The Chinese government is pressing ahead with hydropower, despite finally admitting last week that the Three Gorges dam has caused significant environmental problems.

The dam is the biggest in the world and can generate 18 gigawatts of power. However, it has attracted a storm of criticism: 1.4 million people had to be displaced to build it, and the enormous reservoir it created on the Yangtze river is plagued by pollution. The government has now accepted that the project has had an environmental impact on the local area, and has announced policies to address the problems and to help displaced people who have slipped into poverty.

The announcement comes shortly after China unveiled its latest five-year plan, covering 2011 to 2015. The plan sets ambitious targets for hydropower, which produces lower greenhouse gas emissions than the coal-fired power plants that supply China with most of its power today. China’s watercourses could provide 500 GW of hydropower – 200 GW is currently exploited. With power outages now occurring every summer, the Chinese government has set targets to boost hydropower capacity to 284 GW by 2015 and 430 GW by 2020.

“Hydro is huge in China, and it’s going to be bigger,” says Darrin Magee of Hobart and William Smith Colleges in Geneva, New York.

China plans to build up to eight dams on the Mekong, the first of which is already disrupting its flow and causing problems downstream. However, the last dam in the cascade, at Ganlanba, is planned to be a “re-regulation dam” that would smooth out the disruptions.