Lao People's Democratic Republic: Renewable Energy Development in Remote Communities Project

Sovereign Project | 43222-012

Summary

The proposed Project will implement 5.5 Mega Watts (MW) of distributed off-grid capacity with (i) solar photovoltaic (PV) home systems; and (ii) mini-grids powered by RETs (PV, micro/pico-hydro and mini-wind). It will also include institutional and beneficiary capacity building in procurement, operation and maintenance (O&M), and monitoring.

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Project Name Renewable Energy Development in Remote Communities Project
Project Number 43222-012
Country Lao People's Democratic Republic
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7866-LAO: Renewable Energy Development in Remote Communities Project
Japan Fund for Poverty Reduction US$ 1.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change
Sector / Subsector Energy - Renewable energy generation - solar
Gender Equity and Mainstreaming Effective gender mainstreaming
Description The proposed Project will implement 5.5 Mega Watts (MW) of distributed off-grid capacity with (i) solar photovoltaic (PV) home systems; and (ii) mini-grids powered by RETs (PV, micro/pico-hydro and mini-wind). It will also include institutional and beneficiary capacity building in procurement, operation and maintenance (O&M), and monitoring.
Project Rationale and Linkage to Country/Regional Strategy

Energy poverty constrains opportunities for sustainable social development, especially in rural remote communities, where women-headed households (HHs) and indigenous and ethnic minorities are remarkably vulnerable. This limited access to rural electricity services needs boosting in areas with hard topographic conditions, by promoting sustainable off-grid options. These include solar home systems (SHS) and mini-grids powered by Renewable Energy Technologies (RETs) to replace contaminating kerosene lighting, diesel generation, and conventional grid-extension, alternatives with high financial cost and externalities. The proposed Project will address these issues and assist the Government of Lao PDR (GoL) in pursuing its ambitious target of electrifying 80% of villages and 90% of HHs by 2020.

The Asian Development Bank (ADB), through its Energy Policy, Energy for All Initiative and Sector Roadmap for Lao PDR, has promoted improving the country's energy security and access to clean energy. So far, ADB's key Assessment Strategy and Roadmap (ASR) for the Energy Sector in Laos PDR has promoted sector development by implementing new power generation capacity and extending and interconnecting provincial distribution grid-infrastructure. Nevertheless, the ASR scope needs to now include pro-poor clean distributed generation of electricity in its menu of options, especially SHS and mini-grids powered by RETs as one of the best technological and cost-effective alternatives to conventional grid extension in remote rural areas of Lao PDR. In figures, in developing countries grid extension cost can be estimated on average at $8,000 $10,000/ kilometer (km) and in difficult topographies at about $22,000/km. Besides, the Project will enhance ADB's regional experience and be the first of its kind in Lao PDR.

The midterm review 2007-2011 Country Strategy Program (CSP) for Lao PDR, recommends accelerating the electrification rate, mainly in the Northern Provinces. This will help to achieve the GoL's national electrification targets, mainly by targeting rural remote communities difficult to reach and with low capacity of payment for energy services. These HHs are not yet included in any ongoing electrification plans of the GoL and development partners. The Ministry of Energy (MEM) and its Department of Electricity (DOE) support this argument.

In the Northern Provinces the electrification rate is much lower compared to the national average of 60% (measured in 2010). Barely electrified remote areas will offer the best environment to demonstrate the suitability of RETs for bringing access to clean electricity services and social development. Sustained by this rationale and assisted by the Project Team, the MEM and DOE, proposed the selection of project implementation sites in the Provinces Oudomxay with 295,000 inhabitants, 45,000 HH and 14% electrification rate; Luang Nahmta with 155,000 inhabitants, 29,000 HH and 20% electrification rate; and Phongsaly with 168,000 inhabitants, 30,000 HH and 12% electrification rate. The Project will benefit at least 10,000 HHs.

The Project, which is included in the Country Operations Business Plan (COBP) for Lao PDR 2012-2014, will address a pro-poor-design targeting indigenous peoples; ethnic minorities and women headed HHs. It is categorized as Effective Gender Mainstreaming . The Project will strengthen the criteria for selecting sites and promote project ownership among beneficiaries. To avoid market distortions, it is foreseen that the project beneficiaries will repay part of the equipment costs through cash or in-kind contributions. The Project will promote sustainability models to ensure no equipment failure during expected service life.

Impact
Project Outcome
Description of Outcome
Progress Toward Outcome
Implementation Progress
Description of Project Outputs
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Provinces of Oudomxay, Louang Namtha and Phongsaly
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design There will be a consultative and participatory inclusion process for creation of awareness and project ownership.
During Project Implementation Communities will be involved in the operation and maintenance of the off-grid schemes after provision of appropriate capacity development programs.
Business Opportunities
Consulting Services All contracts closed.
Responsible ADB Officer Takafumi Kadono
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Energy Division, SERD
Executing Agencies
Ministry of Energy and MinesNongbone Road
P.O. Box 4708
Vientiane, Lao PDR
Timetable
Concept Clearance -
Fact Finding -
MRM -
Approval 09 Sep 2011
Last Review Mission -
Last PDS Update 18 Mar 2014

TA 7866-LAO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
09 Sep 2011 11 Nov 2011 11 Nov 2011 31 May 2012 31 May 2014 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 1,000,000.00 0.00 0.00 50,000.00 0.00 1,050,000.00 09 Sep 2011 32,907.51

Safeguard Documents

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Evaluation Documents

See also: Independent Evaluation

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