Hydro scale and LDC oil substitution — the Guianas' experience

Abstract

Project scale is often critical in LDC hydro substitution. Large hydro schemes have low costs and wide development options but they are difficult to implement because they depend on external capital and markets. Although small hydro schemes are more easily implemented their costs are closer to the margin. Sustained high inflation eroded the potential benefits that the 1973–1974 oil shock gave to large hydro. The 1979 shock restored the competitive potential of larger hydro, but the subsequent recession narrowed its prospective market and made smaller hydro schemes more prudent. Large-scale hydro's marketing problem can be reduced through regional cooperation, but presents formidable political problems. Guianese experience suggests that in such difficult circumstances, multi-stage large hydro projects have advantages over single-stage ones.