Renewable Energy Development Strategy in Lao PDR

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Renewable Energy Development Strategy in Lao PDR ( renewable-energy-development-strategy-lao-pdr )

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identify priority projects for development, and develop a small hydropower investment plan for each key river basin to optimize usage and benefits of water flow for power generation, irrigation, water supply as well as environmental and social protection. The plan also includes rehabilitation of old and inefficient small hydropower projects; • Introduce procedures for solicited and unsolicited small hydropower independent power producers (IPPs). Proposals for small hydropower projects at preselected sites will be solicited by MEM through competitive tender process. On the other hand, MEM also accepts unsolicited proposals from small hydropower project sponsors. For both solicited and unsolicited projects, MEM will establish transparent procedures in the submission, evaluation with special emphasis on environmental and social aspects and processing of projects as well as determination of off-take power tariffs and rules for grid interconnection and power dispatch; • Introduce simplified small hydropower development framework. The current framework governing small hydropower development is the existing legal framework for IPP procurement. To support the objectives of the Amended Electricity Law of 18 December 2008 expediting the development of 5 MW or less small hydropower projects in Lao PDR, MEM will introduce simplified procedures for small hydropower project with capacity of 5 MW or less. The simplified procedures however ensure that environmental and social safeguards are enforced, and that local communities are consulted and that they possibly participate as project shareholders. This includes exemption from the concession agreement requirement and negotiations will be carried out directly with provincial governments. On the other hand, the existing IPP framework and the above proposed procedures remain relevant for small hydropower projects with capacity between 5 MW and 15 MW; • Ensure grid access and promote third party sale of power. MEM will coordinate with Electricite du Laos to provide undiscriminatory access to small hydropower projects to transmission network and provide priority dispatch of all the power generated by grid- connected small hydropower projects. In addition, small hydropower producers will be allowed to sell the entire amount or part of the power generated directly to third party consumers; • Introduce legal framework for setting off-take tariff for small hydropower projects at an appropriate level ensuring investors to recover project costs and earn reasonable return on investments; • Establish framework and program to provide financing and guarantees to small hydropower projects. Encourage local financing institutions including state owned banks to provide loans and preferential financial packages. In addition to the above, pico hydropower technologies are relatively popular in remote villages in Lao PDR as source of power generation. The deployment of these technologies is mainly market driven. Presently, around 60 thousand units are installed all over the country supplying electricity services to about 90 thousand households. Though there is a declining trend on the use of this technology due to increased rural electrification rate, pico hydropower is estimated to continue 19

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