Success Story: Laos' First Solar Energy Auction

However, hydro dams are drought-vulnerable and may cause negative impacts on vulnerable populations and the environment. To fully take advantage of the country's ample renewable energy resources, solar power is being promoted as a viable alternative. Solar power offers lower emissions, energy security and independence through reduced energy imports, and less reliance on polluting power sources. Additionally, solar power provides the flexibility and reliability for Laos to start exporting energy to neighboring countries. The planning for solar power generation in Laos has traditionally been non-competitive, with energy providers directly proposing projects to the government. This approach has helped address some energy demand but provides the government with less control over power planning. Laos' 2011 Renewable Energy Development Strategy aims to make non-hydro renewable resources one-third of total energy demand by 2025. However, recent years have been challenging for renewable energy in Laos due to an ill-designed subsidy scheme that made solar and wind expensive, and an uncompetitive energy procurement process that lacked transparency and was prone to corruption. To overcome these challenges, the Government of Laos has partnered with USAID Clean Power Asia since 2017 to implement open, transparent, and best-value energy procurement practices through the country's first-ever solar auction. The solar auction is being overseen by the Institute of Renewable Energy Promotion and a Working Committee from various ministries and departments. USAID provided the committee with essential tools, models, and insights, and worked in collaboration with partners Global Green Growth Institute and Hawaii Natural Energy Institute to draft an auction announcement package. The auction announcement package includes key documents such as technical standards, grid connection requirements, and a reference price. Despite the COVID-19 pandemic, USAID on-the-ground staff and government stakeholders conducted an auction site selection process with survey visits to Khammouane and Savannakhet provinces. The provincial authorities agreed on five sites with a total potential auction capacity of 45 megawatts. These site visits yielded the necessary preliminary results for the Working Committee to move towards land acquisition and clearance. The solar auction is expected to improve fair and transparent power project procurement, obtain the most competitive tariff, and reduce project approval time. The auction will expand access to affordable and reliable energy and create an open, efficient, rule-based, and transparent energy market. Increased power procurement through competitive bidding will put the Government of Laos in the driver's seat for power generation planning, and on the road to a more comprehensive renewable energy policy environment. The auction will also offset pollution and carbon emissions that impact health and welfare in cities and communities, create green jobs and market competition with opportunities for U.S. companies, and help spur the continued scaling-up of renewable energy throughout Southeast Asia and the Indo-Pacific.