July 16, 2020 Read More →

Laos adding coal ventures in hopes of securing steady electricity supply


The plan to turn Laos into a hub of Southeast Asia’s rising cross-border power trade was never without controversy. But amid the nation’s recent approval of yet another coal power plant, a question looms large: In its thirst for foreign capital, has Laos fallen prey to rogue firms doing more harm than good?

At the end of May, the government signed a deal with two corporations, greenlighting a feasibility study on the development of a proposed 1,000-megawatt (MW) coal plant in the country’s southern province of Sekong. The firms are Singapore-based energy firm Evolution Power Investment Corporation (EPIC) and Lao company Khounmixay Bridge and Road Construction and Repair Company (KMX).

Amid plummeting clean energy costs and increasingly stringent environmental regulations that require coal power generators to retrofit pollution control equipment, the odds are stacked against the new project in Laos delivering sufficient returns in a few decades’ time, said Tim Buckley, director of energy finance studies, Australasia at the Institute for Energy Economics and Financial Analysis.

“The chance of that a coal-fired power plant being viable in 2050 is close to zero. That is the definition of a stranded asset before you even build it,” he said. “Why would the government allow a company to pollute the environment when there are so much cheaper, cleaner alternative energy sources available that are superior in every possible way to a coal-fired power plant?”

The burden, Buckley said, will eventually fall on taxpayers, both in countries that finance the plant through public capital, and in Laos, where the nation’s state-owned utility firm, Électricité du Laos, will need to sign a power purchase agreement with the plant’s operators, locking itself into filthy, costly energy for decades. 

[Tim Ha]

More: Development dilemma: How did coal sneak into Laos’ energy plans?

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