Cheap electricity?

[Louis Proyect <lnp3@xxxxxxxxxxxxx>]

"If God had said ?Let There Be Light!? in Colombia, He would have run out
of money for the rest of creation."
--Semana magazine, Bogota, 4 April 1989

===

Like most Americans my age, I had the dubious privilege of watching Ronald
Reagan host the weekly General Electric Theater on CBS television, which
always featured spiels on behalf of nuclear power and hydroelectricity
during the commercial breaks. Maybe my questioning of these "gifts" from
modern industry have something to do with a generalized hatred for the
1950s, which first expressed itself through passionate identification with
Allen Ginsberg's "Howl".

Moloch whose mind is pure machinery!
Moloch whose blood is running money!
Moloch whose fingers are ten armies!
Moloch whose breast is a cannibal dynamo!
Moloch whose ear is a smoking tomb!

But on a more mundane basis, there's very little truth to the notion that
hydroelectricity is either cheap or a rational use of resources. Take the
question of Plant Factor Percentage (PFP), a standard industry measure of
the ration between a power plant's capacity to generate power and its
actual energy production. As a basis for comparison, the PFP of fossil fuel
power stations in is about 65 percent. Here are some PFP's for some
hydroelectric dams:

Dam                     Country         PFP
Balbina         Brazil          44
Guri                    Venezuela       50
Cirata                  Indonesia       33
Sardar Sarovar  India           28/3
Sirikit                 Thailand        17

What is the explanation for such mediocre to poor performance? One
important factor neglected by supporters of such projects is that they are
subject to lower power production during the long dry season in many Third
World countries. Backers of Sardar Sarovar proclaim a capacity of 1,450
Megawatts but admit that actual production during the initial phase of the
project will be only 439 MW because of climactic constraints. As the
project's 80,000 kilometers of irrigation canals are completed, even less
water will reach the main turbines. Eventually only 50MW will be produced,
bringing the PFP down to 3%. Not a very rational use of resources, and
socialists are supposed to be rational, aren't we?

The economic justification of the 3,100 MW Yacyretá Dam in Argentina rested
on the assumption that Argentinean electricity demand would grow at a rate
of 8-10 per cent a year during the 1980s. In fact demand grew by an annual
average of just over 2 per cent so that when the first turbines of the
$11.5 billion megaproject came on-line in 1994 (eight years behind
schedule), the country already had a sizeable surplus of generating
capacity. I guess Argentina can afford to waste resources in this manner
because it is so wealthy.

Between 1970 and the mid-1980s, the World Bank and Inter-American
Development Bank together lent Colombia a total of $3.8 billion for 12
large hydrodams and their associated infrastructure. Yet by 1986, when
these dams had mostly been completed (after incurring extensive time and
cost overruns), electricity demand in Colombia was one-third lower than
forecast when the dams were planned, and the excess generating capacity was
estimated to have cost Colombia more than $400 million. In a confidential
report, the World Bank?s Operations Evaluation Department (OED) concluded
that this high cost of overcapacity highlights "the vital importance of
having more flexible investment programs with smaller projects so that
better responses can be had to the vicissitudes of demand uncertainties."

Colombia?s hydropower splurge had a serious impact on the country?s
economy. By the mid-1980s, one-third of Colombia?s total public investment
was being eaten up by the power sector, and 60 per cent of this money was
leaving the country to pay for imported goods and services. In 1987,
interest payments on the power sector?s foreign debt represented nearly
two-fifths of Colombia?s total public foreign debt repayments. Colombia?s
hydropower investment program, the OED concludes, combined with the power
utilities? low revenues and large external borrowing, ?undoubtedly had a
negative impact on Colombia?s economic growth in the 1980s.

Now that the World Bank has taken this position, I suppose it is incumbent
upon us to pressure the FARC and ELN to include the demand "MORE DAMS FOR
COLOMBIA" in their program.

Moving to the north, the use of precious water resources is just as
irrational. All the nations in Central America rely on hydropower for well
over half of their electricity. Sixty-five per cent of Guatemala?s energy
is provided by Chixoy Dam. In 1990 the country suffered a series of
blackouts because of a lack of water at Chixoy. Two years later, another
power shortage because of Chixoy?s low reservoir resulted in electricity
being rationed for more than a month, costing the country $2 million a day
in lost industrial production. The 300 MW turbines of El Cajón Dam
represent 70 per cent of the installed capacity of Honduras. Low rainfall
through the early 1990s has meant that the level of El Cajón Reservoir has
steadily fallen. By mid-1994, the dam was able to generate at only half
capacity at best and Honduran electricity consumers were suffering
blackouts of up to 14 hours a day.

Louis Proyect
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