China to help Russia build five new hydropower plants

Two Chinese hydropower heavyweights have agreed to help Russia build five new power schemes with a combined estimated cost of $8bn.

Russia’s biggest power generator, RusHydro, announced the two historic agreements on Sunday, 9 November, the same day presidents Vladimir Putin and Xi Jinping signed a second deal to supply gas to China from Siberia.

The biggest initiative, estimated to cost $4.94bn (RUB 230bn), could see RusHydro and China Three Gorges Corporation (CTG) build four dams along the Amur River, which forms a section of the eastern border between the two countries. 

Combined, the four plants would generate up to 2,000MW, RusHydro said in a statement.

The second agreement would see RusHydro and the Power Construction Corporation of China (PowerChina) revive the Leningradskaya pumped storage plant (PSP) scheme near St. Petersburg at an estimated cost of $2.97bn (RUB 138bn).

The PSP would have an installed capacity of 1,560MW.

Both agreements concern the formation of joint ventures, with RusHydro retaining 51% ownership in each.

"The agreement signifies a breakthrough in cooperation between our countries in the power sector and in attracting Chinese investment into the Russian electricity sector," said the CEO of RusHydro, Evgeny Dod, of the preliminary agreement with CTG.

He added: "Our Chinese partners will be actively involved on all stages of the projects’ development – engineering, procurement and construction."

The partners plan to raise at least 70% of required funds as project financing for the Amur schemes from primarily Chinese and Russian institutions backed by long-term power purchase agreements.

Some of the electricity may be exported to China.

As well as generating power, Dod said the scheme would also protect "vast territories, both on Russian and Chinese banks of the Amur River from catastrophic floods".

The Rushydro statement said the 2013 flood of the Amur River basin was the "strongest in the entire history of hydrological observations".

RusHydro said it will prepare detailed feasibility studies of each project, which will be approved by a "reputable professional international financial advisor". 

The JV’s management and Board of Directors will then evaluate the projects based on their economic feasibility and potential for electricity export under a power purchase agreement.

For the Leningradskaya pumped storage plant near St. Petersburg, the JV of RusHydro and PowerChina plans to raise 70-75% of required funds as project financing from primarily Chinese and Russian institutions following the review of the feasibility study prepared by RusHydro earlier, project’s economic parameters and selection of EPC contractor.

Photograph: The Amur River near Khabarovskiy Kray, Russia (OndÅ™ej Žváček/Wikimedia Commons)

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