Diagnostic Study on Renewable Energy Potential and Feasibility in South East Asia
MBA-Thesis Dobelmann fertig
MA 40389040
Fakultät Verkehr-Sport-Tourismus-Medien
Umwelt- und Qualitätsmanagement
MBA-Thesis
Diagnostic Study on Renewable Energy Potential
and Feasibility in South East Asia
Prepared by
Jan Kai Dobelmann
Marie-Curie Strasse 6
76139 Karlsruhe
Germany
dobelmann@dgs.de
Diagnostic Study on Renewable Energy Potential and Feasibility in South East Asia
MBA-Thesis Dobelmann fertig
MA 40389040
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List of Content
1
Introduction ……………………………………………………………………………………………………13
1.1 Aim of this study …………………………………………………………………………………………13
1.2 Approach of the study …………………………………………………………………………………15
1.3 Content of the study ……………………………………………………………………………………16
2
Present Situation in South East Asia……………………………………………………………….18
2.1 General Country Information Lao PDR …………………………………………………………18
2.1.1 The Country…………………………………………………………………………………………..18
2.1.1.1 Geography…………………………………………………………………………………………19
2.1.1.2 Climate ……………………………………………………………………………………………..19
2.1.1.3 The Laotian Economy …………………………………………………………………………19
2.1.1.4 The Laotian Rural Society ……………………………………………………………………20
2.1.2 Relevant Organisations…………………………………………………………………………..21
2.1.3 Power Policy and Legislation …………………………………………………………………..22
2.1.4 Energy Status in Lao PDR ………………………………………………………………………23
2.1.4.1 Total Energy Consumption…………………………………………………………………..24
2.1.4.2 Cost Structure of Gasoline and Diesel …………………………………………………..25
2.1.4.3 Typical Householde Expenditure for Cooking …………………………………………26
2.1.5 Electricity Generation ……………………………………………………………………………..27
2.1.5.1 Electricity Generation by Sources …………………………………………………………27
2.1.5.2 Electricity Generation, Consumption, Import and Export…………………………..28
2.1.5.3 Electrical Energy Consumption by Consumer Categories and Provinces……29
2.1.5.4 Electrical Energy Demand Forcast 2004-13……………………………………………33
2.1.6 Rural Electrification ………………………………………………………………………………..34
2.1.6.1 Current Rural Electrification Systems…………………………………………………….34
2.1.6.2 Targets and Costs for Rural Electrification……………………………………………..36
2.1.6.3 Off-Grid Rural Electrification Procedure …………………………………………………37
2.1.6.4 Safety and Operational Awareness……………………………………………………….38
2.1.6.5 Barriers experienced of the Mini and Macro Hydro and Diesels Projects ……38
2.1.6.6 Summary …………………………………………………………………………………………..39
2.1.7 Electricity Tariffs and Price Structure ………………………………………………………..40
2.1.7.1 Electricity Tariffs on-grid………………………………………………………………………40
2.1.7.2 Electricity Tarifs off-grid (PV, Hydro, Gen-set and car batteries systems) …..41
2.1.7.3 Export and Import Tariffs……………………………………………………………………..44
2.1.8 Transmission Line and Substation Facilities ………………………………………………45
2.1.8.1 Transmission Lines …………………………………………………………………………….45
2.1.9 Feed-in Conditions …………………………………………………………………………………48
2.1.10 Financing and funding possibilities for RE projects……………………………………..48
2.1.10.1
Off-grid promotion fund …………………………………………………………………..48
2.1.10.2
Poverty Reduction Fund………………………………………………………………….49
2.1.10.3
SNV Biogas Programme …………………………………………………………………50
2.1.10.4
Credit Facilities………………………………………………………………………………50
Diagnostic Study on Renewable Energy Potential and Feasibility in South East Asia
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2.1.11 Power Sector Investment ………………………………………………………………………..51
2.1.11.1
Power Sector Investment Plan…………………………………………………………51
2.1.11.2
Off-grid Investment according the PDP 2004-13 ………………………………..54
2.1.12 Summary………………………………………………………………………………………………54
3
Present Situation in Thailand…………………………………………………………………………..61
3.1 General Country information ……………………………………………………………………….61
3.2 Relevant institutes and Contacts for Energy Matters…………………………………….62
3.3 Legislation in the Energy Sector ………………………………………………………………….67
3.3.1 Laws and Regulation………………………………………………………………………………67
3.3.2 Small Power Producer Programmes …………………………………………………………71
3.3.2.1 Small Power Producer Programme……………………………………………………….71
3.3.2.2 Very Small Power Producer Programme………………………………………………..72
3.3.2.3 Renewable Portfolio Standard………………………………………………………………72
3.3.3 Incentives for Renewable Energies…………………………………………………………..72
3.3.3.1 Fiscal Incentives…………………………………………………………………………………73
3.3.3.2 Clean-Development-Mechanism …………………………………………………………..73
3.3.3.3 COGEN/EC-ASEAN Cooperation …………………………………………………………74
3.3.3.4 Biomass-One-Stop-Clearing-House (BOSCH)………………………………………..75
3.3.4 Licenses, Concessions and Project Approval Cycle ……………………………………75
3.3.4.1 Power Purchase Scheme…………………………………………………………………….75
3.3.4.2 General Administration and Approval Procedures in the Energy Sector …….76
3.3.4.3 Process for Grid Connection to EGAT (IPP and SPP) ……………………………..77
3.3.4.4 Process for Grid Access to PEA and MEA (VSPP)………………………………….78
3.3.4.5 Direct Sale to Industry, Construction, Operation and Permits……………………78
3.3.5 Action Plan for the Development of Renewable Power in Thailand ……………….79
3.3.6 Land Accessibility…………………………………………………………………………………..81
3.4 Energy Status in the Kingdom of Thailand……………………………………………………82
3.4.1 Electricity Generation and Consumption……………………………………………………85
3.4.2 Energy Consumption by Consumer Types…………………………………………………92
3.4.3 Energy Consumption Outlook ………………………………………………………………….93
3.4.4 Rural Energy Demands …………………………………………………………………………..94
3.4.4.1 Residential uses …………………………………………………………………………………94
3.4.4.2 Productive uses………………………………………………………………………………….95
3.5 Electricity Tariffs …………………………………………………………………………………………98
3.5.1 Electricity Tariffs on-grid………………………………………………………………………….98
3.5.2 Electricity Tariffs off-grid………………………………………………………………………….98
3.5.3 Feed-in Conditions …………………………………………………………………………………99
3.5.3.1 Present Situation ………………………………………………………………………………..99
3.5.3.2 Feed-in conditions targeted with the Action Plan for the Development of
Renewable Power in Thailand ………………………………………………………………………100
3.5.4 General……………………………………………………………………………………………….101
3.5.5 Renewable Energy for Power Generation………………………………………………..102
3.6 Financing and Funding Possibilities for RE projects…………………………………..103
Diagnostic Study on Renewable Energy Potential and Feasibility in South East Asia
MBA-Thesis Dobelmann fertig
MA 40389040
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4
Solar Energy specific Data in Lao PDR…………………………………………………………..104
4.1 PV Solar Application in Laos ……………………………………………………………………..104
4.1.1.1 TRI’s solar PV demonstration projects (1997-2001) ………………………………105
4.1.1.2 MIH-JICA solar PV pilot projects (1998-2001)……………………………………….107
4.1.1.3 MIH/World Bank Rent-to-buy projects (1999-2004) ……………………………….108
4.1.1.4 Sunlabob-InWent’s pilot projects on Renting PV systems (since 2003)…….111
4.1.1.5 Sunlabob Solar PV systems (2002-present) …………………………………………112
4.1.1.6 Summary of available PV Solar Technologies ………………………………………114
4.1.2 MIH-WB vs Sunlabob……………………………………………………………………………115
4.1.3 Meteorological Solar Irradiation Data………………………………………………………116
4.1.4 Educational Demand for Operators and Applicants of the Technology…………118
4.1.5 Overall PV Solar Condition in Lao PDR …………………………………………………..120
4.1.6 Policy review ……………………………………………………………………………………….123
4.1.7 PV Solar ……………………………………………………………………………………………..123
4.1.8 Biomass………………………………………………………………………………………………124
4.1.9 Comparison of private sector extension models ……………………………………….124
4.1.10 Summary and Conclusions ……………………………………………………………………127
5
Solar Energy Specific Data in Thailand ………………………………………………………….130
5.1.1 Research and Development, Pilot Projects and Studies…………………………….130
5.1.2 PV Applications in Thailand……………………………………………………………………131
5.1.2.1 Solar Home Systems…………………………………………………………………………132
5.1.2.2 EGAT Projects………………………………………………………………………………….135
5.1.2.3 Tesco Lotus System………………………………………………………………………….135
5.1.2.4 Military applications …………………………………………………………………………..135
5.1.2.5 Others……………………………………………………………………………………………..135
5.1.3 Meteorological solar irradiation data ……………………………………………………….137
5.1.4 Available Technologies …………………………………………………………………………141
5.1.4.1 Thai grid connected system description ……………………………………………….141
5.1.4.2 Thai solar home system description…………………………………………………….141
5.1.5 Educational Demand for Operators and Applicants of the Technology…………142
6
SWOT Analysis……………………………………………………………………………………………..144
6.1 PV Solar Systems………………………………………………………………………………………144
6.1.1 PV Based energy Generation Possibilites………………………………………………..144
6.1.2 SWOT Analysis ……………………………………………………………………………………147
6.1.3 SWOT Matrix……………………………………………………………………………………….150
6.2 PV Solar ……………………………………………………………………………………………………150
6.3 Biomass ……………………………………………………………………………………………………153
6.3.1 Biomass to Energy ……………………………………………………………………………….154
6.3.2 Biogas Application in Laos …………………………………………………………………….154
6.4 Legislation ………………………………………………………………………………………………..155
7
Strategies for the implementation of Solar and Biomass Energy …………………….156
Diagnostic Study on Renewable Energy Potential and Feasibility in South East Asia
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7.1 Suitable Technologies ……………………………………………………………………………….157
7.1.1 PV………………………………………………………………………………………………………157
7.1.2 Biomass………………………………………………………………………………………………158
7.2 Energy Plants – Cultivation and Harvesting………………………………………………..159
7.3 Calculation of Profitability………………………………………………………………………….160
7.3.1 PV Solar Calculation of Profitability for South East Asia…………………………….160
7.3.2 Affordability Price for SHS and BCS ……………………………………………………….162
7.3.3 Biomass………………………………………………………………………………………………165
7.4 Location Requirements ……………………………………………………………………………..165
7.4.1 Special location requirements for PV Solar Systems …………………………………165
7.4.2 Biomass………………………………………………………………………………………………165
7.5 Urban Energy Supply…………………………………………………………………………………170
7.5.1 PV Concepts for Urban Areas………………………………………………………………..170
7.5.2 Biomass Concepts for Urban Areas………………………………………………………..172
7.6 Energy Supply in Lao off-grid Areas…………………………………………………………..173
7.6.1 PV off-grid Concepts …………………………………………………………………………….173
7.6.1.1 Comparisom of the Main applies Systems MIH-WB and Sunlabob ………….173
7.6.1.2 Future of photovoltaic electricity in Laos ………………………………………………176
7.6.2 Biomass Off-grid Concepts ……………………………………………………………………179
7.7 Development of Suitable Financing Procedures………………………………………….185
7.7.1 Recommendations for the Improvement of rural electrification programmes…185
7.7.1.1 Proposed new delivery scheme: Rent-to-buy by ESCO………………………….185
7.7.2 Micro-financing…………………………………………………………………………………….188
7.8 Necessary Policy Adjustments…………………………………………………………………..189
8
General Conclusions …………………………………………………………………………………….192
8.1 Conclusions for Solar Energy projects……………………………………………………….193
8.2 Recommendation for renewable energy supply concepts in South East Asia –
General recommendations………………………………………………………………………………..196
9
General Summary …………………………………………………………………………………………200
10
References………………………………………………………………………………………………..201
Diagnostic Study on Renewable Energy Potential and Feasibility in South East Asia
MBA-Thesis Dobelmann fertig
MA 40389040
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List of Tables
Table 2: Primary Energy Resources in Lao PDR………………………………………………………..23
Table 3: Energy consumption by type in KToe (Koopmans et al, 2005) …………………………24
Table 4: Share of the energy consumption by type of energy source in 2002 …………………25
Table 5: Taxes and duties set in 2003 (World Bank, 2005) ………………………………………….26
Table 6: Average gasoline and diesel retail prices, in LAK and EUR (Nanthavong, 2005)..26
Table 7: Household expenditure for cooking fuels (Ghimire et al, 2003) ………………………..26
Table 8: Existing Power Plants in 2005 Laos (DOE, MIH, EDL, 2006) …………………………..27
Table 9: Generation, Import, Export and Consumption of Energy, (EDL, 2005)………………28
Table 10: Number of Electricity consumers by Category (EDL, 2004; EDL, 2005)…………….30
Table 11: Energy consumption by provinces in 2004 (on-gid) ………………………………………..31
Table 12: Summary of Electricity Demand forecast according PDP2004-13 (EDL, 2004) ….33
Table 13: Targets of electrified households until 2020 according PDP 2004-13 ……………….36
Table 14: The EDL’ s Tariff of Domestic Electricity charges 2004 (EDL, 2004)…………………40
Table 15: Electricity tariff in KIP (MIH, 2005) ……………………………………………………………….40
Table 16: Price structure of SHS in Laos …………………………………………………………………….42
Table 17: Off-grid hydor and gen-set tariffs………………………………………………………………….43
Table 18: EDL electricity import and export rates in 2004 (EDL, 2005) ……………………………44
Table 19: Transmission lines …………………………………………………………………………………….48
Table 20: Total Power Sector Investment needs (2005–2020)……………………………………….51
Table 21: Potential GOL Investment Requirement (2005 – 2020)……………………………………52
Table 22: Composition of a Typical Lao PDR IPP Debt Finance Plan……………………………..53
Table 23: Total cost for rural electrification according the PDP 2004-13 (EDL, 2004) ……….54
Table 1: Institutes [source: COWI 2006] ……………………………………………………………………64
Table 2: Laws and regulation related to energy in Thailand (source MoE 2006] ……………..67
Table 3: Economic zones and its provinces [DENA 2006]……………………………………………73
Table 4: Reduction of custom duties [DENA 2006]……………………………………………………..73
Table 5: CDM projects in preparation – Oct. 2004 [DENA 2006]…………………………………..74
Table 6: Connection costs to the grid for a 1 MW VSPP [COWI 2006]…………………………..78
Table 7: Primary Energy Resources in the Kingdom of Thailand…………………………………..84
Table 8: Existing Power Plants in Thailand [DEDP/ELECTRIC POWER IN THAILAND as
cited in Srisovanna 2002]………………………………………………………………………….88
Table 9: Existing and planned Power Plants of IPPs in Thailand [DEDP/ELECTRIC
POWER IN THAILAND as cited in Srisovanna 2002]……………………………………89
Table 10: Existing SPPs in Thailand [DEDP/ELECTRIC POWER IN THAILAND as cited
in Srisovanna 2002] …………………………………………………………………………………90
Table 11: VPSS projects and application received, Dec. 2006 [source: www.netmeter.org
2006]……………………………………………………………………………………………………..91
Table 12: Total Energy and Electrical Energy Consumption by Economic Sector 2004 in
ktoe [Kanoksak 2006b] …………………………………………………………………………….92
Table 13: Final Energy Consumption for Economic Sector by Fuel 2004 [Kanoksak
2006b]……………………………………………………………………………………………………93
Table 14: Yearly average energy consumption per household in rural Thailand [Source
Shrestha et al. 2006]………………………………………………………………………………..94
Table 15: Yearly average energy expenditures per household in rural Thailand [Source
Shrestha et al. 2006]…………………………………………………………………………………..95
Table 16: Prioritisation of energy use in the residential sector in rural Thailand [Source
Shrestha et al. 2006]………………………………………………………………………………..95
Table 17: Yearly average energy consumption of the productive sector in rural Thailand
[Source Shrestha et al. 2006] ……………………………………………………………………96
Diagnostic Study on Renewable Energy Potential and Feasibility in South East Asia
MBA-Thesis Dobelmann fertig
MA 40389040
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Table 18: Yearly average energy expenditure in the productive sector in rural Thailand (in
US$/unit/year) [Source Shrestha et al. 2006] ………………………………………………97
Table 19: Prioritisation of energy use in the industrial sector in rural Thailand (in
US$/unit/year) [Source Shrestha et al. 2006] ………………………………………………97
Table 20: Main energy use and potential renewable energy technologies [Source
Shrestha et al. 2006]………………………………………………………………………………..98
Table 22: Capacity targets for implementation of RE for power generation [Source Jepsen
et al. 2006] ……………………………………………………………………………………………102
Table 89 Strengths and risks associated with extension models…………………………………..126
Table 30: PV Solar Applications in Thailand ………………………………………………………………131
Table 31: Geographic distribution of SHS in Thailand …………………………………………………133
Table 90: PV Solar SWOT Matrix……………………………………………………………………………..150
Table 91: Affordability SHS and BCS Price………………………………………………………………..162
Table 92: Cost and potential usage of available solar systems (Source: Sunlabob) ………..164
Table 93: Substrate plan …………………………………………………………………………………………169
Table 94: Table of Comparisons between Rent-to-buy and Rental Systems…………………..175
Table 95: Possible supply strategy for Laos……………………………………………………………….179
Table 96: Comparison of the various electricity production units for villages…………………..179
Table 97: Example for a crop rotation within a village electricity system ………………………..183
Table 98: Investment calculation for a village with 50 households…………………………………184
Diagnostic Study on Renewable Energy Potential and Feasibility in South East Asia
MBA-Thesis Dobelmann fertig
MA 40389040
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List of Figures
Figure 2: Lao Energy Organisations…………………………………………………………………………..21
Figure 3: Energy Sources for cooking (National Population and Households census 2005.
National Statistic Centre 2006) ………………………………………………………………….25
Figure 4: Installed Capacity in year 2005 ……………………………………………………………………27
Figure 5: Generation, Import, Export and Consumption of Energy, (EDL, 2005)………………29
Figure 6: Shares of energy consumption by category of consumers in 2004……………………30
Figure 7: Electricity consumption by category of consumers (EDL, 2004)……………………….31
Figure 8: Geographical electrified area in 2004 (EDL, 2005) …………………………………………32
Figure 9: Number of households using on- and off-grid electricity by provinces (NSC,
2005; MIH, 2003) …………………………………………………………………………………….33
Figure 10: The model of MIH Rural Electrification (Maunsell, 2004)……………………………….37
Figure 11: Pico hydro turbines installation with draft tube ( …………………………………………..43
Figure 12: Pico hydro turbines and its spar parts on sale……………………………………………..44
Figure 13: Pico hydro turbine installation……………………………………………………………………44
Figure 14: Existing and planned hydro and thermal power plants and transmission lines
in Laos (EDL, 2004)…………………………………………………………………………………47
Figure 15: Organisation and disbursement of the Off-Grid Promotion Fund…………………….49
Figure 16: Total Estimated Sectoral Funding Requirement (2005 – 2020)……………………….52
Figure 2: Organisational chart of the energy sector in Thailand [source Kanoksak 2006] ….66
Figure 3: Targets for RE 2011…………………………………………………………………………………102
Figure 17: Principle of Solar Home – Battery Charging system……………………………………106
Figure 18: Rent-to-buy solar home systems ……………………………………………………………..108
Figure 19: Application of SHS (Lighting for handicraft production, education and
entertainment)……………………………………………………………………………………….109
Figure 20: Community solar system: Ban Kuay health post…………………………………………112
Figure 21: Possible appliance of community PV system …………………………………………….112
Figure 22: Rental Solar Home systems ……………………………………………………………………113
Figure 23: Installation and maintenance service are performed by well trained
technicians, operating systems as franchisees of Sunlabob Co……………………113
Figure 24: Sunshine hours in Lao PDR…………………………………………………………………….117
Figure 25: Solar Irradiation in Lao PDR ……………………………………………………………………118
Figure 26: Combination chart: Rainfall-Sunshine duration…………………………………………..118
Figure 27: Poverty cycle model simple (left) and advanced with education possibilities
(right) (www.tripurafoundation.org) …………………………………………………………..119
Figure 4: Population Density and SHS Distribution Maps (NSO, 2000; PEA, 2004)………..134
Figure 5: Principle of grid connected PV systems………………………………………………………141
Figure 6: Solar home systems comprise a 120 watt solar module, a 125-Ah 12-volt
battery, and a combination inverter/charge controller. Maximum power output
from the system is 150 watts. The system shown is the type installed by
Solartron in Tak province………………………………………………………………………..142
Figure 7: Poverty cycle model simple (left) and advanced with education possibilities
(right) (www.tripurafoundation.org) …………………………………………………………..143
Figure 57: Sketch of solar home system (www.eere.energy.gov)…………………………………145
Figure 58: Solar home systems in a Lao village (www.iea-pvps.org)…………………………….146
Figure 59: Sketch of a PV based hybrid system (www.nsenergy.org) …………………………..147
Figure 60: Conversion chains of the different biomass energy materials ………………………153
Figure 61: Grid connected PV systems…………………………………………………………………….157
Figure 62: Connection between investment costs and power generation prices at 20 year
lifespan…………………………………………………………………………………………………160
Diagnostic Study on Renewable Energy Potential and Feasibility in South East Asia
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Figure 63: Connection between investment costs and power generation prices at 15 year
lifespan…………………………………………………………………………………………………161
Figure 64: Connection between investment costs and power generation prices at 10 year
lifespan…………………………………………………………………………………………………161
Figure 65: Off-grid SHS Payback time model from Thailand ……………………………………….163
Figure 66: Catalogue for planning and financing of a biogas plant……………………………….165
Figure 67: Damaged batteries for PV solar after 9 months of operation on Bitra, India……180
Figure 68: Flowchart of a selfsustainable, standalone energy production system from
biomass in a village………………………………………………………………………………..181
Figure 69: Production scheme for the oil crop expelling ……………………………………………..182
Figure 70: Oilseed expeller for cold pressing in a village size ……………………………………..182
Figure 71: SVO genset modified for the operation in developing countries in tropical
areas……………………………………………………………………………………………………182
Figure 72: Scheme of a 2-stage biogas plant for the electricity supply for a community
centre on Kavaratti island, India……………………………………………………………….184
Diagnostic Study on Renewable Energy Potential and Feasibility in South East Asia
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Attachments
Appendix 1: Statistic of Electricity Production, Domestic Sale, Import & Export of Power of
EDL, Theun Hinboun & Houay Ho (Unit in GWh) (1962-2005)…………………….203
Appendix 2: Overview about selected studies and pilot projects on RE in Laos………………205
Appendix 3: PV applications in Laos…………………………………………………………………………215
Appendix 4: Basic Data on Agriculture and Cultivation in Lao PDR……………………………….217
Appendix 5: Data Sheets of selected PV plants………………………………………………………….220
Appendix 6: Selected Profiles of Energy Crops ………………………………………………………….226
Appendix 7: Monitoring of the Crop Cultivation in Various Stages…………………………………230
Appendix 8: VDI Guidelines 4630 “Vergärung organischer Stoffe” (Fermentation of
organic substances)……………………………………………………………………………….236
Appendix 9: Crop Data Sheets…………………………………………………………………………………237
Appendix 10: Laboratory Analysis Results……………………………………………………………….238
Appendix 11: Biogas Technology data sheets………………………………………………………….244
Appendix 12: Financing Biogas through Microfinance in Nepal…………………………………..250
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List of Appreviation
AAEP
Asia Alternative Energy Programme
ADB
Asian Development Bank
APE project – PV
solar and Biomass
Asia Pro Eco Project “Diagnostic Study on Renewable Energy Potential
and Feasibility in Southeast Asia”.
ASEAN
Association of South East Asian Nations
BCEL
Banque pour le Commerce Exterieur Lao
BLA
Bilateral Agency
BOO
Build Own Operate
BOOT
Build, Operate Own, and Transfer
BOT
Build, Operate, and Transfer
BSRP
Banking Sector Reform Programme
BTF
Build, transfer, and finance
BTL
Build, Transfer, Lease
CDEA
Community Development and Environment Association
COD
Commercial Operation Date
DOE
Department of Electricity (Ministry of Industry and Handicrafts)
DSCR
Debt Service Coverage Ratio
DSM
Demand Side Management
EBIT
Earnings before Interest and Tax
EBRD
European Bank for Reconstruction and Development
ECA
Export Credit Agency
EDL
Électricité du Laos
EGAT
Electricity Generating Authority of Thailand
EIA
Environmental Impact Assessment
EPF
Electric Power Forum
ESCOs
Electricity Service Company
ESCOs
Electricity Service Companies
EVN
Electricity of Vietnam
FDI
Foreign Direct Investment
FEA/NUOL
National University of Laos, Faculty of Engineering
FIMC
The Foreign Investment Management Committee
FMAC
Financial Management Adjustment Credit
FMCB
Financial Management Capacity Building
GDP
Gross Domestic Product
GEF
Global Environmental Facility
GMS
Greater Mekong Subregion
GOL
Government of the Lao PDR
GTZ
Deutsche Gesseltschaft für Technische Zussamenarbeit
GWh
Gigawatt-hour
IFC
International Finance Corporation
IMF
International Monetary Fund
IPP
Independent Power Producer (with Export Mandate)
JICA
Japan International Cooperation Agency
KfW
Kreditanstalt für Wiederaufbau (German bilateral agency)
kW
kilowatt
kWh
Kilowatt hour
LDC
Less Developed Countries
LIRE
Lao Institute for Renewable Energy
LNCE
Lao National Committee for Energy
MAF
Ministry of Agriculture & Forestry
MDG
Millennium Development Goals by the UN
MIGA
Multilateral Investment Guarantee Agency
MIH
The Ministry of Industry and Handicraft
MIH-WB
Ministry of Industry and Handicraft – World Bank
MOF
The Ministry of Finance
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MPO
The Prime Ministers Office
MTCPC
Ministry of Transport Communication Post and Construction
MV
Medium Voltage (22 kV in Lao PDR)
MW
Megawatt
NGO
Non-Governmental Organization
NPEP
National Poverty Eradication Programme
NTPC
Nam Theun Power Company
NUOL
National University of Laos
O&M
Operation and Maintenance
OCO
ADB’s Office of Cofinancing Operations
ODA
Official Development Assistance
OPIC
Overseas Private Investment Corporation
OPS
Off-grid Promotion and Support Office
PDP 2004-13
EDL’s Power System Development Plan 2004-2013
PPA
Power Purchase Agreement
PPIAF
Public Private Infrastructure Advisory Facility
PPP
Public-Private Partnerships
PRG
Political Risk Guarantee (ADB) or Partial Risk Guarantee (World Bank)
PRGF
Poverty Reduction and Growth Facility
PRI
Political Risk Insurance
PSDP
Power Sector Development Plan
PSFS
Power Sector Financing Strategy (“PSFS Study”)
PV Solar
Photo Voltaic Solar
RE
Renewable energy
RED
Rural Electrification Division, Department of Electricity, MIH
RES
Renewable energy sources
RESDALAO
Renewable energy for sustainable development association
SPC
State Planning Committee
SPP
Small Power Producer (developers of small power generation projects)
SPRE
Southern Provinces Rural Electrification
STEA
Science Technology and Environment Agency
Sunlabob
Sunlabob rural electrification systems Co. LTD
SVO
straight vegetable oil
SWER
Single Wire Earth Return
THPC
Theun Hinboun Power Company
TOR
Terms of Reference
TRI
Technology Research Institute
TRI/STEA
Technology Research Institute/Science Technology Environment Agency
UNDP
United Nations Development Programme
UNIDO
United Nations Industrial Development Organization
VEM
Village Electricity Manager
Wp
Watt peak
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1
Introduction
1.1 Aim of this study
Rising oil prices have received much public attention in recent months. The impact of higher
prices affects disproportionately developing countries in Southeast Asia constrained by their
reliance on oil imports and limited budgets. On the other hand, Southeast Asian countries
have abundance of two renewable energy (RE) sources – sun and biomass. Sunlight used
in PV solar systems is an efficient source of electricity. Biomass from agricultural crops and
live stock manure can be converted into biogas, electricity and fertilizer.
The aim of this thesis is to carry out a Potential Analysis and feasibility Evaluation of the fur-
ther Introduction of Solar and Biomass Energy in South East Asia. This is serving the pur-
pose of assisting the affected nations in South East Asia to tap into their abundantly avail-
able potential. Only if the right technologies are chosen and the right strategies pursued, the
nations in South East Asia are able to direct their economic growth and the pairing energy
hunger into a sustainable direction by drawing on the advantages of renewable energies.
Advantages of Renewable Energy Sources:
o Decentralization of energy production
o Value-adding of domestic agricultural products
o Capital savings on oil imports
o Employment creation
o Greater independence from the world oil market
Acknowledgements to the partners of the study:
The thesis is based on the European Commission funded Asia Pro Eco Project “Diagnostic
Study on Renewable Energy Potential and Feasibility in Southeast Asia”. It is coordinated by
the Deutsche Gesellschaft für Sonnenergie e.V. (DGS) under a project partnership with
Wageningen University in The Netherlands, the Thai Renewable Energy and Environmental
Centre (REEC), the Lao Renewable Energy for Sustainable Development Association
(RESDALAO), the Lao Community Development and Environment Association (CDEA) and
the National University of Laos (NUOL). The author wishes to thank the partners in involved
to the generous assistance in the gathering of data an input for the study
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1.2 Approach of the study
Since the study is supposed to give general and credibly founded comments on the imple-
mentation of renewable energy generation technology in South East Asia it is important that
the scope of the analysis is chosen right. The Study will focus un two countries in South East
Asia which both typically represent the different development levels present in the region.
1. Lao PDR one of the least developed countries on this globe
2. Thailand a growing economy in South East Asia
Both nations were chosen due to their respective statuses and because they have put in
place policy goals which are promoting the use of renewable energies in economic growth
and rural development:
1. Thailand is to achieve the 2011 aim to in-crease the quota of RE to 8% and
2. Laos is to achieve the 20020 aim to electrify 90 % of the country’s households
and hence asked the European commission to support the data gathering with a thorough
analysis of the matter. The studied areas are the utilization of bioenergy with the whole bio-
mass chain and the implementation of solar energy projects.
The Biomass Chain
Analysis of the biomass chain in the study will focus on the availability, suitability and pro-
duction possibility of the input materials. In addition to technical data collection on wasted
biomass research will be carried out on the wider social and economic potential of biomass
cultivation for energy production. Appropriate technologies for biomass treatment will be
identified in both Laos and Thailand and an evaluation completed on the transfer possibility
of European technologies.
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The PV Chain
The study analysis of the PV solar chain will carried out by a compilation of the solar irradi-
ance to provide accurate calculation of the annual output. Furthermore a thorough analysis
of the existing technologies and the experienced performance during applications within the
respective country and environment. Data collection from two urban areas in both Laos and
Thailand will enable the formulation of appropriate technical interventions improve the cost
efficiency and environmental benefits of the technology.
1.3 Content of the study
In order to analyse the concrete potential and demand of biomass and PV solar energy in
South East Asia a thorough analysis of the existing status quo must be performed in the fol-
lowing fields:
1. General information on the participating nations concerned
2. General situation of the national energy sectors
3. Legal situation of the relevant laws affecting the sectors
4. Statistics and cost structure of the national energy sectors
5. Financing and funding of energy related projects
Furthermore the study needs to gather and evaluate the technical possibilities of the renew-
able energies in view of the study. This means for solar energy and bioenergy the following
information needs to be gathered in the concerned countries.
1. Solar irradiation data and biomass availability
2. Technology available and experience with photovoltaics and bioenergy utilization
It these tasks are thoroughly performed the basis for the formulation of an energy concept in
two selected pilot cities is to be formulated. The study will be rounded off with the recom-
mendation for a national implementation of renewable energies.
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The study will end in a concrete evaluation of the possibilities and economic chances that lie
within the implementation of renewable energy projects in the region. The goal of the action
is the generation of guidelines for the implementation of such renewable energy projects in
South East Asia. The guidelines are supposed to be of a general nature and will cover the
necessary technical and economical areas to enable policy makers and investors to judge
the success of applications in their respective fields.
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2
Present Situation in South East Asia
This chapter is divided in 3 main parts:
•
General Information
•
PV Solar information
•
Biomass to energy information.
2.1
General Country Information Lao PDR
The general country information includes all relevant information on the energy sector, as
relevant institutions, energy production, consumption, export, import, renewable energy ap-
plication, etc.
2.1.1 The Country
Laos is bordered by China, Vietnam, Burma,
Thailand and Cambodia. The Capital of Laos is
Vientiane. On a total area of about 236.800 km²
live about 5,621 million people with a growth
rate of 2,7 % (NSC, 2005). Only 27 % of the
population lives in urban areas (NSC, 2005).
The rural, and often remote areas are charac-
terised by poor development indicators such as
high infant mortality and malnutrition (UNDP
2001). As such the country is ranked among
the poorest in the Southeast Asia in terms of
both GDP and Human Development. The
population comprises three main ethnic groups:
the Lao Loum (lowland), 68%, the Lao Theung
(Low Mountain), 22% and the Lao Soung (high
mountain), 10%. The population density is 23
persons per square kilometers. The adult
literacy rate is 62% and life expectancy at birth
is 57 years for males and 61 years for females. The major cities are Vientiane, the capital,
Savannakhet, Pakse, and Luangprabang. Buddhism is the dominant religion with more than
85% of the population as believers. The official language is Lao.
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2.1.1.1 Geography
Laos is divided into 16 provinces (khoueng) and 1 prefecture (kampheng nakhon), Vientiane
Capital. Until recently, Lao PDR had no administrative separation between urban areas and
rural areas with provincial towns forming (part of) a district. Thus, the newly formed urban
areas as Vientiane Capital consist of urban and peri-urban and rural districts or sub-districts.
The Lao PDR is a small landlocked mountainous country in the middle of Indochina penin-
sula with an area of 236,800 sq. km. Terrain is 80% comprised of rugged mountains, pla-
teaus and alluvial plains, with about 55% forest coverage.
2.1.1.2 Climate
The climate in Laos has clearly different two seasons:
•
Wet humid season with high precipitation (May – October). Usually at this time cloudy,
less sunshine hours, especially in northern provinces.
•
Dry warm season (November-April) with good sunshine but less precipitation
The Lao PDR is located in the zone of relatively high precipitation and good sunshine, thus
serves the abundance of hydro potential and rich tropical biodiversity. Main Natural re-
sources are hydroelectric power, timber, and minerals.
2.1.1.3 The Laotian Economy
Since the late 1980s, the government’s economic policy has been to move rapidly from a
centralized, planned economy toward an open, liberalized, market-oriented economic sys-
tem. The foreign exchange markets were also opened and formal exchange controls lifted,
and the Lao currency (kip) now floats freely based on supply and demand. Gross Domestic
Product (GDP) has been growing annually at 4% to 7% since the crisis and the economy is
expected to continue on this trajectory for the next few years. Real GDP growth over the last
few years has been in the range of 5.5 – 6.5 % per year .
GNP in 2002 was US$ 320 / capita in 2002, and is estimated to have increased to about
US$ 370 / capita in 2004. The main economic sectors in Laos in 2003 were agriculture, for-
estry, power generation, mining and small industries, whereby agriculture contributes to 50%
of the GDP, while the Industry is 24% and Services 26 % (NSC 2004). Electricity was with
33 % next to garments 34 %, wood products 21 % and coffee 5,5 % one of the four main
export products of the country in 2002 (Dahanayake, 2005).
Lao PDR is one of the poorest countries in the East Asia region. Nearly 77 percent of its
population lives on less than US$2 a day, and 29 percent are below the national poverty line
of $1.5 a day (in 2002/03). Social indicators remain low and among the worst in the region.
Particularly rural areas suffer from poor or even no social services.
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Domestic savings are low, forcing Laos to rely heavily on foreign assistance and conces-
sional loans as investment sources for economic development.
2.1.1.4 The Laotian Rural Society
The rural area comprises of the main part of the territory and is inhabited by the majority
(about 80%) of the population. Living conditions in rural area have maintained largely un-
changed for several generations. The majority of the rural population living in unhygienic
conditions is illiterate and has low cultural awareness, particularly in the case of ethnic mi-
norities. The Lao PDR has approximately 46% and 53% of the total and rural population,
respectively, living in poverty with a per capita income of less then $100 per annum (World
Bank survey, 1995).
The situation in rural areas is exacerbated by a lack of income generating opportunities be-
cause of weak linkages to markets and production centers combined with poor access to
infrastructure. Since 1995, important area development initiatives have been implemented
bringing about material improvements in several aspects, such as road construction and
maintenance, the construction of schools and free health clinics, small water reservoirs,
maintenance and development of small scale irrigation systems, electricity supply, etc. But in
general, Lao rural areas still remain poor with dominance of unproductive agriculture and
underdeveloped infrastructure.
Some characteristics of Lao rural society can briefly be described as following: About 80% of
un-electrified villages have less then 100 households. In the Lao villages, usually the houses
are built close to one another. Average size of Lao family is 6.1 persons per household. A
typical rural house has a living room, sleeping room and a kitchen, with floor raised above
ground (1-2 m). Woven bamboo is often used as wall. The roof of traditional houses is made
of bamboo or straw, some times corrugated galvanized steel sheets are used for roofing.
Remote villages in Laos usually have strong unity among villagers. Village leaders and eld-
erly are respected and have leadership. Normally, skilled technicians are difficult to find in
remote villages. Major income sources of rural villagers are from farming and selling live-
stock. Rural households in Laos, in general, depend on subsistence level of agriculture,
mainly low productive rice farming. Depending on each local condition, there are other pos-
sible sources of income, such as gardening, weaving, fisheries, service, commerce, etc. It
can bee inferred from these facts that any rural electrification program must take into ac-
count this lack of financial reserves and earning possibilities. The laotian rural population is
in intense need for money generation concepts in order to put electric power provided to a
useful concept.
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2.1.2 Relevant Organisations
The organization of the Power Sector and relevant Agencies involved in Renewable Energy
in the Lao PDR is shown in Figure 1.
Figure 1:
Lao Energy Organisations
Prime Minister’s Office
Council of Minister
Cabinet
– Secretariat
– Administration
– Personnel
– Documents
– Finance
State Planning Committee
Committee of Investment
Management & Foreign
Economic Cooperation
Science, Technology and
Environment Agency
National Committee for Energy
Ministry of
Finance
Ministry of Transport, Com-
munications, Post & Con-
struction
Ministry of
Energy and
Mining
Ministry of
Agriculture and
Forestry
Electricity
Personal
Administration
Inspection
Hydropower Office
Rural Electrification Div
Provincial
Authorities
Public Services
District Authorities
Off Grid Agencies (public)
Development
Services
Administration &
Finance
Business Venture
Generation
Distribution
Electricite du Laos
Board of Directors
General Manager
Internal Audit
GM’s Office
Power
Sector
Construction
Companies
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Figure 1 already includes the new Ministry of Energy and Mining, wich was establiched in
the middeld of 2006. The data research for the presented chapter already were closed be-
ginning 2006, when still all the energy related departments belonged to the Ministry of Indus-
try and Handicraft, thus the Ministry of Energy and Mining is not presented in detail in the
explanations below.
2.1.3 Power Policy and Legislation
The overall government policy aim is to: 1. Increase the household electrification ratio
from the current level of approximately 45% to 90% by the year 2020, with intermediate
targets of 70% in 2010 and 79% in 2015 (Number of Households electrified: 1.140 396); and
2. Reduce the use of imported fuels for electricity generation and other uses by substi-
tute indigenous energy resources principally hydropower but also solar, coal, and biomass
energy.
The policy states that low cost and reliable electricity is needed to promote social devel-
opment and to overcome Lao PDR’ s comparative disadvantages in attracting indus-
tries and investment. On the national level, electrification is slowly developing and the gov-
ernment policy is to increase this as quickly as possible by focusing on four priorities areas:
•
Maintain and expand an affordable, reliable and sustainable electricity supply in the
country to promote socio-economic development
•
Promote power generation for export to provide revenues to the government develop-
ment objectives.
•
Enhance the legal and regulatory framework to effectively direct and facilitate power sec-
tor development.
•
Reform institutions and institutional structures to clarify responsibilities, strengthen com-
mercial functions and streamline administration.
The Electricity Law which became effective on August 1997 set out the regime for the ad-
ministration, production, transmission, and distribution of electricity, including export and
import, through the use of highly productive natural resources potential to contribute to the
implementation of the national socio-economic development plan and to upgrade the living
standards of the people (Article 1, Electricity Law). In addition it provides a suitable frame-
work for the promotion and implementation of electrification.
The Law defines electricity systems those “connected to a common system, or is any area’s
separate electrical system that produces electricity by small-scale hydropower, with petro-
leum-operated machinery, by solar energy, by wind power, or by some other form of energy”
(Article 38, Electricity Law). The law therefore makes adequate provision for the devel-
opment of renewable electricity, with a specific focus on rural areas.
The Law stipulates that the pricing of electricity is set differently to rural and non-rural
areas, subject to socio-economic conditions and allowing for periodic reviews. In the
long term the government policy indicates that tariff policy is to move the cost recovery pric-
ing over a period of time. The GoL shall agree to / approve all electricity tariffs. (Article 32).
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2.1.4 Energy Status in Lao PDR
Fuel wood–based energy sources dominate the energy consumption pattern in Lao PDR.
The main energy sources are fuel wood, hydropower generated electricity, and coal. In addi-
tion, Laos imports refined petroleum products from its neighbouring countries, having no
production sources or refining capacity of its own. However, the country is abundant of sev-
eral renewable energy resources. Table 1 gives and overview about the different available
fossil and renewable energy source.
Table 1:
Primary Energy Resources in Lao PDR
Resource
Reserves
Potential for Use in Power Genera-
tion
Oil and Gas
Three exploration concessions in central
and southern Laos. Mapping and geophysi-
cal investigations carried out, including one
deep drill hole (2.560 m). Results not yet
evaluated
Possibly in the longer term (10-15
years), if sufficient reserves found
Coal
(Lignite)
Major resource located at Hongsa in north-
west Lao PDR. About 810 million tones
proven reserve, of which over 530 million
tones is deemed economically recoverable.
Energy content 8-10 MJ/kg, relatively low
sulfur content of 0,7-1,1 %
Sufficient reserves for about 2,000 MW
installed capacity
Coal
(Bitu-
minous and
Anthracite)
Reserves, mainly anthracite, dispersed in
various fields throughout Lao PDR. Explo-
ration ongoing. Total proven reserve to date
about 100 million tones Energy content 23-
35 MJ/kg
Current
annual
production
of
130.000 tones, used for local factories
or export. Possible longer-term option
for around 500 MW installed capacity,
depending on results of exploration
Solar
Annual solar radiation received in Lao PDR
about 1800 kWh/m2, possibly less in moun-
tain areas
Corresponds to conditions in southern
Europe (Italy, Spain)
Photovoltaic modules have been al-
ready used for small-scale off-grid ap-
plications in remote areas
Wind
Mean wind speeds at Luang Prabang and
Vientiane around 1 m/s, in mountain areas
likely to be somewhat higher
Costs in areas of less than 4 m/s likely
to be in upper end of range US$ 0.05-
0.25 per kWh, hence limited potential
Biomass
(waste)
Biomass resources dispersed throughout
the country
Current share of biomass (mainly wood
fuel) in total energy consumption about
88%. Wood-fired cogeneration (heat
and power) plants could be economic
for self-supply in wood processing facili-
ties
Hydropower
Average annual precipitation about 2,000
mm. Total runoff around 240,000 million m3
Theoretical
hydropower
potential
of
26.500 MW
Exploitable hydropower potential, in-
cluding share of mainstream Mekong,
around 18.000 MW
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2.1.4.1 Total Energy Consumption
Fuel wood has remained as the most important energy source of Lao PDR over the years
1996 to 2002, while the use of natural gas with less than 1 % of the total energy consump-
tion is negligible small. Fuel wood and charcoal account to about 75 % of the total energy
consumption. Wood fuel is mainly used for cooking and space heating and its use in rural
areas are still accounts to up to 90% of the energy consumption (Nanthavong, 2005).
Table 2:
Energy consumption by type in KToe (Koopmans et al, 2005)
Year
Total*
Electricity*
Fuel Oil
LPG
Coal
Fuel wood
Charcoal
Sawdust
1996
1.677,44
32,65
590,3
1,76
21,75
847,46
179,4
4,12
1997
2.003,15
37,32
895,63
2,68
11,34
868,65
183,7
3,83
1998
1.702,95
44,15
561,62
1,6
13,76
890,36
187,9
3,56
1999
1.513,92
48,65
339,56
1,07
16,33
912,6
192,4
3,31
2000
1.537,38
53,88
301,2
1,37
53,03
930,8
197,1
N/A
2001
1.569,72
61,10
325,7
1,37
30,45
949,5
201,6
N/A
2002
1.664,46
65,96
301,2
1,37
53,03
1031,5
211,4
N/A
2002
Share
3,96%
18,10%
0,08%
3,19%
61,97%
12,70%
*The data on electricity consumption of this source were not equal to the EDL data presented in chap-
ter
2.1.5
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Electricity Generation. Thus, the electricity data and the total consumption were adapted. Anyway, it
can be assumed that the date on the other energy sources can be used to give a general picture on
the use of those sources.
Table 2 shows the energy consumption by type of energy source in Lao PDR. Although the
different available source give different figures on the yearly energy consumption, the distri-
bution of the different energy sources is similar in all sources, see the data for the year 2002
exemplarily in Table 3. The overall 2002 energy consumption according the different sources
ranges from 1490 to 1812 kToe.
Table 3:
Share of the energy consumption by type of energy source in 2002
Electricity*
Fuel Oil
LPG
Coal
Fuel wood
Charcoal
4-12%
17-18 %
0,01-0,08 %
0,03-3 %
57-62 %
12-15 %
Sources: Koopmans et al, 2005; Department of International trade, Ministry of Commerce
2005; EDL, 2005
The share of firewood as cooking fuel ranges from 55.1% in urban to 88.4% in rural areas
followed by charcoal with 34.6 % in urban and 7.4 % in rural areas. The overall distribution is
shown in Figure 2.
Urban areas
not sure
2.6%
Electricity
3.8%
NPG
2.7%
sawdust
0.3%
Oil
0.1%
firewood
55.1%
coal
0.7%
charcoal
34.6%
other
0.1%
Rural areas
Firewood
88.4%
Oil
0.1%
NPG
0.2%
Other
0.1%
Not sure
3.5%
Coal
0.2%
Charcoal
7.4%
Sawdust
0.0%
Electricity
0.1%
Figure 2:
Energy Sources for cooking (National Population and Households cen-
sus 2005. National Statistic Centre 2006)
2.1.4.2 Cost Structure of Gasoline and Diesel
Before 2002, there was a specific lump-sum tax for each litre of gasoline, collected in the
form of custom duty and a turnover tax. The government introduces an excise tax in percent
of price per litre and a road fund (levies to finance the maintenance of road infrastructure) in
2003. Most of the rates introduced in 2003 have been subject to revisions since with tempo-
rary exemptions introduced to the tax/duty rates in order to slow the pass-through from in-
creasing world prices. However, the Government of Lao PDR recently removed these ex-
emptions and increased the fuel fund levy on November 18, 20051. (Nanthavong, 2005)
1 Correspondences with Dr. Khamphone Nanthavong, Faculty of engineering, National University of
Laos, Vientiane
