Key Points

Lao PDR adopted the Renewable Energy Development Strategy in 2011 and set a target of 30% small-scale renewables in the energy mix by 2025. The country relies heavily on large hydropower in electricity production and is an attractive investment destination for hydropower. At the same time, Lao PDR has also significant small-scale hydro and solar power potential. Given the mountainous landscape, small-scale renewable energy is viewed as a more appropriate and cost-efficient solution than large-scale deployment. To fulfil the 30% target, Lao PDR needs to compete successfully for renewable energy investment. As of 2020, the country has not adopted feed-in tariff or auction policies and, excluding hydropower, has attracted only limited investment in the renewable energy sector.

Lao PDR has significant capacity gaps in renewable energy governance. It is ranked no 120 out of 156 countries in the Index of Geopolitical Gains and Losses after energy transition. GeGaLo Index) and thus needs to build stronger institutions for governing renewable energy.  Bearing in mind these points, we propose five actions that can improve the investment climate in Lao PDR for small-scale hydropower, solar and wind energy.

Action plan to attract investment in renewable energy in Lao PDR

• Establish an autonomous government agency for renewables
• Join IRENA and build capacity for renewable energy governance
• Adopt a feed-in tariff and build a robust regulatory framework
• Develop a roadmap for small-scale renewable energy
• Facilitate market entry for investors