Lao Dam To Feed Thai Energy Hunger

By Johanna Son and Jaime Lim

Inter Press Service

Original URL

BANGKOK, Jan 21 (IPS) - News reports that initial work has begun on the Nam Ngun-3 hydropower project in Laos are a stark reminder of Thailand’s increasing reliance on its neighbours to satisfy its appetite for energy.

While the construction of the Nam Ngun 3 project, located in the Xaysomboun district of Vientiane province, is still at a very early stage, the buyer of the power to be produced by the 440-megawatt plant has been identified -- Thailand.

Thailand is already the biggest customer of electricity from a string of hydropower projects in Laos, a landlocked country keen to earn badly needed revenues. The country has up to 23,000 Mw of hydropower to be tapped from 2006 to 2010, Lao energy officials have said.

Thailand’s 15-year power development plan involves adding more than 32,000 gigawatts of capacity by 2015, including buying more than 5,000 Mw from neighbouring countries. Plans seek to increase the amount of power bought from neighbouring countries from one to two percent now to nine percent by 2020, news reports say.

According to the English-language daily ‘Vientiane Times’, initial construction work, including the building of an access road to the project site, is starting. The main construction phase is set to begin in October, and the 700 million US dollar project is to be completed by 2013. It will have a 28 km transmission line to Thailand.

News of the start of Nam Ngun-3 comes just a few months after Thailand agreed to buy another 2,000 Mw of electricity from Laos, bringing the total to 7,000 Mw by 2015.

These purchase agreements by Thailand are based on assumptions that its energy demand will grow at 5.95 percent annually from 2007 to 2011, going by GDP growth of 5 percent.

But that is exactly where the problem lies, say activists and critics who argue that the questionable are fuelling overinvestment in power plants at home and in buying electricity from overseas that this country does not really need.

Thailand's peak electricity demand is expected to rise to 50,223 megawatts in 2021 from 22,684 megawatts in 2007, according to government figures.

Apart from buying electricity overseas, Thailand has been looking to build more power plants at home. The Ministry of Energy has just approved four large power plants in Thailand to produce a total of 4,500 Mw of electricity, according to Tara Buakramsri of Greenpeace, South-east Asia.

‘’One big problem is that the Ministry of Energy’s electricity demand forecasts, which serve as the basis for their approval and ultimate existence of new power plans, are notoriously biased and overestimate how much electricity we need,’’ he wrote. ‘’Every official forecast over a year old -- there have been nine since 1993 -- has predicted demand that has failed to materialise.’’

‘’Forecasts that consistently over-estimate electricity demand causes the government to set inappropriate policy, for example by creating a false sense of urgency to build new power plants,’’ Chris Greacen, an independent energy analyst with the Bangkok-based non-government organisation Palang Thai, has explained.

Chuenchom Greacen of the same group added: ‘’Instead of being self-sufficient by living and consuming within our means, we over-consume and over-produce to the point that we have to rely on resources of our neighbouring countries.’’

Chris Greacen and Buakamsri say that exaggerated load forecasts stem from problems with the power planning process.

Greacen has questioned the ‘’lack of checks and balances’’ in the Power Development Plan (PDP) of the Electricity Generating Authority of Thailand (EGAT), which critics say is inherently structured to get electricity to sell to consumers in the country and not really to encourage conservation.

‘’The PDP is problematic because the monopoly utility’s core business is building and operating big centralised power plants. EGAT is ambivalent about energy efficiency because it earns less money when customers save energy,’’ he has pointed out.

‘’The problem is, while there are committed people in EGAT?s energy-efficiency programme, they are marginalised by an institution incentivised to sell electricity not to save it,’’ Tara wrote, maintaining that Thailand’s reserve margin for electricity is 27 percent, or quite above the official target of 15 percent. Apart from being accused of helping drive Laos’ dam-building trend, Thailand has also been criticised for shunning the environmental and social implications of damming by investing in its poorer neighbour -- where opposition is unlikely to have a voice as it does in Thailand -- while Laos gets the rap for accusations of lack of transparency and trading the livelihood of its people for foreign currency.

But Lao officials stress they need to meet development goals. ‘’According to our surveys, there is room for the development of 70 more hydropower dams in the future, with a combined capacity of 23,000 megawatts,’’ Khammany Inthirath of the state-owned Electricite du Laos was quoted as saying last year.

‘’But we need to protect the environment by conserving our forests, particularly in watershed areas so that hydropower projects will have enough water to produce electricity. We have already committed to exporting 5,000 Mw of electricity to Thailand by 2015, and we have to work hard to fulfill this commitment,’’ he added.

At the forum on Lao-Thai Partnership in Sustainable Hydropower Development in September 2007, World Bank country director for Thailand Ian Porter said the Thai-Lao power purchase deals benefitted the two countries.

‘’The increased flow of clean hydropower from Laos can help Thailand sustain its rapid economic growth and supply power to the 17 provinces in the Northeast -- the poorest region of the country -- at economically attractive rates without adding to local or global pollution,’’ he said.
‘’In turn, sustainably exploring the use of its hydropower resources will allow Lao PDR to generate much-needed revenue to invest in poverty reduction programmes and thereby achieve its goal of reaching middle income status by the year 2020, while benefiting locally impacted communities.’’

Porter described the Nam Theun-2 power project in Laos -- the largest such project in the country criticised by activists -- as an example of ‘’responsible hydropower development’’. Laos expects to sell over 90 percent of the electricity generated by Nam Theun-2 to Thailand.

EGAT is to buy 220 Mw from Nam Theun-Hinboun, one of the four Lao projects that Thailand agreed to buy power from in October. The others are Nam Theun-1, Nam Ngum-3, Nam Ngieb. Thailand also looks to other neighbours like Burma and Malaysia for electricity but plans to rely on Laos for a good part of its imported power.

There are eight hydropower plants now in Laos, according to the Electricite du Laos website. The site shows 75 planned electric plants, 18 of which have Thailand as the planned market.

‘’Excessive investment in new power plants leads to needless environment and social costs, as well as unnecessarily high electricity bills for captive Thai consumers,’’ Aviva Imhof, campaigns director of International Rivers, said in an email interview.

‘’It is time for the EGAT, Thai developers and investors to ensure that they only support power projects in Laos that meet the same environmental and social standards demanded at home,’’ added Shannon Lawrence, International Rivers- Lao programme director.

(END/2008)

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