The great grey wall cuts across the valley of the Jinsha river, a tributary of the Yangtze. Downstream from the dam, the yellow water gushes down the spillway from China's third most powerful hydroelectric plant. It races on past the city of Xiangjiaba, on the border between the Sichuan and Yunnan provinces, a featureless place with a maze of factories and chimneys built into the urban fabric. Its only claim to fame is the wall 200 metres high that now overshadows it.

The structure, into which 14bn cubic metres of concrete have already been poured, is due to be completed next year. Fitted with an impressive boat lift, it will drive eight giant 800MW turbines, currently the largest in the world.

Xiangjiaba is no match for the array of 32 turbines on the massive Three Gorges Dam, with installed capacity of 22,000MW. But it does confirm China's enthusiasm for hydroelectric facilities, including really big ones, regardless of the environmental cost – in climate disruption and landslides –and the number of people displaced to make way for the work. According to official figures, the Xiangjiaba structure entailed the departure of more than 100,000 people.

On 28 September a new invitation to tender was published, for 16 1,000MW turbines, though it is not known for which dam they are intended. No single structure has ever delivered so much power.

Following the publication of China's 12th five-year plan (2011-15), the state council set a goal for energy policy, including ambitious hydropower targets. The challenge of boosting renewable energy to a 15% share of the country's primary energy consumption depends largely on hydropower. The prime concern is to reduce pollution from coal-fired power stations, which is poisoning the atmosphere of Chinese cities. At present coal accounts for a much larger share of the energy mix than solar, wind or even nuclear power.

Just doubling hydropower (from 190,000MW to 380,000MW) would give renewables a 10% overall share. In theory, on completion of this titanic effort, just over 70% of China's total hydropower potential would be exploited, according to the International Hydropower Association's (IHA) annual report published in April.

Further upstream on the Jinsha another wall is going up at Xiluodu. With 13,600MW nameplate capacity, it will be substantially larger than Xiangjiaba.

"Every year the Chinese increase their hydropower capacity by 15GW," says Yves Rannou, the head of the China division at Alstom, the French engineering firm, a figure the IHA confirms for 2012. This is an impressive achievement compared with new capacity being built in other parts of the world, apart from Asia: 1.9GW in North America, 1.8GW in South America, 0.5GW in Europe and 0.3GW in Africa. It should be borne in mind that France, for instance, has a total hydropower capacity of 25GW.

Downstream from the Xiangjiaba dam, on its righthand side, a tunnel disappears into the rock face. It leads to a cavity like the nave of a cathedral, filled by a dull roar. Without waiting for the structure to be finished, the Jinsha is already driving four Alstom turbines and their generators. They were brought up the river on barges as far as a quay just below the dam.

The four monsters, each weighing more than 2,000 tonnes, were manoeuvred into position by suitably gigantic cranes, mounted on tracks that run down to the riverside.

On 17 September Alstom officially opened a new hydropower industrial site in Tianjin, north-east China. Airbus operates a large assembly unit on the same technology park. The engineering firm is keen to consolidate its position in this booming market. At the ceremony, CEO Patrick Kron predicted that between now and 2035 half of the world's new hydropower plants would be built in China, with south-east Asia accounting for 85% of the total. He added that hydropower was "clean, renewable and particularly easy to store".

Though hydropower represents a relatively small share of Alstom's revenue (10%), growth on this scale justifies the €100m ($130m) investment the firm has made in China, in the larger context of cutbacks. "We need to streamline our operations. But we can do it, even in China, without adopting a strategy of retreat," Kron explained on the sidelines of the ceremony.

The French firm is by no means the only one interested by the turbine and generator part of future hydropower plants. Its rivals Andritz and Voith, respectively from Austria and Germany, are also on the lookout for work. Voith markets integrated solutions comparable to Alstom's technology. It has a factory in Shanghai, originally built as part of a joint venture with Siemens and Shanghai Electric Corporation. Voith now owns an 80% share of the undertaking and is quick to point out that it equipped China's very first hydropower facility, at Shi Long Ba, in 1910.

But foreign engineering firms have little room for manoeuvre. For example, Xiangjiaba's four other hydroelectric units have been produced in China. Two powerful firms, Harbin Electric and Dongfang Electric, which together claim a 40% share of Chinese-installed capacity (as against 20% for Alstom) have become serious competitors, after learning the trade from foreign partners. Asked to compare the strengths and weaknesses of Chinese and French suppliers, the head of the China Three Gorges Corporation, which is operating the Xiangjiaba dam, Nie Yuanlong, smiled politely before noting that Alstom's prices were "slightly higher".

Quality, a key selling point for both Voith and Alstom, may enable them to maintain a slight strategic lead over Harbin and Dongfang in the struggle to deliver increasingly powerful hydroelectric units. But with heavy industry in China plagued by surplus capacity, unlikely to improve if domestic growth slows, competition could well be increasingly fierce.

This article appeared in Guardian Weekly, which incorporates material from Le Monde