The electricity sector in Laos is facing significant challenges. According to a report from the Ministry of Energy and Mines, electricity consumption has surged by 45 percent over the past three years, while supply fluctuates due to weather patterns.
This increase in consumption has far exceeded the 21 percent growth predicted in a 2021 study, which had estimated a 7 percent annual rise in electricity demand for the period 2022-2024.
The unexpected surge is largely attributed to the growing demand from the crypto-mining industry. This has led to an imbalance in electricity supply, especially during the dry season when hydropower production is lower, the Ministry of Energy reported.
During the first four months of this year, according to the report, Laos imported over 1.7 billion kWh of electricity from Thailand, China, and Vietnam. In contrast, the country exported a total of 994.8 million kWh to Cambodia, Myanmar, and Thailand during the same period. This resulted in a net power trade deficit of 827.8 million kWh for Laos.
Additionally, hydropower, which accounts for 95 percent of Laos’ electricity, is highly dependent on rainfall. In years with ample rainfall, such as 2022, production meets demand. However, the drought in 2023 resulted in a 10 percent decrease in production compared to 2022, and a further 10 percent decrease is expected in 2024.
This could result in a projected 20 percent reduction in electricity production compared to 2022 levels, despite the increasing electricity demand, according to the Ministry of Energy’s report.
To address these issues, Laos is exploring short-term measures, including adjusting electricity usage and taxing crypto mining to reduce imports from other countries. Additionally, plans are underway to expedite the approval of solar energy projects nationwide and to seek funding for new hydropower projects, such as the Nam Ngum 3 project.
In the long term, Laos plans to diversify its energy sources by adding coal-fired and possibly wind power in Khammoaune, Savannakhet, and Sekong provinces. The government also aims to upgrade transmission infrastructure to improve power distribution reliability and stability.
The Lao government is further urged to renegotiate energy export contracts and redefine policies to ensure domestic energy security, particularly as concession agreements for hydropower projects approach expiration.
