Laos has taken a significant stride towards bolstering its clean energy infrastructure with a $1.45 billion agreement signed with China Western Power Industrial. This deal, inked with the Xekong Thermal Power Plant, is set to design, supply, and construct an 1,800-megawatt clean energy power project in southern Laos. The project, expected to be completed by early 2030, will collaborate with a Singapore-based construction company, as reported by Reuters. The initial designs are anticipated by the end of 2025.
The specifics of the energy source for this project remain under wraps, but the timing and scale suggest a strategic move to diversify Laos’ energy portfolio. Laos has historically relied on hydropower, generating 80% of its electricity from this source since 2016. However, the country has faced hurdles in scaling up solar and wind power, despite its mountainous terrain offering potential for renewable energy development.
This new project comes on the heels of another significant agreement in 2023, where a Chinese state-owned power company signed a deal to expand a wind and solar energy base in northern Laos. This trend indicates a concerted effort to reduce reliance on hydropower and embrace a more diversified clean energy mix.
The agreement also includes a $228.8 million power transmission deal, complementing a $409 million supply and service agreement signed in 2022 with another Laotian power company. These investments underscore China’s growing influence in Laos’ energy sector and the strategic importance of power transmission infrastructure.
Electricity exports are a cornerstone of Laos’ development strategy, earning the country the nickname “the battery of Southeast Asia.” The Laos-China 500kV interconnection project, launched in February 2025, aims to enhance bilateral power exchanges. This initiative, operational by 2026, will facilitate a two-way electricity exchange capacity of 1.5 million kW, delivering three billion kilowatt hours of clean electricity annually.
The implications of these developments are profound. For Laos, this marks a pivotal shift towards energy diversification and increased export capacity. For China, it represents a strategic investment in a key regional partner, bolstering its influence and securing a stable energy supply. The involvement of a Singapore-based construction company adds an international dimension, potentially setting a precedent for future collaborations.
The sector can expect a surge in clean energy projects, not just in Laos but across Southeast Asia. This trend could spur innovation in renewable energy technologies and transmission infrastructure. However, it also raises questions about energy security, environmental impact, and the geopolitical dynamics at play. As Laos and China deepen their energy ties, other regional players may need to reassess their strategies to avoid being left behind.
The Laos-China clean energy agreement is more than just a business deal; it’s a geopolitical maneuver that could reshape the energy landscape in Southeast Asia. As the project unfolds, stakeholders will be watching closely, anticipating the ripple effects on energy markets, technological advancements, and regional power dynamics. The coming years will be crucial in determining how this agreement shapes the future of clean energy in the region.
