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Toward a Sustainable Renewable Energy Policy in Cambodia

Photo of the Lopburi solar power plant in central Thailand, taken in 2011. Courtesy of the Asian Development Bank’s Flickr account.

This is the fourth and final in our short series featuring voices from emerging experts in Cambodia on the water-energy-food nexus and resource management in the Mekong region.

Although Cambodia and Laos continue to move ahead with hydropower projects in the Mekong, solutions to reduce reliance on large-scale hydropower projects exist! It is increasingly acknowledged that large-scale hydropower projects are unsustainable and harmful to the environment and ecosystems both up and downstream of the reservoir. At the same time, the price of renewable energy technologies are globally falling and provide an alternative power generation source to meet development needs and provide affordable and equitable electricity. Cambodia has high-level commitments to reduce carbon emissions, phase-in renewable energy, and bring electricity access to 90% of households by 2030. Cambodia’s National Strategic Development Plan 2019-2023 and Cambodia’s commitment to INDC lay out an ambitious framework for change. Using solar and potentially wind energy to replace non-sustainable hydropower projects could help Cambodia meet these targets.

As a result of increasing construction and investment in manufacturing, Cambodia’s electricity demand is significantly increasing. Electricity consumption has risen between 18% to 20% annually since 2010. The government predicts that electricity demand will grow annually by 9% between 2015 and 2040. To meet this demand, the government plans to more than double supply between 2020 and 2030.

In order to meet this rapidly rising electricity demand, Cambodia has significantly increased domestic energy generation. To date, this has primarily been through support for large-scale hydropower dam and coal. 2019 electricity generation data from the Electricity Authority of Cambodia shows that hydropower makes up 54.76 percent (1,329 MW), coal provides 27.18 percent (660 MW), fuel oil 11.2 percent (271.98 MW) and renewable energy (mostly solar) provides 6.7 percent (163.77 MW).

The government of Cambodia’s Basic Energy Plan for 2020- 2030 continues to rely on hydropower and coal as the main sources for electricity generation. The Sambor and Stung Treng dams are 2 proposed hydropower projects on the Mekong mainstream in Cambodia. The environmental, economic and social impacts of the Sambor and Stung Treng dams have been assessed by numerous agencies and their construction is opposed by many regional and non-governmental organizations and civil society groups. If built, Sambor will become the most severely impactful dam on the Mekong River mainstream, reducing sediment load and blocking the passage of over 80% of migratory fish from Cambodia and Vietnam. This will reduce fish yield by a third just in Cambodia.[1]

In 2019, Cambodia faced electricity shortages during the dry season (March-May) because of high dependency on hydropower power plants, which produced insufficient electricity due to a drought which meant there was insufficient water to operate the hydropower turbines as planned. This prompted action from the government: in presenting Cambodia’s 2020 energy vision, the director of the Cambodian utilities Electricite du Cambodge (EdC) Keo Rattanak announced that Cambodia will expand its solar energy capacity by 12 per cent by the end of 2020 and to 20 per cent by 2023. He said that solar power would be used to meet increasing electricity demands in the industrial and commercial sectors. He also noted that this would be preferable to mainstream dams: “We believe solar power will provide lower prices [than hydropower]. As EdC’s director, I do not want to see the Mekong River as part of the hydropower generation.”

This new goal is takes advantage of falling costs for solar and wind technology and reflects discussions among CSOs and private sector businesses interested in solar energy investment. The 20 percent solar power target mentioned by the Cambodian EDC senior official are very welcome. Many civil society experts think that energy from solar panels could be the number one generator of electricity in Cambodia. There is strong potential with studies suggesting between 8,100 MW and 11,000 MW (IES and MKE 2016) of peak generation capacity in Cambodia every year. To put this in context, Cambodia’s total generation capacity in 2019 (including both domestic and import sources) is 2,870 MW.

Despite these exciting targets, currently the energy policies limit the adoption of solar energy. The government does allow companies and consumers to connect to the national grid while also using solar energy from a rooftop installed system. However, Electricity Authority of Cambodia regulations say that grid-connected solar power projects are only allowed to generate up to 50% of their total demand (in KW) and must purchase the rest from EDC. In order to promote solar photovoltaic generation investment, the government should consider adjusting the energy policy and regulations to remove obstacles and limitations like these. Making these changes would address concerns over the extra costs imposed on industry that want to use solar among small and medium enterprises.

Cambodia has the potential to promote clean and environmentally-friendly energy and reduce dependence on large-scale hydropower in the Mekong. There are signs the government is considering next steps to do so. The draft Environmental Code outlined plans to pilot a feed-in tariff, offering a fixed price for energy fed into the grid from independent renewable energy producers. However, implementing this will require practical and technical actions in addition to legal changes. Access to project financing and taxation is another area where policy changes could help incentivize solar investment companies.

Energy efficiency is also important as an alternative policy to address electricity demand, which on a business as usual (BAU) path will grow at a rapid rate of at least 9% per year and impose challenges on the overall electricity system. The Basic Energy Plan aims for a 15% reduction in total energy demand by 2030, compared to BAU levels. This is the minimum that should be achieved. The Cambodian Government should take further steps to achieve these reductions.

Ultimately, adopting decentralized electricity generation and shifting towards renewables in the energy mix will ensure continued economic growth and affordable electricity prices while minimizing other risks and costs.

The author visiting the first major 60MW commercial solar farm in Kampong Speu province, Cambodia, on July 29, 2019. Photo courtesy of Soknak Por.

Soknak Por, a Cambodian, has been working with non-governmental organizations for more than ten years. Engaging in NGO sector since 2003, Soknak has worked with various projects in Cambodia in the fields of community development, capacity building, governance and natural resources management. He has formulated and built capacity hundreds of community-based organizations and sub-national government officials. He received master’s degree of Development Studies from University of Cambodia and Bachelor of Education in English Literature from Build Bright University in Cambodia. He has strong interest in working with grassroots community for capacity building and empowering them to protect and manage their own resources toward fair sharing of natural resources and sustainable livelihoods. He is currently working as Project Coordinator for People Protecting Their Ecosystems in The Lower Mekong Project, part of Asia Regional Natural Resource Governance Cluster of Oxfam based in Cambodia.

[1] Dr. Vittoria Elliott and Chheng Phen, Report on Spawning Habitats of Fish in the Mekong and 3S Rivers in Cambodia, Inland Fisheries Research and Development Institute, May 2017.

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Pragmatic Approaches to Coal and Renewable Energy in Thailand

Thai protestors demonstrate their opposition to the Krabi coal plant in February 2017. Image: Phuket Gazette

 Over the next two decades, Thailand’s Power Development Plan 2015-2036  lays out a path to increase its use of coal as a portion of its overall power mix (PDP2015).The rise of coal is an intentional diversification away from Thailand’s long-standing reliance on natural gas, which has raised its energy security risk. Domestic natural gas is depleting rapidly, and the country is heavily dependent on natural gas imports from Myanmar. However, coal is not as popular with the general public, as Thais are now more keen to develop renewable energy sources. To Thai people, pursuing a path that leads to wider use of renewables fulfills two objectives: it reduces environmental impacts and also supports the local economy, enabling more citizens to produce and sell electricity back into grids. In the battle over Thailand’s energy future, the country can move toward actions that address fundamental dimensions of energy development – local concerns, environmental threats, and energy security by including public involvement, expanding renewable infrastructure, and taking responsibilities to social and environmental impacts by the government.

Prior to the detention of protest leaders in early February, local citizens of Krabi Province in southern Thailand and environmental activists gathered in front of the House of Government in Bangkok to protest against a proposed 800-megawatt coal-fired power plant in their hometown. According to the Electricity Generating Authority of Thailand (EGAT), the plant will tackle power shortages related to a projected annual demand growth of 6% and insufficient grid infrastructure in the southern region. The new power plant reflects Thailand’s PDP2015 that lays out an increase in the share of coal power generation via clean coal technology from 20% to 25%. The local citizens, however, asserted that renewable energy such as solar and biomass should be considered, instead of coal, together with reinforcement of the renewable grid connection network[i]. Although the potential nation-wide application of a renewables-only strategy is a long way off, policymakers should recognize that renewables have the potential to become a substantial source of electricity in the region.  Pursuing coal as a dominant power source without developing capacity for alternatives will undoubtedly make Thailand’s energy security even more vulnerable.

According to PDP2015, Thailand’s power development aims to address the energy security issue by diversifying its energy mix and avoiding over-dependency on a particular source. Thailand currently ranks near the top of the list in least energy secure countries, according to the US Chamber of Commerce. Thailand plans to curtail natural gas use that accounts for as high as 67% of its total electricity generation in 2015, and diversify by building new coal-fired power plants. New coal-fired generation units in the country would replace old and inefficient coal-fired power plants with “supercritical” or “ultra-supercritical” technologies, leading to an increase in energy efficiency ranging from 30%-50%. Nevertheless, the current most advanced ultra-supercritical technology could render 17% less carbon emissions, compared to other pollutants such as nitrogen which could be reduced up to 80%. Coal prices are expected to decrease by 23%-49% in year 2020 due to its abundant availability. This expected price drop supports EGAT’s estimation that at a capacity of 1000 megawatts, coal-fired power plants will save Thailand up to USD $86 million per year compared to natural gas.

New coal generation, however, carries a set of potential environmental and health concerns, not to mention the tourism impact emerging from coal transportation by water in tourist-concentrated areas such as Krabi. Although some pollutants such as sulfur dioxide and PM2.5 released are not a concern, the potential impact of externalities such as mercury contamination have not yet been studied. Worries about transparency and misjudgment to build the new coal power plant have pressured the Thai government to require a new and more stringent Environmental Impact Assessment (EIA) and Environmental Health Impact Assessment (EHIA) to prove the safety of environment and the people.

There is still a silver lining in Thailand’s drive for diversification, in that the national energy plan predicts that renewable energy will grow from 8 to 20 percent of Thailand’s total capacity over the next two decades (AEDP2015). To help meet this target, the Thai government has encouraged renewables by initiating subsidies in a form of feed-in tariff (FIT) to both small and large commercial-scale producers. The FIT rates differ on power plant size and fuel types i.e. waste, biomass, biogas, wind, hydropower, and solar.

Krabi residents are more ambitious than the PDP, as many are advocating for 100% of electricity generation from renewables as the ultimate goal. According to the Research Center in Energy and Environment in Thaksin University, it would be economically and technologically feasible for installations of renewable energy to power the entire province within 2 years. If fully employed, solar, wind, biomass, biogas, and waste capacities combined could provide electricity exceeding Krabi province’s power demand. Similar practices could be adopted by other provinces in the South. A study by Thai Health Promotion Foundation (in Thai) estimated that the exclusive utilization of alternative energy in all the southern provinces alone could increase GDP by $3.309 million USD (116,000 million BTH) and employment by 200,000 workers by 2027, while decreasing imported fossil fuel costs by $683 million USD (24,000 million BTH) and greenhouse gas emissions by 27 million tons per year. However, reliance on renewables alone would endanger local electricity stability since renewables are limited in transmission network and storage capacity.

How, then, should Thailand develop an approach considering its citizens’ health, environmental concerns, and energy security?  First and foremost, the Thai government should allow public participation to occur. There is no denying that the opposition of the coal power plant derived from the lack of decision-making power by local individuals and organizations. Citizens should have a role to play in the decision-making process about energy development in their community. Reports of the benefits and disadvantages conducted by both the government and non-partisan groups should be provided to citizens for their review and understanding. This will also promote transparency and allow the government to discuss its national energy issues with its citizens.

At the same time, adoption of renewable energy sources should be encouraged with a negotiated percentage of the total electricity needed, given its energy diversification benefits. Since Thailand primarily imports energy from abroad, the country should harness its domestic renewable energy potential by enhancing infrastructure for renewable such as transmission and distribution networks for renewables to reverse its current energy dependence. Inevitably, this could solve network congestion that prevents power already online from selling back to the grids.    These improvements will decrease the need for so many new natural gas and coal developments and support diversification.

Due to renewable network constraints and energy security purposes, a balanced use of nonrenewable fuel sources should still be considered.  Whether new coal-fired power plants should be developed or not depends on the consensus for which the public has a stake. The Thai government should assure its people, particularly those who would be directly affected by the operation of new fossil fuel power plants, that adequate remedy will be given if undesirable conditions incur. For a more sustainable path, as IEA Clean Coal Center suggested, the government should establish a clean coal research center to undertake studies on clean coal technologies and implementation. Such a center would allow international experts or organizations a first point to contact and focus their resources and expertise when promoting and/or supporting the clean coal technologies in Thailand.

[i] Thailand’s national renewable development plan, Alternative Energy Development Plan, aims to increase renewable generation to 20% of its overall installed capacity. The target is one of the most ambitious renewable energy plans in Southeast Asia. However, renewable energy facilities tend to concentrate in certain areas, leading to network congestion caused by limited transmission lines. To date, current capacity and planned network reinforcement information has not been publicly available and included in the energy plan.


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Riding a white elephant: Theresa May chooses a path of nuclear dependency and energy uncertainty over sustainability


Earlier this year, I wrote an article for ExSE making a number of connections between Laos’s Nam Theun 2 (NT2) hydropower project’s development history and that of the Hinkley Point C (HPC) nuclear power station’s proposed development in Somerset, United Kingdom. Amongst the obvious links was the involvement of the same main developer, the state-owned Électricité de France (EDF); the manner in which proponents have promoted the projects as low carbon sources of energy in an era of climate change; the willingness by the developers to externalise environmental and social costs on wider society and burden future generations; the fact that both mega-projects are presented by leaders as having no or few alternatives by the government (i.e. so-called TINA-syndrome), and the way in which spaces for public discussion are constrained or actively closed down by the respective states until the projects have become a fait accompli.

There was a further connection, linking each of these projects to China’s overseas energy sector engagement, which in the case of Hinkley Point involves China General Nuclear Power Corporation as a major investor in the consortium, while in the case of NT2 by contrast, its development was spurred on by a fear of China taking over the project by the Western backers and financiers, including the World Bank and Asian Development Bank. As things have transpired, the developers needn’t have worried, as now China is one of the main energy infrastructure developers in Laos, and one more dam in their extensive Mekong basin portfolio would have made very little difference in the overall developmental scheme of things. The only impact would have been on the already weakening influence of the Western hydraulic development industry in making a meaningful contribution to the region’s sustainability debates, which have subsequently become a race to the bottom.

But the underlying geopolitics and political economy of these “Macchiavellian Megaprojects”  is what provokes most curiosity and provides tantalising insights into the mores and motivations of powerful leaders and strategic groups, apparently irrespective of whether such projects occur in one party authoritarian states or multi-party, liberal democratic states. This article updates the circumstances surrounding the long-running HPC saga since May, while at the same time, pays brief consideration as to what this may imply about the historical tendency for certain national leaders to readily spurn seemingly rational, broad evidence-based decision-making processes to engender the widest possible social benefit concerning sustainable energy futures, in favour of appeasing strongly vested interests within their own political clique.

While the British government has given the go-ahead for the Hinkley Point C power station to be built, many questions hang over its feasibility and the future of nuclear power in the UK

Bear in mind that HPC was originally the brainchild of Margaret Thatcher, who thought a new generation of nuclear power stations would be the perfect solution to her goal of closing down Britain’s coal industry and privatizing just about every state utility and corporation. She dreamed of a fully-privatized nuclear industry that would stand on its own two feet, without continual government subsidies or recourse to the public purse.

However, Maggie’s vision was brought back down to earth by two events – the first was the disastrous 1986 Chernobyl nuclear accident that led to a plume of radioactivity spreading across Europe from east to west, even contaminating the upland sheep pastures of Britain for a generation[i], and the second was the bankruptcy and subsequent government bailout of the privatised British Energy in 2002, exposing further the hidden costs of maintaining a nuclear power regime. These wake up calls were enough to take some of the becquerels out of the industry’s more outlandish claims and lead to a temporary dampening in government enthusiasm over UK nuclear capacity expansion, but did nothing to dim the headlong rush to nuclear dependency of neighbouring France, who did not have the luxury of North Sea oil and gas to fall back on, but were content to let the state carry the main cost burden.

It is significant that nuclear power came back on to the UK government’s agenda under Tony Blair in 2006, who announced the best way to meet carbon-free national energy needs was to build new nuclear power plants and that failure to act would “fuel global warming, endanger Britain’s energy security and represent a dereliction of duty to the country”. Blair’s evangelism for nuclear power occurred despite strong reservations from members of his own cabinet and warnings from the government-sponsored Sustainable Development Commission that there was “no justification” for a new nuclear programme. In 2008, EDF bought British Energy in a deal worth £12.4 billion, which produced 15 % of the UK’s power from eight nuclear sites and paved the way for a new generation of nuclear plants to be built, including the one at HPC.

The following year, The Guardian newspaper learned of secret government plans to tax consumers to pay for the construction of the nuclear power stations, despite earlier assurances that the industry would not benefit from public subsidies. EDF would be one of the main beneficiaries of this planned levy on bills. By 2010, the Energy Minister announced that there was a huge black hole in financing unavoidable nuclear decommissioning of existing plants and waste management overheads, which would have to be covered by the tax payer. In other words, it is a myth that nuclear power can ever be independent of state subsidies and development and operational costs are only likely to inflate in future.

Theresa May, whose own rise to power came out of the unexpected Brexit result which led to David Cameron’s resignation as Prime Minister, surprised analysts soon after arriving in Number 10 Downing Street by calling for a full and thorough review of the HPC project. This decision stunned EDF and their Chinese investment partners, who had been fully expecting to toast the project’s future success at an on-site celebration on 29 July, the day after the board of EDF had voted ten votes to seven to approve the investment decision on HPC. The cooled champagne and canapés had to be rapidly cleared away, when it was discovered at the eleventh hour that May wanted to delay the UK government’s decision on whether to proceed with construction for a few months more, sending political reverberations from Somerset to Paris and Beijing.

British Prime Minister Theresa May meets Chinese premier Xi Xingping at the G20 Summit in Hangzhou, China on 4 May, when the delayed Hinkley Point decision threatened to overshadow her first major foreign summit

One of the major concerns, according to insiders including the new joint chief of staff, were the economic fundamentals of the project and national security considerations, given the involvement of Chinese state-run nuclear corporations holding a third equity share in the project. However, it was the insanely high electricity wholesale generation price being offered to the development consortium that mostly grabbed the headlines. At a guaranteed strike price of £92.50 per megawatt hour, it was calculated that electricity consumers could end up paying £30 billion in subsidies for the project over its 35 year lifetime. This cost compares unfavourably with renewable energy options, which have been rapidly falling in price over the last few years, and is over double the present UK wholesale price. It seemed to wilfully ignore the economic affordability trends for renewable sources, and cynically could be seen as merely a politically strategy for keeping the UK at the top table of the global nuclear club. In September, the executive director of Greenpeace, John Sauven, called on May to “stop this radioactive white elephant in its tracks”, claiming the deal would be a “monumental disaster for taxpayers and bill payers”.

Cartoon from The Guardian (16 September 2016) spoofing May upon her trusty nuclear pachyderm steed, taking a swipe at cheaper renewable energy sources through the controversial HPC decision. Steve Bell

Independent analysts in the City of London were of the same opinion as Greenpeace, Friends of the Earth and other environmental groups concerning the project’s exceedingly shaky economic credibility[ii], while even EDF board members were divided on the level of existential threat it posed to the future of EDF itself, given the unproven nature of the design and rising economic risks and liabilities to EDF’s nuclear business model at home in France. While the project was seen as crucial to keeping EDF afloat and safeguarding tens of thousands of jobs, The only people in Britain left firmly backing the project seemed to be a core group of construction contractors who stood to benefit financially from the project, some labour unions, a significant rump of Tory MP’s ideologically wedded to nuclear power and the Chinese state, which increasingly became more anxious and threatening about the consequences of cancelling HPC in the following months.

In the days following May’s decision to review the HPC, the Chinese government started to issue veiled threats about the future of UK-China relations, if the HPC project was not approved. Liu Xiaoming, China’s ambassador to the UK, wrote a letter to the Financial Times, warning that bilateral ties stood at a “crucial historical juncture” and hoped the British government would continue to support Hinkley Point – and come to a decision as soon as possible so the project can proceed smoothly.” At May’s first major international summit, ironically the G20 summit in Hangzhou in early September, she was at pains to point out that Britain’s relationship with China were “more than about Hinkley” and that UK had built “a global strategic partnership with China”, claiming it was “a golden era of relations between China and the UK.” Indeed, China’s interests are not solely focused on becoming involved as a partner in the HPC project, but extend to future planned investments in Bradwell B and Sizewell C nuclear power plants on the east coast, where China General Nuclear hopes to employ its own reactor designs and eventually run Bradwell. Majority Chinese involvement in such a sensitive sector as nuclear power generation have understandably raised a number of concerns in numerous quarters over national security which are unlikely to die down in a hurry.

As matters transpired, on 15 September May capitulated to pressure to appease both the Chinese investors and the strident pro-nuclear lobby within her own cabinet, and the £18 billion deal to build HPC was subsequently signed in late September at a “low-key ceremony” in London, attended by Greg Clark, the UK business secretary, Jean-Bernard Levy the CEO of EDF, and He Yu, chairman of China General Nuclear. He Yu noted that, “CGN’s commitment to the UK as one of the world’s leading developers and operators of nuclear power. This flagship program is a triple win for China, Britain, and France and is a culmination of years of cooperation between the three countries. CGN looks forward to providing UK consumers with safe, reliable and sustainable energy and maximizing opportunities for UK suppliers and the UK workforce.”

While engineering unions and contractors welcomed the deal, it was widely criticized by many across the spectrum of media, civil society, business analysts and opposition political parties, who believe that it will lock British energy consumers into an unnecessarily expensive electricity source for two generations, just at the moment when renewable energy sources such as solar, wind and tidal power are rapidly falling in price. Furthermore, it will create a massive radioactive material waste problem that is estimated to equate to 80% of all the material produced thus far in the UK in terms of radioactivity. And all this depends upon whether or not the European Pressurised Reactor (EPR) design chosen by EDF functions or not, given its unproven record and the fact that the only two other nuclear plants adopting the same design have suffered massive technical problems, delays and cost overruns. As EDF’s former chief finance officer who resigned in March 2016 warned, the EPR design represented a “major construction risk” and rhetorically asked, “Who would bet 60 to 70 per cent of his equity on a technology that has not yet been proven that it can work and takes ten years to build?”

As with hydropower development in the Lower Mekong Basin, there appears to be a grim inevitability to the prospect of a tranche of new nuclear plants progressing in the United Kingdom, once HPC construction gets fully underway, as occurred in Laos after the decision to fund NT2 sparked a boom in new hydropower development. While some analysts consider HPC still not a done deal, as there remain many regulatory hurdles to overcome,plus an ongoing challenge by the Austrian and Luxembourg governments in the European Court of Justice over subsidies provided by the UK government to EDF, supposedly breaching European law on distortion of energy markets, the argument that one new nuclear plant will trigger permission for many more is a persuasive one, due to path dependency.

On the other hand, Vietnam recently demonstrated that a nuclear development pathway is in no sense pre-ordained and can be averted through sensible and far-sighted leadership decisions. In early November, the government officially suspended its nuclear development programme, after a series of technical setbacks and delays in its earlier plans to generate 10 % of the nation’s power needs or 15,000 MW from nuclear by 2030. It recently announced that due to a dwindling rate of energy demand expansion and nuclear power’s lack of price competitiveness, the government would postpone its plans indefinitely, a decision that was subsequently endorsed by the national legislature.

An artist’s impression of the proposed nuclear power plant in south-central Ninh Tuan province, Vietnam, that has now been cancelled.

This move came against a background of growing unease about the over-hyped promise of nuclear power’s benefits, general environmental and cost concerns around waste management, and worries about the safety and environmental risks of Chinese nuclear power plants near the Vietnamese border. The government’s decision may temporarily damage, albeit not seriously, economic relations with large investors from Japan and Russia that were seeking to develop the nuclear plants, but at the same time it should open up new space for informed discussion and debate about national and regional energy development futures, not only in Vietnam but more widely, across the Mekong Region. The decision also de-escalates the probability of other regional states wanting to rapidly develop their own nuclear generation capability, with potential implications to weapons manufacturing designs. The challenge for Vietnam now will be to wean itself off fossil fuels, particularly imported oil and gas, while the UK seems to be heading down a road of new nuclear addiction, just at the moment when long-term renewable energy investments have never made more sense.

[i] It took 26 years after the Chernobyl accident for restrictions on the sale and movement of livestock from affected farms in England and Wales. In total, some 10,000 farms were affected due to the contamination of grass by radioactive caesium and iodine isotopes. The Food Standards Agency (FSA) finally lifted farm restrictions on 1 June, 2012

[ii] Critics of the HPC deal from the financial and  business sector have included Legal and General, HSBC, the Institute of Directors, RBC Capital Markets and Moody’s Credit Rating Agency

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Hydropower in Laos: An Alternative Approach


It’s time to take another look at the future of energy in Southeast Asia.

A report published in September by the Stimson Center, a D.C.-based think tank, challenges prevailing notions about the future of hydropower in the Mekong subregion, an area including Vietnam, Cambodia, Laos, Thailand, Myanmar, and southwestern China.

The report focuses on Laos, which in years past has proclaimed itself the future “Battery of Southeast Asia,” by aggressively developing hydropower dams on the Mekong. Laos has already built 29 large dams along the river’s mainstream and tributaries, with plans for over 100 in total. The land-locked country remains the poorest in Southeast Asia, and has planned to raise cash by exporting electricity to consumers in neighboring countries.

But project developers of these dams – who are typically Thai and Chinese companies – have faced criticism from civil society groups and international observers for the myriad social and environmental consequences brought on by dam construction. The Mekong is home to an estimated 1,000 species of fish, many of which migrate along the river and replenish the region’s fisheries. By changing the hydrology of the river, these dams threaten the biodiversity of the Mekong and the livelihoods of fishermen and farmers throughout the region. In times of drought – as has been experienced this year – the dams can cause regional insecurity by contributing to water scarcity problems downriver.

While dam construction has continued apace despite these dangers, the Stimson report argues that new markets and technologies are creating an opportunity to change course.

Challenges for Lao Hydro

The report highlights new developments that could steer Laos away from further damming on the Mekong. First, following a period of economic and political liberalization, Myanmar is emerging as a competitor for energy infrastructure finance. Myanmar boasts nearly 100 gigawatts of potential hydropower capacity, far exceeding what is possible in Laos. Such a glut of potential projects in the region is likely to siphon away financing that might otherwise go towards hydropower development in Laos.

At the same time, China’s economic slowdown could signal the end for cheap and easy hydropower finance in the region. In previous years, Chinese state planners encouraged outbound investment in strategic sectors such as hydropower projects in Southeast Asia. However, the report notes that government concerns about non-performing loans on the books of Chinese banks seem to have reduced the funding available for some projects in Laos. Rising local awareness about the social and environmental costs of these dams also adds a layer of risk that financiers may find discouraging.

Perhaps most critically, it appears as if planned generation in Southeast Asia is outpacing the region’s appetite for energy. China, once envisioned as a potential market for Laos power, is already experiencing serious overcapacity in its domestic power market. Thailand, while still a major investor in Laos hydro projects, has consistently overestimated its own consumption levels – and has lots of room to cut demand through energy efficiency measures. Both Cambodia and Vietnam have planned to reduce their reliance on imported energy, with the latter investing heavily in coal-fired power plants.

A New Vision for Laos

Taken together, these signals make a compelling case for a new energy strategy in Laos and in the region as a whole.

First, the report suggests that Lao planners should invest in a backbone transmission network to connect its patchwork regional grids. This is a good idea for a variety of reasons. A nationwide transmission system would help open up markets for Lao electricity both domestically and internationally by creating a more flexible grid. It would help planners integrate renewable energy resources like solar and wind. It would also be a great step towards electrifying the remaining 20% of the country still without power.

Secondly, planners should consider ways to diversify the country’s energy mix with wind and solar. With too much reliance on hydro, the region risks facing shortages during drought conditions, which will become increasingly likely due to the effects of climate change.

It also makes good economic sense. Utility-scale solar is now nearly cost-competitive with hydro in Laos. Solar avoids the social and environmental challenges associated with hydro that have led to disruptive public protests and cost overruns, making it a safer bet.

In fact, solar already plays an important role in electrifying Laos’ rural communities. Companies like Sunlabob have pioneered low-cost solar home systems to provide basic electricity services like lighting and device charging to remote communities. A new energy outlook from Lao energy planners would also be a great opportunity to optimize plans to fully electrify the country, whether by grid connection, solar home systems, or village-level microgrids.

Lastly, greater international cooperation in energy planning is needed. The construction of a national power grid will require technical assistance from international experts. The Asian Development Bank is leading this effort, and plans to invest $400 million in a national transmission network by 2020. The US has already begun providing power planning and optimization assistance through the Department of Energy and its national laboratories.

The US is also supporting renewables in Laos. In advance of President Obama’s visit to Laos in September 2016, the US Trade and Development Agency committed to funding a feasibility study for a 20 megawatt solar farm in the country.

China, as a regional power with an abiding interest in Laos’ energy sector, can also benefit from this shift. The world’s largest solar module manufacturers are Chinese, and government support for emerging solar markets is one way to bolster domestic manufacturers while also rebranding China as a responsible stakeholder in the region.

Laos’ energy future is still uncertain. Energy planners remain convinced that prioritizing dam construction is Laos’ ticket to prosperity, despite the risks. But as the challenges for Lao hydro become ever more apparent, a new way forward could be in the making.

Read the Stimson Center’s full report here.

This article was first published here on the Pacific Observer website.

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World’s largest solar maker invests in Yunnan


Solar power is shining a renewed spotlight on Yunnan. Last week, Trina Solar announced an agreement with Yunnan Electric Power Design Institute to supply solar cells capable of producing 51 megawatts of electricity. These panels will be the first installment of a larger plan to populate some tea-growing areas in Xishuangbanna with photovoltaic generators.

The proposed solar farm will eventually reach a capacity of 100 megawatts (MW), enough to power roughly 36,000 homes annually. Despite its tremendous size, all of the electricity has been reserved exclusively for large tea plantations within the prefecture. The power will be utilized to run well-water pumps and irrigation systems already in place within the farms.

The Yunnan Electric Power Design Institute (YEPDI), according to an industry press release, will supply “engineering, procurement and construction services for the project”. Representatives from both companies expressed hope the collaboration will revolutionize renewable energy projects in the region. Chang Jichun, deputy manger of YEDPI, congratulated Trina Solar as “an industry leader with a vision to build a greener world…[building] a pioneer project in China to put solar power to work on the tea plantations.” As a result of the endeavor, Chang continued, Yunnan’s “tea plantations can be more efficient with increas[ed] self-reliance and less pollution.”

In the first stage of the multi-pronged project, Trina Solar will deliver approximately 43,000 TSM-255 modules and 154,000 TSM-260 versions. Extremely durable and designed to withstand exposure to pesticides and herbicides, the glass panels represent only half of the solar farm’s eventual size. With each panel measuring one meter by 1.65 meters, the 190,000 panels eventually covering the farm will take up an area of 660,000 square meters.

Put in perspective, that corresponds to 120 American football fields worth of solar modules placed side-by-side — a sea of glittering black. Each TSM-260 panel comes with a 25-year performance guarantee. Tea farmers in the area are thus assured a long-term source of renewable electricity, with each panel replaceable and upgradeable. Already underway, shipments and installation are expected to be completed by the third quarter of 2015.

Trina Solar has proved itself the most lucrative and successful businesses of its kind, often promising shareholders five percent returns on investment. Founded in 1997, Trina Solar today operates mostly in Africa, China and North America and explosive demand for solar energy has allowed the company to grow exponentially since its founding. Last year, the company sold solar panels able to generate 3.66 gigawatts of electricity. With such success, Trina Solar may well push further into the Yunnan market as the BBC reports Beijing has pledged to introduce programs to significantly expand the nation’s solar and wind power industries.

Yunnan province is already home to some of the largest photovoltaic power stations in Asia. Just 70 kilometers southeast of Kunming on the outskirts of the Stone Forest, a 166 MW solar farmis expected to complete construction this year. Once fully underway, the project will generate 188 million kilowatts of energy per hour, eliminating 175,000 tons of carbon dioxide emissions each year. The 9.1 billion yuan (US$1.45billion) project is just one of many reasons Kunming carries the unofficial title of China’s ‘Solar City‘.

Outside of Yunnan, massive endeavors throughout China are underway to reinforce the importance of wind and solar energy while tackling the country’s crippling pollution issues. Although often overlooked, China already leads the world in terms of renewable electricity production, currently spending more than US$80 billion annually on enhancing its green energy sector — funding which has facilitated a 100-fold increase in the country’s use of solar cells since 2005.

This article written by Richard Diehl Martinez, was originally published here on the Gokunming.com website.

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