Recalibrating Vietnam’s electricity cooperation with Laos
Vietnam is planning to import more electricity from hydropower facilities in Laos. Such an arrangement, however, poses a threat to the food security and livelihoods of Vietnamese living in the Mekong Delta.
Vietnam is grappling with a power shortage due to a surge in consumption and low outputs from hydropower dams caused by adverse weather conditions. This has resulted in rolling blackouts that impacted local businesses and foreign manufacturers based in Vietnam, particularly in the Northern region. In an attempt to mitigate the situation, Vietnam Electricity (EVN) has since May boosted hydroelectricity imports from the Nam Kong and Nam San hydropower plant clusters in Laos. The dilemma for Hanoi is that its attempt to purchase power from hydropower dams in Laos could exacerbate ecological impacts in the country’s Mekong Delta region.
Vietnam’s electricity imports, which come from China and Laos, traditionally account for about one to two per cent of Vietnam’s annual generation capacity. According to National Power Development Plan for the 2021 – 2030 period, with a vision to 2050 (NPDP 8), the import share of total generation capacity is expected to rise to 3.3 per cent in 2030 before returning to around two per cent in 2050.
Although China has been the primary source of Vietnam’s electricity imports, recent additional imports have been predominantly sourced from Laos. Vietnam’s bid to diversify its energy mix, coupled with Laos’ position as the ‘Battery of Southeast Asia,’ has prompted the shift. Currently, Vietnam purchases approximately 4 million kWh per day from China, compared to 7 million kWh a day from Laos.
Vietnam has opted to boost hydroelectricity imports from Laos as several roadblocks hinder the country’s ability to tap into its domestic renewable energy capacity of 4,600 MW, which concentrates in the Southern provinces. Particularly, the limited electricity transmission capacity from the South to the North poses a major challenge. It is easier to import electricity from Laos to shore up power supply for the North, given the shorter transmission distance.
Laos’ decision to build the Sekong A dam likely presented a fait accompli to Vietnam, in which the perceived best course of action was to participate in its construction.
The NPDP8 states that by 2030 based on the agreement of the two governments, about 5,000 MW would be imported into Vietnam from Laos. Since these will mostly come from hydropower dams in Laos, Vietnam is faced with a dilemma. On the one hand, Hanoi is deeply concerned about the ecological impacts that these dams have on the Mekong Delta, which produces half of the country’s rice, 70 per cent of its aquaculture, and one-third of its GDP. The extensive development of hydropower reservoirs by upstream countries, combined with the effects of climate change, poses significant threats to the food security and livelihoods of 17 million Mekong Delta residents. Vietnam has prioritised addressing these challenges, as demonstrated by the passing of Resolution 120, which outlines a vision for sustainable and climate-resilient development in the Mekong Delta.
On the other hand, Vietnam finds itself in need of importing electricity from Laos and strengthening bilateral ties with its most trusted friend. Consequently, Hanoi continues to engage in hydropower cooperation with Vientiane, despite the apparent contradiction to its own interests in the Mekong region.
As Vietnam cannot prevent Laos from building dams, there is an argument advocating Vietnam’s participation in the construction and operation of these dams to minimise potential environmental impacts.
Such rationale could explain Vietnam’s participation in the construction of the 86-MW Sekong A dam on the Sekong River in southern Laos, the last unobstructed major tributary of the Mekong. When it is completed (expected to be in 2025), this run-of-river dam would block vital sediment from reaching the Mekong Delta, and cut off migration routes for a variety of fish species. Vietnam could have invested in low-risk hydropower projects or explored solar and wind power alternatives in the Sekong basin, which offer higher capacity and pose no harm to the Mekong. However, Laos’ decision to build the Sekong A dam likely presented a fait accompli to Vietnam, in which the perceived best course of action was to participate in its construction.
Vietnam’s support for the Sekong A dam and increased hydroelectricity imports from Laos undermine its efforts to meet the objectives set forth in Resolution 120. Consequently, it is imperative for Vietnam to recalibrate its electricity cooperation with Laos and pursue alternative approaches to secure energy supply while minimising the ecological ramifications for the Mekong Delta.
First, Vietnam needs to adopt a more proactive role as a middle power in the Mekong region. This involves raising the adverse impacts of dams on the Mekong’s ecology in regional platforms, actively opposing the construction of high-risk dams, and utilising its diplomatic influence to attract foreign investment in non-hydro renewable energy projects in the Mekong region. These actions would exert pressure on Laos to reconsider its dam-building spree while enabling Laos to access the foreign capital and technologies needed to diversify its energy sources away from hydropower.
These options alone would not be sufficient in getting Laos to change its mind, given the substantial economic benefits of hydropower. Vietnam, as Laos’ major power purchaser and investor, also needs to actively encourage Laos to embrace non-hydropower renewables. With its domestic expertise in wind and solar power plant construction, Vietnam could offer to assist Laos in this regard. Doing so would expand Hanoi’s options for electricity imports and help Vientiane pursue economic gains without jeopardising the well-being of the Mekong Delta. The 600MW Monsoon Wind power project in Laos’ Sekong province is a case in point. This is the first cross-border wind project between Vietnam and Laos, with all the electricity generated being sold to EVN.
Finally, Vietnam must address the root causes of its power shortage to reduce reliance on electricity imports and ensure a sustainable supply for its national grid. This necessitates upgrading the country’s electricity infrastructure and facilitating electricity reform. After all, the future of the Mekong Delta is closely linked to the future of Vietnam’s energy transition.
By Phan Xuan Dung – Fulcrum.sg – July 3, 2023