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Earlier this month, China officially started construction on a massive hydropower dam in tibetan Yaoum. The dam, when completed, will be the biggest power plant on the planet.
It's three times bigger than the largest power plant in the world right now. It's more than all of the power plants in Poland combined.
Dan Mortor covers the energy industry for Bloomberg from Beijing.
The amount of cement their estimating their need it would be enough to fill more than fifty Hoover dams, and the amount of steel. It would be enough to build one hundred and sixteen Empire state buildings.
This mega project comes with a mega price stack one hundred and sixty seven billion dollars.
This would be one of the most expensive undertakings for infrastructure in human history, more expensive than the International Space Station. You're looking at decades long projects like building the US Interstate Highway system before you get to comparable amounts of investment.
China says the dam will provide a major source of clean energy. More importantly, it will boost the country's slowing economy. But the project carries huge engineering and environmental risks and could strain relations with two of its neighbors, India and Bangladesh.
The Indian government has been worried about if China was able to build a dam, they would then be able to use sort of water access as a pain point if there was an eventual conflict between the countries. And there's going to be all of this human activity in a place that's been remote for most of its history.
You hope for the best, but human history has not been very kind to the planet Earth, and you just have to wonder if they're going to be able to rain in people from not damaging that really area.
This is the Big Take Asia from Bloomberg News. I'm Mini Kadoshi filling in for one half every week. We take you inside some of the world's biggest and most powerful economies and the markets, tycoons and businesses that drive this ever shifting region. Today on the show, China bats big on a new mega dam, Why the project is raising alarm with its neighbors, and what its construction could
mean for China's economy and its green energy ambitions. When it comes to building hydro dams, China has got plenty of experience. It operates two of the world's largest dams. That includes the world's biggest hydro dam, Three Gorges, which opened in central China in two thousand and nine. This this new megadam will be built in Tibet, a mountainous region just north of the border with India.
It's in this bend on the Arlansangwo River that they call like the Medor or Moto Gorge.
And Bloomberg Energy reporter Dan Motor says the dam is in an area that till recently was very difficult to get to.
It is a very, very very steep drop. The river drops about two thousand meters over a fifty klometer stretch as it curves and bends through the mountains of the Himalayas. The county that it's at is up until twenty thirteen didn't even have a highway that connected it. You'd have to walk a day, you know, or take a donkey or a horse to get to the river from the closest highway.
Most dams, like the Hoover Dam, block the path of a river to create a reservoir. They then release the water, which turns turbines and generates electricity. This Yar Lungsangpo Dam is different.
What they're trying to do here is a little bit more audacious. The idea is to drill a tunnel through the mountains down that steep, steep, steep gradient, and then divert some of the water from going around that big bend and instead go basically just vertically straight down the mountain. That steep gradient that this river moves on really allows you to get that water flowing at high enough speeds to be able to run the turbines to generate the electricity.
At the groundbreaking ceremony earlier this month, Chinese Premier Li Chiang called the Yar Lungsanko Dam the project of the century. State engineers have said it has the potential to generate as much as seventy gigawatts of electricity. That's enough to power the United Kingdom.
It's three times bigger than the largest power plant in the world right now. It is a national, country level type of generating asset, but China's huge. China has about
four thousand gigawatts of total generating capacity right now. Its peak demand is about one four hundred and fifty gigawatts, and so this project isn't going to have a huge world changing impact on China's power sector, but it does do a couple of different things that are going to be really beneficial to China's attempt to clean up its energy sector and will help China meet its energy transition goals of peaking emissions by twenty thirty and then reaching net zero emissions by twenty sixty.
China still relies on coal power plants to back up its more sustainable energy sources like solar and wind.
Wind and solar, while cheap and wall abundant, only generate when the wind blows, and it doesn't really allow them to replace coal plants because at the end of the day, you still need backup generation to make sure that when there's a period where there's no sun out and the wind stops, that people can still turn on their lights. What hydropower does that when solar don't do is it's what we call a dispatchable source. You can use it
when it's needed, you can hold it back when it's not. Now, hydropower is not perfectly dispatchable, like if you're using a fossil fuel power plant, a gas or a coal power plant, you can really just sort of turn it off and on as needed hydropower. There's still some external things like whether there's a drought, if there's you know, too much water, If there's rain, you know, you have to open the floodgates.
It's not perfect, but it is a clean power source that allows the grid to be a little bit more flexible in terms of, you know, generating when it's needed and not just when the supply is available.
That reliability and flexibility are just two of the reasons why building a hydroelectric dam is so expensive. The Yarlung Sungpo Dam will cost one hundred and sixty seven billion dollars more than the International Space Day did, and Dan says the power it generates will be several times more expensive than any other energy source.
If it ends up being about a segmenty gigawatt project, as we expect it to be, you're talking about two point four million dollars per megawatt. Now. That compares to an onshore wind plant right now that China would spend about six hundred thousand dollars per megawat on, or a solar power plant that China would spend about four hundred thousand dollars per megadon. China infrastructure projects never lack for lenders.
But this is not a white elephant. This is going to be a hydropower project that sells a lot of electricity. That electricity has value, and so they're going to be able to code to their lenders and say, listen, over twenty thirty years, we're going to make a ton of money, and we're going to have the revenue to pay you back.
Dan says, there's another reason the Chinese government has green lit the project, and that's the state of China's economy.
The way I think about it is this is less of a hydropower project that's going to provide some economic stimulus and more of an economic stimulus project that at the end of the day will be able to produce some hydropower. We're in this new sort of era where China's economy has been stagnant since COVID people have been waiting for a kind of stimulus boost to recover it.
Sectors like cement, like steel, like construction, those have been particularly hard hurt by the burst of the property bubble, and so you've got this perfect storm here where there's this project that requires a lot of those materials that used to be seen as maybe a little bit risky and costly to do, but now it kind of fits this dual need of both providing some economic stimulus for some hurting sectors while also eventually providing a really, really large source of clean energy.
The project is estimated to generate two hundred thousand new jobs and boost China's GDP every year for the next decade.
They've estimated that it's likely bigger than multiple different monetary policy actions that the Central Bank has taken over the past few years, so it could really help reflate the economy as they try to do their supply side reform over the coming years.
How China plans to transmit all that clean energy, and what the dam's construction means for simmering tensions between Beijing and New Delhi. That's after the break. China has been talking about building a mega dam on the Yurlanngsungpur River for decades, but construction was approved only in December last year. Bloomberg Stan Mertor says that's largely because the challenges to the project are so formidable.
In past conversations I've had with people, they were a little bit iffy on whether it would ever get built. Because this is an incredibly remote site. It's very very far away from any major population centers, and so you have to transport millions of tons of cement and sand and aggregate and tens of thousands of workers up to this remote area.
The project site is in a seismically active area. That means engineers will need to ensure that the dam is strong enough to withstand earthquakes. And then there's the question of how to get the power generated by the dam to the places that need it. Beijing, Shanghai, Hong Kong. They're all thousands of miles away, which means this isn't just one massive infrastructure project, it's two.
Earlier this year, when China announced this project as part of their work plan for this year, they not only said we're going to try to develop hydropowered the is Ensemble River, but they said we're going to try to build a power line from Tibet to the Hong Kong, guangzhosh and Jen Bay area to transmit some of that. That itself is going to be a major undertaking. It's going to require lots of copper and aluminum steel itself.
City Bank has estimated just the transmission alone could be another seven hundred billion yuan about one hundred billion dollars, and so that will also be a difficult thing.
The domestic considerations in building this mega dam are considerable, but they might be overshadowed by international complications. Downstream from the site. The Yar Lungsangpu River flows into India and then into Bangladesh and is critical to livelihoods in the region.
When China first announced back in December that there was going to go forward with this, the Indian government reach out to the Chinese government. They raised alarm bells, an Indian minister set in March. This was part of discussions the countries had in January. The Chinese government clearly thinks that they've told the Indian government the downstream areas won't be affected, and they think that they've convinced Indian officials that this is not a project that will harm the ties.
The relationship between China and India has worsened in recent years after a long history of border disputes in the Himalian region.
It is too early to say how this is going to develop. Already, India has mooted building its own hydropower station across the border from this plant where they would be able to at least put in a little bit of their own control over the flow of the water and produce their own electricity.
There's another complication. Tibet is a highly sensitive area. The region has long endured intense social security and religious controls under Beijing's policies, and though China has denied them, allegations of mass labor systems and repression persist.
Tibet is a politically sensitive area. It's been in the sort of global crosshairs for decades. Tibet and the Beijing government have a very long and fraught history, and you know, frankly, as a foreign journalist, Tibet is an area that I'm not allowed to visit.
It's not just the political situation in Tibet. There are significant concerns around the environmental implications as well.
This is a really really fragile area. It's really unique there. You know, you have this dry mountain air coming down from the Himalayas meeting up with this humid, warm air coming up from the Indian Ocean. It's one of the most uniquely biodiverse spots in the world. And the idea of bringing tens of thousands of workers. Plus However, many tens, if not hundreds of thousands of more wolves will pop up to create like the restaurants and food trucks and
bars and karaoke and stuff to service these people. The idea that there's gonna be all of this human activity in a place that's been remote for most of its history. You hope for the best, but human history has not been very kind to the planet Earth, and you just have to wonder if they're going to be able to rain in people from not damaging permanently. It's really eigue area.
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