Megadams Are Dismal Investments

Private investors avoid Brazil’s Belo Monte as its price tag soars

Indigenous Munduruku men at the quarry site for Belo MontePhotograph by Taylor Weidman/Zuma Press

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By Blake Schmidt

March 14, 2014 at 12:26 AM UTC

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This article is part of the March 17, 2014 issue of businessweek.

It’s hard to overstate the massive proportions of Belo Monte. When completed, it will be the world’s third-largest dam. Set in the heart of the Brazilian Amazon, it will funnel water through 18 turbines, each with the diameter of the Space Shuttle. When the last one is switched on in 2019, Belo Monte will have a capacity of 11,233 megawatts—enough to supply power to 40 percent of Brazil’s households. Construction crews, which began work in 2011, will have to dig up almost twice as much dirt as was removed to build China’s Three Gorges Dam, and truck in enough steel to build 16 Eiffel Towers, according to the dam’s developers. About 26,000 laborers toil in shifts around the clock.

Massive is a word that also applies to the hydropower project’s price. Norte Energia, the consortium awarded a 35-year concession to operate the dam, pegs the cost at 29 billion reais ($12.3 billion), up from 25.8 billion reais when it bid for the contract in 2010. Eletrobras, the state-owned utility holding company that is the lead partner in the consortium, estimated the cost at just 8 billion reais in 2008.