Let a Hundred Russian Kilowatts Bloom

KHABAROVSK, Russia - - Recalling that Quebec powers New York and Paraguay powers São Paulo, Viktor N. Minakov tapped his pen on a map of Russia's Far East and spun a vision of this corrugated landscape helping power China, the 21st century's factory to the world.

As power blackouts threaten China's industrial growth, China is increasingly looking north, much the way American power company executives first looked to Canada for power in the 1960's. Only 3 percent of hydroelectric power potential has been tapped in border areas of the Russian Far East, a mountainous region with a population density on a par with that of Maine.

With new Russian laws allowing foreign investment in electricity generation, envoys from Khabarovsk, home to the regional power company, have traveled to Beijing recently, pitching proposals for Chinese financing of dams.

"In China, many powerful industries are going to lobby this year for importing electricity from Russia," predicted Mr. Minakov, director general of Vostok-Energo, the far eastern export arm of Russia's electricity monopoly, the Unified Energy System. "Thirty percent of the factories we saw were stopped because they lack electricity," he said of a tour he took in January through a Chinese border province. "They say they need one to two billion kilowatt hours annually - and they are ready to buy it now."

Chinese planners had forecast 5 percent annual growth in electricity use last year, but, the actual increase was 15 percent. Northeast China is expected to exhaust its existing power generation capacity by 2010. (Similarly, oil consumption in China has tripled since 1980, while production has been flat.)

"We expect our power sales to China to increase fourfold this year," Mr. Minakov said, forecasting sales of 600 million kilowatt-hours on a small line linking Blagoveshchensk, Russia, and Heihe, China.

Studying the Northeast Asia wall map in his office here, he pointed to four other sites identified for high voltage lines that would send power from the Russian Far East, population seven million, to Northeast China, population 100 million. Another project would bring a line through North Korea to South Korea, an enclave of high electricity prices that would be the real economic prize for Vostok-Energo.

If investment goes according to plan, he said, his company could be exporting to China and the Koreas a total of seven billion kilowatt-hours a year by 2010. According to figures from the Institute of Energy Economics, Japan, seven billion kilowatt-hours would cover Beijing's energy use for about 58 days.

Long term, this region could export to its neighbors in Northeast Asia 50 billion kilowatt-hours, twice the level of Russia's total electricity exports today, predicted Alexander Y. Ognev, an aide to Mr. Minakov who has taken Vostok-Energo's sales pitch in recent months to Japan, China and Canada.

The company plans to complete by this fall a 1,000-mile, 500-kilovolt line that starts at the newly commissioned Bureya hydroelectric dam and ends outside Vladivostok, on the Sea of Japan.

Aimed at eventually bringing Russian electricity to South Korea, the line features the tallest power pylons in Russia, 625 feet, and the wires jump the Amur River in two, one-mile-long spans.

The price for reaching South Korea and its high energy prices would be to pass through North Korea. Analysts see this line as part of a wider international initiative that would let electricity go to North Korea in return for Pyongyang's bringing its nuclear weapons program under international controls.

To reach Japan, Northeast Asia's richest market, Vostok-Energo has proposed stringing underwater lines from a natural gas power plant on Sakhalin Island to the major Japanese population centers. But with Japanese per capita electricity consumption 10 times the level of North China's, the big growth in demand will be in China, where prices are about the same as in Russia.

Financing is a big barrier to projects. Vostok-Energo has little money to invest, and there is little precedent for investment by foreign companies in Russian electricity.

"Russia will not lift a finger to send a kilowatt south unless someone finances it," said Peter Hayes, director of the Nautilus Institute for Security and Sustainability, a California-based research group specializing in Northeast Asia energy. "There is a substantial surplus of hydropower, but there is no financing at all at the moment. It is all conceptual."

Multinational companies have been lured by Sakhalin's oil and gas, embarking last year on a program to invest $1 billion a year for the next decade. That helped foreign investment in Russia jump 50 percent last year, to $29.7 billion. Energy analysts forecast that Russia's hydropower potential in the Far East will combine with China's looming shortages to attract foreign capital.

According to Vladimir I. Ivanov, a Russian energy economist based in Japan, "There are at least 10 hydropower projects that are economically feasible."

"The potential is there,'' he said, "but it requires long-term contracts and relationships."

Although Russian officials do not publicly link the two energy projects, sending electric power to China could ease China's anger if Russia decides to build pipelines that will bring Siberian oil and gas to a Russian terminus on the Sea of Japan instead of to China.

In a telephone interview about electricity exports from Russia, Daojiong Zha, director of Center for International Energy Security at Renmin University in Beijing, said, "The potential is good, this is clearly something that should be promoted, but we need someone to point the way out."

He Xin, an engineer with the State Grid Corporation of China, wrote approvingly in a paper last August: "In order to satisfy energy demand in North China, natural gas or electricity can be directly transferred into the load centers in North China from producing fields and power plants in the Russian Far East if the electricity price is competitive and the investment is possible and valuable."

Prices, reliability of supply and technical standards all need to be sorted out, said Dr. Hayes, whose Nautilus Institute has held four workshops in recent years on creating a power grid in Northeast Asia, one of the regions in the world most dependent on imported energy.

"These systems require real-time control centers," Dr. Hayes said by telephone, recalling the blackout last August that cascaded through eight American states and Canada.

Alluding to the fact that Russia and China fought border skirmishes near here only 35 years ago, he added, "In an engineering system, you have to create the kind of trust that allows you to react instantly to supply and demand."

Leaders of Russia's fledgling environmental movement argue that dams have already flooded thousands of acres of forest, bringing little benefit to residents of the Russian Far East. Bureya, the region's largest hydropower project, flooded 270 square miles of forest but has not brought down local power prices. Many rural dwellers living near the dam still cook with wood.

"We are not against all dams - some middle-sized dams can be built in the gorges, but not in the lowlands," said Yuri Darman, director of the environmental group WWF Russia. "The benefits should go for the local economy, and not for the world."

Perhaps mindful that damming Russian rivers to power Chinese factories is not a vote-getter, President Vladimir V. Putin on a visit to Khabarovsk two weeks before the March 14 election, spoke in favor of using locally generated power for local development.

"Consumers should be found for the energy facilities to be constructed," he told reporters here. "This is what the Economic Development Ministry should be thinking about rather than about pumping natural resources out for export."

But a few weeks before the president's visit, Konstantin Pulikovsky, his envoy to the Russian Far East, was in Beijing talking to Chinese businessmen about investing to add turbines to the Bureya station.

Mr. Minakov, meanwhile, is busy pitching the hydropotential on China's doorstep to any foreign investors - Chinese, Japanese, European, or American. He said: "If there is an interested company, we are ready to cooperate."