International ConferenceRenewable Energy Asia 2013-New Opportunities in the ASEAN Community-Focus on Renewable Energy and Energy Efficiency

“The Current Policy and Investment Opportunities in Laos”

Chantho MilattanaphengDeputy Director GeneralInstitute of Renewable Energy Promotion (IREP)Ministry of Energy and Mines (MEM)

5th June, 2013/ BITEC, Bangkok, Thailand

PRESENTATION CONTENT

• CURRENT POLICY AND STRATEGY• STATUS OF RENEWABLE ENERGY

DEVELOPMENT• INVESTMENT OPPORTUNITIES AND

CHALLENGES

POLICY• The promotion and development of renewable energies is one of the

priority policies of the Government to stabilize energy supply and to assist in the social and economic improvement of the country.

• Promote sustainable renewable energy development as an important part of ensuring energy supply for social and economic development

• Provide financial incentives to investors who aim to produce clean energies to meet domestic demand and, who take socially and environmental corporate responsibility in order to increase investments in renewable energy projects

• Formulate and improve laws and regulations to facilitate renewable energy development

POLICY• Prioritization of policies which facilitate private sector investments in rural

electrification such as provision of incentives and financing,

• Development of small hydropower systems, biofuels, solar and biomass energy at the village level to provide electricity and energy to rural and remote communities.

• Generation of electricity for productive uses at the village level using waste materials from agriculture, biogas, hydropower or other local resources. People in rural areas will be encouraged to use renewable energy to enhance self-sufficiency and the GoL will seek cooperation with private sector, NGO and development partners to encourage investment support for processing equipment and necessary machinery adjustments.

Solar+ Wind 106 MW

Solar 33 MW

Wind 73 MW

SHP

400 MW

Bio-EnergyBiomass-electric Biogas Waste

58 MW 51 MW 36 MW

Biofuels (ML)• Ethanol 150• Biodiesel 300

Financial Incentive for Investors

Renewable Energy Strategy Development (2011-2025)

Develop and Modify Legal documents (laws,

regulations and guidelines)Target: increase RE use to 30 % of national demand by 2025 (bio-fuel production to account 10 %)

STRATEGICAL TARGETObjective: Ensure energy security, sustain socio-economic development, and enhance environmental andsocial sustainability

Biomass

• Establish Renewable Energy Fund• Financial Mechanism:- Import duty free on production machinery, equipment and raw materials- Import duty free on chemical materials necessary for biofuels production within 7 years- Profit tax is divided in to 3 categories: 20%, 15% and 10%. Profit tax exemption is possible for a certain period dependingon activities, investment areas and size investment• Subsidies on unit product price depending on energy type and times period

Support Mechanism

Renewable Energy Development Plan 2010 - 2025

Develop legal documents (laws, regulations and guidelines), Study development models, Market assessment and energy source studies, Rural energy planning, Develop model projects, capacity building and raising

awareness on renewable energy technology, Financing and marketing at both national and local levels

(promote the use of approved renewable energy technologies)

SHORT TERM (2010-2015)

RE DEVELOPMENT PLAN (CONTD.): 2016-2020

Promote the renewable energy technology industry, Formulate a clear framework for a midterm program

(through focus on increased competition) Support the full development of renewable energy:

biodiesel and bio-ethanol production from crops, production of biomass, biogas for household use and industrial purposes at community level. Increased competition and reduced dependency

RE DEV. PLAN (CONTD.): 2021-2025

Promote new, economically viable, renewable energy technologies and encourage full competition based on equality. Promote Lao PDR to become a regional bio-

fuel exporter

INVESTMENT OPPORTUNITYBIOFUEL

Kolao Farm and Bioenergy Co., LtdKenthao, districtSayabury ProvinceFacility Capacity: 10,000L/dFeedstock: Jatropha

Lao-Agrotech Co., LtdNaxaythong, districtVientiane CapitalFacility Capacity: 10,000-20,000L/dFeedstock: Palm oil

Biodiesel-Makao Lao Co., LtdLuangprabang, districtLuangprabang ProvinceFacility Capacity: 100-10,000 L/dFeedstock: Vernicia Montana

Production B5 Demonstration B5 from

Jatropha; Demonstration B5 from Palm

Oil;Demonstration B5 from

VERNICIA MONTANA.

IMPLEMENTATION

I. Biofuel production

2,00

0,00

0

50,0

00,0

00

79,0

00,0

00

2,00

0,00

0

41,0

00,0

00

79,0

00,0

00.0

0

-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

2011-2015 2015-2020 2020-2025

Biodiesel (ML)

Target Biodiesel (ML)

Target Bio-ethanol (ML)

2,10

0,00

0

2,00

0,00

0

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2013

Biodiesel (ML)

Target Biodiesel (ML)

Bio-ethanol (ML)

Target Bio-ethanol (ML)

Data: 11/2/2013

II. Small Hydropower Development Potential: 2,000 MW (Less

than 15 MW) Developed: 30 MW Under Construction 85 MW Under study: 500 MW

PICO Hydro: More than 1,000 units (in isolated areas)

- Low efficiency;- Not safety; and- Not appropriate

management

Small Hydro

30

80

134

400

0

50

100

150

200

250

300

350

400

450

2013-2015 2020 2025

Existing (MW)

Target (MW)

III. Solar Energy

III. Solar Development

1.5

22

36

48

0

10

20

30

40

50

60

2013-2015 2020 2025

Existing (MW)

Target (MW)

Biomass for Power GenerationMit Lao Sugar MillXaibury, districtSavannakhet ProvinceInstall Capacity: 9.7 MWFeedstock: Bagasse

Hoang Anh Sugar MillPhouvong, districtSavannakhet ProvinceInstall Capacity: 30 MWFeedstock: Bagasse

IV. Biomass for Power Generation

39

13

24

58

0

10

20

30

40

50

60

70

2013-2015 2020 2025

Existing (MW)

Target (MW)

V. Biogas

SNV, 2,400 HHs (2011)

2,40

0

2,85

0

25,0

00

50,0

000

10,000

20,000

30,000

40,000

50,000

60,000

2013-2015 2020 2025

Existing of HH

Target of HH

10

19

51

0

10

20

30

40

50

60

2015 2020 2025

(MW)

Target (MW)

V. Biogas Plant(Lao Indochina Group (LIG) Public Company)

Million m3 • Waste water treatment fromCassava and produce biogas 7million m3/y• Production of biogas 90Million (Nm3) or millionnormal cubic meters (Nm3),approximately at 175 millionliters, of heavy fuel oil (HFO)• reducing as much as 300,000tones of greenhouse gas peryear and 60,000 tones of CO2on an annual basis.

7

90

0

10

20

30

40

50

60

70

80

90

100

Production Plant (m3/y) Concession

2013

VI. Wind Development

6

12

73

0

10

20

30

40

50

60

70

80

2015 2020 2025

Existing (MW)

Target (MW)

INVESTMENT OPPORTUNITIES (3)

Energy crops Fuel crops plantation for biofuels production has also progressed,

especially Jatropha, Vernicia Montana, Palm, Sugarcane, Cassava plantation.

Organic wastes: Agriculture-Forestry production, By-products of agro-forestry

industry (sawdust, wood chips, rice husk, corn cobs, livestock manures...) and municipal wastes

Production of biomass, biogas for household use and industrial purposes at community level.

INCNETIVES

The Government will provide financial incentives and financing assistance to renewable energy projects and investors. Financial Incentives– Import duty free on production machinery, equipment and raw

materials;– Import duty free on chemical materials necessary for biofuels

production within 7 years;– Profit tax is divided in to 3 categories: 20%, 15% and 10%. Profit tax

exemption is possible for a certain period depending on activities, investment areas and size investment;

– Subsidies on unit product price depending on energy type and times period.

INCENTIVES

• The government has policies to support renewable energy, especially financial measures which include:– Subsidizing tariffs (FIT IS UNDER STUDY)– Project Condition basic, project by project– The government is responsible for basic

infrastructures to accommodate the expansion of renewable energy such as: transmission line systems

CHALLENGES

• Lack of regulations and laws on renewable energies

• Limited knowledge and understanding on various aspects of renewable energies

• Limited number of people with strong knowledge of renewable energy technologies as well as limited access to equipment and supply of materials for projects

• Lack of public funding for the renewable energy sector. Limited budget allocated for research and development.

• Lack of information concerning off-take tariffs which represent significant financial risk for investors.

• Lack of information on renewable energy potential for each province

MANY THANKS FOR YOUR KIND ATTENTION