William Pentland
Forbes (USA)
Is your company looking for a cheap source of energy? Consider moving your plant to Vietnam's Mekong Delta, roughly two hours outside of Ho Chi Minh City.
It's not a particularly convenient place to access, but it's got something most other parts of the world don't have: a prodigious source of hydro-electricity.
The Mekong River, 4,500 miles long and the world's 10th largest in total discharge, is fast becoming a global magnet for water power, a cheap resource sought by industries as divergent as semiconductors and aluminum smelting, for which electricity makes up half the cost of production.
Intel (nasdaq: INTC - news - people ) is building a $1 billion semiconductor plant there. General Electric (nyse: GE - news - people ) has already built a big turbine plant, and is looking to expand in what has become one of the world's fastest growing economies (gross domestic product growth last year: 8.5% compared with 2.2% for the U.S.).
Japanese companies like Yamaha Motor and Mabuchi Motor may soon take the plunge as well.
Last year, foreign investment in Vietnam grew more than 60%, to $17 billion, up from $10 billion the year before, and water was a big part of the allure. Never mind that other countries might have a more sophisticated technology base or have more demand for semiconductors.
"The semiconductor industry is very thirsty, and one of the things that Vietnam has is lots of unclaimed water," says JP Morgan economist Marc Levinson. "So Intel can go in and get access to water supplies that companies, which come later might not be able to get access to."
Hydropower is cheap and clean. Utility-scale hydro plants cost billions of dollars to build but very little to operate and maintain. Once the initial costs are paid off, the plants churn out cheap electricity for several decades and tend to last longer than any other type of power plant. Hydropower is as cheap as coal but doesn't have the public relations and carbon problems.
Vietnam isn't the only country in the region trying to tap it.
Cambodia plans to build a whopping 5,000 megawatts of hydroelectric power capacity on the Mekong River. China, the single largest investor in Cambodia, is doing its best to make sure that the country achieves that milestone. China's Sinohydro is building a 145-meter dam on the Kamchay River in Cambodia's Kampot province. Another Chinese company is developing the Steung Atai dam.
So many hydropower projects are being developed along the Mekong River that the United Nations has formed an oversight agency devoted exclusively to preventing potential conflicts it could create.
In Laos, the Nam Theun 2 project, a $1.2 billion joint venture between various foreign companies, is about 80% complete. It is the largest ever hydropower project in that country.
Laos plans to build four additional dams across the Mekong with Malaysian power generating company Mega First, Thai infrastructure developer Ch. Karnchang and Chinese power giants Sinohydro and Datang International.
More than a dozen dams on Mekong tributaries in Laos should start generating electricity mostly for export by 2015, and plans to build more than 30 others are being actively considered.
Hydropower is catching interest elsewhere. Far from Asia, 100 miles south of the Arctic Circle in eastern Iceland, tunnels stretch nearly 25 miles under a vast plateau of ice, channeling run-off glacier waters into a network of eight dams called the Karahnjukar Hydropower Complex.
The complex produces 500 megawatts of electricity for a giant aluminum smelting facility built by Alcoa (nyse: AA - news - people ) in 2003. Alcoa, the world's largest aluminum producer, bet more than $1 billion on the project. The aluminum smelter produces nearly 300,000 tons of aluminum every year.
Alcoa moved to Iceland after a drought in Washington State in 2001 forced it to suspend operations.
Companies like Google (nasdaq: GOOG - news - people ) are building new server farms in North America on premises that aluminum smelters like Alcoa abandoned. The reason, again, is access to hydropower for a cheap source of electricity and water for water-cooled air conditioning systems.
Hydropower provides more than half the electricity used in the Northwest United States, holding electric rates well below the national average.
Server farms can consume up to 100 megawatts of electricity, enough to power more than 20,000 American homes.
The Environmental Protection Agency estimates that server farms consume at least 1.5% of all U.S. energy. No wonder the thirst for electricity leads them to hydropower.
It's not a particularly convenient place to access, but it's got something most other parts of the world don't have: a prodigious source of hydro-electricity.
The Mekong River, 4,500 miles long and the world's 10th largest in total discharge, is fast becoming a global magnet for water power, a cheap resource sought by industries as divergent as semiconductors and aluminum smelting, for which electricity makes up half the cost of production.
Intel (nasdaq: INTC - news - people ) is building a $1 billion semiconductor plant there. General Electric (nyse: GE - news - people ) has already built a big turbine plant, and is looking to expand in what has become one of the world's fastest growing economies (gross domestic product growth last year: 8.5% compared with 2.2% for the U.S.).
Japanese companies like Yamaha Motor and Mabuchi Motor may soon take the plunge as well.
Last year, foreign investment in Vietnam grew more than 60%, to $17 billion, up from $10 billion the year before, and water was a big part of the allure. Never mind that other countries might have a more sophisticated technology base or have more demand for semiconductors.
"The semiconductor industry is very thirsty, and one of the things that Vietnam has is lots of unclaimed water," says JP Morgan economist Marc Levinson. "So Intel can go in and get access to water supplies that companies, which come later might not be able to get access to."
Hydropower is cheap and clean. Utility-scale hydro plants cost billions of dollars to build but very little to operate and maintain. Once the initial costs are paid off, the plants churn out cheap electricity for several decades and tend to last longer than any other type of power plant. Hydropower is as cheap as coal but doesn't have the public relations and carbon problems.
Vietnam isn't the only country in the region trying to tap it.
Cambodia plans to build a whopping 5,000 megawatts of hydroelectric power capacity on the Mekong River. China, the single largest investor in Cambodia, is doing its best to make sure that the country achieves that milestone. China's Sinohydro is building a 145-meter dam on the Kamchay River in Cambodia's Kampot province. Another Chinese company is developing the Steung Atai dam.
So many hydropower projects are being developed along the Mekong River that the United Nations has formed an oversight agency devoted exclusively to preventing potential conflicts it could create.
In Laos, the Nam Theun 2 project, a $1.2 billion joint venture between various foreign companies, is about 80% complete. It is the largest ever hydropower project in that country.
Laos plans to build four additional dams across the Mekong with Malaysian power generating company Mega First, Thai infrastructure developer Ch. Karnchang and Chinese power giants Sinohydro and Datang International.
More than a dozen dams on Mekong tributaries in Laos should start generating electricity mostly for export by 2015, and plans to build more than 30 others are being actively considered.
Hydropower is catching interest elsewhere. Far from Asia, 100 miles south of the Arctic Circle in eastern Iceland, tunnels stretch nearly 25 miles under a vast plateau of ice, channeling run-off glacier waters into a network of eight dams called the Karahnjukar Hydropower Complex.
The complex produces 500 megawatts of electricity for a giant aluminum smelting facility built by Alcoa (nyse: AA - news - people ) in 2003. Alcoa, the world's largest aluminum producer, bet more than $1 billion on the project. The aluminum smelter produces nearly 300,000 tons of aluminum every year.
Alcoa moved to Iceland after a drought in Washington State in 2001 forced it to suspend operations.
Companies like Google (nasdaq: GOOG - news - people ) are building new server farms in North America on premises that aluminum smelters like Alcoa abandoned. The reason, again, is access to hydropower for a cheap source of electricity and water for water-cooled air conditioning systems.
Hydropower provides more than half the electricity used in the Northwest United States, holding electric rates well below the national average.
Server farms can consume up to 100 megawatts of electricity, enough to power more than 20,000 American homes.
The Environmental Protection Agency estimates that server farms consume at least 1.5% of all U.S. energy. No wonder the thirst for electricity leads them to hydropower.
2 comments:
Go for it Cambodia! BHP Billiton will need a lot of cheap electricity for the aluminum smelter! Go for the big one. 5000 MGW gonna be OK. And Cambodians will get the jobs created by BHP BILLITON. Otherwise, the smelters would go to Vietnam and the lucrative jobs with it.
wow! let's make it happen as this will help to solve the energy needs in cambodia permanently and even have surplus to export to neighboring countries. god bless cambodia.
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