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Belo Monte boondoggle: Brazil’s biggest, costliest dam may be unviable

  • The controversial Belo Monte mega-dam in Pará state has done significant socio environmental harm to the Xingu River and the indigenous and traditional people living beside it. Now it appears the dam may not be able to produce the electricity totals promised by its builders — an eventuality critics had long warned about.
  • Project designers appear to have seriously misestimated the Xingu River’s flow rates and fluctuations between wet and dry seasons, while also not accounting for reductions in flow due to deforestation caused by rapidly expanding cattle ranches and soy plantations far upriver in Mato Grosso state.
  • Climate change-induced droughts are also decreasing Xingu River flows and generating capacity. In 2013, an important Brazilian Panel on Climate Change report warned that global warming could drop water levels all across the Amazon basin, putting hydropower in serious jeopardy.
  • As deforestation due to agribusiness and mining spreads across the basin, now driven by the development-friendly policies of Brazilian President Jair Bolsonaro, the future for Amazon hydroelectric dams, their generating capacity and investment potential looks increasingly bleak.
On November 27, 2019, Brazilian President Jair Bolsonaro, with wife Michelle Bolsonaro beside him (to left of plaque), celebrated the official end of Belo Monte mega-dam construction as its last turbine was installed. To the right of the plaque is Pará state governor Helder Barbalho and head of the Mines and Energy Ministry, Bento Albuquerque. The banner reads, “Belo Monte Hydroelectric Plant: Brazilian Giant, Fully Operational.” Photo credit: Palácio do Planalto on VisualHunt / CC BY

Designers of the Belo Monte hydroelectric project built their Amazon mega-dam on Brazil’s Xingu River with an installed capacity of 11,233 MW averaged monthly over a year. That’s what the turbines technically could spin — that is, if there weren’t this organic being called a river, with its own seasonal rhythms, rising, falling, spreading, mounting, and dropping again. Add to that reduced Xingu flows due to regional deforestation and climate change-induced drought, further cutting power generation.

Opened in 2016 in Pará state, Belo Monte was slated to operate at a level where it would generate 4,571 MW monthly over 12 months. This is what’s called “firm energy,” an approximation of actual electricity produced. But now even that amount looks high.

In 2019, the Xingu’s flow dropped drastically during the July to November dry season, and even with all but one of its 18 turbines operational, the plant produced a monthly average of just 568 MW in August, 361 in September, 276 in October, and 583 in November, according to Brazilian authorities. Norte Energia, the dam’s operator, was forced to shut down the turbines multiple times to prevent their being damaged.

But even in the high water season, the dam never came close to producing the 11,233 MW monthly “full operational capacity,” which Norte Energia’s press release touts to investors. The highest value last year was 6,882 MW produced in February.

For all the hyped hydroelectric efficiency pledges dished up during planning and construction between 2011 and 2016, Belo Monte has shown itself to be the very opposite of efficiency — a project that not only did huge socio environmental harm, but which now seems unlikely to ever turn a profit. These days, some locals call it not Belo Monte, “Beautiful Hill” (from the Portuguese) but Belo Monstro, “Beautiful Monster.”

The Pimental dam, part of the Belo Monte hydroelectric project, and the dam that was in danger of eroding during Norte Energia’s “water emergency.” The Pimental dam diverts the Xingu River’s natural flow into a constructed channel, then into a reservoir and to the main electricity-producing Belo Monte dam. Image courtesy of Palácio do Planalto on Visual hunt / CC BY

Norte Energia declares emergency amidst viability doubts

So it was that on October 11, Norte Energia sent an official letter to the federal government that, paradoxically, asked the Bolsonaro administration to allow the firm to produce even less energy.

In the letter, the company declared its own “water emergency,” saying that levels in one reservoir had dropped so low that an unreinforced dam’s earthen base would be exposed to waves and at risk of “structural damage.” In order to avert such harm, Norte Energia said it needed to reduce even further the flows going from the upstream dam down to the energy-producing dam.

The Brazilian press responded quickly with criticism of Norte Energia’s failure to plan for the operation of a dam into which R$40 billion (roughly US$9.5 billion) has been invested — with much of that funded by Brazilian taxpayers through the BNDES, Brazil’s giant development bank.

Then in November, Norte Energia formally asked Brazil’s National Electric Energy Agency (Aneel) for authorization to build thermoelectric plants alongside the Belo Monte dams — plants that would likely use fossil fuels. The company denied it was trying to make up for the hydro project’s electricity shortfalls, as the press inferred, stating only that electricity companies often diversify their portfolios.

If allowed to build thermoelectric plants, Norte Energia could at least make more use of its two R$15 billion (US$3.6 billion) transmission lines, owned by Chinese company State Grid, which transmit electricity to Rio de Janeiro and Minas Gerais states — power lines that are underused for five months of the year.

Construction of the Belo Monte hydroelectric project required the cutting of a channel to divert 80% of the Xingu River’s flow away from the river’s Volta Grande (Big Bend), populated by the Juruna indigenous people and other traditional fisherfolk. Photo credit: Programa de Aceleração do Crescimento (PAC) on VisualHunt.com / CC BY-NC-SA.

Investors bet on dam’s construction, not its operation

Experts today attribute Belo Monte’s stunning inefficiency to a variety of factors, including poor design, poor siting on a seasonally variable river, plus dramatic increases in regional deforestation that are drawing down Xingu River water levels, and finally, global climate change, which is bringing more drought — factors that were recognized by dam opponents and business analysts alike in the planning stages.

In addition, analysis from many corners predicted that controversial Belo Monte would never produce the amounts of electricity predicted, nor would it ever be economically viable — forecasts ignored by Norte Energia, the government, and BNDES.

So why did the company press forward with the R$40 billion (US$10 billion) mega-project? The answer: mega-profits to be made from taxpayer dollars during construction.

“I think what was driving it was basically the huge amount of money that flows around these projects in the construction phase,” said Brent Millikan of International Rivers, an environmental NGO. “There were big construction companies and political interests connecting to them through patronage networks, kickback schemes, and so forth, that stood to just make huge amounts of money from [building it]. I think part of the evidence for that is that all of those big construction companies all migrated away from Belo Monte’s [energy generation] investors.”

Smaller companies like Queiroz Galvão and Galvão Engenharia, for example, originally invested in a minor way in the Norte Energia energy utility company, but then pulled their money out, instead joining the Belo Monte Construction Consortium (CCBM).

Meanwhile, some of Brazil’s big construction companies, including Odebrecht and Camargo Corrêa, never even joined Norte Energia at all and chose only to invest their money in the Belo Monte construction consortium. Through their actions, these firms were protected from the speculative risk the electric company posed, while profiting from the huge influx of BNDES construction cash, which saw limited public oversight.

As a result, only public sector entity investments — coming from Brazilian pension funds and the state-owned Eletrobras energy company — went into the Norte Energia energy utility. And it is exactly those public entities that may be left holding the bag if Belo Monte never produces significant amounts of electricity.

So it was that the Belo Monte construction consortium partners profited hugely. But Norte Energia, the electric company, is increasingly troubled. Today, it owes R$25.4 million (US$6.25 million) to the BNDES development bank.

Norte Energia did not respond to requests for comment for this story.

Rainforest converted to soy in Mato Grosso state, Brazil. Image by Mayangdi Inzaulgarat / Mongabay.

Rising deforestation imperils Amazon dam projects

Norte Energia’s thermoelectric licensing request, countering its lack of hydroelectric generating capability, isn’t only a local trend. In that single action, the fate of dams throughout the Amazon may be writ large, as the spread of pastures and soy plantations dramatically increases regional deforestation, and as global climate change worsens — both taken together reducing Amazon rainfall and making river levels drop.

“[T]he problem is that there’s just not enough water in the Xingu River,” said Millikan, something that is typical of other Amazon basin waterways. The Xingu River “is a seasonally variable river. We already knew that from historical data, and the trend is just going to get worse.”

That problem is worsening for two reasons: “Number one: you’ve got [major] deforestation in the Xingu River basin, and that’s [negatively] affecting the hydrology of the basin.” Deforestation in the Xingu basin jumped 81% from 2018 to 2019, and that in turn reduced river flows.

“Number two, climate change, both regional and global climate change, is reducing rainfall,” said Millikan. “So you’re having less water and less ability to capture water in the watershed and to release it slowly in the rainy season. As a result, they’ve got the problem of the turbines being shut off completely for several months of the year.” Basin-wide, the burning of vegetation and the release of climate-warming gases into the atmosphere are combining to dry out the Amazon rainforest, leading to deepening drought, according to a new NASA study.

André Oliveira Sawakuchi, a Geosciences Institute professor at the University of São Paulo, agrees that deforestation, particularly caused by agribusiness, is making Amazon hydropower economically inviable: “Soy and pasture expansion in the southeastern Amazon is the enemy of the Belo Monte dam in the decades to come,” he said.

But none of these effects should come as a surprise to Norte Energia, BNDES or the Brazilian government, said both Millikan and Sawakuchi. As far back as September 9, 2013, an important Brazilian Panel on Climate Change issued a report warning that global warming could drop Amazon water levels, putting hydropower in jeopardy.

The Xingu River flows into the Xingu Reservoir where the Pimental dam diverts 80 percent of the river’s flow into a channel and on into the Belo Monte Reservoir, then finally to the electrical turbines of the Belo Monte dam. The Volte Grande do Xingu, deprived of water, has seen significant fish kills. The proposed Canadian Belo Sun gold mine, if allowed to go ahead, could do more environmental harm. Image by Ricardo Abad / Instituto Socioambiental (text translated from Portuguese by Tiffany Higgins).

Immediate origins of the “water emergency”

Besides the problem with falling water levels, Norte Energia’s declared “water emergency” points to hidden deficiencies built into Belo Monte.

According to the letter sent to the National Water Agency (ANA) from Norte Energia Director-President Paulo Roberto Ribeiro Pinto, the October 2019 drought had lowered the level in one of Belo Monte’s two reservoirs, called the Xingu Reservoir, far enough to put the Pimental dam at risk of structural harm. High winds in the reservoir, he wrote, could create waves that would erode the base of the earthen, unreinforced dam.

The situation was serious enough, the company said, that it had also asked Brazil’s National Electric Systems Operator (ONS) to temporarily release the company from its obligation to deliver promised energy output to customers throughout Brazil.

Millikan speculates that the economic hit Norte Energia takes when it fails to meet these energy generating agreements with Brazil’s National Electric Energy Agency (Aneel) explains why the company wants to construct thermoelectric plants next to Belo Monte: “I think this financial emergency thing is, ‘Oh, let’s just build some thermoelectric plants and that will save us,’” said Millikan. If Norte Energia fails to supply enough energy, then its government contract says it must buy electricity on the spot market to make up the difference, which is expensive. The thermoelectric plants could help reduce that loss.

On November 8, journalist Eliane Brum reported in El País on the Norte Energia emergency declaration, saying it revealed an error in the original dam’s construction. The very same day, Norte Energia fired back that there was no error and no risk to the dam’s structure, even though their own letter said waves driven by high winds could “cause structural damages.”

The fundamental problem leading to the October “water emergency”: Norte Energia needs a total of 1,000 cubic meters per second (m3/s) in Xingu River flow to meet its government agreed requirements, supplying sufficient water to the reservoirs and dams, and to the Volta Grande — a gigantic bend in the Xingu River bypassed by the Belo Monte project, with a shoreline populated by fishermen who rely on the horseshoe bend as their fishery and livelihood.

But due to 2019’s drought and regional deforestation, “the river wasn’t able to supply 300 m3/s to the intermediate reservoir and the [mandated] 700 m3/s [flow] to the Volta Grande,” explained Professor Sawakuchi.

With Xingu River water flow dipping down to just 750 m3/s, the company issued its emergency letter and reduced to 100 m3/s the amount flowing through the channel that connects the Xingu Reservoir to the intermediate reservoir, in an attempt to avert the risk of “structural damages” to the dam.

In so doing, the firm also chose to supply roughly the flow required to meet its obligation to the Volta Grande, an amount the company and the government determined is the very minimum to safeguard life and navigability (though locals say even that is insufficient),

This image from the Earth Observation Unit of Brazil’s National Institute for Space Research (INPE) illustrates the diversion of the Xingu River into a man-made channel (at center), resulting in lower water levels in the Big Bend (pictured on the right in red). Photo credit: Coordenação-Geral de Observação da Terra/INPE on Visualhunt / CC BY-SA.

Norte Energia disputes environmentally needed reservoir flow

Critics argue that Norte Energia’s October flow decision is environmentally risky. Previous agreements with IBAMA, Brazil’s environmental agency, established that at least 300 m3/s must be maintained in the intermediate reservoir to avoid harming its water quality. But Norte Energia contracted with EnvEx Engineering to run mathematical modelling and concluded that even at 100 m3/s — the drastically low flow rate set in October — there would be no water quality damage.

Sawakuchi questions this claim: “There can be problems with mathematical modeling” versus real life water quality sampling. When water flows get that low, algae can proliferate and accumulate, negatively impacting the whole system.

The problem isn’t merely theoretical or localized. Sawakuchi warns that a water quality decline in the intermediate reservoir wouldn’t stay there, but could spread to the Xingu River, and from there to the Volta Grande, where the Juruna and Arara indigenous peoples drink, bathe and fish. Norte Energia’s October letter promised to do water quality tests three times daily to address this “exceptional situation.”

Rainforest and savanna converted to cattle pasture in Mato Grosso state, Brazil are acting to reduce downstream flows in the Xingu River. Image © Henrique Manreza courtesy of The Nature Conservancy.

“Soy and pasture expansion is the enemy of Belo Monte”

The really bad news: October 2019 isn’t likely an outlier. “Studies predict that in the next thirty years, the water in the Xingu basin will be reduced by 20-30%,” says Sawakuchi. “Some studies even predict a more than 40% drop in water in the river basin within fifty years,” bringing even worse outcomes for the Xingu River and for Belo Monte.

The professor — who investigates interactions between climate change and river systems — points out that when industry and government formulated the original flow rule “they considered the amount of water in the last sixty or seventy years. But now that’s changing,” and is likely to go on changing for the foreseeable future.

He concludes that advancing deforestation and climate change will cause the “company to have to modify their way of operating the dam” to meet minimum flow requirements for generating electricity, protecting structural integrity, while meeting needs on the Volta Grande. Reduced Xingu flows, divided between Belo Monte and the Volta Grande, could be an environmental disaster waiting to happen.

Sawakuchi explains further that the Xingu River and its tributaries have their sources in Mato Grosso, and depend on forest cover for dependable water flow. But much of Mato Grosso, part of the Amazon and Cerrado biomes, has seen its rainforest and savanna converted to water-hungry soy plantations.

Amazon forests, with their high humidity, help generate their own rain, and locally replenish moisture in the Xingu basin. “When you have more rain, you have more consistent river flows throughout the year. When there’s less rain, it makes river levels more inconsistent,” Sawakuchi said. Put simply, the drying effect of the vast upstream soy plantations makes it hard to run a downstream hydroelectric dam that’s promising energy at consistently high levels.

With the further expected expansion of agribusiness and cattle production — two industries that Brazilians lump together into one word, agropecuaria, “it intensifies and concentrates rain in some parts of the year, but as a whole reduces rain over the course of the year.” Overall, “agribusiness and cattle production in Mato Grosso removes water from all the tributaries,” drying the river system even before it arrives in the Lower Xingu River basin, so the water doesn’t reach the Belo Monte dam, explains Sawakuchi.

“The expansion of soy and pasture means less water in the Upper Xingu basin. The expansion of soy and pasture is the enemy of Belo Monte.”

Brazil plans new dams on the Tapajós River (seen here), the  Trombetas River, and at dozens of other places across the Amazon basin. Image © Teresa Moreira / The Nature Conservancy.

More dams planned, less water coming

Belo Monte won’t likely be Brazil’s last big dam. The government is planning more on the Tapajós River, the Trombetas River and other rivers across the Amazon basin.

Those projects ignore the warnings of scientists, including Carlos Nobre and Tom Lovejoy, who in December 2019 declared that a long modeled Amazon tipping point from rainforest-to-degraded-savanna “is here, it is now.” If these researchers are correct, the prospects for Amazon rainfall, river flows, and existing and proposed Amazon hydroelectric dams will grow bleaker.

Sawakuchi calls into question the viability of Amazon hydroelectric projects: “The dam companies always expect to make their most energy in the highwater season from January through July,” he says. “But they’ll have less water in July,” as climate change intensifies and shortens the wet season. “This isn’t being factored in” as the government lines up more dam projects across the Amazon basin.

“This can [mean shortages and] intensify conflicts for water,” he said, as riverine indigenous and traditional peoples compete for dwindling supplies with old and new dams, industrial mining operations, agribusiness and cities in need of drinking water.

Looking at Belo Monte specifically, Sawakuchi says, “80-90% of the Xingu River water will be used to produce energy.” And it’s the people and aquatic animals on the Volta Grande who will suffer.

The Tucuruí hydroelectric dam in Pará state. Deforestation due to agribusiness, combined with climate change-induced drought, could reduce river flows throughout the Amazon, making existing and future dams less viable. Image by PPGEDAM (NUMA/UFPA) -Visualhunt.com – CC BY-NC.

A future of Amazon water shortages

On November 27, Brazilian President Jair Bolsonaro, to much fanfare and media coverage, unveiled a plaque as the eighteenth and last Belo Monte turbine went into operation. That event also signaled Norte Energia’s lowering of flows to the Volta Grande, with likely huge impacts on fish and local food security. It’s an even lower flow regime than the initial flows negotiated between Norte Energia and Brazil’s government. Local people have been clamoring for years to prevent this new, lower flow regime from going into effect on the Volta Grande.

“Things are already really bad, but they’ll get worse,” predicts Millikan.

If Norte Energia manages to get approval to build thermoelectric plants alongside its dams, as well as alongside a Canadian company’s planned Belo Sun mine — the largest open-pit gold mine in the world — then life-giving water levels in the Volta Grande, which Norte Energia pledged to maintain, will probably dwindle to a trickle.

And if Brazil continues to pursue policies like those implemented to nurture Belo Monte while starving the Xingu, then it isn’t difficult to predict the future losers: “Up until now, it’s always the dam companies that have won. Not the people,” says Sawakuchi.

Update: Norte Energia, the Belo Monte dam’s operator, responded to this article in an email sent to Mongabay and dated 2/28/20. The two documents attached to that email, one dated 2/19/20, offering the company’s clarifications and comments can be read here and here.

Banner image caption: Principal Belo Monte dam, as it looked on November 27, 2019. Each of the descending tubes marks one of the eighteen electricity producing turbines. Photo credit: Palácio do Planalto on Visualhunt.com / CC BY

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