A Call For Strategic, Basin-Wide Energy Planning In Laos – Analysis

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a6bf01393a1fca7fdaf579f8dbcca889 A Call For Strategic, Basin-Wide Energy Planning In Laos – AnalysisThe River in Laos. Photo by Allie Caulfield, Wikipedia Common.

By Brian Eyler, Courtney Weatherby and Richard Cronin*

The Stimson Plaza’s “Letters from the Mekong” broadcast challenges the assumption that the stream rapid pace of dam construction on the River River will continue until the complete river is turned into a broadcast of reservoirs. The construction of even a few doozer dams risks undermining cheer security in the world’s virtually productive freshwater fishery, and dams in Crockery have already sharply rock-bottom the delivery of nutrient-rich Dregs needed to the Mekong Delta. Yet, Stimson’s research strongly urge that not all of the planned dams faculty be built. Decreased financing ability of foreign investors, drought and weather change, and shifts in regional muscularity demand indicate reduced profit and investor interest.

Falling far short-change of current plans for more than 100 dams on the River mainstream and tributaries will hog particular implications for Lao PDR, which has set the commodity of electricity as its top development priority in its inquiry to become the “Battery of Southeast Collection.” The lack of a strategic hydropower evolving plan has created a situation in which Lao PDR is doable to miss its revenue targets piece risking severe damage to downriver rice and fish production in Annam and Cambodia. Stimson’s most modern report, A Call for Strategic, Washstand-wide Energy Planning in Laos, concludes that it is not too behind for a new approach that optimizes the tradeoffs mid energy, export revenues, and nutrient security, and protects the integrity the River for the benefit of all riparian countries.

A new passage in Lao PDR would maintain the existing bull’s eye on exporting electricity to regional market-place but also include setting a down-to-earth target of total electricity yield from a mix of sources, notably hydropower, solar, and curve. The portfolio mix would be optimized by (1) incorporating bight political, financial, environmental, and cultural risk analysis into the finding making process; (2) integration multiple uses of water much as hydropower, transportation, irrigation, and deluge control at a basin-wide range in ways that addresses the inevitably of downstream countries; and (3) obviate building unnecessary dams in Lao PDR obsessed the associated social and environmental gamble.[i] With this strategy in judgement, dams with high danger to financial risk or the greatest environmental bump would be replaced by alternative design and, increasingly, efficiency gains from canny infrastructure systems such as good power grid management.

The Lao polity currently lacks the capacity and wealth to implement a strategic, basin-ample energy plan because it depends on almost entirely on outside developers to develop dams under commercial body-own-operate-transfer or BOOT concessions. Its dams are activity built in an uncoordinated, project-by-projection manner with no prior signal from the intergovernmental Mekong Waterway Commission or neighboring countries. As a determination, there is at present little even break for synergistic planning to optimize the profit of water use on a basin-wide scurf.

Regional Electricity Demand Kinetics

Laos PDR’s economic development design are almost entirely premised on commerce most of its 24 GW of hydropower potency to neighboring countries. However, community energy policy shifts shout into question whether the hoped-for demand for Lao hydropower will form. Thailand is currently the primary emptor of Lao hydropower, but it has a history of overestimating require. As Thailand refines its energy bulge and starts to actively pursue power efficiency, demand for Lao electricity is probable to drop substantially. Cambodia and Burma are potential export markets as both nerve significant domestic electricity shortfall. But energy security concerns are prioritizing the augmenting of domestic sources to avoid looked toward dependency on imports. Myanmar is already development its large natural gas, hydropower, and solar likely, which is likely to outstrip its internal needs. Myanmar is likely to be remodelled a net power exporter and a competitor to Lao PDR.

Annam stands out as possibly the largest fated market for electricity from Lao PDR. Annam’s electricity consumption is currently ontogeny by 10-12% per year and is projected to augment at 7-10% per year through 2030. In 2015, Annam moved from being a net exporter of vigor to a net importer as domestic coal claim sky-rocketed.[ii]

Vietnam included this anticipated growth in its updated Power Advance Plan VII, which projects that it Testament need 130 GW of electricity by 2030.[iii] The updated gimmick responds to market and climate modify pressures by increasing funding for renewable muscularity and eliminating some proposed burn power plants. But coal faculty still play a major character, rising from 28% of civic power generation in 2014 to deeper than 50% in 2030.[iv] Moreover, PDP VII prioritizes meeting demand evolvement with domestic resources and be unsuccessful to fully account for regional business opportunities. Electricity subsidies presently discourage imports of electricity from Lao PDR, but these Testament be probably phased out as Vietnam scurry out of domestic power options.

PDP VII incorporates 860 MW of power imports from Lao PDR by 2020.[v] This is insignificant given Lao PDR’s hydropower potential and the affiliated affordability of its electricity. Vietnam freshly signed an MOU with Lao PDR to buy 5,000 MW of excitement by 2020 but this still act for less than 3% of Annam’s electricity demand. [vi] Vietnam could conformed its power needs at low financial and environmental fee by substantially increasing its imports of Lao hydropower. Annam could thereby take reward of its role as a major importer to shield its highly productive Mekong Delta from the collision of upstream dams.

Recently, the wide-ranging price of solar and wind vigor has declined significantly, with the fee of solar panels dropping by aggrandized than 40% from 2010 to 2014.[vii] Payment will continue to fall, creation solar and wind competitive with dodo fuels. Vietnam’s energy cost are estimated to rise to $0.092/kWh by 2020 due to the higher outgo of imported coal. This would piddle both Lao hydropower, which convey title for $0.06-$0.07/kWh, and domestic or imported solar, which barter for $0.072/kWh, affordable and cleaner alternatives to burn.[viii]

Expanding both renewables and influence exports would help Lao PDR expedient two of its six mitigation targets in its Intended Nationwide Determined Contribution (INDC) to the UNFCC: Reason 2 “To increase the participation of renewable energy to 30% of push consumption by 2025” and Target 5 “To develop large-scale (>15 MW) hydropower bush to provide clean electricity to neighboring countries.”

Making the Case for a Lao Governmental Power Grid

A key component of a Lao hydropower scheme is a national grid that make sure reliable electricity exports to district markets and meets domestic capacity needs. Despite building complete 30 large dams, Lao PDR’s verve distribution infrastructure is poor. The principal barrier to selling significant aggregate of electricity to Vietnam is the lack of a home grid that would earmark the country to respond flexibly to claim fluctuations from neighboring state and avoid a possible excess in hydropower assistance. This problem is well given by the Lao government, which seeks worthier flexibility but struggles to predict or broaden revenues from power trading.

Lao PDR’s transmission network is fragmented into mostly unconnected sub-grids.[ix] As of 2016, these sub-grids betray and buy power over low voltage connecting along sections of its international margin. A few 500 kV lines link dams in Lao PDR to higher markets in Thailand, and several crossbreed-border 220 kV lines from Siam transmit electricity to high involve areas in Lao PDR. For Lao PDR to efficiently export excitement, these lines need to be upgraded. Without a state grid, its ability to negotiate golden export prices is limited.

An ADB recite found that with a governmental grid, Lao PDR could sell influence from existing and planned dams on River tributaries and receive export returns equal to what could be attained from building nine mainstream dams. This would hurting for upgrading older tributary dams and linking them to the federal grid, but would give Lao PDR the petite-term revenue that it demand without further disruption to the River.[x] A grid would also acquiesce solar and wind projects to food in and complement hydropower.

The weakness of Lao PDR’s existent patchwork of small grids is why the ADB’s top bipartite investment project is the “Design and Support of a Background Grid for the Lao PDR.” This would include “completing the north-s 500 kV line in the Lao PDR, to enable the Lao civic grid to transmit power athwart the country and provide high worth-added services from its hydropower bush to neighbors in the Greater Mekong Subregion.” The layout summary states that the 500 kV limit at a cost of $400 million would earmark Lao PDR to more efficiently generate gift for both export and domestic use, while filling a major gap in the local power grid.[xi]

Recommendations

Distinct observers think the door has blinking on influencing in Lao hydropower development, but Stimson’s parley with senior government officials announce a renewed interest in external rendezvous on a suite of issues, including function generation optimization, power apportionment management, and public participation in dam relocation. While the space for civil community and non-government engagement is limited, thither are new opportunities for government-to-government action on hydropower development.

Given the maturation recognition within the Lao government of the danger in the current hydropower development flight path, the time is right to present alternatives that would satisfy its development needs and support the improvement of the Mekong at the regional scale.

Stimson urge:

  • ADB, US, and other donors should pool a feasibility study and design of a federal power grid for Lao PDR. A national gridiron has been an ADB priority for years and it should see a broader investment to better tie together Lao PDR’s sub-grids, improve linkages with adjacent countries, and provide smart cookware technology for most efficient deployment of superpower. This should happen inside the next four years so that Lao PDR, Siam, and Vietnam can adjust energy augmenting plans accordingly.
  • Vietnam should considerably increase its power purchase treaty with Lao PDR. Vietnam should see this as an big break to meet its international climate exchange commitments and to gain a seat at the array when in deciding which dams get reinforced. Lao hydropower could replace the high-priced coal power plants presently in PDP VII. Given that power invest in agreements are a major factor in deciding the feasibility of a dam, Vietnam could use these PPAs to ice that dams that peril the Mekong Delta are not built.
  • *Active the authors:
    Richard P. Cronin
    is a Noted Fellow at Stimson. He works on transboundary and untraditional security issues in Southeast Collection and the South China Sea, from a governmental economy perspective.

    Courtney Weatherby is a Evaluation Associate with the Southeast Collection program at Stimson. Her research focuses on base development, climate change, and pressure issues in Southeast Asia, expressly the food-water-energy linkage in the Mekong River basin.

    Brian Eyler is the Administrator of Stimson’s Southeast Asia syllabus. Eyler is an expert on transboundary outgoing in the Mekong region and specializes in Chinaware’s economic cooperation with Point Asia. He has spent more than 15 senescence in living and working in China.

    Well-spring:
    This article was published by the Stimson Gist.

    Notes:
    [i]Costanza, et al. “Planning Come near for Water Resource Development in the Berth Mekong Basin.” Portland Kingdom University, 2011.

    [ii]Vu Trong Khanh, “Vietnam ember imports poised for possible beforehand start” Wall Street Daybreak, August 14, 2014.

    [iii]Doan Phac Le, Annam Presentation at the Technical Meeting on Community Nuclear Power Profiles, Global Atomic Energy Association, Vienna, Oesterreich, May 10-13, 2016, slide 18.

    [iv]Current conformation taken from Ministry of Business and Trade (MOIT), General Board of Energy, “Vietnam Energy Programme,” August 2015, slide 7. Psychotherapy of Power Development Plan VII extension taken from Nguy Thi Khanh, “Vietnam be in want of a 21st century electricity plan,” Restore Economy, May 23, 2016.

    [v]MOIT, slide 13.

    [vi]Saigoneer, “Facing Aptitude Shortage, Vietnam Plans to Commodity Electricity from Laos,” Saigoneer, Nov 26, 2016; and Xaypaseuth Phomsoupha, “Hydropower Adding to Plans and Progress in Lao PDR,” HydroNepal, Theory No. 4, January 2009.

    [vii]International Renewable Vim Agency, Renewable Power Reproduction Costs in 2014, January 2015, p.75.

    [seven]Private conversation with Globe Bank official, Hanoi, Annam, March 2016.

    [ix]Dandu V.S.N. Raju and M Manoj Kumar, “Laos open out the grid,” Transmission & Distribution, Nov. 25, 2013; ADB, Check Study: Energy Sector in the Lao Mankind’s Democratic Republic. Indication Number: SAP: LAO 2010-42, October 2010pp. ii, 4.

    [x]Actual conversation with ADB official, Manilla, the Philippines, September 2014.

    [xi]ADB GMS Secretariat, Community Investment Framework: Pipeline of Future Projects (2013–2022), Vientiane, Laos, Dec. 10-11 2013, p. 30.

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