Changuinola 75 Hydroelectric facility, Panama

AES has begun building the 158MW Changuinola 75 hydroelectric facility, northwest of Panama City in Panama. The $320m plant is in the Changuinola River Basin, about 220 miles northwest of Panama City in the Province of Bocas del Toro. Changuinola 75 is intended to start generating in 2010.

The project includes a ten-year power purchase agreement with Panama's largest utility, Union Fenosa SA. AES began the engineering and geo-technical work and construction in 2007, despite some environmental objections

HIGH PANAMANIAN ENERGY COSTS

Panama is experiencing high energy costs and demand growth. The country has few hydrocarbon reserves (with no natural gas), and imports above 70% of its energy. The new plant integrates the Province of Bocas del Toro into the Panamanian grid, and will also reduce the traditional dependence on imported oil. There are two other Changuinola projects: Changuinola 140 (132MW, planned for 2009) and Changuinola 220 (126MW, planned for 2010).

Hydroelectric makes up 75% of Panama's total energy production. Around 900MW of hydro potential in the country is thought to be economically viable for development by 2015. Panama is expected to invest around $1bn in electricity generation over the next ten years. Nearly 90 hydroelectric projects are proposed, although some are not expected to be built. A 1,100-mile transmission line will connect Panama to southern Mexico.

HYDROPOWER AS LONG-TERM REPLACEMENT FOR GAS/NUCLEAR

The EU-funded Vleem-2 (Very Long Term Energy-Environment Model) project has made an exhaustive global study of hydroelectric power. It suggests that beyond 2020, due to depletion of cheap and near-demand gas reserves, political reasons (public concern over conventional nuclear power), and environmental reasons (global warming), new technologies and increased renewable energy must be put in place.

This will require massive investment in energy infrastructure. In OECD countries most of the growth of renewable energy is expected to come from wind and biomass. Developing countries should see hydropower becoming the fastest-growing renewable energy source.

About 19% of the global electricity generation now comes from hydropower, at 2,600TWh. This is about 32% of the economically feasible hydro potential and 18.2% of the technically feasible potential. This means, the current world electricity demand could theoretically be covered by hydropower.

There is much untouched hydropower potential in South and Central Asia, Latin America and Africa, but also in Canada, Turkey and Russia. In the US, modernisation of hydropower stations could add considerable generating power.

Hydroelectric projects need long-term loans with extensive grace periods. That is because they are capital intensive, have a long construction phase with significant risks, with a long useful life. Average hydropower construction costs are between $1,100 and 1,800/kW. Generation costs, particularly for older hydropower plants, are very low. Average generation costs are below a third of those of coal, oil, gas or nuclear.

ENVIRONMENTAL CONCERNS EXPRESSED

Hydroelectric power stations– especially large ones – can, however, bring problems. They can force people out of their homes (over a million for the Three Gorges Dam in China), decrease wildlife by flooding, block fish from moving up the river to spawning grounds and emit methane.

Plants therefore need careful siting and design, and thorough environmental impact assessments. Environmental groups have accused Panama of ignoring Changuinola's environmental impacts.

The conservation director of the Center for Biological Diversity in San Francisco wrote an open letter to AES regarding the construction of three dams close to the Panamanian portion of PILA (Parque Internacional la Amistad). He remarked that they were threatening the biodiverse World Heritage site, and the indigenous Naso and Ngobe groups.

The Center with more than 30 other groups filed a petition to the World Heritage Committee to list PILA as a World Heritage site 'in danger' in April 2007. The Committee reviewed and agreed with the threats assessment and requested a joint invitation from Panama and Costa Rica for a World Heritage Centre and World Conservation Union (IUCN) mission to investigate the threats. The Committee regretted that Panama did not report the projects to the World Heritage Centre as required under the World Heritage Convention.