With plans for cross-border electricity grids growing in the region, Laos is banking on hydropower exports to earn revenue. But a recent deal to also sell coal power generated in Laos to Cambodia has sparked environmental concerns over this trade.

Last month, Cambodia’s state-owned utility firm Electricite du Cambodge signed a 30-year deal to buy coal power from two producers with a combined capacity of 2,400MW situated in Laos’ Sekong province.

The two companies – Xekong Thermal Power Plant Company Limited and TSBP Sekong Power and Mineral Company Limited – will start supplying power from 2024.

Cambodia is trying to maintain its momentum as one of the fastest-growing economies in Asean, even as it grapples with having one of the highest electricity tariffs in the region.

Securing steady supply is a big challenge. Last year, Cambodia’s domestic sources of power had an installed capacity of 2,208MW.

Last year, it used 9,308 gigawatt-hours of energy – 14.5 per cent of that was from Thailand, Vietnam and Laos, according to the Electricity Authority of Cambodia.

One-third came from domestic coal power plants and nearly half was from local hydropower dams. Less than one per cent came from other renewable sources like solar.

But the dependency on hydropower makes the kingdom vulnerable to seasonal variations in water levels and climate change.

This year, it was forced to ration daytime power supply after dry conditions hobbled the operation of its hydropower plants.

Referring to the deal with Laos, General Department of Energy director-general Victor Jona told the Straits Times: “Laos offers a lower price than Thailand and Vietnam at 7.7 US cents per kilowatt-hour. Cambodia is also buying electricity from Thailand and Vietnam, but on a smaller scale, at 10 US cents per kilowatt-hour.

“To ensure energy security in the country, Cambodia needs to diversify sources of electricity, [by using] coal, gas, solar, biomass, hydropower dams and imports from neighbouring countries.”

The coal power deal with Cambodia marks the second such cross-border agreement for Laos, which currently exports coal power to Thailand from its Hongsa power plant in the northwestern province of Xayabury.

Environmentalists warn that given the rapidly falling prices of renewable energy like solar, Cambodia risks paying more than it should. In a tender for a 60MW solar power park this year, Cambodia secured a price of 3.877 US cents per kilowatt-hour – a record low in Southeast Asia, according to the Asian Development Bank.

Julien Vincent, executive director of Australia-based environmental group Market Forces, told ST: “From the point of view of energy security, health, cost and minimising climate and other environmental risks, renewable energy is already a more attractive option than largescale coal power plants delivering transboundary power.”

Laos’ Ministry of Energy and Mines, and Ministry of Foreign Affairs did not reply to ST queries.

THE STRAITS TIMES (SINGAPORE)/ASIA NEWS NETWORK