This agreement represents a tremendous step toward strengthening the energy infrastructure of Laos and reducing dependence on hydropower. China Western Power Industrial Co. Ltd. is one of China’s leading manufacturers of large equipment for power plants. An associated Singaporean construction firm is also part of the project, which represents a milestone in Laos ambition of becoming a regional clean-energy powerhouse.
The deal, announced Monday in a filing to the stock exchange, lays out plans for the design, supply, and construction of a massive 1,800-MW clean energy project in southern Laos, led by Xekong Thermal Power Plant, the Laotian partner in the venture.
Project Timeline and Scope
Preliminary designs for the project are expected to be completed by late 2024, with an in-service date of early 2030. The filing does not specifically name the primary source of energy, but it is hailed as a clean energy project – as an indication of the strategic shift in Laos’s take on diversifying energy sources beyond hydropower.
The development is of utmost significance to Laos, as hydropower currently counts for nearly 80% of the country’s electricity production. Changing climate patterns and an increasing demand from its regional neighbours are now priming Laos to scale solar, wind, and other forms of clean energy.
Strengthening Transmission Infrastructure
Along with the power generation agreement, China Western Power also signed a $228.8 million transmission infrastructure contract with the same Laotian partner. This part of the partnership would involve modernisation and upgrading of Laos’s power grid to enhance the efficiency of electrical transmission and ensure reliable delivery of electricity both to domestic and international consumers.
This all-encompassing energy package echoes the deepening role of China in the renewable energy development of Laos, with both nations viewing this cooperation as mutually beneficial for economic growth, sustainability, and regional cooperation.
Additional Collaboration on Past Ventures
The new agreement adds one more layer to the ever-expanding portfolio of joint ventures between Lao land and Chinese energy companies. In 2022, China Western Power signed a supply and service contract worth $409 million with another Laotian power company. Further, in 2023, a Chinese state-owned energy business announced the intention to enlarge wind and solar bases in northern Laos, fortifying this investment by China in the green transition of the region.
Laos: The ‘Battery of Southeast Asia’ Looking Ahead
Laos was historically dubbed “the battery of Southeast Asia” because of its massive hydropower exports to Thailand and Vietnam. The country is now retelling the story of its energy. The strategic location of the country and its abundant natural resources will furnish an ideally poised platform toward becoming a regional renewable energy supply front-liner.
Having built a pivot toward solar, wind, and diversified clean energy technologies, Chinese capital and technical assistance will increasingly be significant in transforming the energy landscape of Laos. In the long term, it is intended for securing energy, sustainability, regional integration, and economic development.
Conclusion: A New Era in Laos’s Clean Energy Story
This $1.45 billion project is not merely a power deal but a manifestation of a vision for a cleaner and more resilient energy future for Laos and its neighbours. Strong international partnerships will put Laos in a good position to maintain its lead in regional energy exports while aligning itself with global clean energy trends.
