What is Laos’ Potential as an Energy Exporter in Southeast Asia?



1. Laos’ future as an energy exporter looks very bright

Similar to Myanmar, Laos has an excellent renewable energy profile that is almost unrivaled in the region. And Myanmar also has excellent prospects of becoming a major energy exporter. This could make Laos a major energy exporter for its neighbors, who rely on cheap, always-on energy to fuel industrial production. As industrial production in this region grows and consumes more and more energy, countries in Southeast Asia will look for alternative energy suppliers that will make them less dependent on fossil fuel imports. 

You have to put that in relative terms, because Southeast Asia is relatively energy independent. In fact, the Strait of Malacca is a major weak point for many countries in this region. Even though Laos is a mountainous country, Laos’ future energy prospects are intertwined with those of Singapore, which is located by the sea.

Receiving energy supplies from within the Southeast Asian region is a great boon and reduces geostrategic vulnerabilities arising from maritime trade through the Western Pacific. The same arguments could be made for maritime trade through the Indian Ocean. The Indian Ocean in particular is a hotbed and piracy is a real problem. At the same time, the Indian Ocean holds great opportunities for global energy trade. Laos can benefit from both the Indian Ocean and the Pacific Ocean, albeit indirectly, as the country does not have access to the sea. 

2. Silk Road initiative could become a cornerstone of Laos’ energy diversification strategy

Laos is well positioned to benefit from China’s Silk Road initiative. China has already positioned itself as an energy hub in East Asia and continues to gain importance throughout the Southeast Asian region. Although a major initiative is centered in and around the Malaysian archipelago. It is also true that the Silk Road Iniative aims for a more diversified strategic focus. It focuses equally not only on the sea routes in Southeast Asia, but also on the hinterland and interior of the Asian landmass. 

Which is of interest to the Silk Road Initiative and from an energy perspective. The fact is that Laos is located at the very top of Southeast Asia, in a mountainous region. It can supply all of its neighboring countries with hydropower and thus play a key role as an energy exporter. As a major supplier of hydropower, Laos can promote the growth of the Eurasian power grid as a hub in the south of the Eurasian landmass.

3. International cooperation on all energy issues is of great importance for the future prospects of Laos as an energy exporter

The success of this strategy will depend primarily on cooperation with other countries to ensure water availability downstream. Many of Laos’ neighboring countries have thriving agricultural sectors. 

International relations and water management arrangements can play a very important role in Laos’ relations with Vietnam, which is a growing Southeast Asian powerhouse. In many countries, the country further up the mountains controls the waterways and thus has control over agricultural production in the other country. This is important if the country further up the mountains plans to build dams that can restrict the amount of water that flows down to flood fields. This is one of those areas where energy and water issues are intertwined.

Solar energy is of particular interest to Laos, although it will not be Laos’ bread and butter. Hydropower remains Laos’ true strength. It will continue to provide Laos and other countries with the energy they need to thrive, as it has a very high EROI (energy-return-on-energy-invested). 

Unlike Myanmar, Laos is unlikely to play a significant role as a facilitator for transnational power grids, provided the integration of the Southeast Asian economy progresses and Myanmar and Thailand become a land bridge for power trade between the Indian subcontinent and the Malaysian archipelago. Thailand in particular could become an important power broker in the Southeast Asia region second only to Singapore.

Similarly, Laos could be considered as an energy counterweight to trade through the Strait of Malacca. One country is on the sea, the other sits on the mountain range.

Many thanks for the shared interest in the energy world!

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