Key SEA framing issues Power demand power trade

Key SEA framing issues Power demand power trade development in the LMB and GMS SEA Team

Purpose • This presentation aims to illustrate the changing character of the demand for power within the LMB and where the mainstream dams fit within the mix of electricity generation

LMB Selected indicators 2004 Cambodia Lao PDR Thailand Viet Nam Population (million) (2004) 13. 8 5. 8 64. 2 82. 1 GDP (current USD billion) 4. 9 2. 2 150. 1 41. 2 GDP per capita (current USD) 361 420 2, 519 551 FDI (USD million) 131 17 1, 064 1, 610 FDI/capita (USD) 9. 5 2. 9 16. 6 19. 6 Electricity use per capita (k. Wh) 45 160 1, 752 (2003) 433 (2003) Energy use per capita (kgoe) 180. 0 355. 0 1, 405. 7 (2003) 544. 3 (2003) Fuelwood share in total primary energy 88% 67% 16% 49% Source: Economics of energy integration , ADB, 2008

Regional GMS energy issues Energy poverty widespread • Dependence on traditional sources of energy (e. g. fuelwood) • 20 % of GMs population (74 mil. ) no access to electricity • Energy consumption in GMS is only 2/3 of the world average for developing countries Energy vulnerability high and rising • 1993 -2005 8% annual growth in energy consumption • 21% of total energy consumed in the region imported • Volatile energy prices and limited alternative energy sources mean the region is vulnerable Energy productivity and policy • Energy supplies low and unpredictable – overall quality low • Lack of competitive pressure on energy suppliers • Policy regimes inadequate to address emerging challenges Source: Building a sustainable energy future the GMS, ADB 2008

High economic growth in the LMB 1985 -2005 Source: Building a sustainable energy future the GMS, ADB 2008

Significant differences in electricity consumption Country Per capita household consumption (Kwh) Share of residential sector in total electricity consumption (%) Cambodia 29 52. 0 Lao PDR 95 53. 0 Thailand 409 21. 0 Vietnam 242 42. 0 Source: Building a sustainable energy future the GMS, ADB 2008

Growing demand for power • Not consistent between countries • All projects in Cambodia and Laos, so will be generating more than they can consume • Mainstream project – high proportion of power generated will be exported • If projects are planned on basis of export, they must have secure markets, • Anticipated markets are at moment are Thailand, Vietnam, China

Uncertainty of markets in short-term • Thailand in economic crisis and may be some years before want to import more power • Already some projects giving anticipated unit cost prices to break even which are well above market prices e. g. Sambor and Vietnam • Vietnam in process of multi-year power market reform over many years, e. g. competitive generation by 2005 - 2014 and competitive retail power markets by 2022 • China moving towards greater self-provision of energy SO there are uncertainties in use of this capacity from mainstream dams and when they are going to come

Significant differences in hydropower potential (MWyr/yr) Cambodia Lao PDR Thailand Viet Nam Regional total (GMS) Low –cost 1, 670 4, 640 2, 784 3, 248 54, 102 Medium-cost 1, 114 3, 944 1, 856 3, 712 43, 802 High-cost 742 2, 320 928 1, 392 23, 571 Small 650 1, 015 406 812 5, 928 Total 4, 176 11, 919 5, 974 9, 164 127, 403 Source: Economics of energy integration , ADB, 2008

Limited power trade flows between LMB countries in 2005 (GWh) Exports Cambodia Lao PDR - 74 74 Lao PDR - 2, 628 Thailand 2, 033 Viet Nam 521 Imports Cambodia Thailand - Ro. W Total Viet Nam Ro. W 3, 234 - Total 5, 267 521 2, 628 Source: Economics of energy integration , ADB, 2008 3, 234 -

Regional power demand • Lao – 700 MW generated now with 60 MW imported from Thailand • 7, 000 MW by 2020 • 90% of 2020 will come from Hydropower • 1500 MW of 2020 would come from mainstream dams • Domestic demand is 450 MW by 2020, so only about 7% of installed capacity • But one major energy consuming project mine might have requirement for 60 MW

Cambodia power demand • 13 MW generated now • 90% of power generated from imported fuels • Target to reduce dependence on fuel wood from 80% of population to 52% by 2015 • Target to increase domestic provision of electricity from to 20% of population to 70% • Potential 10, 000 MW from large hydropower projects, plus 3, 000 from mini-hydro • 3, 580 MW of 2020 would come from mainstream dams (Sambor and Stung Treng) • But most of this is destined for export

Projected growth in power demand in LMB 2005 -2025 Source: Economics of energy integration , ADB, 2008 (base case projection)

LMB Regional Energy Story Energy Demand Future • Coal/thermal? • tributaries? • nuclear? • gas? • mainstream hydropower? • Oil? • biomass • renewable? • Ro. W Projected energy demand Existing Capacity • coal/thermal • gas • Tributaries • Oil • biomass • Ro. W Projected energy demand with demand management Supply time *Ro. W = Rest of World Demand delayed through demand management & efficiency measures

Hydropower in GMS power demand to 2025 Source: Economics of energy integration , ADB, 2008 (base case projection)

Projected power trade with integrated power markets 2025 (GWh) Exports Cambodia Lao PDR - 40 15 Lao PDR 22 - 50 Thailand 9, 482 42, 458 Viet Nam 3, 612 25, 988 Imports Cambodia Ro. W Total 13, 116 Thailand Viet Nam Ro. W Total 55 57 129 147, 269* 199, 209 - 5, 918 35, 518 644 584 - 1, 228 69, 130 649 153, 244 - - Source: Economics of energy integration , ADB, 2008 (based on IRM modeling) *Thailand is projected to import 139, 385 GWh from Myanmar by 2025

What about the crisis? Source: World Bank 2009 e – expected f - forecast

Changing economic environment? Power sector projections based on the assumption of continuing rapid economic growth in the region (between 6. 3 and 7. 6 % to 2025 for the GMS region) Can these levels of growth continue to be expected with the global economic downturn? What does this mean for likely future energy demand in the region – especially where growth has been dependant upon exports? What does this mean for investment in the energy sector? And more specifically investment in hydropower?

Mainstream dams • Provide 11. 5% of installed capacity by 2020 • 9. 3% of power produced in the LMB by 2020 • 60 GW hrs annually of the 644 GWhrs per annum in LMB by 2020 • Conditions of BOT, 25 – 30 year handover in which government would have the capacity to manage, but there would be major maintenance and replacements costs