The National Development and Reform Commission in late October granted approval for China Three Gorges Corp to proceed with the early stage of studies on its two planned power stations one of 8.7GW; the other, 14GW downstream on the Jinsha River.

In an interview with Xinhua news agency in August, Zhang Guobao, head of the National Energy Administration, reaffirmed the strategic role of hydropower as the best option for clean energy.

Though China's hydropower capacity already ranks as the world's biggest, the utilization rate of its hydro resources still lags behind other countries.

Zhang Boting, a vice secretary general of the China Society for Hydropower Engineering, said droughts in early 2010 in southwestern China confirmed that more hydropower facilities are needed in the nation. Analysts also agreed that hydropower would be one of the cheapest and most achievable ways to help China meet its clean energy consumption target.

In 2009, ahead of the Copenhagen climate change summit, China pledged to cut carbon intensity or the amount of carbon dioxide produced for each unit of gross domestic product by between 40 percent and 45 percent by 2020, using 2005 levels as the base.

The government also aims to raise the proportion of non-fossil fuels in the nation's primary energy mix to 15 percent by 2020, from an estimated nine percent last year. Of the 15 percent, nine percent will come from hydropower and four percent from nuclear power, Zhang said.

Other renewable sources, like wind and solar, lack competitiveness in terms of scale, economics and technology compared with hydropower in China.

Zhang acknowledged that hydro-power goals would be difficult to achieve, based on the approval status in the sector in recent years. He encouraged relevant agencies to accelerate the approval process, while still adhering to strict development rules.

The China Electricity Council, which represents the nation's power producers, also confirmed last month that the floodgates to build new hydropower projects are now open and the sector will enjoy priority status during the 12th Five-Year Plan. Projects will be mainly in mountainous southwestern provinces such as Yunnan and Sichuan, according to Ouyang Changyu, vice secretary general of the council.

"To expedite approvals, China must address the problems of environmental protection and people relocation," said Zhou Yanchang, an analyst at Huatai United Securities. "And that will increase construction and operating costs."

One solution is to raise the price of hydropower electricity.

At present, the on-grid tariff or the price charged by power producers to grids for hydropower is below that of energy produced by coal-fired plants. The prices are set based on operational costs of producing the power. Hydropower projects require larger investments and involve longer construction times than coal-fired plants, but they run at lower costs upon completion.

In September 2009, Zhang, the energy chief, said China aims to equalize hydropower prices with those of coal-fired electricity in the long term, though many hurdles remain to achieving parity between the two energy providers.