On May 1, Laos began construction of its first wind project, the 600 MW Monsoon Wind project, with Mitsubishi serving as its largest investor. As part of Laos’ plan to export electricity to its neighbors, the country signed a 25-year agreement to sell its power to state-owned Vietnam Electricity. The project received $692.5 million loan from the Asian Development Bank, along with support from Japan International Cooperation Agency and Sumitomo Mitsui Banking Corporation, the largest syndicated renewable energy funding request among ASEAN nations to date. The wind farm’s estimated operation date is 2025.
Why it matters: Besides meeting its own clean energy goals, Laos may be an important contributor to helping its Southeast Asian neighbors meet similar goals and increasing regional energy security. With its extensive existing hydropower, coupled with its solar and wind energy potential, electricity is Laos’s largest export; in fact the country was the twelfth largest electricity exporter globally in 2021, sending power mostly to Thailand, Cambodia, and Vietnam. Laos began shipping renewable electricity to Singapore in mid-2022 via Malaysia and Thailand. Of Laos’ neighbors, Cambodia, Malaysia, Singapore, and Thailand have official goals of carbon neutrality or net-zero GHG emissions by 2050. All generate 50-90% of their electricity from fossil fuels. Approximately 80% of Laos’ power generation goes to Vietnam and Thailand, but more high-voltage transmission lines with Laos’ neighbors will be necessary to satisfy the region’s goals. Singapore’s 2022 agreement with Laos, Malaysia, and Thailand marked the first cross-border electricity trade between four ASEAN nations, and in January 2023 Laos commenced building a 200km transmission line to Cambodia.
While Laos has lofty ambitions for economic and energy growth, critics have said the country’s growing external debt to fund energy projects could pose long-term financial challenges. In 2021, Laos made a 25-year agreement to concede control of its high-voltage power lines to a Chinese majority-owned company in exchange for a $2 billion investment for its power grid.