Bottom Line
- Lao PDR envisions becoming the “Battery of Southeast Asia” by exporting hydropower to neighboring countries through the regional power grid designed to reach ASEAN’s goal of net-zero emissions.
- The ecological consequences of hydropower such as increased drought and sediment blockage could negatively impact a hydro-reliant regional grid system.
- For the grid system to be effective, Southeast Asian states must facilitate the incorporation of renewable energies beyond hydropower and actively encourage transboundary cooperation with China.
The mighty Mekong River, a life source for millions across Southeast Asia, now faces an existential threat. An ambitious regional plan developed by ASEAN incorporates Lao PDR as the “Battery of Asia” to generate hydroelectric power for export across the region. However, this massive engineering project could trigger severe ecological consequences, disrupting vital sediment flows, devastating wild fisheries that feed over 60 million people, and increasing the risk of droughts, floods and saltwater intrusion that threaten the global rice basket of the Mekong Delta.
Southeast Asian nations face immense pressure to develop renewable energy as they balance economic growth with goals of net-zero emissions (NZE) by 2050 under the Paris Agreement. While ASEAN has identified hydropower exports from Laos through an integrated regional transmission grid as a way to balance growth with reduced emissions, this strategy overlooks the significant environmental impacts of large dams. To truly achieve sustainable energy security, ASEAN must facilitate a diverse renewable energy mix beyond hydropower dependence and foster transboundary cooperation – especially with upstream power China – through strengthened regional governance mechanisms. On the other hand, the U.S. has strategic interests in promoting a just energy transition in this globally vital region through increased investment and technical capacity building.
Connecting the Battery of Southeast Asia to Consumers
In response to the need to comply with their climate commitment, ASEAN’s Centre for Energy has adopted regional goals for transitioning energy and reducing emissions through achieving
23 percent share of renewable energy (RE) target in the ASEAN total primary energy supply. For example, at COP 28 in Dubai in December 2023, Malaysia committed to a 45 percent reduction in greenhouse gas (GHG) emissions and Singapore committed to hitting a
NZE target by 2050. However, many of these nations do not have the solar or wind energy capacity necessary to meet energy demand, and thus the ASEAN Plan of Action for Energy Cooperation (APAEC) outlines a strategy for regional cooperation on energy transition.
Initially created in the late 1990s, the ASEAN Power Grid (APG) is currently being promoted as a way to continue economic growth while reaching NZE goals. ASEAN calls this plan of an integrated power grid a “
silver bullet that ensures reliable electricity access for its citizens”, but it is important to note the severe environmental consequences and significant transboundary issues, as the plan catalyzed a vision for Lao PDR to serve as the “Battery of Asia” by linking their increased hydropower production to a regional transmission grid first in Thailand, Malaysia, and then Singapore and Indonesia.
Lao PDR’s “Battery of Southeast Asia” development strategy, first proposed by the Laotian government in the early 2000s, is based on the Least-Cost Optimization (LCO) scenario in the ASEAN Energy Outlook as a means to provide abundant, cheap, and stable electricity to its neighboring countries to achieve its economic development as well as the region’s net-zero emission target. The final form of the APG will encompass all 10 members of ASEAN, divided into three sub-systems: (1) The Upper West System, located in the Greater Mekong Sub-region (GMS), will encompass Cambodia, Lao PDR, Myanmar, Thailand, and Vietnam; (2) the Lower West System will cover Thailand, Indonesia (Sumatra, Batam), Peninsular Malaysia and Singapore, and (3) the East System will include Brunei, Malaysia (Sabah and Sarawak), Indonesia (West Kalimantan), and the Philippines. At this time, most of the development has been on the Lower West system terminating in Singapore to construct a regional transmission grid, termed the Lao-PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP) This project, originally proposed in November 2020,
officially commenced on June 23, 2022.
Currently, Lao PDR suffers from
high inflation and public debt but is expected to
‘graduate’ from its least developed country status in 2026. Today, around
80 percent of the power generated in Laos is sold to neighboring Thailand and Vietnam, accounting for
30 percent of the country's exports by value. Laos started
power exports to Singapore in 2022 and completed building transmission infrastructure for selling electricity to Cambodia in 2023. Most energy is exported instead of used domestically, amounting to
more than half of all electricity consumed in Laos and
77 percent of total hydropower generation in 2019. Given that the Laotian economy relies on the export of its electricity resources, becoming the main exporter of renewable energy in the region will be beneficial both for the Lao PDR and the broader region. This is vital for the future energy outlook of the ASEAN region as a whole.
The Ecological Challenges:
The key goals of the “ASEAN Power Grid” program under APAEC are “
to expand regional multilateral electricity trading, strengthen grid resilience and modernisation, and promote clean and renewable energy integration.” However, many challenge the claims that imported energy from Laos is clean and renewable.
