Laos has moved from tiny service unit to regional energy supplier

The Laotian energy sector expects to continue its sharp growth at an average of about 30 per cent annually from 2016 to 2020, according to a recent report of the Ministry of Energy and Mines.

The sector will achieve this large expansion because there are currently 21 power-plant projects under construction that will be completed and commence energy generation within this period, adding an installed capacity of about 3,492 gigawatts, according to the ministry’s report. 

The ministry also plans to continue to promote or support another nine power-plant projects that are under study by Electricite du Laos (EDL) and some 20 joint investment projects of independent power producers (IPPs) that will have power-development agreements with the government in the near future.

So far Laos has 25 commissioned power plants generating energy for both local use and export, with installed capacity of 3.244GW. This number does not include small-scale plants that have installed capacity lower than 1 megawatt.

The ministry reported that total electricity generation was about 15.461 billion kilowatt-hours in fiscal year 2013-14, exceeding expectations by 6.98 per cent. It also represented a 10.44-per-cent increase over the previous fiscal year.

Power generation in 2014-15 will be at least 15.659 billion kilowatt-hours because new supplies will come from a recently completed hydropower plant and another one that will start generating next year.

Under current arrangements, the generated energy is for both local supply and exports to Thailand, Vietnam and Cambodia.

The sector also has the potential to develop an electricity grid linking Laos and Singapore, and trading in electricity is possible as Thailand and Malaysia would also benefit from the project.

Laos will push for the acceleration of energy integration under the Asean Power Grid (APG) to address the imbalance in the distribution of power-generating resources in the region.

The APG aims to connect countries with surplus power-generation capacity to those with a deficit. The intention is to link up power lines in the 10 Asean nations by 2020.

At the 29th Asean Ministers of Energy Meeting held in Brunei in 2011, Laotian Energy and Mines Minister Soulivong Daravong highlighted that his country could help other Asean members reduce their use of fossil fuels, which are the main source of greenhouse-gas emissions, and help Asean stabilise its power supply.

The energy sector is one of the most important business units in the public economic system. During the 1960s, the Laotian electrical sector was merely one small service unit, according to a report from EDL. It could provide people with power for lighting for only two or three hours per day in the evening, and only in Vientiane and a few other urban areas.

Before the communist Pathet Lao won the civil war in 1975, there were only three hydropower plants around the country with a combined installed capacity of 40MW.

In Vientiane there was a petrol-driven generator that could produce 10MW of power, providing around 241 million kilowatt-hours annually to more than 10,000 households, the EDL report noted.

The ministry stated that the country also had only one small-scale power plant, Xelabam, with an installed capacity of 5MW, that was able to generate only 21 gigawatt-hours annually for some areas. 

In 1970 the Nam Dong power plant began operation in Luang Prabang provincem generating 1MW or 5GWh per year for local consumption.

In 1971 the first phase of the Nam Ngum 1 hydropower construction project in Vientiane province was completed with an installed capacity of 30MW, which has now been expanded to 155MW.

In addition, there were also network systems and electrical generators being run on petrol in some large towns in Luang Prabang, Khammuan, Savannakhet and Champassak provinces.

On the right path for economic development and, as planned by the government, to be based on the development of a power sector as a focus for the stimulation of national economic development, the energy sector was built up from ground zero when there was only primitive technology available and very limited funding at its disposal. However, the sector managed to work successfully through those hard times, step by step.

Hydropower development, which relies totally on natural water resources, is very suitable for the country and is to be used as the economic basis for transforming the country into a modern, industrialised nation, the government says.

The development of an electrical industry is an important base, among other sectors, in national economic development and is consistent with steps forward in socialisation, it says. 

The government’s stated policy to promote, encourage and invest strongly is based on the mandates given to EDL to take on the central role and duty for actual implementation.Laos will try to have total installed capacity of about 12GW by 2025, the ministry’s report noted.

Deputy Energy and Mines Minister Viraphonh Viravong said at a meeting in April that the rich water resource of the Mekong River and its tributaries gave Laos the potential to develop more than 25GW.