Green energy opportunities in emerging markets are difficult to recognize without pointers from insiders. This series of articles introduces emerging markets with high potential in green energy and energy efficiency.
Lao PDR Snapshot
- Population︰5 million, spoken languages include Lao, Thai and Hmong, predominantly Buddhist.
- Geography︰7 square kilometers of thickly forested landscape, with Phou Bia as the tallest point at 3820 meters. The Mekong River runs throughout the nation, supporting agricultural development.
- Climate︰Tropic, sub-tropic climate with distinct rain season from May to November. Yearly rainfall could reach 3500 mm.
- Politics︰Single-party socialist nation. Current national development plans focus on infrastructure and public health.
Intersection of the Greater Mekong Sub-region (GMS)
Laos is at the center of the GMS, bordering with Thailand, Vietnam, Cambodia, Myanmar and China. Although Laos is not the most developed of the GMS countries, with the East-West Corridor (EWC) running through it, Laos is critical for GMS trade development. In response to growing economic activity on the EWC, The Savan-Seno Special Economic Zone was established in 2003 and has since become a prime center for Southeast Asian trade.
High Political Stability and Steady Economic Growth
Laos is a factor driven, lower-middle income economy whose investment climate is still in developmental stage. High political stability, low labor cost (min. wage: $85.7/month) and high primary education are competitive advantages for attracting investment from neighboring Asian countries.
Laos average GDP growth is at 7.75%, with accelerated growth of 8-9% expected by ADB. GDP per capita of 2012 is at 1,417 USD. Energy and mining industries and infrastructure development contribute most to GDP, however traditional manufacturing and retail is experiencing fastest development.
Green Energy Market Developments
- Encouraging energy diversity
|Coal||Major resources located in northwest Laos and have proven reserve of 810 million tons.||Sufficient reserves for about 2 GW installed capacity.|
|Solar||Average irradiation is 3.6-5.5 kWh/m2/day.||PV modules currently used for off-grid applications.|
|Biomass||Dispersed throughout the country.||Traditional biomass is used in 88% of total energy consumption, for household use and resource processing facilities.|
|Hydropower||Annual precipitation is about 2000 mm, and has potential hydropower installed capacity of 26 GW.||Most abundant energy source in Laos. Large hydro plants supply excess power to neighboring countries Thailand and Vietnam.|
- GMS power grid interconnection project
The GMS has planned regional economic cooperation and power development since 1992, its power trade and transmission policies are implemented to facilitate regional trade and alleviate poverty. Among various economic projects in the region, 51.4 billion USD are planned for potential energy projects in the GMS. Pilot projects for renewable energy are supported by the fund in Laos, where the power sector is open to private foreign and domestic investment.
- National Energy Saving Target / Intensity Target 2025
The national target plans to increase the share of renewable energies to 30% of total energy consumption by 2025, and will promote investment in renewable energy production from public and private sectors from local and foreign investors. Among some of its focuses are biofuel, pico-hydro and off-grid solar projects. 10% of transportation fuel is expected to be substituted by 2025 and the policy actively promotes development of small scale fuel crops. 650 MW of small hydro installed capacity is to be developed between 2010 and 2025 by private and public funds. A large-scale grid connected solar project of 50 MW is currently under feasibility study, and solar lighting and hybrid solar systems in rural homes will be distributed under the Rural Electrification Plan.
- Rural Electrification Program
Electrification in Laos only reached 71% by Sep. 2010. The Rural Electrification Program supports extending the existing power grid to rural households (68% of population) in Southern Laos, while promoting off-grid renewable energy. As of 2010, 35,000 households use off-grid solar or mini-hydro power systems and an additional 19,000 households are planned to be electrified with mini-solar by 2020.