The dam no one needs

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As the final debate approaches regarding the construction of the Xayaburi dam, experts say that Thailand has more power than it knows what to do with



A file photo taken just downstream of the proposed site for the Xayaburi dam. Thailand doesn't actually need the power the massive hydroelectric dam will create, experts have said.

The members of the International Rivers oganization recieved some rather disquieting valentines this year.

On February 14, frantic emails and phone calls began pouring in reporting that Thai contractors had began rolling heavy machinery down fresh access roads through Laos' remote Xayaburi Province.

The anti-dam NGO learned that a bridge now linked these machines to the future site of a 1,260 Megawatt hydropower dam that's slated to be built on a vital stretch of the Mekong river.

Scientists say the Xayaburi dam could devastate the river's roughly $7 billion freshwater fisheries and displace 2,100 people living near the site. Last fall, the Mekong River Commission (MRC), an advisory board on river construction, released an independent scientific study on a dozen dam projects, of which the Xayaburi was the first and largest.

The study called for a decade-long moratorium on any mainstream dam construction to allow for further research on their potential impact, much to the relief of the dam's numerous detractors.

Days later, Laos officials responded by giving their neighbors until April 22 to approve construction of the Xayaburi dam.

The clock is ticking...

Staunch public opposition to the Xayaburi dam began in October 2009 when the prime ministers of Cambodia, Laos, Thailand and Vietnam recieved copies of a 23,000-signature petition calling for the Mekong River's mainstream to remain free of dams.

In September of 2010, Thai community groups representing about 24,000 people in five provinces along the Mekong River submitted a petition to their Prime Minister, again asking him to cancel the project.

On Monday (February 28), Cambodian government officials raised fresh concerns about the dam and a handful of Vietnamese officials grumbled to local media outlets about delaying the project.

Laos officials have long contended the dam will provide much needed income to its poor, landlocked citizens.

In reality, it seems it will do little more than provide a fleeting boost to the Thai economy.

At least four Thai banks (none of which responded to requests for comment) will provide funding for the construction. Ch. Karnchang, Thailand's second-largest publicly traded construction company, will build it. The Electricity Generating Authority of Thailand (EGAT) has already agreed to purchase 95 percent of the electricity that the dam produces.

However, Independent experts point out that Thailand is sitting on a huge energy surplus.

"We're not facing a situation in which without Xayaburi the Thai system would black out," said Witoon Permpongsachareon, Director of the Mekong Energy and Ecology Network. "The main driver of this project is investment and the stock market. It's not based on the real demand situation in Thailand."

Manufacturing demand

Chris Greacen, an independent energy expert has charged that the Thai Load Forecast Subcommittee, the body responsible for predicting Thailand's power needs, has consistently overestimated demand, leading to investment plans that call for too many power plants.

In 2009, Thailand's peak load (the maximum instantaneous demand for electricity that ever occurred in the year) topped out at 22,045 megawatts.

But Thailand's contracted capacity in the same year was 29,212 MW a reserve margin of almost 28 percent. The excess capacity can be attributed to large, conventional power plants which were built prematurely. The cost of that excess is passed on to consumers in their electric bills, Greacen says.

Part of the problem is Thailand's utility incentive structure.

The Electricity Generating Authority of Thailand's economic incentives are based on a "cost-plus" model in which the more the utility spends, the more profit it makes. This leads to over-investment in power plants and other infrastructure.

"It's not surprising then that utilities are not particularly interested in energy conservation even though there are is a lot of evidence that energy efficiency and conservation is cheaper than building new power plants and fuelling them for the next 30 years," he said.

Greacen and his wife have been advocating for cost-saving alternative and renewable energy sources since 2003. 

Together, they have successfully pushed for Thailand to allow small renewable power producers to connect to and sell electricity back to the national grid. They've found vast energy potential in pig manure, rice husks and lost industrial heat, to name just a few negelected sources.

"Right now, there's about 850 megawatts of these projects online," he said. "That's comparable to a large natural gas power plant."

Greacen says that another 4,500 megawatts are "in the pipeline" as small and very small producers continue to ink purchase agreements with PEA, a Thai utility firm.

Many of those projects could come online in the next two to three years, if funding were made available for their construction.

Greacen contends that still more megawatts could be saved (at a profit) by investing in more efficient engines, turbines and lighting.

If you build it...

Once a big hydropower project gains momentum, it becomes rather hard to stop.

In 2004, the World Bank guaranteed a loan to build the Nam-Thuen II hydropower plant in Laos. Like the Xayaburi dam, most of the power from the roughly 1000 megawatt dam was slated for sale to Thailand.

As part of its due diligence in funding the dam's construction, the World Bank commissioned a study of the project's economic efficiency.

The reports author found that it would be cheaper to invest in 1,225 megawatts of energy conservation and 216 megawatts of renewable energy than to build the NamThuen II.

Work on the dam went ahead as planned.

The bank concluded that Thailand would need the energy produced by the dam (eventually) and continued its support for the project while pushing for measures to conserve energy and promote renewable energy projects.

"Today in Thailand, about five to six percent of the electricity services that are being provided are actually power plants that didn't need to be built because [Thailand conserved] energy," said Peter Dupont, a consultant with the International Resources Group.

Ironically, Thailand has ceased building large hydropower dams, within its own borders a shift Dupont attributes to widespread public opposition and poor dam performance.

Keep it small and local

Laos, for its part, has fairly small power needs.

The mountainous, rural nation actually relies on several, disconnected grids for its power. Consumers often buy electricity from Thai-owned dams at various points along their shared border, but that is expected to change.

Industrial power demands alone are projected to rise by a staggering 38 percent annually a figure which can be attributed to the massive amount of power that will be required to construct the proposed hydropower dams.

According to a presentation made at the beginning of this month in Vientiane by Helvetas (a Swiss NGO) and the Lao Institute of Renewable Energy, the Laos government aims to have 90 percent of its households electrified by 2020.

During the preliminary presentation Swiss researchers recommended that Laos pursue "direct renewable electricity production" rather than expanding a large centralized grid.

Such a policy would allow small rural energy producers to make power where it's needed (about ten percent of energy is lost in transit through a centralized grid).

The group cited environmental benefits, energy security and efficiency as reasons to pursue the decentralized approach.

The final study will not be out before the end of the year.

"The problem is that there is not a lot of data in Laos and power planning is not done in an integrated manner only big (hydro) stuff is considered," said Samuel Martin, Technical Adviser to Helvetas Laos. "The aim of the study is to try to see what the alternatives are and propose policy options to promote these alternatives."

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