The first priority of Lao PDR’s energy policy is to provide reliable, affordable, and sustainable electricity to ensure economic growth and to reduce poverty. The main focus areas are to increase the electricity access and hydropower development.

The Renewable Energy Development Strategy in Lao PDR (2011) sets the target for renewable energy share in national energy mix in 2025. The plan consists of three strategies: short-term strategy (2010-2015) aiming at provision of necessary studies and capacity building, mid-term strategy (2016-2020) to establish clear renewable energy framework, and long-term strategy (2021-2025) to develop a fully competitive renewable energy market.

In 2015, the Government has approved the Policy on Sustainable Hydropower Development in Lao PDR. The purpose of the policy is providing guidance and reference on hydropower sector investment as well as to inform and encourage project developers/investors to be aware of the Government policy on sustainable development in Lao PDR.

Household electrification is also an important aspect of Lao energy policy. The Power Sector Policy and Targets for 2020 outlined the target of 90% electrification rate by 2020. With abundant hydropower resources, the development of hydropower constitutes another key area. The Law on Water and Water Resources (1996) sets the regulation for utilization of hydropower to ensure sustainability of hydropower projects and to prevent any adverse effect on the environment.

The latest available official data for describing the energy situation in Lao PDR comes from 2015. Figure 1 (Primary Energy Supply) presents the share of each energy source in the national primary energy supply. The share of RE is relatively high. Biomass and small hydropower are the main renewable resources of Lao PDR. The biomass is generally used for thermal energy generation, whereas hydropower is almost the exclusive source for electricity generation. The first lignite thermal power plant was put into operation in 2015 and in 2017 it has contributed to generate 12,597 GWh of electricity as presented in Figure 2 (Electricity Generation by Source) below.

Lao PDR's Primary Energy Supply in 2015 (%)

  • Oil & Petroleum (930ktoe)
  • Coal (1,801 ktoe)
  • Hydro (414 ktoe)
  • Biomass (1,619 ktoe)
  • Electricity (817 ktoe)

Source: Lao PDR Energy Statistics 2018 by Ministry of Energy and Mines, Lao PDR

In 2017, Lao PDR generated around 35,022 GWh of electricity, 5.34% of which (equivalent to 1,873 GWh) was exported to Thailand, Myanmar and Cambodia. Power exports are projected to increase sharply, because the government has reached agreements with its neighbouring countries to export 7,000 MW to Thailand and 5,000 MW to Viet Nam by 2020. However Lao PDR has also imported electricity from Thailand, Vietnam, and China that amounted to 430 GWh in 2017.

Lao PDR's Electricity Generation by Source in 2017 (%)

  • Coal (12,597 GWh)
  • Hydro (22,320.38 GWh)
  • Biomass (105 GWh)

Source: Electricite du Laos. Lao PDR Energy Statistics 2018

The electricity tariffs in Lao PDR are divided into several sub-groups. The electricity tariffs in three main sectors have not changed since 2017, that are shown in Figure 3 (Electricity Tariffs in Lao PDR for 2017).

 

Electricity tariffs in Lao PDR for 2017

Source: Electricite du Lao PDR (2016)

Note: Conversion rate for LAK to USD 0.00012 (as of December 2018)

 

In the residential sector, the tariffs are classified into three main types based on the consumption level [kWh], while the commercial and industrial tariffs take the voltage level into consideration. The tariffs are set for the period of 2012 – 2017 that are revised for each year. In 2017, the residential and commercial tariffs is 8.2% higher than in 2012, while the industrial tariffs are raised by 24%.

The maximum tariff applies when the customer consumption level is higher than 150 kWh. For the commercial sector, the type of business is decisive in determining the tariff i.e. education and sport businesses connected to medium voltage pay the lowest tariff, while the entertainment businesses connected to the low voltage – the highest. For industrial sector, the lowest tariff is paid if connected to the high voltage, while the highest tariff applies to industries above 5 MW connected to medium voltage.

According to the data obtained from Lao PDR delegation presentation in the annual Renewable Energy Sub-Sector Network (RE-SSN) Meeting of the ASEAN Energy Cooperation in Singapore (2017), Lao PDR’s electricity has reached around 92.05% of total households in 2016. In Vientiane, full electricity access (100%) has been achieved, while Phongsali has the lowest electrification rate of 21.86%. The government plans to increase the overall electrification rate to 98% by 2020.

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