Sustainable approaches to new hydro development was the subject of debate at the Hydrovision 2002 conference, as Sophie Baylis reports

SHUT your eyes and picture a world where the following rules are rigorously applied: energy must be supplied to all those who need it, said energy must meet strict environmental safety standards, said standards must be satisfied using new technologies. Now open your eyes and read on.

Sustainable approaches to hydro power was the subject for debate at Hydrovision 2002 in Portland, Oregon. Up for discussion were the issues, solutions and new approaches to a conflict which raged long before the birth of the buzz words ‘environmentally friendly’, and will continue to do so (miracle withstanding) in the future.

Although the production of energy and the protection of the environment are age-old adversaries, efforts to find a compromise are relentless.

‘The hydro industry has been around for a long time and we need a lot of new thinking for the future,’ said secretary general of the hydro-equipment-association, Donal O’Leary.

‘If we can look outside the box and explore new ways to store energy, attack the problems, accept what’s happened to the environment and turn it into positives, that’s the future of hydro,’ agreed Damien Kenneally, general manager civil infrastructure at the Snowy Mountain Engineering Corporation (SMEC) of Australia.

‘We’ve been discussing hydro power for a long time but unfortunately we are unable to harness it properly. If we could generate money by other means, we can invest in such projects,’ was the opinion of the president of Asian Hydro Link, Durga Lal Shrestha.

Three representatives, three conclusions – all keen to promote hydro as one of the viable options for meeting future energy needs, whilst addressing environmental concerns.

O’Leary kicked off proceedings by identifying the ‘major’ changes to have taken place in the industry in the last few years. Focusing upon two documents, he reviewed the Dams & Development report published by the World Commission on Dams (WCD) in November 2001, and the subsequent Dams & Development Project (DDP) launched at the Dams & Development Forum in Nairobi in early 2002.

‘The work of the WCD really heightened the profile of those issues related to decision making, implementation and operation of dams including hydro electric projects,’ explained O’Leary.

‘But the most positive aspect of the WCD was the engagement of all stakeholders in the process. Through the WCD Forum, stakeholder representatives met on three different occasions to provide input into the commissions work.’

O’Leary was enthusiastic for the DDP to follow in the WCD’s footsteps in this way. ‘I would look at one index of success in the DDP is if we can bring back some of the people who have been alienated by the process,’ he said.

The WCD report was broken down into core values and strategic priorities. Core values comprised of equity, sustainability, efficiency, participatory decision making and accountability.

Strategic priorities included gaining public acceptance for dam projects, identifying solutions for meeting demands that dams must satisfy and assessing the situation of existing dams, O’Leary noted.

Strategic priorities also took into account sustaining rivers and the livelihoods of people effected, recognising entitlements and dividing benefits, ensuring compliance and the sharing of rivers for peace, development and security.

Twenty-six guidelines were subsequently devised by the WCD to implement the priorities in the context of the core values.

‘Although the industry supports the core values and priorities,’ reported O’Leary, ‘there is a feeling that the 26 guidelines cannot be implemented by any country in the world as they are set out. That is not to say that there aren’t good ideas within those guidelines,’ he stressed.

In response, the DDP was conceived, resolving to continue discussions on dam development and the dam development report; its four objectives were to disseminate the WCD report, promote dialogue, organise an information network and facilitate the exchange of ideas and good practice.

‘The industry is very keen to remain active in the whole DDP process,’ O’Leary concluded at the close of his speech, ‘including playing an active part in the governments steering committee, the Dams & Development Forum and participating in actual dialogues facilitated by the DDP.’

Private investors

Moving the discussion away from the reports, Kenneally of SMEC identified the pros and cons of hydro power; substantial upfront costs, seasonality, environmental impact, resettlement and the peak load function versus sustainability, renewability, long term earning potential, a reduction in fossil fuels and multi purpose potential.

Kenneally focused upon the pitfalls faced by private investors involved in hydro projects. Issues he identified included preconstruction risks – the cost of investing in the feasibility, study and design of a project that does not proceed; resettlement risks – according to Kenneally ‘typically underfunded’ and ‘badly managed’; and political and country risks – war or changes in government.

Additional considerations included hydrological risks, geotechnical risks, cost overruns, dam safety and water access rights.

Having painted a sobering picture for private investors, Kenneally outlined possible solutions, drawing upon processes in operation at SMEC. ‘Community consultation is essential,’ he explained. ‘Initially, when we started a project in Nepal in 1996, we contacted all the relevant NGO’s and people affected so that the input was definitely’

‘There also needs to be a provision for foreign exchange,’ he continued. ‘This means independent procedures for disputing a solution, which should be clear and dealt with by a third country.’

Kenneally’s answer to ecological concerns was an early environmental analysis. ‘These days we need a study of the total water resources in the basin to see where the project fits, in regards to irrigation, water supply and resettlement towns,’ commented Kenneally. Once again he stressed that a consultation process would help to identify environmental factors.

It was resettlement, however, that Kenneally flagged as ‘crucial’. ‘They say that every river is different, similarly every resettlement problem is different and requires a lot of effort,’ he rationalised.

‘If a resettlement is going to be carried out properly we need to make a substantial investment in agriculture infrastructure somewhere else before resettlement commences.’

In these circumstances, Kenneally advised that costs should be estimated up-front, firstly to ensure that the budget isn’t blown and secondly to guarantee that attempts to remain within budget do not result in the resettlement process being botched.

Another issue that Kenneally identified was climate change. Although scientists agree that climate change has occurred, how fast the issue is moving or how this will affect hydro power is currently impossible to predict.

According to Kenneally, one course of action is to analyse past movements and select a rate. This suggests that a significant change is not expected in the next 25 years, ‘but that’s on a general global basis,’ he stressed, “there hasn’t been a detailed examination of various sites that I’m aware of.’

In summing up, Kenneally looked to the future, ‘I believe fewer hydro power projects will be viable on a strictly commercial basis which will require government support in the form of guarantees, equity and multi-lateral funds.’

When asked if he was sealing the fate of hydro power by drawing this conclusion, he responded, ‘many projects in the future will not see the light if day because of environmental reasons. I think that when you are looking to private development, people are looking for higher returns than perhaps governments. So looking from a private point of view a lot of projects will not be attractive.’

Potential in Nepal

The third speaker, Durga Lal Shrestha, spoke briefly about the problems facing Nepal, a country with enormous potential for hydro but a lack of funding. ‘In Nepal we have 6000 rivers and reservoirs,’ he began. ‘Therefore we can generate 83,000MW of clean energy.’

But what Nepal has in hydro power potential it lacks in finance – unfortunately attracting foreign money is not an option. “Our kW projects do not attract foreign investors, they are too small,’ explained Shrestha. His solution? To generate money by alternative means, in the case of Nepal, high value cash crops.

‘We could encourage foreign investment in tea, mushrooms, herbs for medicine, flowers and honey,’ explained Shrestha. ‘If we can attract foreign investment in these five high value cash crops we can generate a good amount of money, which we can invest in hydro projects which in turn will provide a good service to the public.’

He concluded by briefly discussing a successful hydro project currently in operation in Nepal. Described as ‘low cost’ and ‘sustainable’, Shrestha hopes that it will be followed by others in the future.