstream from Alfalfal 1, and Las Lajas will be near the confluence of the Maipo River and El Manzano marsh.

Overall completion of the project is expected in 2017.

The 111 MW Chacayes project in Chile was chosen as Hydro Project of the Year at the POWER-GEN International event.
The 111 MW Chacayes project in Chile was chosen as Hydro Project of the Year at the POWER-GEN International event.

In November, project developer Alto Maipo S.p.A. awarded a US$490 million contract to Austria-based Strabag SE for tunneling and civil work at the project. Strabag will design and build more than 46 km of tunnels and shafts. The work will include drilling, blasting, and boring with tunneling machines.

In more good news for hydropower in Chile, the 111 MW Chacayes project in Chile, owned by Pacific Hydro, was honored as Hydro Project of the Year during the POWER-GEN International Project of the Year awards gala in Orlando, Fla.

The Chacayes project is the result of a 2005 feasibility study, which resulted in a recommendation for six run-of-river plants in the Chachapoal River Basin. The US$450 million project was built under an EPC contract with Constuctora Astaldi Fe Grande Cachapoal Ltda. For more on the facility, see page 32.

Bank offers loan for Liberia’s Mount Coffee rehab

The Liberian government has secured a US$65 million concessional loan from the European Central Bank to help finance rehabilitation of the 64 MW Mount Coffee hydroelectric project.

Mount Coffee was destroyed during a period of civil war in the early 1990s, and the cost of repairs and upgrades is about $230 million. Work on the project was expected to begin in January 2013 after Liberia declared its electricity deficit to be a national emergency.

MWH selected for environmental studies of Pakistan’s 83 MW Kurram Tangi

Infrastructure development group MWH Global has been awarded a US$7.2 million contract for environmental assessment of Pakistan’s 83 MW Kurram Tangi project.

The MWH contract – part of a program being managed by USAID and Pakistan’s Office of Energy – is meant to ensure that the Kurram Tangi plant complies with a number of environmental clearance requirements.

The Kurram Tangi project is to include a 295 foot-tall concrete-faced rockfill dam, weir, tunnel, powerhouse, electromechanical works, and an irrigation system, as well as remodeling of a civil canal system. The multipurpose reservoir created by the dam will be located on the Kyram River.

Indonesia’s PLN enlists ANZ to help develop three plants

Indonesia’s government-owned power corporation Perusahaan Listrik Negara (PLN) has signed a deal with the Australian and New Zealand Banking Group (ANZ) to help develop three large hydropower projects.

PLN President Nur Pramudji announced the project in March 2012. Included in the plan are the 450 MW Karama, 510 MW Batang Toru and 350 MW Merangin projects. The overall cost of the plants will exceed US$2.9 billion, according to PLN.

ANZ will act as a consultant in executing studies, preparing procurement plans and assisting PLN in the bidding process. ANZ will also help attract private sector investments given its experience in developing hydro plants in Asia, PLN says.

Sino Hydro and ZPC sign on for Kariba project upgrade

Zimbabwe Power Company (ZPC) has signed a US$400 million agreement in December with China’s Sino Hydro to upgrade and expand the national utility’s Kariba hydro project, adding an additional 300 MW to the current capacity of 750 MW. This rehab project will help ease the energy shortage in Zimbabwe due to a lack of hydropower investment.

Zimbabwe's Kariba project will see a significant capacity upgrade, going from 450 MW to 750 MW as the result of a recent US$400 million agreement.
Zimbabwe’s Kariba project will see a significant capacity upgrade, going from 450 MW to 750 MW as the result of a recent US$400 million agreement.

The upgrade and expansion includes the design and construction of two additional generator units to add to the current six, each contributing 150 MW to the station’s capacity. The upgrade will begin in 2013 and will require four years to complete.

The majority of the project is to be financed by the Export-Import Bank of China, with the rest coming from area banks and regional financiers.

Joule, Cameroon advancing on new 450 MW project

Renewable energy developer Joule Africa and the Republic of Cameroon have announced the details of a Project Development Agreement that will advance a new 450 MW hydroelectric plant.

The parties announced that they had signed a memorandum of understanding for the US$1 billion hydropower project’s development in March 2012.

Joule said it will now rely on consultant group Lahmeyer International to perform feasibility and bankability studies.

The project, to be located on the Katsina-Ala River near the Nigerian border, will initially increase Cameroon’s installed capacity by at least 40%, with the option for expansion to 850 MW possible, Joule said.

IHA emphasizes hydropower at U.N.’s COP 18

Hydroelectricity’s role in the global energy mix was emphasized by the International Hydropower Association (IHA) during the United Nations Climate Change Conference in Qatar.

IHA, speaking on behalf of the International Renewable Energy Alliance at the U.N.’s COP 18, noted that energy and climate policies like the U.N.’s Clean Development Mechanism, the European Union’s mandate, and U.S. President Barack Obama’s “all-of-the-above” strategy are driving countries to increase their green portfolios.

Hydropower’s ability to provide energy storage and system stability alongside its generating qualities make it worthy of consideration, according to IHA Programme Director Tracy Lane.

“Hydropower already provides base load and peaking supply in many countries,” Lane said. “But it can also provide important ancillary services. These include regulation, frequency response, reactive supply, scheduling and black start service.”

Lane also emphasized the role of hydro in responding to climate change via water management. “Water infrastructure is critical to global water security and to ensuring resilience to the impacts of climate change,” she said. “Hydropower can have a role to play in providing the financing for water storage infrastructure, which is critical to adapaation in the water sector. Adding the hydropower component not only provides low-carbon electricity, but also enables communities to benefit from multiple services of water storage.”

Verbund, E.ON agree to hydropower asset swap

Austrian utility Verbund and energy provider E.ON have agreed on a US$2 billion asset trade that includes German hydropower capabilities and Turkish equity interests.

The documents – signed in December – will turn over E.ON’s interest in eight German run-of-river projects to Verbund. In exchange, Verbund will sell 50% of its interest in Turkey’s Enerjisa Enerji A.S. to E.ON.

Verbund says it previously held interests in the acquired facilities, as well as electricity purchase rights. This deal gives the company 100% ownership of seven of the eight projects.

Included in the transaction are shares of the Ering, Egglfing, Nubdorf, Osterreich-Bayerishe Kraftwerke AG and Donaukraftwerke Jochenstein AG hydropower facilities, adding 351 MW to Verbund’s portfolio.

The deal also gives Verbund procurement rights from the Zemm Ziller Hydroelectric Group, along with 50% of E.ON’s interests in hydropower projects in the Freilassing and Tittmoning basins. The deal is scheduled to close in the first quarter of 2013, pending antitrust review.

Indian hydro development moves forward

India’s proposed 850 MW Rattle project has been awarded environmental approval by the Apex Committee of the Union Ministry of Environment in Dehli. Rattle, to be constructed under a build, own, operate and transfer (BOOT) arrangement in India’s mountainous Jammu and Kashmir state, will be built by GVK Power Infrastructure Limited.

The project is to be completed by 2017, although the plant’s size has been increased from its original 690 MW after revised water flow studies by India’s Central Water Commission.

GVK will hold control of the project for 35 years as per the BOOT arrangement, after which point it will be transferred to Jammu and Kashmir.

In other news, the Asian Development Bank (ADB) and India have agreed to a US$315 million loan to help fund the 450 MW Shongtong Karcham plant in Himachal Pradesh state.

The loan is the fourth tranche in an $800 million financing plan called the “Himachal Pradesh Clean Energy Development Investment Program,” which was created to develop power sources in the mountainous region. The program also includes the Integrated Kashang (including Kashang Stages 1-3) and Sainj (or Sanj) hydropower projects. ADB says the projects will have a combined output capacity of 856 MW.

“This program not only benefits Himachal Pradesh by supplying affordable, reliable power to its residents, but will enable the export of excess power to the rest of the country for the benefit of power-deficient states,” reports Indian official Prabodh Saxena.

The loan has a 25-year term with a five-year grace period and interest determined in accordance with ADB’s LIBOR-based lending facility.

German development bank KfW will provide $192 million through a separate loan, with the Government of Himachal Pradesh providing an additional $235 million.

In addition, India’s Union Ministry of Environment and Forests has given environmental approval for the 450 MW Baglihar 2 project.

The Jammu & Kashmir State Power Development Corporation (SPDC)-owned project already had about 40% of its underground work completed in November 2012, according to Indian sources, with the above-ground work expected to be finished by the end of 2016.

Civil work is being executed by New Dehli-based Jayprakash, with electromechanical work being provided by Voith Hydro.

SPDC also owns Baglihar 2’s sister project, 450 MW Baglihar 1, which shares a reservoir on the Chenab River.

Nigeria signs MOUs to build two new projects

A pair of agreements signed in November in Nigeria’s capital city will lead to the construction of two new hydropower projects with total capacity of 3,750 MW.

The memorandums of understanding will see China’s Gezhouba Group Company Ltd. and the Sinohydro Corporation construct a 3,050 MW hydroelectric plant in Mambila and a 700 MW plant in Zungeru.

Nigeria’s State Minister for Power, Zainab Kuchi, said at the document signing ceremony that China’s Export-Import Bank would pay for 85% of the US$3.2 billion project, with the remainder being picked up by the country’s government and other private equity funds.

Kuchi says the bulk of funding for Zungeru would also come from China Exim, although a loan has yet to be completed.

Laos picks Poyry to oversee construction of Xayaburi

Global consulting and engineering company Poyry Energy Business Group has been selected to supervise the construction of Laos’ 1,285 MW Xayaburi project.

As per the contract, Poyry says it will support the Laotian government and project owner Xayaburi Power Company Limited throughout what is expected to be an eight-year process.

The run-of-river plant will include eight Andritz-supplied Kaplan turbines, multiple fish passages, low-level outlet gates for sediment flushing and navigation locks for shipping along the Mekong River.

Poyry says it acted as a technical consultant for the project in 2011 and made a number of proposals that will be incorporated into the final plan. “By first reviewing the project’s technical design and now overseeing the project implementation, we can actively and positively contribute in careful implementation of the first hydro power project in the lower Mekong River,” says Ari Asikainen, president of Poyry’s Energy Business Group.

Hydrelectric sector status update in China

The first turbine at China’s 6,400 MW Xiangjiaba plant on the Jinsha River in Yunnan Province began contributing power to the country’s grid in November.

Alstom delivered the first of the 812 MW turbines in May 2011, with installation of Units 7 and 8 being completed in July.

The China Three Gorges Corporation, which operates the US$6.3 billion plant, says Unit 7 is now generating power and Unit 8 is undergoing testing. Construction of the Xiangjiaba project began in November 2006. Once complete, it will be the third largest hydroelectric facility in China.

In other news, an earthquake in China’s Hubei Province that measured 3.2 on the Richter scale had no effect on the 22,500 MW Three Gorges plant, state news agency Xinhua says.

A Three Gorges official said the earthquake was “shallow-focus” rather than “structural,” meaning it could have been triggered by water pouring into caves or the excavation of mine shafts in the region. The earthquake coincides with Three Gorges’ third full-capacity storage test, which means the project’s reservoir is holding its designed maximum load.

Critics say Three Gorges itself is causing the earthquakes, noting that about 19,000 “slight or ultra-slight” earthquakes have been recorded since the reservoir first began holding water in 2003. But Niu Xinqiang – head of the Yangtze River Institute of Survey, Planning and Design – says seismic activity has been decreasing over the years.

Lower Sesan 2 plant gets Cambodian approval

Cambodia’s 400 MW Lower Sesan 2 hydropower project has been given the go-ahead from the country’s government. The US$781 million project will be built along the Sesan River in northeastern province Stung Treng.

Cambodian officials say Lower Sesan 2 will be built by a Chinese/Vietnamese joint venture but did not name the companies involved.

The Mekong River Commission, alongside environmental group 3S Rivers Protection Network, says as many as 50,000 people could be displaced by Lower Sesan 2’s reservoir.

Cambodian Prime Minister Hun Sen has ordered the development group to build new homes and prepare land for resettled residents, however, and the government says the approval comes after an eight-year review process.

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