The leaders of Namibia and Angola have agreed to move ahead with a hydro-electric dam project at Baynes on the Kunene River.
The picturesque Epupa Falls site will now be safe from development
An initial proposal to build a dam and power station along the river at Epupa Falls generated a storm of protest.
The picturesque Epupa Falls site will now be safe from development.
But environmental campaigners say they will reserve judgement on the plan pending the findings of an environmental impact assessment (EIA).
The joint hydropower project is one of 11 agreements signed during a two-day official visit to Namibia by Angola's President Jose Eduardo dos Santos.
Bryan Ashe of the pressure group Earthlife Africa told the BBC that the Baynes mountains site was "a better option than Epupa Falls because it will be a smaller project with a lesser environmental and social impact".
"We will reserve judgement until an open and transparent EIA comes up with details of the actual proposal," Mr Ashe said.
Namibia's President Hifikepunye Pohamba says he wants "to construct the Baynes hydropower project as soon as possible" because power shortages are disrupting the economy, The Namibian newspaper reports.
Namibia's national power company - NamPower - first opted for the Epupa Falls site after a $7m feasibility study concluded it would represent the best option economically.
But it would have been a massive dam - the 80km by 20km reservoir would have had a capacity of 7,500m cubic metres.
There was uproar as this would have required the removal of the long-settled Himba tribe from the area as well as drowning a large area of natural beauty, forest and grazing land.
Angola relies heavily on hydro-electric power for its energy needs and is investing hundreds of millions of dollars in rebuilding the industry.
Hydropower supplies 75% of Angola's energy supply and its National Electricity Company (ENE) has entered into a number of international agreements to refurbish existing dams and power stations, and to build many more.
Industry experts say the country has a minimum of 65,000 GWh/year hydroelectric potential from three main rivers: the Kwanza in the north, the Catumbela in central Angola and the Kunene in the south.
Angola expects to supply all its own domestic energy needs and to export the surplus power it can generate to neighbouring countries.