In what is considered to be Asia’s first cross-border ( non-hydropower ) renewable energy project, Southeast Asia’s largest wind farm, the 600-megawatt ( MW ) Monsoon Wind Power Project in southern in Laos, has started to export energy to neighbouring electricity-hungry Vietnam, under a 25-year agreement with state-owned utility Electricity of Vietnam ( EVN ), which plays a central role in Vietnam’s power sector.

The wind farm, operated by Monsoon Wind Power Company, is the first wind power project in Laos and includes 133 wind turbines and a 22-kilometre transmission line crossing the Vietnam-Laos border.

The Asian Development Bank ( ADB ) and the Monsoon company, a Laos-incorporated entity backed by shareholders from multiple countries, signed in March 2023 a US$692.55 million non-recourse project financing package to build the 600MW power plant in Sekong and Attapeu provinces in southern Laos to sell power to Vietnam.

The package comprises a US$100 million A loan from the ADB’s ordinary capital resources, a US$150 million syndicated B loan, US$50 million in concessional financing, US$382.55 million in parallel loans and a US$10 million grant.

Financing came from a consortium led by the ADB, with participation from the Asian Infrastructure Investment Bank, Japan International Cooperation Agency, Export–Import Bank of Thailand, Hong Kong Mortgage Corporation, Sumitomo Mitsui Banking Corporation, Kasikornbank and Siam Commercial Bank.

The US$950 million project is invested in by a consortium comprised of firms from Thailand, Hong Kong, Laos, the Netherlands, Japan and Singapore. Notable stakeholders include Thailand’s Impact Electrons Siam Group and BCPG, Japan’s Mitsubishi Corporation and Laos’s SMP Consultation Sole.

The wind farm, according to project estimates, is expected to generate enough electricity annually to avoid approximately 1.3 million tonnes of carbon dioxide emissions.

The project supports the Association of Southeast Asian Nations ( Asean ) power grid connectivity goals by demonstrating cross-border electricity trade between member nations. Laos, which used to be called “Southeast Asia’s battery”, gains energy diversification beyond hydropower while Vietnam is able to get wider access to renewable power supply for its energy transition and decarbonization.

As part energy development plans within the Asean region, electricity generated in Laos will also be exported to other countries like Cambodia, Thailand and Singapore.

Vietnam’s increasing demand

The export-driven economy, according to Vietnam’s Ministry of Trade and Industry ( MoIT ), is able to buy electricity from neighbouring Laos and China as both have surplus supply, especially hydropower, and are in a position to export.

Vietnam’s electricity import volume, MoIT figures show, has in recent years steadily increased, hitting 5 billion kilowatt-hours ( kWh ) by the end of 2024. In 2021, however, the amount dropped to about 1.4 billion kWh due to a temporary halt in imports from China.

The total import capacity from Laos, according to an agreement between the governments of Laos and Vietnam, is expected to climb to 5,000MW to 8,000MW annually by 2030, much higher than the approximately 1,000MW annually recorded prior to the Monsoon project’s commencement of delivery to Vietnam.

Vietnam’s government expects double-digit economic expansion in the coming years, according to the MoIT, to achieve the goal of becoming a high-income country by 2045. To support the goal, the annual electricity demand growth is estimated to be around 12% to 14%.

Imported electricity, an MoIT scenario estimates, could account for 5% of Vietnam’s total installed electricity capacity by 2030, 1.7% higher than the current plan and up 4% from the end of 2024. Together with domestic sources, including renewable energy, hydropower and liquefied natural gas-powered electricity, importing energy will help the nation meet its increasing future power demands.