Report#: DOE/EIA-0484(98)

Hydroelectricity and Other Renewable Resources

Regional Activity

World events and low fossil fuel prices in 1997 have had mixed effects on the markets for hydroelectricity and other renewable energy sources. World oil prices have fallen from $24 per barrel in 1996 to the 1997 price of $17per barrel, and they are expected to remain below $23 per barrel through 2020 (prices in 1996 U.S. dollars). Low fossil fuel prices will continue to make it difficult for renewable energy sources to compete for market share. On the other hand, the climate change protocol developed in Kyoto, Japan, in 1997 increases interest in the potential role of renewables, inasmuch as many developed countries have committed to reducing carbon emissions substantially over the next decade or so. The IEO98 projections, however, do not take into account any policy initiatives that may result from the draft agreement.

The IEO98 reference case projects that, by 2020, total consumption of renewable energy will reach 50 quadrillion Btu—an increase of 67 percent over 1995 levels (Figure 69). Renewables are not expected to gain market share in terms of world energy consumption. Renewable energy use grows just enough to maintain an 8-percent share of total world energy consumption throughout the projection period (Figure 70). Use in developed countries is projected to rise more slowly than in developing countries, where major hydroelectric development projects are underway (Figure 71).

Figure 69. World Consumption of Hydroelectricity and Other Renewable Energy in Three Cases, 1970-2020

Sources: History: Energy Information Administration (EIA), Office of Energy Markets and End Use, International Statistics Database and International Energy Annual 1996, DOE/EIA-0219(96) (Washington, DC, February 1998). Projections: EIA, World Energy Projection System (1998).

Figure 70. Renewable Energy Share of World Energy Consumption, 1970-2020

Sources: History: Energy Information Administration (EIA), Office of Energy Markets and End Use, International Statistics Database and International Energy Annual 1996, DOE/EIA-0219(96) (Washington, DC, February 1998). Projections: EIA, World Energy Projection System (1998).

Noncommercial fuels from plant and animal sources remain an important source of energy, especially in the developing world; however, comprehensive data on the use of noncommerical fuels are not available and, as a result, are not included in the IEO98 projections. Similarly, because there are few extensive sources of international data on their use, dispersed renewables (renewable energy consumed on the site of its production, such as solar panels used for water heating) also are not considered in the projections.

Some key developments affecting world renewable energy in 1997 include:

• Most renewable energy development involves expanding or refurbishing sites for hydroelectric power generation—predominantly outside North America and Western Europe, where resources have for the most part been fully exploited.
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Figure 71. Renewable Energy Consumption by Region, 1970, 1995, and 2020

Sources: 1970 and 1995: Energy Information Administration (EIA), Office of Energy Markets and End Use, International Statistics Database and International Energy Annual 1996, DOE/EIA-0219(96) (Washington, DC, February 1998). 2020: EIA, World Energy Projection System (1998).

• Nonhydroelectric renewable energy development varies across regions, with wind generation receiving the greatest development support. The American Wind Energy Association reported in its 1997 survey that, for the second year in a row, more than 1,200 megawatts of new wind generating capacity was installed worldwide, most of it in Germany and India [1]. In 1996, installed wind energy grew by 25 percent over the 1995 level. Worldwide wind capacity was estimated at 6,259 megawatts at the end of 1996.
  

• The Asian financial crisis in the autumn of 1997 created difficulties for many renewable energy projects, as well as other energy projects that had been planned in the region. In Indonesia, 8 out of 13 power projects whose construction was postponed in September 1997 because of the financial crisis were geothermal power plants. And the future of the Laotian 681-megawatt Nam Thuen 2 hydroelectric dam, the output from which was slated to be exported to Thailand, remains uncertain, especially since a power purchase agreement between the state-owned Electricity Generating Authority of Thailand (EGAT) and the Nam Thuen 2 Electricity Consortium expired when the consortium could not meet its commitment to complete the project by 2000. Malaysia’s 1.8-gigawatt Bakun hydroelectric project was indefinitely postponed in 1997.
  

• Perhaps some of the most promising trends for thefuture of renewables involve new initiatives bylarge fossil-fuel-based companies. Enron Corporation formed Enron Renewable Energy Corporation in January 1997 with its acquisition of Zond Corporation, an American wind energy power plant developer [2]. Further, in October 1997, Enron announced the acquisition of Tacke Windtechnik GmbH, a German wind turbine manufacturer [3]. In May 1997, British Petroleum announced plans to increase solar power sales to $1.1 billion per year within the next decade, and in October Royal Dutch Shell announced that it would invest more than $500 million in renewables over the next 5 years [4].

Regional Activity
North America

Over the next 25 years, renewable energy use is projected to increase by 1.3 percent annually in North America. At this rate, renewable energy consumption would increase from 10.6 quadrillion Btu in 1995 to 14.8 quadrillion Btu in 2020 and would account for about 10 percent of total projected energy use in the region (Figure 72).

Figure 72. Renewable Energy Consumption in North America, 1975-2020

Sources: History: Energy Information Administration (EIA), Office of Energy Markets and End Use, International Statistics Database and International Energy Annual 1996, DOE/EIA-0219(96) (Washington, DC, February 1998). Projections: EIA, World Energy Projection System (1998).

In the United States, most growth in renewable energy use for power generation involves municipal solid waste (MSW), wind, and biomass [5, p. 57]. The increase in MSW is attributed mostly to the recovery and use of landfill gas (methane); the increase in biomass is split between industrial cogeneration and gasification combined-cycle units owned by electricity generating firms. U.S. wind capacity is expected to double over the forecast period, with improvements in wind technology that include larger, more efficient turbines and improved turbine siting [5, p. 58]. At the end of 1996, approximately 1.8 gigawatts of wind capacity was operating in the United States. There are 17 States with plans to add new capacity between 1997 and 2005 (Figure 73).

Figure 73. Grid-Connected Wind Power Plants in the United States as of December 31, 1996

Source: International Energy Agency and National Renewable Energy Laboratory, IEA Wind Annual Report 1996 (Golden, CO, October 1997), p. 143.

The U.S. Utility Wind Turbine Verification Program has been managed jointly by the U.S. Department of Energy and the Electric Power Research Institute [6]. The program—in place since 1992—was designed to increase the commercial viability of wind-powered electricity by evaluating advanced wind turbines operating at wind plants developed by U.S. electric utility companies. Under this program, two 6-megawatt projects have been built. The first was commissioned in 1995 and is owned by Central and South West Services Corporation in Fort Davis, Texas. The project uses 12 550-kilowatt wind turbines. The second project, with 11 550-kilowatt turbines, began operation in August 1997 and is owned by Green Mountain Power Corporation in Searsburg, Vermont. Seven other projects are currently planned or under construction:

• Iowa. In 1998, three 750-kilowatt turbines are to be installed in Algona. The project is expected to produce 5.4 million kilowatthours per year, providing enough electricity to supply an estimated 540 homes.
  

• Nebraska. Two 750-kilowatt turbines are scheduled to begin operating in north-central Nebraska by the end of 1998. The project is projected to produce 4.2 million kilowatthours annually, enough electricity for about 420 homes each year.
  

• Texas. Texas Wind Power Company will develop, construct, and operate six 750-kilowatt wind turbines in the Texas panhandle near Brownfield. The facility is expected to produce about 9 million kilowatthours of electricity each year (enough for about 900 homes) for Brownfield.
  

• Oklahoma and Texas. Central and South West Services Corporation (CSW) plans to install four 300-kilowatt wind turbines by the end of 1998. CSW is currently evaluating potential sites in these two States.
  

• New York. Niagara Mohawk Power Corporation plans to install three 300-kilowatt turbines in northern New York by 1999.
  

• Wisconsin. EPRI and four utilities in eastern Wisconsin (Wisconsin Public Service Corporation, Madison Gas & Electric Company, Wisconsin Electric Power Company, and Wisconsin Power & Light Company) plan to install two 600-kilowatt turbines near Green Bay by the end of 1997. The two turbines should supply 3.6 million kilowatthours of electricity each year, enough for about 360 homes.
  

• Alaska. Three 50-kilowatt wind turbines were installed in Kotzebue, Alaska, to supplement the Kotzebue Electric Association’s existing diesel-powered station. The power station, located about 50 miles north of the Arctic Circle in the village of Kotzebue, serves the 2,100 residents of the village.

In Canada, hydroelectricity remains by far the largest source of renewable energy. Although plans for large-scale hydroelectric projects have been scrapped for the most part, Hydro Quebec plans to complete construction of its 882-megawatt Sainte Marguerite 3 project, northwest of Sept-Iles on the Sainte Marguerite River [7]. The project will begin to operate in May 2001. Hydro Quebec began work on the project infrastructure in 1994 and finished building the primary road to the main dam site in November 1995. When complete, the two generating stations are expected to produce a total of 3.2 terawatthours of electricity annually. The 3.2-gigawatt Grand Baleine Complex in Quebec province is expected to be built in stages, with the first stage completed by 2019 [8, p. 57].

In aggregate, Canada projects nearly a one-third increase in hydroelectric capacity by 2020, with most of the increase after 2010. In the near term, electricity growth is expected to be relatively slow, with only modest additions to generating capacity planned [8, pp.55-59]. The Canadian government has announced a range of initiatives to expand renewable energy use, and increased use of biomass and waste fuels is anticipated; however, only a small part of the country’s total energy needs will be met from these sources.

All other future hydroelectric projects in Canada will be smaller than 500 megawatts of installed capacity [8, p.52]. Other Quebec hydroelectric stations to be built when demand exceeds generating capability after 2010 include a combined 2.0 gigawatts of capacity at the following stations: Eastmain 1, Mercier, Kipawa, Haut Saint Maurice, and Ashuapmushan [8, p. 58]. In Manitoba, the Wukswatim and Notigi stations will provide an additional 405 megawatts of hydroelectric capacity after 2010. Four hydroelectric plants (Waneta, Billant, Keenleyside, and Murphy Creek) will be constructed after 2015 in British Columbia, with a combined 1.0 gigawatt of capacity. About 237 megawatts of capacity from small hydropower facilities is expected to be added between 1995 and 2020 [8, p. 61].

Western Europe

Consumption of hydroelectricity and other renewable energy sources in Western Europe climbs by almost 70 percent in the forecast, from 5.1 quadrillion Btu in 1995 to 8.7 quadrillion Btu in 2020 (Figure 74). Most of Europe’s hydroelectric resources have already been developed, and the projected growth consists mostly of alternative energy sources, such as wind.

Figure 74. Renewable Energy Consumption in Western Europe, 1980-2020

Sources: History: Energy Information Administration (EIA), Office of Energy Markets and End Use, International Statistics Database and International Energy Annual 1996, DOE/EIA-0219(96) (Washington, DC, February 1998). Projections: EIA, World Energy Projection System (1998).

The European Wind Energy Association projects wind power capacity to more than double in Europe by 2001, with particularly large increases forecast for Germany and Spain (1,500 megawatts and 1,200 megawatts, respectively) [9]. Germany remains the fastest-growing market for wind generation in Western Europe, adding 438 megawatts of wind capacity in 1996.

Under Germany’s present Electricity Feed Law (EFL), utilities must accept renewables from independent power producers (IPP). The utilities are obligated to pay the IPPs a minimum price of 90 percent of their average electricity rate for wind and photovoltaic energy (today about 10 cents per kilowatthour) and 70 percent for energy from water, biomass, or biogas [10, 11]. The Christian Democrats-CSU party proposed to reduce the minimum required level for wind power fed into utility grids in an effort to ease the burden placed on utilities to use renewables [10]. However, strong public support for the EFL has kept the government from making any changes thus far, and the German ruling coalition parties have tabled decisions on the EFL until 1998 [12].

Individual German municipalities are also developing alternative energy sources. In Berlin, the Energie 2000 program was developed in an effort to increase solar electricity use. City officials and the area’s power firm, Bewag AG, are investing $22.5 million between 1997 and 2000 to support solar energy projects, and 44 potential solar installation sites have already been identified [13, p. 390].

In terms of wind development, Denmark, Spain, and the United Kingdom followed Germany and added, respectively, 190 megawatts, 90 megawatts, and 71 megawatts of capacity in 1996. Denmark still hopes to achieve its target of 1,500 megawatts of installed wind capacity by 2005 as set forth in the country’s Energy 2000 program [14, p. 27]; however, the Danish transmission companies Elsam and Elkraft have not been able to meet their commitment to increase wind capacity. Public resistance to planned facilities has made it difficult to install the capacity; as a result, offshore wind plants are now being planned [13, p. 399]. The first offshore plant should be installed by 2000.

The United Kingdom’s Non-Fossil Fuel Obligation (NFFO) has helped to boost renewable installations—particularly wind—in that country. The NFFO, enacted as part of the Electricity Act of 1989, was seen primarily as a way to subsidize the nuclear power industry after the 1989 privatization of Britain’s electricity supply industry [15]. The country’s nuclear power plants were unable to attract private investors and, as a result, remained government-owned and needed public financial support to operate. Although most of the NFFO taxes were used to support the nuclear industry, a small portion of the proceeds was used to support renewables.

Four NFFO orders have already been made in England, as well as two in Scotland and two in Northern Ireland [16, p. 134]. Wind power has dominated each of the NFFOs—for example, in the fourth NFFO, projects comprising 341 megawatts of wind capacity were awarded. In November 1997, the British government announced plans for a fifth NFFO order for 1998. Bids for NFFO 5 are to be solicited from projects based on municipal and industrial waste incineration, landfill gas, small-scale hydropower, and onshore wind energy [17]. In 1998, there will be no further subsidies for the nuclear power industry, and all NFFO proceeds will be used to support renewable energy projects [18].

Several other European countries have plans to expand their use of renewable energy. In Greece, an estimated 100 megawatts of wind generation capacity could be developed in the Greek Islands by 2000 [19, p. 46-47]. Several wind facilities are already operating on islands in the Aegean Sea. The state-owned Public Power Commission installed four wind farms on the islands of Samos, Chios, Psara, and Andros. These facilities are part of a government effort to add 150 megawatts of wind capacity over the next several years. Since 1991, 13 wind farms have been constructed, with a combined capacity of 22 megawatts.

In June 1997, the Greek government announced the start of construction on the world’s largest solar photovoltaic power station, on the island of Crete [20]. The government will fund the first 5-megawatt portion of a proposed 50-megawatt photovoltaic power station on Crete with the U.S. company, Enron Solar. The European Union (EU) and the Greek government will fund 55 percent of the capital costs, with a total investment of $17.75 million. Enron Solar plans to add 9 megawatts to the plant each year, reaching an installed capacity of 50 megawatts by 2003. Currently, the world’s largest photovoltaic power station is in Italy, with a capacity of 3.3 megawatts. When completed, the Crete solar power station will be 15 times larger than any other solar photovoltaic installation in the world and should provide electricity for almost 100,000 people. Enron has estimated that, for the first 5 megawatts of the 50-megawatt proposal, the cost of generating electricity should be below 8.5 cents per kilowatthour.

Italian Vento Power Corporation (IVPC) installed 38 megawatts of wind capacity in Italy in 1996, with a total of 170 megawatts planned [21]. The potential for large increases in wind capacity in Italy are a result of 1992 legislation that promises a premium price for electricity from renewable energy and cogeneration. By mid-1995, Italy’s Ministry of Industry had approved projects amounting to a total of 723 megawatts of installed capacity, and several hundred megawatts of capacity were added to plans in 1996. The premium is quite large, at 10.7 cents per kilowatthour for the electricity generated by plants installed in 1997, and it extends for the first 8 years of operation. After that, the price falls to 5.4 cents per kilowatthour. At present, wind projects generate electricity at costs ranging from 4.5 to 6.5 cents per kilowatthour, making the premium very attractive to investors.

Although the development of renewable energy in Ireland has been very small, the country has begun promoting the use of renewables for electricity generation through its Alternative Energy Requirement (AER) scheme [19, pp. 76-77]. In 1994, the first AER required the country’s Electricity Supply Board (ESB) to offer contracts to purchase power from combined heat and power (CHP) projects, wind, hydroelectric, and waste and biomass sources for a combined 75 megawatts between 1995 and 1997. Thirty-four projects (mostly wind) were awarded (a total of 111 megawatts of capacity), but because of difficulties in obtaining planning permission for the projects, only 6 have obtained permission to proceed (41.2 megawatts), 2 are still in the process of obtaining permission (9.8 megawatts), and the remaining 26 (22.5 megawatts) have failed to obtain permission to proceed. A second AER was offered in December 1995, and a third in 1997. The government has announced that more AERs will be issued after 2000, planned for 30 megawatts each year through 2010.

Although Finland’s potential for developing renewable energy is only marginal because of its geographical location and climate, the government plans to install 100 megawatts of wind capacity by 2005. State grants and subsidies are being awarded to achieve this goal [14, p.60]. The country also has plans to add two small hydroelectric plants—Pamilo (26 megawatts) and Vuotos (37 megawatts)—as well as a waste facility— VTS/Oulu (50 megawatts)—between 1997 and 2001.

In France, an estimated 85 percent of potential hydroelectric capacity has already been developed [14, p. 120]. In 1989, the government halted all hydroelectric development until 2000. Most of the other renewable energy development in France has been at the 240-megawatt LaRance tidal barrage. In 1996, however, Electricite de France and the Industry Ministry launched the EOLE 2005 wind development program. Under EOLE, the government hopes to install between 250 and 500 megawatts of wind capacity by 2005. The first call for bids under EOLE was made in July 1996. At the end of February 1997, a 2.7-megawatt wind farm began operating in Dunkirk, near France’s first 300 kilowatt wind turbine, which was commissioned in 1991. At the end of 1997, a third wind facility of 7.5 megawatts was scheduled to begin operating at Salleles-Limousis.

Industrialized Asia

Over the next 25 years, the countries of industrialized Asia are expected to increase their use of hydroelectricity and other renewable energy sources by 0.7 quadrillion Btu from the current level of 1.4 quadrillion Btu (Figure 75). In Japan, several programs are in place to promote renewable development: the government’s New Sunshine Project, a $68.5 million investment from the City of Tokyo, and a $102.8 million investment to install 9,400 private solar roof arrays are expected to help the country install 400 megawatts of photovoltaic capacity by 2000 and 4,600 megawatts by 2010 [22].

Figure 75. Renewable Energy Consumption in Asia, 1970-2020

Sources: History: Energy Information Administration (EIA), Office of Energy Markets and End Use, International Statistics Database and International Energy Annual 1996, DOE/EIA-0219(96) (Washington, DC, February 1998). Projections: EIA, World Energy Projection System (1998).

New Zealand generates the bulk of its electricity from hydroelectricity and other renewable resources. In 1995, almost 27 billion kilowatthours of the total 34 billion kilowatthours of electricity generated came from hydroelectricity. Another 2 billion kilowatthours was generated from geothermal and other renewable resources. There has been little development of New Zealand’s wind resources. A demonstration project at Brooklyn and the Wairarapa Electricity’s 3.5-megawatt wind farm at Hau Nui are, thus far, the only projects operating. The Electricity Corporation of New Zealand proposal for a wind farm at Baring Head was rejected, and the company is encountering strong public opposition to its proposed development at Makara (near Wellington) [23]. Economics have kept construction from beginning on Tararua Wind Power’s proposed 137-turbine, 30-megawatt wind facility in Manawatu. Construction is now planned to begin in 1998.

In Australia the bulk of electricity continues to be generated from coal. In 1995 only 16 billion kilowatthours of the 163 billion kilowatthours of electricity generated came from hydroelectricity and other renewable sources (overwhelmingly hydro). Most of the development of wind and solar photovoltaic energy is planned for non-grid systems located in remote sites [24]. BP Solar Australia, the country’s largest photovoltaic manufacturer, has been selected to supply 500 solar photovoltaic energy systems (producing 1 million kilowatthours per year) for the Sydney Athletes Village at Homebush [25]. The photovoltaic facility should be completed by December 1999, with some generation expected to begin as early as April 1998 [26].

Developing Asia

Despite the cancellation of Malaysia’s large-scale Bakun hydroelectric project and the recent economic downturn in the region, robust growth in renewables is still expected for the countries of developing Asia over the projection period. In the reference case, consumption of hydroelectricity and other renewable sources grows from 4.0 quadrillion Btu in 1995 to 10.9 quadrillion Btu in 2020 (Figure 75).

In September 1997, the Malaysian government announced an indefinite delay of the 2.4-gigawatt Bakun hydroelectric project [27]. The $6.2 billion project, first proposed in 1962, has been plagued by problems throughout its 35-year history [28]. A 1996 ruling by the Kuala Lampur High Court stated that the Bakun project’s environmental impact assessment was invalid, further delaying construction of the dam [29]. Protests by international environmental groups, and complaints that compensation given to residents dislocated by the project were well short of the promised amounts, added to the controversy surrounding the project. The devaluation of the Malaysian ringitt in 1997 raised cost estimates for the project by 20 percent and caused the project to be shelved indefinitely.

India has also had problems with public protests over several proposed hydroelectric projects. In October 1997, some 10,000 people gathered to protest construction of the proposed Maheshwar Dam on the Narmada River [30]. The cost of the 400-megawatt Maheshwar hydroelectric project has been projected at around $436 million. It is part of the Narmada Valley Development Project, which is a plan to build 30 large, 135 medium, and 3,000 small dams on the Narmada River and its tributaries. In September, the state government of Sikkim agreed to scale back its 30-megawatt hydroelectric project at Rathongchu to an 18-megawatt project [31].

In Laos, environmental and economic problems associated with the $1.2 billion Nam Thuen 2 (NT2) hydroelectric project have resulted in the World Bank’s withholding (at least temporarily) of a partial loan guarantee of $100 million to the Laos government [32]. The 680-megawatt dam probably will not be able to proceed without the World Bank guarantee. Additional problems relate to securing guaranteed purchase agreements for the project’s output. A 1995 agreement with the Electricity Generating Authority of Thailand (EGAT) expired when the NT2 Electricity Consortium admittedit could not complete NT2 by 2000 as originally promised.

A number of hydroelectric projects under construction in developing Asia are expected to fuel the fast-paced growth of renewables in the region. For example, Japan’s Kajima Corporation is constructing a 280-megawatt hydroelectric project in Paunglaung, Myanmar [33], and in the Philippines construction has been started on the $168 million 70-megawatt Bakun AC scheme, which will be one of the first private hydroelectric projects in that country [34].

China is aggressively developing its hydroelectric resources. In addition to the controversial 18.2-gigawatt Three Gorges dam project on the Yangtze River (see box on page 105), the country has announced plans to construct 13 hydroelectric stations along the upper reaches of the Yellow River [35]. The Lijiaxia Hydropower Plant in Qinghai Province went into operation in August 1997, with 2 gigawatts of installed capacity and the ability to generate 5.9 billion kilowatthours of electricity per year. Construction on the Gaobazhou Hydropower Station on the Qingjiang River (through central Hubei Province) began in 1997. The facility will have three generating units of 84 megawatts each. It is the second of three generating stations planned for the Qingjiang River. The first station, Geheyan, which was completed in 1994, has a capacity of 1.2 gigawatts. The site for the final station, Shuibuya, is presently undergoing feasibility studies.

Hydroelectric projects are also underway on southwest China’s Hongshui River [36]. The 1.2-gigawatt Tianshengquiao hydroelectric facility is the first of 10 hydropower projects planned for the Hongshui. Tianshengquiao should begin generating electricity by the end of 1998.

China’s Yunnan Province has established a memorandum of understanding with Thailand for electricity supplies from the proposed Jinhong and Mensong hydroelectric projects [37]. Construction of Jinhong is expected to begin in 1998. Thailand would like to purchase 1.2 gigawatts of capacity from the Jinhong site, beginning in 2004 or 2005, when the facility can begin generating electricity, and 80 percent of the project’s 1.5 gigawatts of installed capacity would be exported to Thailand.

Several projects have been tabled or postponed in Indonesia. As part of government spending cuts—in reaction to the devaluation of the Indonesian rupiah against the U.S. dollar—Indonesia postponed 14 power generation projects worth $5.9 billion, placed 9 others worth $4.9 billion under review, and allowed only 6 projects to go ahead as scheduled [38]. Eight geothermal power projects were included on the postponed list (Table 23). The U.S. company, Unocal, had been given the construction contract for the $550 million Sarulla geothermal project in Sumatra, which was supposed to be developed between 1998 and 2000 [39]. The geothermal plants Pathua unit 1 in West Java, Dieng units 1, 2, and 3 in Central Java, and Bedugul in Bali are rumored to be under review [38].

There is some good news for Indonesian renewable development. The World Bank and the United Nations Global Environmental Facilities (GEF) have already provided Indonesia with $40 million for development of rural solar power plant projects [40]. Construction of solar power plants in West Java, South Sulawesi, and Lampung provinces began in 1996. The World Bank hasembarked on a $120 million program to provide electricity from solar energy for 200,000 houses [41]. According to Indonesia’s agency for the assessment of technology, the country began its solar energy program in 1989 in Sukabumi, West Java, providing solar energy devices to 85 houses. A new program, funded by the Australian government, would provide solar power to 35,000 houses in nine provinces in the eastern part of Indonesia.

Wind energy has enormous potential for developing Asia. India installed 264 megawatts of wind capacity in 1996, after installing 383 megawatts in 1995—enough to make it second only to Germany in terms of wind capacity additions [1]. Wind installations might slow further in 1997 because of a change in the corporate tax code reducing the tax shield provided by the 100 percent depreciation in the first year by almost 18 percent. India’s renewable energy program does have some problems. Although total wind capacity has exceeded 732 megawatts, exceeding the Eighth Five-Year Plan target of 500 megawatts by 1997, some believe that private operators have exploited the tax holidays and 100 percent depreciation incentives offered by the federal Ministry of Nonconventional Energy Sources without yielding appreciable gains in energy supply [42]. The performance of wind farms, which are supposed to operate at 25 to 30 percent of the plant load factor, has declined in some cases to only 7 percent. Similar problems have arisen for India’s solar energy programs.

Table 23. Postponed Indonesian Geothermal Power Projects, 1997

Eastern Europe and the Former Soviet Union

In Eastern Europe and the former Soviet Union (EE/FSU), renewable energy grows by 2.1 percent annually over the forecast period, from 3.0 quadrillion Btu in 1995 to 5.1 quadrillion Btu in 2020. Most of the development is expected to be in the form of improvements to and expansions of existing hydroelectric capacity, along with some limited development of other renewable sources. Because the economies of the region have not recovered fully from the collapse of the Soviet Union in the early 1990s, conditions do not support an expansion of renewable energy applications. In Eastern Europe, where economic recovery has already begun, more activity is projected. Renewables are expected to grow by about 4.5 percent annually, mostly through improved hydroelectric utilization.

Several announcements for the upgrading and repair of hydroelectric facilities were made during 1997. Romania’s state utility, RENEL RA, announced that the Iron Gates I project on the Danube River would beupgraded [57]. Iron Gates I is the largest hydroelectric plant in Romania, supplying about 10 percent of the country’s electricity. Albania received a $50 million loan from the World Bank to upgrade and repair five of its hydroelectric facilities [58]. The European Bank for Reconstruction and Development began coordinating financing to help upgrade Albania’s hydroelectric capacity.

The Daugava River is the site of Latvia’s three largest hydroelectric plants—the 848-megawatt Plavinas, the 260-megawatt Kegums, and the 402-megawatt Rigas units. The two other power plants owned by the Latvian energy company, Latvenergo, are 260-megawatt cogeneration units located in Riga. IVO Power Engineering, the international wing of the Finnish state-owned power corporation, Imatran Voima Oy (IVO), has secured a $10 million contract to recondition the Daugava River hydroelectric dams managed by Latvenergo [59]. IVO intends to repair cracks and fissures in the walls of the Daugava River dams, and it is one of four international groups that have indicated an interest in privatizing Latvenergo. The Latvian state plans to divest a majority holding in the company in 1998. The task of finding Western investors for Latvenergo has fallen to the Latvian Privatization Agency, which is currently engaged in finding ways of clearing the power company’s $80 million debt ahead of any international bidding contest. Prospective owners will be required to agree to a $1 billion, 10-year modernization program for the company. Some 54 percent of that total capital sum will be needed to renovate the three hydroelectric plants on the Daugava River, as well as rebuilding whole areas of dam structure.

Hydroelectricity currently provides between 60 and 70 percent of Armenia’s electricity generation [60]. The country has plans to expand its hydropower resources on the Razdan River with several new hydroelectric facilities, as well as plans to rehabilitate several older plants, some of which were constructed in the 1940s and 1950s. The country is considering a two-stage hydroelectric development program, to be funded in part by an IDA grant of $13.7 million. The first stage, scheduled to be completed by 2000, involves upgrading of existing plants, privatizing small (less than 5 megawatts capacity) projects, and constructing 41 units with a combined capacity of 167 megawatts. In July 1997, Armenia obtained an $18 million loan from Germany to rehabilitate the second unit at the Kanater hydroelectric plant.

Source: Energy Information Administration, Office of Integrated Analysis and Forecasting.

History of the Three Gorges Dam Project

In Eastern Europe the dispute between Slovakia and Hungary over the Gabcíkovo hydroelectric project was resolved in the United Nations International Court of Justice at The Hague. The two countries had taken their dispute to The Hague in 1993. The Court issued its ruling on its first major environmental case on September 25, 1997 [61]. It ruled that both countries were in breach of the 1977 treaty to construct a series of hydroelectric dams on the Danube River. The 1977 agreement between Hungary and the then Czechoslovakia was a joint project to construct a three-stage hydroelectric project of two dams—the Slovakian Gabcíkovo and, 80 miles to the south, the Hungarian Nagymaros.

Hungary suspended work on its portion in 1989 because of protests from the populace and international environmental groups. In 1992, Czechoslovakia decided to complete Gabcíkovo without Hungarian cooperation. Today, the $500 million, 180-megawatt Gabcíkovo project supplies an estimated 12 percent of the electricity consumed in Slovakia [62]. The Court stated that Hungary was wrong to withdraw from the treaty, but that Slovakia also acted unlawfully by completing its part of the project on its own. After almost a year of talks to resolve the differences between the two countries, Hungary and Slovakia signed a protocol agreement onFebruary 27, 1998, to construct a dam either at Nagymaros—the original site of the Hungarian portion of the project—or at Pilismarot [63]. Construction should be completed between 2004 and 2006.

There is little prospect for development of alternative energy sources in the region. The still weak economies in the FSU make it unlikely that renewable energy programs will flourish, although there are some small pilot projects and some opportunity for renewables in harsh climates where conditions are favorable to wind power generation. In 1997, construction began on a 40-megawatt geothermal power station near the existing Klaipeda geothermal facility in Lithuania [64]. Work should be completed by the middle of 1999. The geothermal energy will be used for space heating and hot water supplies for the city of Klaipeda. The project is estimated to cost about $18 million and is being funded by a World Bank loan ($5.9 million), as well as funds from the Global Environment Fund ($6.9 million), Danish Environment Fund ($2.6 million), the Lithuanian government ($2.6 million), and aid funds from the European Union (Ecu 85,000).

Middle East and Africa

Renewable energy remains a small part of the energy used in the countries of the Middle East and Africa. Inthe Middle East, two countries—Iran and Syria— generate about 90 percent of the region’s hydroelectricity; and in Africa, eight countries—Cameroon, Egypt, Ghana, Kenya, Nigeria, Congo (Kinshasa, formerly Zaire), and Zimbabwe—generate almost 80percent of the region’s hydroelectricity. Similarly, only three countries in the Middle East and Africa— Jordan, Ethiopia, and Kenya—consume measurable amounts of other, grid-connected renewables.

In October 1997, Mozambique was able to provide South Africa with “trial-supplied electricity” from the Cabora Bassa hydroelectric project for the first time in 14 years [65]. The Cabora Bassa transmission line had been severely damaged during Mozambique’s Civil War. South Africa may purchase as much as 75 percent of the 2-gigawatt dam’s capacity. The country joined the South Africa Power Pool (SAPP) along with Angola, Botswana, Lesotho, Malawi, Namibia, South Africa, Swaziland, Tanzania, the former Zaire, and Zimbabwe. In October 1997, the government of Mozambique signed a memorandum of understanding with the government of Malawi for construction of a power transmission line between the two countries that would link Malawi to the SAPP grid [66]. The transmission line, which will run from Cabora Bassa to Malawi, will cost an estimated $37million. Zimbabwe has also been receiving Cabora Bassa electricity on a trial basis through an existing transmission line, and Mozambique hopes to be able to supply the country with 500 megawatthours of electricity early in 1998 [65].

A successful implementation of alternative renewables is the World Bank’s Global Environment Facility solar photovoltaics program which is attempting to install solar energy lighting units in 9,000 Zimbabwean households by the end of 1997 [67]. By the beginning of November, more than 8,000 units had been installed in high-density areas, rural businesses, and community centers and clinics. The $5.6 million project began in 1993 as a pilot program.

Central and South America

Hydroelectric resources are well established in Central and South America. In many countries of this region, the bulk of electricity is generated from hydropower resources. In fact, the trend seems to be toward diversifying the electricity supply by installing more thermal electricity generating capacity. Renewable energy is expected to grow by about 1.1 percent annually between 1995 and 2020, from 5.1 quadrillion Btu in 1995 to 6.6 quadrillion Btu in 2020. The renewables share of energy consumed for electricity generation actually drops by almost 25 percentage points over the forecast. Whereas renewables account for about 77 percent of the energy consumed for electricity at present, their share drops to about 52 percent in 2020. Increases in natural gas capacity account for most of the loss of share for renewables.

Hydroelectricity accounted for 92 percent of Brazil’s generating capacity in 1996 [68, p. 65]. Although hydroelectricity should remain the main source of electricity generation through the projection period, the renewables share of energy consumed for electricity generation is projected to fall from about 95 percent in 1995 to 86 percent in 2020. Much of the country’s hydroelectric potential has already been developed, and the cost of adding new capacity is increasing, because the remaining available resources are located far from the consuming centers. Moreover, continued heavy dependence on hydroelectricity leaves Brazil vulnerable to droughts, which result in power shortages.

Work on the 3-gigawatt, Brazilian Xingo plant should be completed by the end of 1997 [68, p. 65]. The government is also launching tenders for seven additional greenfield hydroelectric facilities (Table 24), according to the local business daily, Gazeta Mercantil [69].

Chile too is, at present, heavily dependent on hydroelectricity for its electricity supplies. Hydroelectricity accounted for 81 percent of the country’s total electricity generation in 1996 [68, p. 95]. Endesa, Chile’s major hydroelectric generation utility, has had to resort to running inefficient combustion turbines because of recent low water conditions. In fact, low water levels in 1997 led to several blackout events. To guard against the risk of droughts in the future, the country plans to add large quantities of thermal capacity which, according to DRI/McGraw-Hill, by 2020 might compose as much as 44 percent of total installed capacity.

Argentina currently has 22.5 gigawatts of total electricitygeneration capacity [68, p. 35]. Hydroelectricity accounts for more than half of Argentina’s electricity generation. Thermal capacity is about 10 gigawatts, and nuclear plants provide about 0.9 gigawatts. The country still expects to provide a large amount of additional electricity capacity through hydroelectric projects. The 2.7-gigawatt Yacyreta project (a joint venture between Argentina and Uruguay) is scheduled to become fully operational by 1998. Several other hydroelectric facilities are planned for the Alto Uruguay and Parana rivers after 2010, with an estimated additional capacity of 4.6 gigawatts. Finally, there are plans to add several smaller hydroelectric facilities by 2020. In the near term, there are plans to privatize the Pichi Picun hydroelectric dam in Patagonia [70]. The winner of the bid for this project is expected to receive a $25 million subsidy from the Argentinean government to complete the project.

Table 24. Brazilian Hydroelectric Tenders