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Viewpoint: The Upside of a Downturn

The recent turmoil in the world’s financial and commodity markets may turn out to be very good news for hydropower.

During 2008, hydro development and construction activities were seriously affected by rapidly rising prices for steel, cement, fuel, and other essentials.

The bubble of these rising costs has now burst — best signaled, perhaps, by the spiking of oil prices in July 2008 and their subsequent decline to barely one-fourth of peak prices. Many of the raw materials needed for hydro plant construction are now available at bargain prices.

Moreover, the chaos in world financial markets has created a clamor for safety on the part of investors and a massive withdrawal of funds from traditional stocks and equities. This has led to a huge flow of funds into fixed-income-type investments, further leading to very low interest rates for high-quality borrowers — i.e., those who can give high levels of assurance for their repayment of debt. Owing to hydro’s typical need for large amounts of borrowed capital, this opportunity to obtain low-cost funds could be highly advantageous.

In this milieu, electricity continues to be a valuable product. Many regions remain short of power — in some cases, critically so — and local electricity markets would support the infusion of additional, economical hydropower.

Further, the clamor continues for power that is domestically-produced, renewable, and climate-friendly — all qualities inherent to hydro.

In a time of economic slowdown, hydropower projects offer governments an excellent opportunity to provide jobs, economic stimulus, and future well-being for their countries. An example of this is the United States’ iconic 2,080-MW Hoover Dam. At the time it was built, it was the largest public works project ever undertaken in the country and was seen primarily as a “public works” project to create construction jobs as an antidote to the 1930s’ Great Depression. Yet, the low-cost, highly affordable electricity it produced (and still produces more than 70 years later) provided, and provides, stimulus to the economy of a large region.

Editor Emeritus

Now brought to you by PennWell!

You may note, above, the new title that replaces my former title of editor-in-chief. In late 2008, PennWell Corporation acquired HRW, along with other entities (including Hydro Review magazine and the Waterpower and HydroVision conferences) previously published and produced by HCI Publications. PennWell’s acquisition adds a hydropower portfolio to its other magazines, conferences, and products, many of which serve the electric power business. Most of HCI’s former staff are continuing with PennWell. Leslie Eden, formerly the publisher, and I are serving as consultants.


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