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Lao PDR Country Report

Lao PDR Country Report

The Need for Sustainable Renewable Energy in Lao PDR

Kinnaleth VONGCHANH

Department of Mechanical Engineering, Faculty of Engineering, National University of Laos, Lao PDR

Corresponding Author, Tel: (856-21) 78483983, E-mail: kinnalethv*yahoo.co.uk (replace * with @)

Abstract

This paper describes the trends and the need of renewable energy in Lao PDR in order to sustain the energy in the country to curb the rise of energy requirement and price all around the world. Lao PDR has high potential in producing hydro-electricity. The Lao government aims to increase the share of renewable energies to 30% of the total energy consumption in 2025. Hydropower is the most important energy resources in Lao PDR, which technical potential was estimated around 26,000 MW. In the Lao PDR hydro power projects with capacity bellow 15 MW are classified as small-scaled hydropower. Only 10% of produced electricity is used domestically. The government energy strategy is focusing on the renewable energy resources development for following: biofuel, small-scale hydro power plant, solar, biomass, biogas and wind, and other alternative fuels for transportation.

Keywords: Renewable energy, energy consumption, energy potential in Laos

1. COUNTRY OUTLOOK

1.1 Country energy outlook

Energy is one very important for modern human life and for economic development because it has been deeply integrated into daily life activities of humankind. Worldwide population growth has caused the rise in energy consumption and requirement, while conventional energy resources, especially natural fossil fuel deposit, are depleting which, to some extent, is responsible for the increase in energy cost. Summarized in Table 1 the statistical data from year 2006 to 2010 shows a growing population year by year and the relevant rise in fuel consumption in Laos PDR. In year 2006, there were 5.7 million people with GDP of 8.6% and fuel consumption was 450 million liters but in year 2010, there were 6.2 million people with GDP of 8.5% and there were over 700 million liters of consumed fuel. It is clear that the rising of population and a growing of the economic in the country, Lao PDR, are the root cause of higher fuel consumption or the energy requirement.

In present days, Lao PDR and many countries in the world are facing very high fossil derived fuels prices. As the country is not petroleum and LPG producing country; Lao PDR has strongly relied on imported fuels, so the country would be very prone to high energy price and supply shortage related crisis. Effective energy strategy must be in place in order to make the country the energy self-sufficient and to secure in energy supply. The first step is to promote more energy saving and then turn to the development and utilization of inexhaustible and environmental friendly renewable energy resources. With the above consideration, strategy on the energy of Lao Government is to develop and to sustain renewable energy sources such as hydropower, biomass, bio-fuel, biogas, solar, wind, etc.

Lao population is around 6.7 million averages per capita GDP is 960 USD/year. The average domestic GDP growth rate is about 7.8% for 2006-2010. During the same duration, 2006-2010, growth rate of industrial sector reached 13-14% and the economic growth rate is between 7.5-8%. Recently, although economic growth has slowed down due to international financial crisis, energy demand of the country continues to rise. On the consumer side, the demand of energy for transportation is high due to rapid increase of personal vehicle ownership.

Lao PRD lacks of conventional energy resources (e.g., oil or Natural gas) but has some reserve of coal, which, in case used, creates harmful effect to the environment, particularly greenhouse gas emission being responsible for global climate changes. Anyway, the country has abundant renewable energy resources such as biomass, hydropower and solar energy. In some part of the country, there are some potential of wind and geothermal energy.

1.2 Vision and mission on renewable energy in Lao PDR

The government of Lao PDR promotes the development of renewable energies as an important component of the national economic development to ensure energy security, sustain socio-economic development, and enhance environmental and social sustainability. Policies on the promotion and development of renewable energies in Lao PDR focus on small power development for self-sufficiency and grid connection. The main objectives of this strategy are the following:

  • To ensure adequate of energy, energy efficiency and conservation throughout the country and promote cultivation of fuel crops for the production of bio-fuels to replace imported fossil fuel
  • To bring socio-economic benefits, including; development of RE industry, contribution to national economic growth
  • To ensure environmentally and socially sustainable development through enforcement of adequate safeguards.

2. COUNTRY ENERGY AND BEYOND

Lao PDR is agriculture-based country. It has abundant natural resources such as river, mountain, forest, etc., which can be turned into sources of energy generating production. Renewable energy development is an important component of the national economic development to ensure energy security, sustain socio-economic development, and enhance environmental and social sustainability. The development policies on the promotion and development of renewable energies in Laos focusing on small power development for self-sufficiency and grid connection, biofuels production and marketing, and the development of other clean energies (6). The government aims to increase the share of renewable energies to 30% of the total energy consumption in 2025. Moreover, to reduce the importation of fossil fuels, the tentative vision is to source 10% of the total transport energy consumption from biofuels.

2.1 Previous and Future Energy Consumption

The locally made energy sources of Lao PDR are mainly traditional fuels (biomass such as wood and charcoal). In 2009, wood and charcoal were accounted for 69% of the total energy consumption. Fossil fuel use was only 17% which is equivalent to 0.9% tons of TOE. The fuel consumption in Laos is still very low compared with that of other developing countries. Major energy consumers are residential, accounting for 51%, and transport accounting for 21%. The demand for energy by the transport sector has increased due to rapid increased in private vehicle ownership, as shown in Fig. 1 (6).

As shown in Fig. 2, the total primary energy supply (TPES) of Laos would increase from 120 PJ in 2000 to 747 PJ by 2035. The energy system of the country is expected to rely on hydroelectricity. Biomass such as woods and agricultural waste that is currently the major energy sources is expected to have the least share (20%) of the TPES by 2035. On the contrary, the share of hydropower in the TPES would be the largest (50% of the TPES), followed by lignite (32%), oil (21%), and biomass (17%). It should be noted that the export of power to neighboring countries is expected to increase at an annual average growth rate (AAGR) of 9% during 2000–2035 (7).

Figure 3(a) shows the total final energy consumption (TFC) of Laos would grow at AAGR of 4% during the planning horizon. The rapid growth of service-based economy effectively induces the energy consumption in the country. The residential sector that currently consumes most of the energy would be overtaken by the service sector. By 2035, the service sector would have the largest share of about 32% of the TFC, followed by the industrial (29%), residential (23%), and transportation (16%) sectors, respectively. During 2000–2035, it is remarked that the industrial sector would grow the highest rate at an AAGR of 8% due to rapid industrial development in the country. Within the planning horizon, the energy source for Laos is found to rely more on imported petroleum products (e.g. LPG, gasoline, and diesel). Oil consumption is expected to increase as well as the growing service-based economy in the country. Resulting from model simulation, oil would have the largest share (59%) of TFC by 2035, followed by biomass, coal, and electricity (shown in Fig. 3b). Based on the assumption of increased hydropower development, the electricity consumption would grow at an AAGR of 6% during 2000–2035. Laos, which is currently a biomass-intensive-consuming country, would become an oil-intensive economy after 2025.

3. Potential of renewable energy in Lao PDR

3.1 Renewable energy development in Lao PDR

Potential of biomass in Laos PDR includes energy crops and organic wastes. Energy crops comprise oily crop (palm, jatropha, veronica Montana, sunflower, beans, coconut, etc.), sugarcane, cassava, corn, and quick-growing tree and aquatic cultures. Organic waste includes residues of agriculture-forestry production, by products of agro-forestry industry sawdust, wood chips, rice husk, corncobs, livestock, and manures) and municipal wastes (households’ wastes, communal wastes, food-processing wastes). It was estimated that utilization of livestock wastes for biogas production could generate around 2.8×108 m3 of biogas per year or equivalent to 5×108 kWh electricity (about 216 MTOE).

Hydropower is the most important energy resources in Lao PDR, which technical potential was estimated around 26,000 MW, excluding small scale hydropower sites (below 15 MW) with estimated potential around 2000 MW. In the Lao PDR, hydropower projects with capacity below 15 MW are classified as small-scaled hydropower.

3.2 Future trend of renewable energy in Lao PDR

Electricity generation is predicted to increase at 11% percent annually for the 2005 to 2025 period. Most of produced electricity is for exporting to neighboring countries and only 10% is used domestically. The domestic demand for electricity will increase from 425 MW in 2006 to 2,863 MW in 2025. This increase will be covered mainly by development of hydropower and coal-fired power plants.

The demand for fuel transportation is predicted to increase by 5% per year by 2025, the total demand for refined petroleum products will reach 1,174 million liters of which 45% is for gasoline (528 million liters) and 55% is for diesel (645 million liters).

The available renewable energy resources in the country can meet some domestic demand. Table 2 illustrates the potential of renewable energy resources of Laos, which may help achieving target of the government for the share of renewable energy up to 30% of energy consumption by year 2025.

3.3 Promotion and development of bio-fuels

The country imported over 700 million liters of fossil fuels in 2010, a significant increase of about 5% per year. To reduce the importation of fossil fuels and optimize the use of marginal land, the government will encourage and actively promote the development of fuel crops in the country with a preference for smallholder production under maintained community land ownership and control.

  • Substitute 10% of the transportation fuel demand by 2025
  • Increase deployment of biofuel technologies in rural areas
  • Formulate a biofuels action plan (biodiesel and bio ethanol) as blueprint for development.

3.4 Promotion and development of small hydropower

Hydropower resource is the most abundant energy resource in Lao PDR. The development of small hydropower (capacity up to 15 MW) could play an important role in meeting the country’s objectives of increasing rural electrification coverage from the current level of 70% to 90% in 2010. Small hydropower provider least cost power supply to remote area, which currently reply on imported electricity. Lao PDR has substantial potential for small hydropower development, which is estimated to be around 2000 MW. In the past, small hydropower development were not sustainable due to natural disaster, lack of management, lack of technical and budget for maintenance. To promote the development of small hydropower resources, the government will implement measures to address the existing technical, financial, procedural and institutional barriers for small hydropower development in the country.

Pico hydropower technologies are relatively popular in remote villages in Lao PDR as source of power generation. Presently, around 60,000 units are installed all over the country supplying electricity to about 90,000 households.

3.5 Promotion and development of solar energy

Solar energy is one of the abundant energy resources in Lao PDR. The country receives and average solar irradiation between 3.5 to 5 kWh/m2/day. Solar energies can play an important role in achieving government objectives to provide energy services to off-grid and remote areas. To encourage the use of solar energy in order to reduce consumption of other type of commercial energies and reduce environmental impacts, the government promotes the development of solar energies in the following services areas.

Mostly, solar energy in water and space heating for households and commercial installation are promoted.

For the period 2010-2020, the government under the rural electrification master plan (REMP) aims to upscale the program covering additional 19,000 households within 331 villages in 11 provinces.

In addition, the government also encourages the development off-grid connected solar PV systems and solar PV hybrid system, such as the integration with small hydropower and wind power, to sustain supply of electricity during the dry season. In addition to power generation, the government also promotes the use of solar energy for thermal application for individual households, commercial buildings and industrial.

3.6 Promotion and development of biogas

Lao PDR imports liquefied petroleum gas (LPG) for domestic and industrial utilization. LPG imports are relatively high measuring to 871,800 kg in 2006. Significant potential exist in Lao PDR for biogas production from animal and livestock wastes, agro-industrial wastes, municipal solid wastes and wastewater treatment plants.

The government aims to sustain these initiatives by up scaling and increasing the number of households using biogas to 50,000 in 2025 to reduce the importation of LPG.

3.7 Promotion and deployment of other biomass energies

Being a predominantly agriculture base economy, Lao PDR generates substantial amount of wastes from agriculture and forest production and processing such as sugarcane bagasse, rice husks, corn cobs, wood wastes, etc. In addition, with growing urbanization, main cities are also generating significant amount of solid wastes. At present time, there is no large-scale exploitation of these resources for energy generation.

3.8 Promotion and development of wind energy

Based on the existing data, wind energy can be potentially developed for large-scale grid connected power generation and hybrid system providing energy services to rural and remote villages. The government aims to develop around 50 MW of wind power by 2025.

With this prospect, the government will expand the current wind measurement campaign, identify potential site for grid-connected and off-grid hybrid system, and in partnership with international financial and donor organization, prepare wind concession framework and electricity market assess framework.

4. CONCLUSIONS

Lao government’s target for 2025 is to focusing on the development and harnessing of renewable energy resources including: biofuels, small-scale power plant, solar, biomass, biogas, wind, and other alternative fuels for transportation. The government aims to increase the share of renewable energies up to 30% of the total energy consumption in 2025. The objectives of Lao government are following;

  • To reduce the importation of fossil fuels, to reach 10% of the total transport energy consumption from biofuels
  • To promote investment in energy production from public and private sectors and from local and foreign investor
  • To develop wind power of about50 MW
  • To increase number of households using solar energy in 331 villages within 11 provinces in year 2010 to 2020.

5. REFERENCES

[1] Department of Statistics (2011), MPI, Lao PDR http://www.nsc.gov.la/index2.php?option=com_content&view=article&id=37&Itemid=38.

[2] GDP growth (2012), The World Bank Group http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG/countries/LA- 4E?display=graph.

[3] Bio-fuel Development in the Lao PDR: Baseline Assessment and Policy Evaluation. s.l. : LIRE, 2010.

[4] Survey on Fossil Fuel Consumption for Energy Efficiency Conservation to Promote the New Technology of Biofuel in Lao PDR. s.l. : LIRE, 2010. pp6.

[5] Fuel prices pursue upward trend (2011), http://www.laopdr.gov.la.

[6] Lao Government, Renewable Energy Development Strategy, Vientiane : Goverment, 2011.

[7] Watcharejyothin M., Ram M. Ram, (2009), Effects ofcross- borderpowertradebetweenLaosandThailand:Energy securityandenvironmentalimplications. Jourmal of Energy Policy, Elsevier , Vol. 37. pp1782-1792