Long read: China is building the world’s most powerful hydropower system deep in the Himalayas. It remains shrouded in secrecy

Jensen Huang famously proclaimed that China is going to win the AI race and his basis was simple – if electricity is the physical upper bound for AI’s progress, China seems to have highest upper bound by a country mile. And it continues to up the ante with a $168bn hydropower system, the world’s largest of its kind.  Not just AI, China is already home to the largest number of electric vehicles and such expansion at scale of renewable energy projects helps wean itself out of fossil fuels. China is today the world’s largest carbon emitter but also the world’s largest renewable energy producer.

“Experts say the hydropower system, built in the lower reaches of Tibet’s Yarlung Tsangpo river, will be a feat of engineering unlike any ever undertaken. Leveraging a 2,000-meter altitude drop by blasting tunnels through a mountain, it will enable China to harness a major river in a region known as Asia’s water tower and at a time when governments are sharpening their focus on water security.

…But its construction could also disrupt a rare, pristine ecosystem and the ancestral homes of indigenous residents.

Tens of millions of people also depend on the river downstream in India and Bangladesh, where experts say the potential impact on the ecosystem, including on fishing and farming, remain understudied.

Headlines in India have already dubbed the project a potential “water bomb” – and its proximity to the disputed China-India border put it at risk of becoming a flashpoint in a long-simmering territorial dispute between the two nuclear-armed powers.”

Despite such potential threats to ecology and geopolitics alike, the project has been kept secret with not much shared with the international community. This investigative piece in the CNN uncovers details of the gigantic project:

“Known as the world’s highest major river, the Yarlung Tsangpo winds its way from a glacier in the Himalayas across the plateau that cradled Tibetan Buddhism, and toward the country’s southernmost edge.

One stretch of the river, tucked alongside Tibet’s de facto border with an Indian state whose land China claims, has long drawn attention for its power-generating potential.

There, the waterway makes a dramatic horseshoe turn as it wraps around a mass of mountains at what’s known as the Great Bend – a trajectory that sees the river lose some 2,000 meters in altitude within roughly 50 kilometers.

That descent has been estimated to have the potential to generate some 300 billion kilowatt-hours of electricity annually – roughly triple the output of China’s Three Gorges Dam, currently the world’s most powerful.”

In a nutshell, “… The system is expected to consist of five cascade hydropower stations, tunnels and dams. The diversion dam and tunnel system shortcut the river’s natural flow and divert water into tunnels, where it passes through hydropower power stations placed at strategic locations to generate electricity as the elevation drops.”

For those interested, the piece delves into the details, emphasising the sheer ambition of the project which could reinforce China’s recently achieved standing as the global engineering powerhouse.

Indeed, China has been there, done that, though not at the same scale:

“China has a history of building complex and controversial dams.

The Three Gorges project – a dam rising nearly half the height of the Empire State Building – required uprooting more than a million people before it began operation in 2003, and has had a mixed record on flood control, despite promises that it would serve this purpose.

Today, China’s rivers are dotted with hydropower projects, while cutting-edge transmission lines carry high-voltage electricity from rural and mountainous regions to the skyscrapers, AC units and electric vehicles of urban China.

Nearly a third of the total installed capacity of hydropower globally as of 2024 was in China, and the country is on track to meet targets for new capacity early – part of Xi’s push to electrify China as he aims for ambitious climate goals and energy security.”

The piece extends into the ecological and geopolitical risks posed by the project.

If you want to read our other published material, please visit https://marcellus.in/blog/

Note: The above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. The information provided is intended for educational purposes only. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India (SEBI) and is also an FME (Non-Retail) with the International Financial Services Centres Authority (IFSCA) as a provider of Portfolio Management Services. Additionally, Marcellus is also registered with US Securities and Exchange Commission (“US SEC”) as an Investment Advisor.