Itaipu: a mega-dam that redistributes wealth

Presentation

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Context of how the project emerged:

The Parana river, four thousand kilometres in length, is characterised for the power of its discharges, often close to 17,000 m³/s at its mouth. It ranks 10^th in the world for discharge and 5^th in terms of watershed. Brazil and Paraguay, the two countries of the basin, expressed their common interest as early as the 1960s regarding the exploitation of this shared resource by signing the Iguaçu Agreement (Ata do Iguaçu).

 

In 1973, a treaty established a theoretical right of consumption of 50% of the energy produced for each country. Paraguay committed itself to selling the surplus energy only to Brazil at a price set until the expiry of the treaty (2023). The following year, the binational company Itaipu was founded and the works began.

Strategy and objectives

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Thus, the largest dam of the hydropower cascade on the Parana river, which comprises sixty dams, came into being.  Located on the border between Brazil and Paraguay, Itaipu dam became a major economic resource for Paraguay and an important strategic regional asset, thanks to the electricity it generates. With an annual average of more than 96,000 GWh, Itaipu is still the most productive hydropower plant in the world and it is the second in terms of installed capacity, after the Three Gorges dam in China.

The performance of this infrastructure is not simply linked to production. Its model of redistribution is part of a rationale devoted to sustainable development.

 

 

The project’s innovative characteristics

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Economic/financial

Itaipu Binacional  has a budget of around $3.2 billion a year. More than half this sum is used to reimburse the debt ($2 billion) while $500 million are assigned to the two governments by way of royalties paid for each MWh produced. The income of the royalties amounts to $320 million a year each for Paraguay and Brazil. Since Itaipu was built, $5 billion have been paid on both sides of the border. In the case of Paraguay, half of this revenue is distributed to the government and the other half to 17 departments and 250 municipalities. The financial redistribution based on the income generated by the dam can amount to 80% of the budget of certain Paraguayan municipalities! In Brazil, the redistribution of the income from Itaipu not only concerns the entire country but also 331 municipalities.

In addition to supplying electricity to the populations of the two countries, the infrastructure is a source of wealth for their regions.

Environmental

Besides financial redistribution, Itaipu also performs actions in favour of the environment. By way of example, a million fish were introduced into the river in 2016. 100,000 ha of land are protected, which, for a dam, is the largest ratio of land protected to megawatt of installed capacity (7.5 ha / MW). The benefits are quantifiable, since every day the reserves produce oxygen for 22 million people, that is three times the population of Paraguay.

 

Furthermore, ITAIPU is carrying out a huge program in relation with the UN to preserve biological diversity through the association of forest fragments with the promotion of sustainable development of the land used.

 

 

 

Societal

These environmental actions fall within a larger framework of a social responsibility fund, through which other actions (in favour of disadvantaged children and populations) are carried out. These actions concern education, health and the economy (improving the productivity of farm installations). Lastly, ITAIPU also generates economic spinoffs through tourism: the site received 1 million visitors in 2018.

Research and development

Through its hydro-computing innovation centre (CIH) started in 2007, Itaipu works with UNESCO in the framework of the International Hydrological Program (IHP) devoted to research on water, the sustainable management of water resources, training and strengthening capacities.

 

For further information

Photo Credit: Itaipu Binacional