Asian hopes for hydropower may add to oil reliance

Asian plans for a multitude of hydroelectric projects will lead some nations to a greater reliance on dams to meet power demand, potentially triggering costly bouts of extra oil imports in times of drought.

While coal, gas and nuclear power stations will make up the bulk of new regional generation, hydro will take up a growing share in countries such as China and Vietnam as record-high oil costs spur domestic energy production.

“Fluctuations in hydro supply mean the back up capacity must be provided. Where gas and coal are not available this will be oil,” Singapore-based consultants Tri-Zen said.
“Hydro is unlikely to occupy the place that the potential suggests. To ensure reliable supplies, you need to be able to top the hydro capacity with other plants whose operation you can control — an option that many of these countries cannot afford,” said Bishal Thapa of ICF Consulting in New Delhi.

While natural gas and coal are both cheaper fuels for back-up power generation, their illiquid spot markets can make it difficult to get emergency supplies in a hurry; oil, however, is readily available for the highest bidder.

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