In pursuit of becoming the powerhouse for Southeast Asian Nations, Laos is rapidly harnessing the immense potential of hydropower through IPPs’ investment.
The IPPs’ contribution in hydropower production is transforming the country from power deficit nation to power rich nation. At present, Laos is exporting almost 30% of electricity to ASEAN nations. Thailand and Vietnam are its major export markets where it expects to sell up to 10,000 MW and 5,000 MW electricity, respectively by 2020. The country is likely to expand its electricity market to Myanmar, Cambodia, Singapore and China in near future.
Government Adding Fire Power
Realizing the contribution and potential of hydropower in the economic growth of the country, the government of Lao People’s Democratic Republic (PDR) has attracted IPPs in the nation with several lucrative offers. It extended incentives such as, tax holidays for almost a decade, lowered tax rates for large projects, etc.
To address the growing demand for electricity within the country, the Laotian government estimates to generate over 9 GW electricity (more than 7 GW from hydropower and around 2 GW from coal) in next three years of which above 90% will be produced by IPPs. The projected target seems achievable because 54 power projects are under construction at present. They are expected to generate electricity by 2020
Hydropower to uplift Laos in the Rank of Middle-Income Nation Shortly
Currently, 46 hydropower plants are in operation in Laos. They are producing over 6 GW electricity which is three-fold more than what the country produced seven years back. Of the total operating power plants, more than half are IPPs.
The Laotian government’s strong electrification program to illuminate 90% households of the country by 2020 also drove the hydro sector towards prosperity as the program surged the demand for electricity. With IPPs’ contribution, the government achieved the target three years prior to scheduled date. And now the government targets to electrify 98% of households in the next three years.
Laos is expecting more investment from IPPs for the optimal utilisation of its hydropower resource which has theoretical potential of more than 26 GW. Capitalisation of the resource will make Laos powerhouse of ASEAN region. This will also help Laos in joining the ranks of middle-income country because electricity plays vital role in the overall economic growth of the country.
Subarna Poudel is a researcher with Frost & Sullivan. He can be reached at firstname.lastname@example.org
Sapan Agarwal drives content and marketing for Frost & Sullivan. Sapan is based out of Kuala Lumpur Malaysia and can be reached at email@example.com | +603 6204 5830