Laos to become ASEAN hydropower hub

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Mekong river in southern Laos

Laos is on the way to become Southeast Asia model nation for the use of hydropower as a primary source of electricity, though the development also causes a lot of controversial discussions on the environmental impact of large dam projects.

The country’s government has said it is planning to build up to 70 hydroelectric dams along the Mekong River and its tributaries over the next decade, an increase from the previous but already significant estimate of 55.

This construction boom will have wider repercussions than extensive environmental damage. It has the potential to alter the geopolitical balance in Southeast Asia, say analysts.

Background

Laos is a landlocked, mostly rural and agrarian country rich in natural resources, but becoming increasingly urbanised and better integrated within the Greater Mekong Subregion. Traditional energy sources, mostly fuelwood and charcoal, are giving way to electricity and petroleum. While Laos imports all of its petroleum products, it has large hydropower potential, and a major portion of existing hydropower capacity is for power exports.

The key energy sector objectives of the government include bringing electricity to all by expanding and improving the main grid or, where cost effective, by off-grid electrification, and earning foreign exchange by setting up export-oriented hydropower projects and exporting electricity.

Apart from aiding the Laotian economy these exports are expected to greatly increase the country’s regional importance, as well as establish it as one of the largest energy hubs in the region and perhaps in Asia as a whole.

The hydroelectric potential of Laos is estimated at around 26,000 megawatts, the majority of which will be available for export rather than domestic consumption. This fact already attracted considerable attention from ASEAN countries and beyond. Energy investors from China, France, Japan, Norway, Russia, South Korea, Thailand, the US and Vietnam are involved in the planning or construction of several hydroelectric dams. The construction projects are given ample funding from sources such as China’s policy banks, the World Bank and the Asian Development Bank (ADB).

Main investors

Chinese companies have invested close to $2.8 billion in the country over the last decade, of which 32 per cent was invested in hydropower.

Thailand is also highly active in the sector. Much of the future Laotian hydroelectric exports are slated for its western neighbour. For example, the new, huge $3.5 billion Xayaburi dam is being entirely financed by Thai banks.

Vietnam, the third major player in Laotian hydropower, has, in total invested about $3.45 billion in Laos, with a high share also going into hydropower projects. Vietnamese companies are involved in the planning and construction of several hydroelectric dams in Laos, with most of the electricity that will be generated by these projects already earmarked for export to Vietnam.

At present, Laos has 16 major hydroelectric dams generating 2,560 megawatts of energy, and 37 small-scale plants with a total capacity of 6.59  megawatts, according to the Vientiane Times.

Laos plans to increase its hydropower output to around 3,856 megawatts by 2015, according to a recent statement by Lao Deputy Minister of Energy and Mines, Khammany Inthirath.

Much of the energy produced is currently exported to Vietnam and Thailand. However, domestically the energy should also help improve the number households able to access electricity, currently at 76.9 per cent. The Lao government hopes that, through hydropower, this will increase to 85 per cent by 2015 and 90 percent by 2020.

Presently, Laos has 23 more dams in the planning stage, another 33 dams are undergoing feasibility studies. Their total expected output is 7,376 megawatts, which is still just around one third of the full potential in the country.

Environmental concerns

Interestingly, the main foreign investors in Laos’ power projects have also shared concerns about the environmental impact of continued dam construction. Thailand and Vietnam, which share the lower Mekong with Laos along with Cambodia, have criticised Laos’ insufficient environmental impact assessments. The Xayaburi Dam, for example, stopped construction in May 2012 due to numerous complaints based on scientific studies that have shown that they could cause irreversible harm to the Mekong River’s fisheries.

Reduced flow of sediment down the Mekong is another concern for the environment of the lower Mekong. Sediment flow deposits rich soil on the banks of the lower Mekong, creating excellent agricultural land. A dam on the Mekong could affect these flows, impacting the livelihood of millions of people who live on the lower Mekong, detractors said.

The Asian Development Bank has said that it will assist Laos in implementing environmental standards and find ways to reduce impact on the Mekong region through the big dams along the river. Laos already passed an Environmental Protection Law in 1999 that introduced measures on the management, monitoring, restoring and protection of the environment. However, the government has failed to release data on its adherence to the provisions of the law, the ADB criticised.

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[caption id="attachment_5607" align="alignleft" width="300"] Mekong river in southern Laos[/caption] Laos is on the way to become Southeast Asia model nation for the use of hydropower as a primary source of electricity, though the development also causes a lot of controversial discussions on the environmental impact of large dam projects. The country's government has said it is planning to build up to 70 hydroelectric dams along the Mekong River and its tributaries over the next decade, an increase from the previous but already significant estimate of 55. This construction boom will have wider repercussions than extensive environmental damage. It has the...

Reading Time: 3 minutes

Mekong river in southern Laos

Laos is on the way to become Southeast Asia model nation for the use of hydropower as a primary source of electricity, though the development also causes a lot of controversial discussions on the environmental impact of large dam projects.

The country’s government has said it is planning to build up to 70 hydroelectric dams along the Mekong River and its tributaries over the next decade, an increase from the previous but already significant estimate of 55.

This construction boom will have wider repercussions than extensive environmental damage. It has the potential to alter the geopolitical balance in Southeast Asia, say analysts.

Background

Laos is a landlocked, mostly rural and agrarian country rich in natural resources, but becoming increasingly urbanised and better integrated within the Greater Mekong Subregion. Traditional energy sources, mostly fuelwood and charcoal, are giving way to electricity and petroleum. While Laos imports all of its petroleum products, it has large hydropower potential, and a major portion of existing hydropower capacity is for power exports.

The key energy sector objectives of the government include bringing electricity to all by expanding and improving the main grid or, where cost effective, by off-grid electrification, and earning foreign exchange by setting up export-oriented hydropower projects and exporting electricity.

Apart from aiding the Laotian economy these exports are expected to greatly increase the country’s regional importance, as well as establish it as one of the largest energy hubs in the region and perhaps in Asia as a whole.

The hydroelectric potential of Laos is estimated at around 26,000 megawatts, the majority of which will be available for export rather than domestic consumption. This fact already attracted considerable attention from ASEAN countries and beyond. Energy investors from China, France, Japan, Norway, Russia, South Korea, Thailand, the US and Vietnam are involved in the planning or construction of several hydroelectric dams. The construction projects are given ample funding from sources such as China’s policy banks, the World Bank and the Asian Development Bank (ADB).

Main investors

Chinese companies have invested close to $2.8 billion in the country over the last decade, of which 32 per cent was invested in hydropower.

Thailand is also highly active in the sector. Much of the future Laotian hydroelectric exports are slated for its western neighbour. For example, the new, huge $3.5 billion Xayaburi dam is being entirely financed by Thai banks.

Vietnam, the third major player in Laotian hydropower, has, in total invested about $3.45 billion in Laos, with a high share also going into hydropower projects. Vietnamese companies are involved in the planning and construction of several hydroelectric dams in Laos, with most of the electricity that will be generated by these projects already earmarked for export to Vietnam.

At present, Laos has 16 major hydroelectric dams generating 2,560 megawatts of energy, and 37 small-scale plants with a total capacity of 6.59  megawatts, according to the Vientiane Times.

Laos plans to increase its hydropower output to around 3,856 megawatts by 2015, according to a recent statement by Lao Deputy Minister of Energy and Mines, Khammany Inthirath.

Much of the energy produced is currently exported to Vietnam and Thailand. However, domestically the energy should also help improve the number households able to access electricity, currently at 76.9 per cent. The Lao government hopes that, through hydropower, this will increase to 85 per cent by 2015 and 90 percent by 2020.

Presently, Laos has 23 more dams in the planning stage, another 33 dams are undergoing feasibility studies. Their total expected output is 7,376 megawatts, which is still just around one third of the full potential in the country.

Environmental concerns

Interestingly, the main foreign investors in Laos’ power projects have also shared concerns about the environmental impact of continued dam construction. Thailand and Vietnam, which share the lower Mekong with Laos along with Cambodia, have criticised Laos’ insufficient environmental impact assessments. The Xayaburi Dam, for example, stopped construction in May 2012 due to numerous complaints based on scientific studies that have shown that they could cause irreversible harm to the Mekong River’s fisheries.

Reduced flow of sediment down the Mekong is another concern for the environment of the lower Mekong. Sediment flow deposits rich soil on the banks of the lower Mekong, creating excellent agricultural land. A dam on the Mekong could affect these flows, impacting the livelihood of millions of people who live on the lower Mekong, detractors said.

The Asian Development Bank has said that it will assist Laos in implementing environmental standards and find ways to reduce impact on the Mekong region through the big dams along the river. Laos already passed an Environmental Protection Law in 1999 that introduced measures on the management, monitoring, restoring and protection of the environment. However, the government has failed to release data on its adherence to the provisions of the law, the ADB criticised.

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