Content Context

It is widely acknowledged that access to modern forms of energy, electricity in particular, is one of the prerequisites for socio-economic development of poor countries and the achievement of the Millennium Development Goals (MDGs). However, in Laos, as in many developing countries, improving access to modern forms of energy remains a challenge. In order to improve access to electricity in rural areas and achieve its objective to provide electricity to 90% of the population, the Lao Government relies mainly and almost exclusively on grid extension. While significant progress have been made over the past decade and now more than 70% of the population has access to the grid, it is questionable whether the highly subsidised extension of the electricity grid in rural areas can be sustained at the same pace and if yes at which cost.

With plans to extend the grid to very remote areas for a total cost of more than 10,000US$/household, it is worth asking whether or not cheaper alternatives can be found and who should bear the costs of these very high investments. The right balance between improvement of living condition through access to reliable electricity and increase of the Government’s debt is yet to be found. The opportunities and risks of letting private companies invest in rural electrification before being reimbursed on the long run have to be identified, especially if these schemes are linked to repayment in kind (e.g. logs). 

While the national grid has made significant progress over the past years, an important number of remote villages still need support to gain access to electricity through alternative approaches. In addition, rural energy policies need to be redefined taking into account new opportunities and challenges and an ever changing rural environment.

One of the reasons why grid extension is promoted at almost all costs is the fact that promotion of off-grid options have focused mainly on installation of solar home systems through a rent to buy scheme. Sustainable alternatives to this one size fit all delivery mechanism have to be found and effectively promoted.

One important aspect for successful and sustainable promotion of off-grid renewable energy technologies is to identify technologies that can satisfy the needs of local people, use locally available resources and be affordable. The affordability depend on the type of technology but also the delivery mechanism, especially subsidies. Since the electricity grid is heavily subsidised it is fair to develop a subsidy mechanism for off-grid technologies.

Another important aspect is for the electricity available in remote areas to contribute to improvement of living condition through provision of better services or development of income generating activities. This is made possible if other basic needs such as access to water and sanitation is also satisfied.

Beyond access to electricity, in rural areas inefficiently used wood remains the main source of energy for cooking and producing heat. This has tremendous negative impacts, especially on villagers’ health.