Lao PDR has significant renewable energy resources. The electricity sector is dominated by hydropower. Currently, 72% of electricity generated in Lao PDR comes from hydropower (5146 MW), 26% from coal with small amounts of biomass, and solar (32 MW of solar in Vientiane) rounding out the current energy mix. Despite an overall surplus of electricity, Lao PDR still has to import electricity from its neighbors to meet peak demand, especially in urban areas. Diversifying the country’s power generation mix with a focus on increasing the share of solar, holds great potential. The generation profile of solar power with output peaking during the dry season can offset seasonal variations of hydro output and, in aggregate, contributes to improved firm power generation. 

In Lao PDR the solar market faces a couple of key barriers. First is the lack of experience with solar PV systems and interconnection requirements. Electricite du Laos (EDL) has expressed concerns about the management of intermittent loads and lacks familiarity with solar PV technology and specifications. Additionally, the GOL is very sensitive to the price of electricity and is concerned about the relatively high price of solar compared to that of hydropower. From the perspective of independent power producers, the high debt burden combined with the fragile cash flow position of the power off-taker (EDL) accounts for more than half of the public sector debt in Lao PDR) poses a significant risk to their investments and increases the cost of financing. 

The project objective is to address key policy and market barriers to the development of the solar market in Lao PDR, paving the way for further growth and expansion in the sub-sector and enhancing access to clean energy services. This project will add 40 MW of solar power to the grid enhancing clean energy access for the approximately 1.4 million residents of Khammouan and Savannakhet Provinces. This project is aligned with IO2. Increased green growth investment flows which enable partner governments to implement green growth policies. 

Specifically, the GOL has requested GGGI’s support and collaboration with USAID Clean Power Asia to complete  i.) Conducting a site selection assessment to help the government of Lao PDR identify multiple sites to comprise an auction of 40 MW of solar PV ii.) Develop technical specifications for solar PV that will be used for the auction, and can be used to guide the development of future solar projects iii.) Design an appropriate risk mitigation mechanism (for off-taker risk) to be incorporated into tender documents for the auction process. 

Impact: Increase access to clean energy services in Savannakhet and Khammoune Provinces for 1.4 million people. 

Outcome: N/A 

Project Outputs completed in 2019:

i. Green Growth Policies:Completed site selection study to identify potential connection points and completed draft technical specifications to be further consulted with the Government of Lao PDR

ii. Green Investments:N/A

iii. Capacity Building and Knowledge Products: N/A 

Project Manager: Annaka Marie Peterson 

Bolormaa Chimednamjil,  Muharrem Askin, Tero Raassina