How to overcome the difficulties of hydropower development

On April 18, the new session of the National Energy Commission held the first meeting to study and discuss related strategic issues and major projects in energy development. The conference emphasized that a large number of major projects are currently under construction, including the orderly start of reasonable hydropower projects on the basis of ecological protection and resettlement. According to the participants in the meeting, the participating departments and enterprises had heated discussions on many issues, except that there was no disagreement on the issue of hydropower.

Hydropower is clean energy, but in the last ten years of development, environmental issues have become one of the biggest obstacles to hydropower development. Under the system of China’s heavy approval, the strong opposition to environmental protection has led some hydropower projects—especially large-scale hydropower development projects—to fail to pass EIA and cannot start construction.

Water is a renewable energy source, and hydropower development basically requires only one investment. However, the current management system has curbed the benefits of hydropower investment. First, cost-based pricing forces companies to artificially raise development costs in order to obtain higher approval prices for the Internet. This will cause new hydropower projects to gradually lose their economic competitiveness. At the same time, the cost-setting approach also creates a multi-track system for electricity prices. Different power plants have different prices. Different units of the same power plant and even the same unit have different prices before and after capacity expansion. This not only causes chaos for dispatch, affects production safety, but also leads to inconsistencies in the distribution of benefits. Second, setting power generation indicators causes waste of resources. Electricity that exceeds planned power generation can only be sold at a low price, causing power generation companies to waste a large amount of water when there is still excess water. Again, due to the inflexible management of immigrants in the reservoir area. On the one hand, local governments have gradually abducted immigration projects in the reservoir area, linking the various targets of local development with hydropower development, resulting in a surge in development costs. On the other hand, the subsidies actually received by the immigrants are very small.

It is no exaggeration to say that China's hydropower development technology can already lead the world. For hydropower development, there are several major trends that cannot be ignored: First, the public’s environmental protection concept is rapidly improving, the concern for environmental issues and environmental quality are also increasing; second, the slowdown in electricity demand. Inevitably, because the overall economic development rate is slowing down, especially the adjustment of the economic structure will inevitably lead to a reduction in the proportion of heavy energy-consuming heavy industries. Third, hydropower development will be more and more westward, and natural conditions are getting worse and worse. The cost will also be higher and higher.

In the face of increasing difficulties in hydropower development, market-oriented reforms in the hydropower sector may be the best way out. Opening competitive prices and reducing government's improper intervention are both the direction of reform proposed by the Third Plenary Session of the 18th CPC Central Committee and the most important way to clear the barriers to the development of clean energy, including hydropower. The market pricing of electricity, the elimination of the planned system, the clearing of taxes, and the advantages and competitiveness of hydropower can be fully demonstrated. Since the new government is determined to simplify administration and decentralize power, there must be a fundamental change in the practice of re-approval and light supervision. For instance, if the newest environmental protection law, which was passed last year and will be implemented next year, imposes no cap on environmental protection fines, it will increase. The power of environmental protection law enforcement agencies is a good start, but how to implement and implement them is the key.

Related companies should also face the problems in the hydropower development process. The environmental protection appeal of non-governmental organizations may have created obstacles for hydropower development. However, it is precisely because some companies do not operate according to regulations and cause environmental pollution and damage. This has given NGOs an excuse. Many experts in the field of hydropower dismissed the appeal of non-governmental organizations, arguing that their claims did not have any scientific basis, but why did the general public rarely hear the defense of hydropower development based on scientific evidence and plain language? The development companies let local governments discuss the issue of immigration and talk directly with the local government. This saves communication costs, but raises the government's asking price, and the livelihood of the immigrants has not been resolved. Therefore, it is necessary for the government to adjust its policies. It is also necessary for enterprises to adjust their tactics so as to promote the transparency of the communication process of immigration issues and form a long-term mechanism to solve immigration issues.