Lao People's Democratic Republic: Small and Mini Hydroelectric Development Project

Sovereign Project | 42320-012

Summary

The Project proposes to assist the MEM in (i) preparing a policy for implementing sections of the amended Electricity Law related to tariff setting, to encourage development of medium to mini hydroelectric power projects to provide electricity from a clean and renewable source of energy for domestic use, and to allow the Government to approve such development proposals; (ii) after screening and ranking identified projects, prepare a feasibility study of one or two small or mini hydropower (with an installed capacity of up to 5 MW each) projects that would benefit from the work under (i); and (iii) preparing the necessary documentation for Clean Development Mechanism (CDM) registration that would serve as a model for replication by other small-scale hydroelectric power project developments.

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Project Name Small and Mini Hydroelectric Development Project
Project Number 42320-012
Country Lao People's Democratic Republic
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7227-LAO: Small and Mini Hydroelectric Development Project
A.T.F. - Finnida Grant US$ 1.00 million
TA 7227-LAO: Small and Mini Hydroelectric Development Project (Supplementary)
Technical Assistance Special Fund US$ 600,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change
Sector / Subsector Energy - Renewable energy generation - small hydro
Gender Equity and Mainstreaming Some gender elements
Description The Project proposes to assist the MEM in (i) preparing a policy for implementing sections of the amended Electricity Law related to tariff setting, to encourage development of medium to mini hydroelectric power projects to provide electricity from a clean and renewable source of energy for domestic use, and to allow the Government to approve such development proposals; (ii) after screening and ranking identified projects, prepare a feasibility study of one or two small or mini hydropower (with an installed capacity of up to 5 MW each) projects that would benefit from the work under (i); and (iii) preparing the necessary documentation for Clean Development Mechanism (CDM) registration that would serve as a model for replication by other small-scale hydroelectric power project developments. This is in line with ADB's Strategy 2020 and the country strategy and program for Lao PDR, which encourages the development of environmentally friendly generating facilities to tackle climate change and promote clean energy, and is also consistent with the Government's energy sector plan to provide electricity to 90% of the population by 2020, and EdL's energy strategy and road map on power generation.
Project Rationale and Linkage to Country/Regional Strategy

Ownership of private or communal pico hydropower-generating sets reflects the importance of electricity in village life. In a 2006 census, provincial authorities reported existence of pico hydropower plants in their province, indicating on average about 22% of villages had installed such devices. Easily available pico-hydro generating sets for about $50-$100 each

provide poor quality electric power, and are generally dangerous to operate. There is therefore a need to continue developing environmentally friendly, affordable, safe and sustainable generating facilities to provide electricity to those in remote areas without electric power and relying on fire wood for their energy needs; or are provided with electricity generated by local diesel generators5 and use kerosene for lightning; or are supplied with electricity imported from neighboring countries6 produced using fossil fuels.7 EdL and private developers have identified about 95-100 small and mini8 environmentally benign hydropower projects totaling about 120 MW to 140 MW in 13 of Lao PDR's 18 provinces. 9 Promoting small-scale hydropower development is a priority to the Government of Lao PDR as (i) solar panels are expensive and more suitable for lighting of houses; (ii) use of biomass is less known in Lao PDR and the technology is not developed locally; (iii) unsuitability of wind power due to absence of all year winds; and (iv) the ability of small and mini hydropower plants to provide electricity also to small industries and enterprises.

Small and mini hydroelectric power plants generally have higher generation costs than large scale hydro, which benefits from economies of scale. Present tariff regulations in Lao PDR

now hinder the development of small hydro. The MEM has prepared an amendment to the Electricity Law to, among other things, encourage small to mini hydropower development for domestic power supply. The amended Energy Law is expected to be discussed and approved by the National Assembly in December 2008. There will thereafter be a need for a policy dealing with development of small hydropower, and identification of what measures need to be taken to encourage interested public and private developers of small hydropower plants. There will also be a need to prepare the necessary implementing guidelines that will allow EdL to purchase electricity at higher cost from such small developers.

Small hydropower plants have a potential to displace carbon emissions from other carbon-based energy sources as mentioned in paragraph 5. Due to the relatively high transaction cost of registering projects under the Clean Development Mechanism, there is a need to standardize the documentation, methodologies, greenhouse emission factors, and procedures within Lao PDR, so that developers of small hydropower plants of similar characteristics prepare similar documentation for submission to the United Nation Framework on Climate Change (UNFCC). This would reduce transaction costs, would make it easier for UNFCC to evaluate proposals coming from Lao PDR, and would reduce transaction costs.

Impact Clean electricity generated at medium, small and mini hydroelectric power plants.
Project Outcome
Description of Outcome Project design, with CDM registration, of one or two small or mini hydroelectric power plants to be used as demonstration projects for further small-scale hydropower development leading to increased use of clean energy.
Progress Toward Outcome
Implementation Progress
Description of Project Outputs (i) Poliy proposal for implementation of amended Electricity Law to give incentives to private and public sector for the development of medium, small and mini hydroelectric power plants to provide clean energy. (ii) Feasibility Study of up to two small or mini hydroelectric plants. (iii) Model CDM PDD for up to two hydroelectric power plants to be determined dring PPTA.
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Rural areas
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Local households, local small entrepreneurs, local government offices, local public service providers (primarily education and healthcare sectors, and agricultural extension centre), district and province authorities responsible for the sub-sector and for regional development.
During Project Implementation No ensuing project.
Business Opportunities
Consulting Services The consulting services for the TA was undertaken by an international consulting firm in association with national consultants and international individual consultants. The consultants were engaged by ADB in accordance with requirements of ADB's Guidelines on the Use of Consultants (2007, as amended from time to time) and use ADB quality and cost based recruitment procedures. Simplified technical proposals was required. The services, with duration of 14 months, required inputs of about 28 person-months. comprising of about 19 person-months of international consultants and a bout 9 person-months of national consultants. The consultants have expertise in hydropower planning and design, hydrology, geology, electro-mechanical engineering, power economics, financial analysis, environmental impact assessment, preparation of resettlement plans, assessment of impacts on ethnic minorities, assessment of gender, HIV, trafficking, and other social issues, CDM and renewable energy policies.
Responsible ADB Officer Takafumi Kadono
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Energy Division, SERD
Executing Agencies
Ministry of Energy and MinesMr. Viraphone Viravongviraphonh123@yahoo.comDirector General
Timetable
Concept Clearance 12 Sep 2008
Fact Finding 09 Sep 2008 to 12 Sep 2008
MRM -
Approval 14 Jan 2009
Last Review Mission -
PDS Creation Date 27 Aug 2009
Last PDS Update 13 Sep 2013

TA 7227-LAO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
14 Jan 2009 09 Feb 2009 09 Feb 2009 28 Feb 2010 31 Dec 2012 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
600,000.00 1,000,000.00 175,000.00 0.00 0.00 0.00 1,775,000.00 14 Jan 2009 1,401,079.54
Title Document Type Document Date
Small and Mini Hydroelectric Development Project TA Completion Reports Oct 2013
Preparing the Small and Mini Hydroelectric Development Project Technical Assistance Reports Jan 2009

Safeguard Documents

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Evaluation Documents

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