Southeast Asia is changing rapidly as the governments of the region seek economic development to provide a better quality of life for their people. It is difficult to argue against this drive, as we are all looking for ways to increase our well-being. However, this development has often come at a cost. This open letter, directed towards the people and government of Laos, is intended to provide an outsider’s view of the current situation and offer a fresh perspective of the options available. It is this author’s hope that these will be valuable to the government and people of Laos to develop sustainably and become a prosperous nation.
Laos is endowed with abundant hydrological resources which it has staked its economic future. The purpose of this letter is to highlight the most effective options of electricity generation for the growing Laotian economy and to meet its other goals, including poverty eradication. Ultimately, I conclude that Laos could better develop its economy by eschewing large, environmentally destructive hydropower systems, and instead invest in benign, small hydropower systems while training its dispersed, remote population to build and maintain them.
The People’s Democratic Republic of Laos (Lao PDR) is traversed by a vast network of approximately a thousand rivers which contribute 35% of the Mekong Rivers flow. These rivers teem with life, providing Laos’ scattered population of 6.7 million with fish, irrigation, and transportation. The vast majority of the Laotian people live in remote areas on less than $2 USD a day, with little opportunity to access employment within labor intensive industries. However, Laos’ significant water resources are brought by two very reliable monsoons from two different directions – the Gulf of Thailand and the Gulf of Tonkin – making it uniquely placed for hydropower development. The Lao government has seized upon this and has placed the development of hydropower as the centerpiece in its efforts to achieve social and economic development.
Hydropower is seen as a cost-effective energy source in Laos which has a hydroelectric potential of about 26,500 megawatts (MW), excluding the mainstream Mekong . Of this, about 18,000MW is considered technically exploitable, with 12,500MW found in the major Mekong sub-basins . Around 15% of the country’s hydropower potential has been developed over the past 30 years, but under the present government policy the rate of development will accelerate to supply electricity to not only Laos, but also the rapidly growing economies of the region, such as Thailand and Vietnam. In 1998, the Lao government adopted a strategy to tap into this resource for its people, and in 2001 set out four policy goals towards this end:
- Maintain and expand an affordable, reliable, and sustainable electricity supply in Laos;
- Promote hydropower exports to earn revenues to meet development objectives;
- Enhance the legal and regulatory framework to underpin power sector development;
- Strengthen institutional structures, clarify responsibilities, streamline administration, and foster economic and social development.
In line with this strategy, the government committed in 2007 to supply 7,000MW to Thailand; 5,000MW to Vietnam; and 1,500MW to Cambodia – ultimately transforming Lao PDR into “the battery of Southeast Asia” (see map) and using the profits to fight poverty through the development of transmission and distribution networks as well as other development projects. As part of this, the government has placed a high priority on rural electrification, setting a target of 90% electrification of the country’s households by 2020.
The Lao Government’s hydropower development plan continues to be an integral part of the country’s poverty reduction and development strategy. While Laos currently remains one of the poorest countries in the world, it is rapidly increasing its income due to its electricity exports to neighboring countries. The Lao power sector has also made great strides in providing electricity to its own population over the past 15 years, tripling access to electricity across the nation, and providing nearly two thirds of the Laotian people with power.
The Lao power sector continues to take off and add to these gains, with at least twelve large dams under construction and close to 25 more at advanced planning stages. Nine of the these hydropower dams are planned to be built on the lower Mekong River, including the highly controversial Xayaburi site which has gained a great deal of attention in the region and throughout the world since 2007. As the controversy around the Xayaburi dam and other sites planned for the Mekong River have grown, international financing for investment in power generation has dwindled, creating a bottleneck of financing for development plans.
In the face of international controversy and decreased financing, Laos may need to reconsider its hydropower and overall economic development plans in order to meet its goals. However, to do this effectively, a number or issues must be considered:
- Topography – Laos is extremely mountainous, with much of its population residing in ~10,000 small villages scattered throughout remote mountain locations difficult to access. As of 2006, there were still 5,389 villages without access to electricity, but with direct access to many rivers and streams.
- Natural Capital – Laos’ large endowment of rivers and streams bring with it an abundance of fish and a large source of freshwater for irrigated agriculture. Hydropower dams are expected to impact both of these resources negatively, as fish are unlikely to migrate past the dams and as cropland loses productivity due to lack of nutrient flow and increasing salinization.
- Development – Laos is currently focused heavily on its resource sectors, with little attention to other critical areas, such as agriculture and manufacturing – a situation often referred to as Dutch Disease – which is likely to lead to a gradual loss of wealth and contrary to Lao PDR’s development goals. This is being compounded by the inundation of Laos’ croplands in pursuit of large hydropower projects.
- Access to Electricity – Laos’ electricity grid has developed in a fragmented manner, with four key grids in different parts of the country (Northern Grid, Central Grids I and II, and Southern Grid). Since the grid is not nationally connected, regional consumption needs are also met by imports from Thailand, making Laos both an exporter and importer of electricity.
- Poverty – The government is dedicated to poverty eradication; however, it has largely focused on channeling revenues acquired from electricity exports to rural poor through projects aimed at involuntary relocation for more hydropower projects and changes in agriculture techniques. This is having a major, and generally negative, impact on the social systems, livelihoods and cultures of many communities, exacerbating poverty rather than reducing it. At the same time, large hydropower projects provide little in the way of long-term employment which is desperately needed in Laos.
- Geopolitics – The Mekong River sustains 65m people with both food and water. Since 2010, planned dams on the Mekong have created a great deal of controversy in the region, particularly among the four riparian countries that comprise the Mekong River Commission (MRC) – Laos, Cambodia, Vietnam, and Thailand. If the Xayaburi dam that is currently being constructed is not halted, it is expected to deal a significant blow to the credibility of the MRC, creating a rift between the four states themselves, as well as harming Laos’ standing within the wider international community. Such an over-reliance on exporting electricity also has the potential to lock Laos into a marriage with neighboring powerhouses, such as Thailand, with a significant loss in its national autonomy.
When then US Secretary of State Hillary Clinton visited the region for the ASEAN summit in July of 2012, she opened her address to the summit with, “I’ll be very honest with you. We made a lot of mistakes…We’ve learned some hard lessons about what happens when you make certain infrastructure decisions and I think that we all can contribute to helping the nations of the Mekong region avoid the mistakes that we and others made.” These words offer a clear warning, and at the same time, a potential opportunity should Laos choose to pursue a different path than the US. While Laos’ current path appears to be a profitable one, this income is coming at the expense of its natural and human capital. Large hydropower projects – which Laos has staked its future on – are environmentally destructive, poverty exacerbating, and politically sensitive – a poor combination for sustainable development. In the current situation, the primary winners are the neighboring countries who import Laos’ electricity and the provider of that electricity, Electricité du Laos. The Lao people are ultimately the losers, as their land is flooded and their rivers degraded. At the same time, these centralized systems are often unable to deliver electricity to the majority of the Lao people who live in remote, sparsely populated areas.
This is a tragic situation for a country endowed with so much natural wealth. However, Laos does have the capacity to change this suboptimal situation into one where there are no losers. Many remote Lao villages have for years installed small hydroelectric power systems – called “pico-hydros” – that produce up to 5 kilowatts (kW) in order to have access to a basic level of electricity. These are generally environmentally benign, as they are typically “run-of-river” – meaning that dams are not used, but rather pipes divert some of the water flow, dropping it down a gradient, and then through a turbine before being returned to the stream. A key downfall to these systems is that they are often shoddily built, poorly maintained, quite dangerous, and only provide enough electricity to satisfy lighting and small household appliance loads. A similar, but much better alternative are small hydropower (SHP) systems that are also “run-of-river” with capacities of up to 5MW. These systems can also be applied in more places than larger systems due to their relatively small footprint. Fortunately, the Lao government has already been encouraging both the public and private sectors to develop these systems, but development has been slow due to the relatively higher unit cost of SHP compared to larger hydropower schemes, and due to the lack of clear policies and guidelines.
Given the challenges Laos faces in implementing its policy goals with its current strategy of relying on large hydropower projects, it appears that looking to alternatives would be a good option. Laos is fortunate to have a geographically dispersed population spread across its vast hydrological resources. If Laos were to invest in SHP and training across this population to build and maintain them, it could help channel electricity export revenues directly to those who need it most, while reducing environmental degradation, eliminating the problems associated with resettlement, soothing tensions with its neighbors and the international community, and tapping into even more of Laos’ hydroelectric potential. Ultimately, however, Laos could use this policy to leapfrog developed nations which have invested heavily in large uneconomic projects, while instead obtaining a distributed, resilient, and sustainable energy system. If Laos truly wishes to become the “Battery of Southeast Asia” and create a long-living, flourishing society, it would be wise to not only tap into its hydrological resources but also into the powerful energy of its people.
I have a deep love for Asia and its people, and I welcome opportunities to play a part in its ongoing story. You can contact me at NathanAlbritton@hotmail.com