Development Partners’ Role in Diversifying Renewables in Lao PDR - Stimson Center
Published December 29, 2025
Development Partners’ Role in Diversifying Renewables in Lao PDR
The Lao People's Democratic Republic (Lao PDR) is increasingly recognized for its potential in renewable energy development. With its abundant natural resources, particularly hydropower, the country is strategically positioned to diversify its energy portfolio. Development partners play a crucial role in this endeavor, facilitating investments, technological transfers, and capacity building to enhance the renewable energy sector in Lao PDR.
Lao PDR has long been known for its vast hydropower resources, which account for a significant portion of the country’s energy generation. However, the government is keen on expanding its renewable energy sources beyond hydropower. This diversification is essential for ensuring energy security, promoting sustainable development, and addressing climate change challenges. The government has set ambitious targets to increase the share of renewable energy in the national energy mix, aiming for 30% by 2025 and 50% by 2030.
To achieve these targets, collaboration with development partners is vital. Organizations such as the Asian Development Bank (ADB), the World Bank, and various non-governmental organizations (NGOs) have been instrumental in supporting Lao PDR’s renewable energy initiatives. These partners provide financial assistance, technical expertise, and policy advice that enable the country to explore alternative energy sources, including solar, wind, and biomass.
One of the key areas where development partners have made significant contributions is in solar energy. With an average of 2,500 hours of sunshine per year, Lao PDR is well-suited for solar power generation. The government, with the support of development partners, has initiated several solar projects aimed at increasing access to electricity in rural areas. For instance, the ADB has funded the Solar Power Development Project, which aims to install solar photovoltaic systems in off-grid communities, providing clean energy to thousands of households.
In addition to solar energy, wind power is another area of potential growth for Lao PDR. The country’s geographical features, including mountainous terrains and open plains, create favorable conditions for wind energy development. Development partners are currently conducting feasibility studies to assess the viability of wind projects in various regions of the country. These studies will help identify suitable sites for wind farms and determine the potential capacity that can be harnessed.
Biomass energy is also gaining traction as a renewable resource in Lao PDR. The country has abundant agricultural residues, such as rice husks and sugarcane bagasse, which can be converted into bioenergy. Development partners are working with local communities to promote biomass utilization, providing training and technical support to enhance local capacities. These initiatives not only contribute to energy diversification but also help improve rural livelihoods by creating jobs and reducing waste.
Furthermore, the role of development partners extends beyond financial support and project implementation. They are also involved in policy formulation and capacity building, ensuring that Lao PDR has a robust regulatory framework to support renewable energy development. This includes assisting the government in drafting policies that promote private sector investment in renewables and establishing incentives for clean energy projects.
For example, the World Bank has been working with the Lao government to create a conducive environment for renewable energy investments by developing a feed-in tariff system. This system guarantees fixed payments for electricity generated from renewable sources, thereby encouraging private investors to participate in the market. Such measures are crucial for attracting foreign direct investment, which is essential for scaling up renewable energy projects in the country.
Moreover, development partners are facilitating knowledge sharing and technology transfer to enhance local expertise in renewable energy technologies. Workshops, training programs, and study tours organized by these partners enable Lao professionals to learn from international best practices and gain insights into the latest technologies in the renewable energy sector.
The collaboration between the Lao government and development partners has already yielded positive results. The country has seen a significant increase in renewable energy projects in recent years, contributing to the overall energy generation capacity. As of 2022, renewable energy sources accounted for approximately 30% of the total electricity generation in Lao PDR, with hydropower still dominating the mix. However, the government aims to further increase this share through continued partnerships and investments in diverse renewable technologies.
Despite the progress made, challenges remain in the path toward diversifying renewable energy sources in Lao PDR. Issues such as insufficient infrastructure, limited access to financing, and lack of technical expertise can hinder the growth of the sector. Development partners are actively working to address these challenges by providing targeted support and facilitating access to international funding sources.
In conclusion, development partners play a pivotal role in supporting Lao PDR’s efforts to diversify its renewable energy portfolio. Through financial assistance, technical expertise, and policy support, these organizations are helping the country harness its renewable energy potential. As Lao PDR continues to pursue its ambitious energy goals, the collaboration with development partners will be essential in overcoming challenges and achieving a sustainable energy future.
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