Realizing rural electrification in Southeast Asia: Lessons from Laos
Research Highlights
► Laos has quadrupled its electrification rate from 16% in 1995 to 63% in 2009. ► The experience with Laos shows that geographic and socio-economic data should be collected before electrification programs proceed. ► It also shows that programs must focus on the commercial viability of electricity suppliers and that fee-for-service models hold great promise.
Introduction
The Lao People's Democratic Republic, a least developed land-locked country in Southeast Asia, has tremendous potential for hydropower projects because of its access to the tributaries of the Mekong River, generous rainfall, hilly terrain, and a low population density that limits the need for human resettlement along rivers. It also shares a border with countries such as Cambodia, Thailand, and Vietnam wanting to import electricity to meet their domestic demand. Despite its abundance of hydroelectric resources, however, Laotian energy planners face problems supplying energy services to a large proportion of their population (Smits and Bush, 2009, Laos Ministry of Mines and Energy, 2009). The country's low population density and rugged terrain make it difficult and costly to connect everyone to an electricity grid. This gives rise to Laos' energy conundrum: while there is plentiful electricity for export, providing domestic access is difficult. This situation has avoided intense criticism because the government is committed towards expanding domestic electrification. As a result of its commitment, the government has worked together with the World Bank and other organizations over several decades extend the domestic grid. These seem to have paid off, and Fig. 1 shows that in 2009, Laos reached an electrification rate of 63%, quadrupling from the electrification rate of 16% in 1995. The latest of these efforts is the Rural Electrification Project Phase I (REP I), through which the government undertook rural electrification through both grid and off-grid measures. When looking at Fig. 1, we must emphasize that the REP I has worked in tandem with other national efforts that have in aggregate electrified more than 600,000 homes.
The objective of this study is to examine the Rural Electrification Project Phase I (REP I) with the aim of drawing conclusions on rural electrification for other countries in a similar position. The second section of the study describes our objectives and approach. The third section provides the background, objectives, and stakeholders of the REP I. The fourth section talks about the design and implementation of the REP I. The fifth section provides an analysis of the REP I's key factors that played a role in shaping the project, emphasizing the pros and cons separately for grid expansion and off-grid electrification. The last section concludes with implications for rural electrification in general.
Section snippets
Objectives and approach
The authors selected the Laos REP I for analysis for three reasons. First, through the program, Laos managed to electrify nearly 40,000 rural households in about 4 years. Since many countries in Asia are struggling with low electrification rates in rural areas, this project could provide useful insights.
Second, Laos is a least developed country and as a result faces a unique set of capacity and infrastructure-related barriers unlike high-income economies. Its government institutions and policies
Background, objectives and stakeholders of the REP I
Before 2006, the World Bank provided US$97 million of funding in the form of International Development Association (IDA) grants for three separate electrification projects to electrify roughly 100,000 households in Laos. These projects are listed in Table 1. The REP I started in 2006.
The REP is being conducted in two phases. The World Bank provided an IDA grant of US$10 million and an additional GEF grant of US$ 3.75 million to the Lao government to implement Phase I of the project from 2006 to
Design and implementation of the REP I
Electrification in the REP I was carried out through both grid expansion and off-grid renewable technologies. This is a reflection of the World Bank's recognition that off-grid extension is a viable alternative to grid expansion, as captured in this statement below by Beck and Martinot (2004):
In many areas, full grid extension is too costly and unrealistic. Policies and rural electrification planning frameworks have recently started to emerge that designate certain geographic areas as targets
Key success factors and lessons learned from REP I
Overall, the REP I project was successful in achieving high electrification rates in rural areas. In all, 36,700 households were electrified by mid-2009 out of the revised goal of 39,400. The project was completed in mid-2010, and when the project results are announced, may even exceed the revised goals. There were several factors that led to this success, but these factors also caused some unintended repercussions and hence provide important lessons. These factors illustrate the often
Conclusions
The REP I was successful in terms of reaching its targeted number of households through both grid expansion and off-grid electrification. However, there are unfortunately no “cookie cutter” solutions to rural electrification that can be applied to other countries. Several design aspects of the REP I were specifically tailored to the development stage in Laos and could have been implemented differently. By examining these in greater in detail, we learn their pros and cons, and some important
Acknowledgments
The authors are grateful to the Centre on Asia and Globalisation for some of the financial assistance needed to conduct the research interviews, field research, and travel for this project. The authors are also appreciative to the MacArthur Foundation's Asia Security Initiative for grant 08-92777-000-GSS, which has supported elements of the work reported here. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the authors and do not necessarily
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