Work

Modelling the long-term risks surrounding Laos’ electricity trade

Year: 2025

Type: article

Abstract: Aspiring to become the “Battery of Southeast Asia,” the Lao People's Democratic Republic (Lao PDR) has rapidly expanded its electricity generation capacity to export power to neighbouring countries. However, this expansion introduces several long-term risks, including over-capacity, rising emissions, debt exposure, and unfair electricity export pricing. To quantify these risks, we apply a spatially disaggregated, bottom-up energy systems optimisation model (OSeMOSYS) to simulate Laos' power sector under multiple electricity trade scenarios. The model evaluates three critical risk dimensions: (i) geopolitical risk related to declining or uncertain electricity export demand, (ii) environmental risk tied to meeting Nationally Determined Contributions (NDCs), and (iii) economic risk associated with low electricity export prices in power purchase agreements (PPAs). Our results show that if electricity export demand drops and planned PPAs are not renewed, the total installed capacity in 2060 falls from 41.1 GW to 15.3 GW (−63 %), while cumulative CO 2 emissions are reduced by over 70 %. To meet the updated NDC targets, coal-based capacity must be fully phased out by 2050 and replaced with approximately 33 GW of new solar PV, thereby increasing PV's share from 1.6 % in 2021 to 22 % by 2060. Additionally, if electricity export prices are revised to match Laos' import price, export revenues could increase 3.7 times. These findings underscore the need for Laos to revise its long-term energy strategy to mitigate economic, geopolitical, and environmental risks while sustaining electricity export revenues. • Quantified the risks associated with Laos' electricity trade with its neighbours. • Open-source model developed to explore long-term power sector transitions. • Reduction in export demand could result in stranded Laotian power assets. • Current Laotian Power Purchase Agreements are unfavourable and need amendment. • Renewable energy investments will reduce emissions and support electricity export.

Source: Energy Strategy Reviews

DOI: 10.1016/j.esr.2025.101865

Authors: Y. Nakajima, V. Sridharan, A. Hawkes, K. Nanthavong, S. Phommachanh, S. Pye

Institutions: Energy Institute, University College London, Imperial College London, National University of Laos

Language: English

Topic: Integrated Energy Systems Optimization

Subfield: Electrical and Electronic Engineering

Field: Engineering

Domain: Physical Sciences

SDGs: Industry, innovation and infrastructure, Affordable and clean energy, Climate action

Open Access status: gold

Estimated APC paid: $4,180