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Lao Rural Electrification

Litthanoulok LASPHOMinistry of Energy and Mines,

Department of Energy Policy and Planning.

SE4ALL Consultation Workshop: Monitoring the Status of Asia-Pacific 14 June 2015 | Discovery Suites, Ortigas Center, Manila, Philippines

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1. Development History of Power Sector

2. Rural Electrification investment and Development

3. Existing model on Rural Electrification

4. Key Driver of success in Laos on Rural Electrification.

Contents

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1. Development History

By 1975

Only 3 hydropower plants with 32 MW, 240 GWh.

Population ~3 millionOnly 5 main cities electrifedEstimated less than 10% of

families have access to electricity

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1. Development History (Cont’)

1. Earn foreign exchange through electricity export to finance the country’s economic and social programs;

2. Increase access to electricity by grid extensions and off-grid rural electrification;

3. Maintain an affordable tariff to promote economic and social development;

4. Replace dependence on imported fuels for energy generation.

1st Power Sector Policy was formulated in 1990:

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Provide a source of foreign exchange to fund economic and social development and alleviate poverty;

Meet the commitments under intergovernmental MOUs and Agreements with Thailand, Vietnam and others;

Extend rural electrification to promote better socio-economic development and reach the government target of 70% and 90% by year 2010 and 2020 respectively;

Integrate power sector and maintain its economic development as a whole with international communities trough its power exchange programs and foreign direct investment.

In early 2005, the power sector played more significant and strategic role when the Govt’ laid out important targets in the NSEDP:

1. Development History (Cont’)

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1. Development History (Cont’) Present day: Population of 6.6 mil. or ~27 people/square kilometers; GDP is US$ 11 Billions (2013) and expected to grow at

an average rate of 7.7%; Electrification ratio reached 87% of total households in

2014, increased 36% from 2000; Per Capita Electricity Consumption of 470 kWh/a but

has been growing at an average rate of more than10% in the last 15 years;

Electricity export ~ 15% of total country’s export revenues; Power sector’s contribution to GDP is projected to increase to ~16% in 2020;

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2. Rural Electrification Investment and Development

Public Investment Private Sector Investment based on

Build Financing and Transfer Community Partnership and others Mini Grid

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3. Existing model rural electrification development

Household connected to grid and P2P prject

Household not connectedEnergy for Off-Grid Area

Grid Off-grid

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Objectives of Rural Electrification: Expand and improve Main Grid supplies; Expand and improve Off-Grid supplies; Increase energy self-sufficiency and security; Implement power project for maximize long-term sustainability. Develop legal framework for off-grid development; Create institutional arrangement to promote sustainable Off-Grid

electrification.

3. Existing model rural electrification development

Enabling Environment: Power to the Poor (P2P) in Laos

• Social impact survey: Pick-up rate in electrified villages only 70%

• Poor households that remained unconnected disproportionately headed by women.

• While female-headed households comprised 8 percent of all households, they accounted for 43 percent of poor households.

Power to the Poor (P2P) programAddressing the equity and gender dimension of rural electrification

• A program designed to support the poorest households with a gender focus, to bring the benefits of access to electricity to the poor

Instrument• Interest-free credit to qualifying households

for payment of the upfront connection changes on installment plan basis: all female-headed and single parent households automatically eligible for support, as long as the house is safe to electrify

• Gender sensitive communication materials and making the consultative process gender inclusive

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Grid Model

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Power to the Poor (P2P) programInstrument

Funds from

EdL, IDA, GEF, AusAID

EdL P2P Revolving Fund

EdL Operational Account

Contractors for house wiring

Monthly billP2P

RepaymentElectricity

tariff

Address the affordability of the upfront connection charges , with a sustainable Revolving Fund

Poor Households

K700k

Kip 700,000 90$

Kip20,000/month 2.5 $

Targeting the poor Initial results and looking forward

Pilot program results (2008-2009) 537 households in 20 pilot villages

connected utilizing P2P credit Average connection rate increased

from 65% to 95% in the pilot villages Connection rate among female-

headed HH increased from 63% to 90%

Example: PHONSAAD Village: electrified in 2002, 63 out of the 270 households not connected by 2008, and all the 63 households were connected to the grid in Feb-Mar 2009 with the P2PProgram scale up country-wide started March/April 2010 14

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Provincial level

Village level

GOL

WB/IDA/GEF

Central level

Ministry of Energy and Mines (MEM) / Institute of Renewable Energy Promotion (IREP)

Customers (Rural Community Households, Enterprises)

IDA/GEF/AusAid

Special Ac count

Electricity from SHS / VHGS Electricity

Contract

Contract

(Village Energy Advisory Committee)

REF

VOPS

PDEM

VEAC

PESCOs

VEM

Rural Electrification Division (RED) / PMUFund Manager

Technical Service & Collecting Tariff

Tariff

Cluster Plan Installation

(Village Energy Manager)

Implementation and Management Model for Off-Grid

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Institutional Structure (REF Secretariat)

Advisory Committee

Fund Manager

Secretariat Office

ConsultantIREP

Permanent Staff

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REF Source GOL established the REF in order to support (provide Grant Aid or Soft Loan) all activities to promote rural electrification developments. The rural electrification development fund could come from: Government budget; Co-finance by the Government and Villagers; State Enterprises; Villagers; Donations from local and international agencies.

In supplementary, GOL also provides tax exception or reduce tax for import equipment, construction and operation of rural electrification project.

Solar Home System(SHS) for Off-Grid Villages

Solar Home System is very widely use within Lao PDR and today people are well acknowledge.

Installation: 20 – 50 Wp

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Rural Electrification (Solar)Year No. operation

1999 257

2000 392

2001 392

2002 1,207

2003 3,531

2004 5,107

2005 6,357

2006 6,183

2007 9,431

2008 8,728

2009 13,339

2010 9,193

2011 13,344

2012 15,546

2013 16,570

BCSSHS

SHS

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Solar photovoltaic Mini Grid

Project is Location in Phakeo Village Phoukhoun District Luangphabang Province, installed capacity 4.8 kWp

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Reverse Running pump Turbine

Micro Hydropower

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Utilization Pico hydropower in Lao PDR

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4. Key Driver of success in Laos on Rural Electrification.

1. Sustained national commitment with substantial financial support by GoL

2. Utility-driven grid-based electrification, complemented by off-grid program

3. Financial support from International donors

4. Private participation and Communities

5. Incentive for Investor and Implimentors

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References:

• Dr Daovong Phonekeo, 2nd GMS Power Summit, Vientiane Cap. Laos, May 20, 2015

• Syvang Xayyavong, U.S.-ASEAN Rural Electrification with Distributed Renewable Energy Workshop.