The most recent national power development plan of the Lao People’s Democratic Republic solidifies hydropower’s role as the main driver of energy production and sets targets for increased coal production through 2030. The emphasis on increased coal production signals a lack of attention towards alternative renewable energy, particularly compared with the regional push towards solar and wind in the Lower Mekong Basin. Lao PDR is falling behind its neighbors in developing a diverse, resilient, and financially stable renewable energy system. However, ongoing efforts by development partners and private investors to diversify renewables, as well as governmental recognition that reliable energy production requires diversification, signal the Government of Lao PDR is perhaps open towards solar and wind energy. Development partners thus have an opportunity to set up Lao PDR for energy resilience by prioritizing diversified renewable energy projects.
Over the last few decades, hydropower dam construction in the Lao People’s Democratic Republic (Lao PDR) has been the primary contributor to the country’s rapidly expanding capacity for electricity exports. Lao PDR has looked towards the Mekong River and its tributaries for hydropower energy and revenues since approving the Nam Ngum 1 dam in 1971. As of early 2023, Lao PDR produced power from 76 hydropower dams and had another 43 dams still under construction. Lao PDR’s most recent National Socio Economic Development Plan (NSEDP9) furthers hydropower’s role as the primary means to achieve its renewable energy goals. The plan reports Lao PDR aims to achieve “continuous quality, stable and sustainable economic growth” via 26 newly proposed dams.
Currently, non-hydropower energy sources play a small role in Lao PDR’s power mix. The Mekong Infrastructure Tracker indicates that Lao PDR’s 76 operational hydropower dams supply 9,608 MW in generation capacity as compared to 1,878 MW from coal and only 56 MW from its 10 solar plants. The NSEDP9 references non-hydropower renewables only in a limited capacity, including mentions of expanding solar into rural areas, solar energy’s role in clean water, and the value of alternative energy sources to “substitute hydropower when electricity generation does not meet the needs of the low water season.” The NSEDP9 sets no specific targets for non-hydro renewables; the aforementioned solar project descriptions contain no explicit numerical targets or project names.
Lao PDR’s National Power Development Plan (NPDP) for 2020-2030 also advocates for a more varied energy mix to supplement unreliable hydroelectricity, but the push for diversification largely recommends coal projects–not solar or wind projects. Mekong Infrastructure Tracker data shows hydropower accounts for 83% of energy production, coal for 16%, and non-hydro renewables for 0.49%. The NPDP assigns hydropower to 65%, coal production to 30%, and non-hydro renewables to 5%.
The Government of Lao PDR (GoL)’s concerns with hydropower, which include Electricité du Laos (EDL)’s accruing debt and hydropower’s unreliable energy production, are the main drivers of diversification. Due to low flow and persistent drought during the dry season, some dams have been unproductive or have produced unpurchased power, meaning EDL has been unable to pay back the money borrowed to build dams and install power lines.
The look towards coal and continued emphasis on hydropower make Lao PDR a regional outlier. Vietnam’s most recent draft National Power Development Plan (PDP8) raised the target for solar and wind to 50% of power supply by 2045, a significant expansion from its existing 20,000 MW of solar and wind capacity in 2022. Thailand’s 2018 Alternative Energy Development Plan (AEDP) aims to increase the share of renewable energy consumption to 30% by 2037. Cambodia is looking to rapidly expand solar, targeting 3,155 MW of solar by 2040, as is Myanmar, where a 20 MW solar project just began operations. This region-wide look towards solar and wind in the Lower Mekong Basin means diversifying renewables may be necessary to meet the expectations of a changing regional energy grid. Diversifying Lao PDR’s energy mix could also help address public debt and seasonal unreliability of hydropower production.
Lao PDR’s continued emphasis on hydropower provides an opportunity for development partners to assist both the Ministries of Energy and Mines and Planning and Investment in considering non-hydro alternative scenarios. Development partners’ existing diversified renewable projects signal the GoL may be open to solar and wind energy given international support. While many official development assistance projects focus on hydro-generation, some prioritize advancing non-hydropower renewables.
Private companies are also investing in diversified renewables. Thai electric power distribution company BCPG Public anticipates completing the 600 MW Monsoon Power project, ASEAN’s largest wind farm, by 2025. Singapore-based developer Solar Attapeu Power Sole Company, Ltd is working to develop the Solar Attapeu Power Project (SAPP), which will produce 64 MW when completed. The 240 MW Nam Theun 2 Floating Solar PV project, slated to begin operation in 2024, would become one of the largest hybrid floating solar project in the world.
The diverse field of international development projects is in part so crowded because partners’ domestic interests and expertise drive individual projects. For example, the Swiss Agency for Development and Cooperation (SDC) leads dam safety projects because Switzerland’s Federal Office of Energy, which supervises 200 major dams, offers applicable technical expertise. The Japan International Cooperation Agency (JICA) leads other development partners in providing capacity building using expertise developed over fifty years of capacity building activities and sending experts to local agencies in Southeast Asia.
Given the United States’ success in building up solar and wind domestically and the Inflation Reduction Act’s policy success supporting the renewable energy sector, an international focus on solar and wind is synergistic with domestic policy back home. The United States, whose Clean Power Asia’s solar auction has already had success in Lao PDR, should prioritize non-hydropower renewable expansion in planned development projects.
However, the push towards non-hydropower renewables in Lao PDR is not straightforward. Lengthy delays in the aforementioned Monsoon project due to delayed field visits reflect renewable energy’s larger obstacles. There are challenges with moving projects forward within establishments in Laos given Memorandum of Understanding (MOU) requirements, and the COVID-19 pandemic slowed the process further by delaying site visits and approval processes. All bilateral work in Lao PDR requires an MOU, but most MOUs in Lao PDR took up to twelve months to approve and approval delays caused 80% of projects to experience delays on implementation. For example, the USAID Lao Energy Sector project has awaited approval for over two years. These delays in field visits and approvals perhaps indicate low prioritization of non-hydro projects as well as a lack of standardized approval processes and long queues for developing projects.
Further, the long history of hydropower expansion in Lao PDR means that most energy infrastructure is built around hydropower, including in-house engineers trained specifically to manage dams and office spaces designated for managing hydropower projects. Hydropower also holds weight as a social norm: the national emblem includes a hydropower dam, hydropower companies have prominent offices in downtown Vientiane, and high school students learn “hydropower dam” as part of their standardized English vocabulary.
Despite limitations, the Monsoon project’s success and development partners’ recent prioritization of solar PV expansion prove there is opportunity to diversify renewables in Lao PDR. Current projects are establishing a framework for continued expansion of non-hydro renewables. Further, national plans’ calls for varied energy mixes indicate the GoL is open to diversification to reach energy stability and resolve public debt.
Development partners should push for diversified renewables to be prioritized in Lao PDR’s coming development and power plans. The regional energy grid is rapidly shifting towards solar and wind, and development partners have an opportunity to continue to support the expansion of solar PV or complement existing projects by supporting the uptake of wind projects and the streamlining of approval and development processes for non-hydro renewables. Given Lao PDR’s already robust energy system, a concerted push away from coal and towards solar and wind energy could position Lao PDR as a strengthened player in the diversified ASEAN energy grid and towards renewable domestic energy independence. Development partners promoting carbon-neutrality at home should do the same in Lao PDR and embrace their roles in advancing reliable, carbon-neutral energy production.
Alana Ballagh was an intern with the Stimson Center Southeast Asia Program in 2023. She is currently serving a second term as a Fulbright English Teaching Assistant in Vientiane, Lao PDR.
Development Partners’ Role in Diversifying Renewables in Lao PDR
By Alana Ballagh
Southeast Asia
The most recent national power development plan of the Lao People’s Democratic Republic solidifies hydropower’s role as the main driver of energy production and sets targets for increased coal production through 2030. The emphasis on increased coal production signals a lack of attention towards alternative renewable energy, particularly compared with the regional push towards solar and wind in the Lower Mekong Basin. Lao PDR is falling behind its neighbors in developing a diverse, resilient, and financially stable renewable energy system. However, ongoing efforts by development partners and private investors to diversify renewables, as well as governmental recognition that reliable energy production requires diversification, signal the Government of Lao PDR is perhaps open towards solar and wind energy. Development partners thus have an opportunity to set up Lao PDR for energy resilience by prioritizing diversified renewable energy projects.
Over the last few decades, hydropower dam construction in the Lao People’s Democratic Republic (Lao PDR) has been the primary contributor to the country’s rapidly expanding capacity for electricity exports. Lao PDR has looked towards the Mekong River and its tributaries for hydropower energy and revenues since approving the Nam Ngum 1 dam in 1971. As of early 2023, Lao PDR produced power from 76 hydropower dams and had another 43 dams still under construction. Lao PDR’s most recent National Socio Economic Development Plan (NSEDP9) furthers hydropower’s role as the primary means to achieve its renewable energy goals. The plan reports Lao PDR aims to achieve “continuous quality, stable and sustainable economic growth” via 26 newly proposed dams.
Currently, non-hydropower energy sources play a small role in Lao PDR’s power mix. The Mekong Infrastructure Tracker indicates that Lao PDR’s 76 operational hydropower dams supply 9,608 MW in generation capacity as compared to 1,878 MW from coal and only 56 MW from its 10 solar plants. The NSEDP9 references non-hydropower renewables only in a limited capacity, including mentions of expanding solar into rural areas, solar energy’s role in clean water, and the value of alternative energy sources to “substitute hydropower when electricity generation does not meet the needs of the low water season.” The NSEDP9 sets no specific targets for non-hydro renewables; the aforementioned solar project descriptions contain no explicit numerical targets or project names.
Lao PDR’s National Power Development Plan (NPDP) for 2020-2030 also advocates for a more varied energy mix to supplement unreliable hydroelectricity, but the push for diversification largely recommends coal projects–not solar or wind projects. Mekong Infrastructure Tracker data shows hydropower accounts for 83% of energy production, coal for 16%, and non-hydro renewables for 0.49%. The NPDP assigns hydropower to 65%, coal production to 30%, and non-hydro renewables to 5%.
The Government of Lao PDR (GoL)’s concerns with hydropower, which include Electricité du Laos (EDL)’s accruing debt and hydropower’s unreliable energy production, are the main drivers of diversification. Due to low flow and persistent drought during the dry season, some dams have been unproductive or have produced unpurchased power, meaning EDL has been unable to pay back the money borrowed to build dams and install power lines.
The look towards coal and continued emphasis on hydropower make Lao PDR a regional outlier. Vietnam’s most recent draft National Power Development Plan (PDP8) raised the target for solar and wind to 50% of power supply by 2045, a significant expansion from its existing 20,000 MW of solar and wind capacity in 2022. Thailand’s 2018 Alternative Energy Development Plan (AEDP) aims to increase the share of renewable energy consumption to 30% by 2037. Cambodia is looking to rapidly expand solar, targeting 3,155 MW of solar by 2040, as is Myanmar, where a 20 MW solar project just began operations. This region-wide look towards solar and wind in the Lower Mekong Basin means diversifying renewables may be necessary to meet the expectations of a changing regional energy grid. Diversifying Lao PDR’s energy mix could also help address public debt and seasonal unreliability of hydropower production.
Lao PDR’s continued emphasis on hydropower provides an opportunity for development partners to assist both the Ministries of Energy and Mines and Planning and Investment in considering non-hydro alternative scenarios. Development partners’ existing diversified renewable projects signal the GoL may be open to solar and wind energy given international support. While many official development assistance projects focus on hydro-generation, some prioritize advancing non-hydropower renewables.
Private companies are also investing in diversified renewables. Thai electric power distribution company BCPG Public anticipates completing the 600 MW Monsoon Power project, ASEAN’s largest wind farm, by 2025. Singapore-based developer Solar Attapeu Power Sole Company, Ltd is working to develop the Solar Attapeu Power Project (SAPP), which will produce 64 MW when completed. The 240 MW Nam Theun 2 Floating Solar PV project, slated to begin operation in 2024, would become one of the largest hybrid floating solar project in the world.
The diverse field of international development projects is in part so crowded because partners’ domestic interests and expertise drive individual projects. For example, the Swiss Agency for Development and Cooperation (SDC) leads dam safety projects because Switzerland’s Federal Office of Energy, which supervises 200 major dams, offers applicable technical expertise. The Japan International Cooperation Agency (JICA) leads other development partners in providing capacity building using expertise developed over fifty years of capacity building activities and sending experts to local agencies in Southeast Asia.
Given the United States’ success in building up solar and wind domestically and the Inflation Reduction Act’s policy success supporting the renewable energy sector, an international focus on solar and wind is synergistic with domestic policy back home. The United States, whose Clean Power Asia’s solar auction has already had success in Lao PDR, should prioritize non-hydropower renewable expansion in planned development projects.
However, the push towards non-hydropower renewables in Lao PDR is not straightforward. Lengthy delays in the aforementioned Monsoon project due to delayed field visits reflect renewable energy’s larger obstacles. There are challenges with moving projects forward within establishments in Laos given Memorandum of Understanding (MOU) requirements, and the COVID-19 pandemic slowed the process further by delaying site visits and approval processes. All bilateral work in Lao PDR requires an MOU, but most MOUs in Lao PDR took up to twelve months to approve and approval delays caused 80% of projects to experience delays on implementation. For example, the USAID Lao Energy Sector project has awaited approval for over two years. These delays in field visits and approvals perhaps indicate low prioritization of non-hydro projects as well as a lack of standardized approval processes and long queues for developing projects.
Further, the long history of hydropower expansion in Lao PDR means that most energy infrastructure is built around hydropower, including in-house engineers trained specifically to manage dams and office spaces designated for managing hydropower projects. Hydropower also holds weight as a social norm: the national emblem includes a hydropower dam, hydropower companies have prominent offices in downtown Vientiane, and high school students learn “hydropower dam” as part of their standardized English vocabulary.
Despite limitations, the Monsoon project’s success and development partners’ recent prioritization of solar PV expansion prove there is opportunity to diversify renewables in Lao PDR. Current projects are establishing a framework for continued expansion of non-hydro renewables. Further, national plans’ calls for varied energy mixes indicate the GoL is open to diversification to reach energy stability and resolve public debt.
Development partners should push for diversified renewables to be prioritized in Lao PDR’s coming development and power plans. The regional energy grid is rapidly shifting towards solar and wind, and development partners have an opportunity to continue to support the expansion of solar PV or complement existing projects by supporting the uptake of wind projects and the streamlining of approval and development processes for non-hydro renewables. Given Lao PDR’s already robust energy system, a concerted push away from coal and towards solar and wind energy could position Lao PDR as a strengthened player in the diversified ASEAN energy grid and towards renewable domestic energy independence. Development partners promoting carbon-neutrality at home should do the same in Lao PDR and embrace their roles in advancing reliable, carbon-neutral energy production.
Alana Ballagh was an intern with the Stimson Center Southeast Asia Program in 2023. She is currently serving a second term as a Fulbright English Teaching Assistant in Vientiane, Lao PDR.
Photo provided by Asia Development Bank.
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