Hydro risks make China's Three Gorges look to wind

BEIJING, May 23 - The state-owned company behind China's Three Gorges Dam is looking to expand its wind power portfolio as the risks associated with hydroelectric projects grow, a senior executive said on Saturday.

"Previously we focused mainly on hydropower but recently we have been restructuring and are moving towards wind and nuclear," said Bi Yaxiong, the vice-general manager of the China Three Gorges Project Corporation (CTGPC).

Tougher environmental safeguards and higher rates of compensation for those displaced by reservoir impoundment were now making it more difficult to launch large-scale hydropower projects in China, Bi told a conference.

"Previously, the biggest problem for hydropower was the cost, but now the biggest problem is relocating people and protecting the environment," he said.

"The increasing social impact of hydropower, including paying compensation for relocated people, along with other political changes, has had an impact on the safety of investment."

The state-owned CTGPC was set up by China's cabinet, the State Council, in 1993 to oversee construction of the Three Gorges Dam, the world's biggest and most controversial hydropower project.

The 26-turbine facility was completed in 2008 and the company is now in the process of selling all its generators to its listed vehicle, China Yangtze Power <600900.SS>.

CTGPC is also building another four big hydropower projects, Bi said, but the risks involved make it necessary to "restructure" and develop other forms of energy.

The Chinese government is already ruing the high costs of the Three Gorges project, which required the flooding of large areas of fertile farmland and forced millions of residents to move.

It has acknowledged the increased threat of landslides, the disruption of fragile ecosystems, water quality problems and even increased seismic activity in the region.

"It isn't a completely harmless phenomenon, and the possibility of geological disaster is unavoidable," Bi said.

"But the negative impact of the Three Gorges and the Gezhouba Dam (a nearby facility also owned by CTGPC) has been far lower than we expected."

China had 171.5 gigawatts of total hydropower capacity by the end of last year, about a third of its total potential, and aims to raise capacity to around 300 gigawatts by the end of 2020.

But environmental concerns might trump ambition as the government continues to rein in a hydro construction boom likened by some critics to the growth of ramshackle backyard steel smelters during the ill-fated Great Leap Forward of 1959.

This week, Premier Wen Jiabao, a geologist by trade, ordered a complete halt to the construction of several controversial, and as yet unapproved, hydropower plants on the UNESCO-protected Nu River in southwest China's Yunnan province.

"Premier Wen said that environmental protection and economic development (in the Nu River region) should come at the same time," Bi told Reuters.

Last year, China also abandoned plans to submerge the Tiger Leaping Gorge, a well-known tourist spot in Yunnan, after objections by environmentalists and local communities.