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Official Name:
Lao People’s Democratic Republic

National Designated Entity

Type of organisation:
Mr. Syamphone Sengchandala
Director of Management and Coordination Division
+856 21 25 43 50, +856 20 555 08961

Energy profile

Lao (2012)

Energy profile
Energy profile
Extent of network

Household connections have increased from 16% in 1995 to 63% in 2009, and 72% in 2011. The rural electrification rate remains at 38%.Lao PDR has no integrated national grid. The EdL transmission system comprises four separate power grids in four operational areas comprising 115 kilovolt (kV) and lower-voltage lines and substations. Each of the four operational areas is also connected to the transmission systems of Thailand and/or Viet Nam and/or Yunnan province in the People’s Republic of China (PRC) for power import at the 22 kV, 35 kV, or 115 kV levels.10 There are medium-voltage connections to neighboring countries that are not connected to the 115 kV grids but provide power to isolated demand centers in the Lao PDR. All these grids are connected with the Thai transmission network, and export hydropower to Thailand (and in the near future, to Vietnam and Cambodia) over high voltage links as well. This situation will persist, certainly over the tenure of the Rural Electrification (APL) Program, until the Lao PDR has a fully integrated transmission grid.The government has declared rural electrification as one of its development and poverty reduction priorities. Using renewable technology has an enormous potential in the rural areas, especially those that cannot be serviced by grid-based electricity. The government encourages all projects for assessing, field-testing and implementing alternate energy schemes. Some micro hydropower stations have been successfully implemented (such as the Houyakasen plant generating 75 kW) and other forms of renewable energy are being explored.

Renewable energy potential

HydropowerThe water resources of the Mekong River and its tributaries are estimated to hold a hydropower potential in excess of 20 times the current power production. Of the 23,000 MW of exploitable potential hydropower in Lao PDR, about 15,000 MW are internal to the country, and the remaining 8,000 MW represent the country’s share in the mainstream Mekong, jointly with one or more riparian countries. Large hydropower capacity (greater than 25 MW) represents more than a 97 percent share in the power generation mix in Lao PDR.To date, about 1,838 MW of hydropower generation capacity has been installed (including the 1,080 MW Nam Theun 2 project), with another 1,372 MW under construction, 3,041 MW in the advanced planning stage with commissioning targeted before 2015, and more than 3,300 with completed feasibility studies. For the seven plants under construction, 1,145 MW will be for export to Thailand and Vietnam and 227 MW for domestic supply. There are also 17 hydropower projects in the pipeline with feasibility studies completed which will add another 4,573 MW of installed capacity by 2020 according to the latest development plan. Of those, three are export-oriented projects at the advanced planning stage, targeting commercial operation before 2015: (i) Nam Ngum 3 (440 MW), (ii) Nam Ngiep 1 (278 MW) and (iii) Nam Theun 1 (523 MW). Once approved and completed, these three projects will account for a total of 2,241 MW of the installed capacity. In addition, some 40 other hydropower projects, with Memorandum of Understanding (MOU) signed with various developers, are at different stages of preliminary consultation and feasibility study.Solar energySolar irradiance on Lao PDR is between 3.6-5.5 kWh/m2, with sunshine 1800-2000 hrs/year. With such solar energy potential, if photovoltaic technology was used (overall efficiency of 10%), it would generate 146 kWh/m2/year, or 1.5x108 kWh/km2/year ( 13 MTOE/km2/year). Photovoltaic solar technology is being used for water pumps, water purification, and communications; however the initial investment cost is high and hence current uptake is low. Current installed capacity of solar power systems is 285 kW. Installation of small solar home systems have been carried by public as well as private sectors, with funding from the World Bank, international organizations or own investment of local private companies. At present, around 20,000 households have been supplied electricity through solar home systems. Larger PV systems (capacity up to 40-100 kWp) have also been piloted within cooperation project between MEM and NEDO (Japan), as a component of a hybrid power system with micro hydropower in remote rural area.BiomassIn Laos, fuelwood (mainly for cooking needs) and electricity are the only energy sources produced locally. Forests are the main source of wood fuel, supplying an estimate of 85% of all fuel-wood. Wood is the main source of energy for the majority of the rural populace, and accounted for 89% of the country’s total energy consumption in 1994. The country is increasingly facing wood energy problems which are recognised by the government.The DOF (Department of Forestry) has a Social Forestry Support Unit which allocates land for village wood lots. Individual farmers are also given land to grow fuel-wood. Furthermore, rural industries are encouraged to grow their own fuel-wood, and receive land entitlements for this purpose. Research on fast-growing species is undertaken at the DOF's Silviculture Centre. Furthermore, DOF is building up a pilot extension network in seven districts (out of 110) in seven provinces (out of 16).As Lao PDR is an agricultural based country, there are a lot of wastes generated every year from agro-forestry production, such as rice straws/husk, sawdust, corn cobs, livestock manures, which can be used as feedstock for energy generation. Besides, communal and organic industrial wastes are among the important biomass energy resources. Annual Energy Potential of Agroforestry wastes is estimated around 500 MTOE.BiogasBiogas produced from livestock manure can be a substitute for traditional sources for cooking and lighting. Although biogas has a long history in the Lao PDR, almost all of the digesters, with the exception of 30 units installed in early 2005, are no longer operational. This is mainly due to incorrect sizing and a lack of understanding of how to maintain the units. It was estimated that utilizing of livestock wastes for biogas production could generate around 2.8x108 m3 of biogas per year, or equivalent to 5x108 kWh electricity (about 216 MTOE).Biofuels Research on energy crops for biofuel production is in its infancy in the Lao PDR; and there are no data to assess the feasibility and sustainability of biofuel production. In addition, the possible environmental impacts will be hard to ascertain. Nevertheless, there is high potential of energy crops in Lao PDR, such as oily crops (jatropha, Vernicia Montana nut, oil palm, soybean, etc), starch culture (cassava, corn,) sugar (sugarcane) and other trees, which can be used as feedstock for biofuels production. Pilot projects on jatropha plantation for biodiesel production have been conducted in recent years. Kolao farm has invested on Jatropha plantation on 2500 ha and pressing factory with capacity 40 ton per day, and biodiesel processing factory - capacity 2000 L/day in Kenthao district, Xayabouly province. Besides, a teak wood company in Luang Prabang has piloted plantation of Vernicia Montana nut on area of 7000 ha.Wind powerThere is lack of data on wind energy potential, particularly at a height above 50 m. According to international data sources, there may be some wind potential in central provinces of Lao PDR, especially up on high mountains along Lao-Vietnam border (Savannakhet and Khammouane provinces) where at a height 50 m and above, wind speeds reach 5.8 m/s 4. The theoretical potential for wind energy in Lao PDR is estimated to be more than 182,000 MW. At present Ministry of Energy and Mines is installing wind data logger in four sites in these province and plans to install in other provinces. A wind power proposal has recently been accepted by an international Scandinavian funder.Geothermal energyThe country’s natural hot springs are known for their important role in tourism; however, to date, no significant geothermal areas have been identified for possible power generation. Known sources are too small to be exploited for this purpose.

Energy framework

Lao PDR is exceptionally well endowed with water resources and enjoys a strategically advantageous location within the Greater Mekong Sub-region. Surrounded by energy-hungry neighbors – including Thailand, Vietnam, Cambodia and China – the long-term management of its 23,000 MW of exploitable potential hydropower is critical to meeting the country’s development goals. The strategy of the Government of Lao PDR is to develop its hydropower resources to earn export revenues as well as to meet domestic needs. However, the Government’s plans are ambitious in light of various constraints and in particular that the sector may be being developed faster than the Government’s ability to scale up its capacity to manage it effectively. The dual challenge it faces is not only “how to do the right projects” but “how to do the projects right.”Lao PDR National Strategy on Renewable EnergyIn October 2011, the Government launched the National Strategy on Renewable Energy, designed to ensure adequate supply of energy, energy efficiency and conservation in the country and promote cultivation of fuel crops for bio-fuels production. According to the strategy, the Government aims to increase the share of RES to 30% of the total energy consumption in 2025. To reduce the importation of fossil fuels, the Government outlines a tentative vision to reach 10% of the total transport energy consumption from biofuels. This target will be regularly revisited and revised, feeding in results of special studies, lessons learned from on-going implementation, and international technological developments in the field of RE.Power Sector Policy and Targets for 2020Government policy gives priority to power sector development as a means of achieving the country’s development aspirations. A number of laws and regulations of the Lao PDR directly or indirectly influence energy usage efficiency, fuel savings, and the promotion and development of renewable energy, including biofuels. The overall policy aim, according to the electricity and agriculture laws, is to increase the household electrification ratio from approximately 45% in 2005, to 70% in 2010, and 90% in 2020; and to reduce the use of imported fuels for electricity generation and other uses through increased use of indigenous energy resources; principally hydropower, as well as solar, coal, and biomass energy. The laws also provide for the development of capital and promotion funds to enable new forms of agricultural production. The four priorities of the government’s power sector policy are to;     i. maintain and expand the provision of an affordable, reliable, and sustainable electricity supply in the Lao PDR to promote economic and social development;     ii. promote power generation for export to provide revenues to meet the government’s development objectives;     iii. develop and enhance the legal and regulatory framework to effectively direct and facilitate power sector development; and     iv. reform institutions and institutional structures to clarify responsibilities, strengthen commercial functions, and streamline administration.The Water and Water Resources Law (1996) requires water users to comply with water and water resources management regulations. It has features that help ensure sustainable hydropower development, including the requirement of environmental and social impact assessments and of approval for small-scale hydropower reservoirs. Similarly, the Environmental Protection Law (1999) is a good instrument for sustainable hydropower development.The Electricity Law was first promulgated in 1997. A key aspect of the Electricity Law is that, with a view to augmenting generating capacity that is developed by EdL or other government entities, it encourages investment in power generation capacity through the public-private partnership mode.The National Policy on the Environmental and Social Sustainability of the Hydropower Sector (NPESSHS) was issued by the government in 2005. It aims to adapt and tailor the principles developed under the Nam Theun 2 hydropower project to the hydropower sector as a whole.The Lao DSM/EE project ( was initially implemented in Phase 1 of the Rural Electrification Program, and will continue to be implemented throughout the second phase until 2012. The program aims to promote the efficient use of energy in the Lao PDR through energy auditing, appliance labelling and the creation of standards, the promotion of ESCO operations for energy efficiency projects, and the creation and expansion of an energy consumption database, in order to better analyse where demand-side management measures would be best implemented.The Energy Efficiency and Conservation (EE&C) goals submitted to the 5th East Asia Summit Energy Ministers Meeting, held on 20 September 2011 in Brunei Darussalam, state that the country uses Final Energy Demand as the EE Indicator, and aims at 10% reduction from business as usual by 2030. However, there are no tangible action plans to achieve the target. Investments in renewable energy projects in Lao PDR are entitled to investment incentives under the Investment Law of Lao PDR, update in 2009. The financial incentives include the following:· Import duty free on production machinery, equipment and raw materials;· Import duty free on chemical materials necessary for biofuels production within 7 years;· Profit tax is divided in to 3 categories: 20%, 15% and 10%. Profit tax exemption is possiblefor a certain period depending on activities, investment areas and size investment;· Subsidies on unit product price depending on energy type and times period.Additionally, the investors can obtain also non-fiscal incentives, such as:· Up to 75 years leasing term (for enterprise construction land);· Permission to expatriate earnings to home or third countries;· Right to employ foreign workforce (not more that 10% of the enterprise’s total labors).To harmonize the support to renewable energies in Lao PDR, the Government will establish a Renewable Energy (REN) Fund as sub-account to the existing Rural Electrification (RE) Fund.Greater Mekong Sub-region (GMS) Economic Cooperation with six member countries was launched with the assistance of the Asian Development Bank in 1992. Its economic cooperation in energy sector includes: regional power interconnection & power trade arrangements; sub-regional strategy for the utilization of natural gas; and sub-regional strategy for cooperation in renewable energy. The Inter-Governmental Agreement on Regional Power Trade in the GMS was signed in 2002, and the Regional Power Trade Coordination Committee (RPTCC) was created in 2002 to coordinate, promote and implement regional power trading development.Given the government ambition to make the Lao PDR the power battery of the GMS, and the impeccable logic of power system integration within the GMS, the government would like to ensure that investment in high-voltage (230 kV and 500 kV) transmission systems is in line with an agreed GMS-wide power system master plan (which does not yet exist).Lao PDR ratified the UN Framework Convention on Climate Change (UNFCCC) on 4 January 1995 and the Kyoto Protocol on 6 February 2003. 

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