Laos foots the bill for power-hungry Bangkok

Seven months ago, in May, Bangkok’s latest shopping mall, Central Embassy, celebrated its opening with aplomb, attracting several thousand Bangkok celebrities to this glitzy affair.

The 144 000 square-meter luxurious and futuristic-looking mall was described by Travel & Leisure magazine as a ‘monster of a shopping complex’. During the same month, the Worldwide Wildlife Fund warned that the construction of the Don Sahang dam in southern Laos would endanger the survival of freshwater Irrawaddy dolphins, and called for a suspension of the project.

These two juxtaposed events, the opening of Central Embassy and the planned construction of the Don Sahang dam, which are occurring 870 km away from each other and in different countries, might appear, at first glance, unrelated. However, they are linked because they form part of a complex web of Bangkok’s electricity consumption. To partially slake Thailand’s ever-increasing thirst for electricity, Thai companies and state-owned enterprises are collaborating with the Lao government to build more hydropower dams in Laos and import the electricity into Thailand. Much of this electricity is used in Bangkok.

Middle-class and upper-class Bangkok residents enjoy cheap, ever-expanding consumption of electricity while company executives and large shareholders of Thai companies in the energy, real estate, construction and finance sectors, and Lao government leaders, reap large profits.

Simultaneously, local rural communities and wildlife in Laos bear the brunt of the environmental damage caused by these dams, and often the communities are worse off after being forced to resettle 1.

Bangkok’s rapid growth over the past few decades, and its unique form of urbanisation, have resulted in high electricity consumption in two specific interrelated ways. First, unlike in many other Asian cities, new development in the peripheral areas of Bangkok over the past 15 years has mostly been in the form of townhouses and detached housing, which consume a lot of electricity. Since developers sell houses and condominiums after they build them, they often do not invest in more expensive energy-efficient technology. Further, Bangkok households—more well-off than those in rest of the country—use more appliances, and their average electricity usage is double that of the rest of the country 2. (see figure below 3)

Source: CBRE Global Research and Consulting (2014) “Bangkok Overall Marketview” Q2 2014. (http://cdn.cbre.co.th/media/research_lang_file/1953/q2_14_bangkok_overall_market_view.pdf)

New Supply of Developer-Built Single-Detached Houses in BMR, 2001-2013 & Q1 2014.

The second form of electricity-intensive urban expansion is the continuing proliferation of shopping malls, some of which use more electricity combined than some of Thailand’s smaller provinces. (see figure below 4)

Comparison of Annual Energy Usage of Bangkok Shopping Malls and Provinces in Thailand in 2011.

Comparison of Annual Energy Usage of Bangkok Shopping Malls and Provinces in Thailand in 2011.

The regulatory structure also contributes to metropolitan Bangkok’s high electricity consumption. None of the five provinces in the Bangkok Metropolitan Region (BMR) factors in electricity as a determinant of urban growth. Nor do the national or provincial governments regulate electricity usage in new buildings.

In addition, the government does not offer sufficient incentives for developers to follow green building codes, nor penalise those who do not comply with them. And the electricity pricing structure does not discourage heavy users from using electricity—it is not much more expensive for shopping malls or industries to buy electricity per unit than it is for home residents.

In 2013, the BMR consumed about 40 per cent of the country’s electricity even though the region constitutes only 1.5 per cent of the country’s total land area and about 22 per cent of its population 5.

Being at the centre of Thailand’s centralised electricity system, Bangkok’s increasing electricity consumption means suppliers need to supply more electricity into the transmission grid.

To meet its growing energy demand, Thailand obtains its electricity supply mostly from natural gas. However, Thailand’s natural gas reserves are projected to last for only another 10 more years, and the government projects that electricity generation will double by 2030.

While many countries have been implementing policies to make their energy sectors greener, the Thai government is taking the opposite approach and planning to build additional coal-power plants and import hydropower electricity generated by large dams in Laos.

This response is largely due to the perverse incentive structure in the electricity sector. The state-owned Electricity Generating Authority of Thailand (EGAT) has always been protected by the national government and allowed to maintain a monopoly over both electricity generation and distribution. Despite previous attempts to liberalise and reform the sector, weak regulation, a lack of regulatory oversight, and little domestic competition have enabled EGAT to exert significant power over the country’s electricity development.

EGAT drafts Thailand’s Power Development Plan (PDP) in a largely closed and non-participatory process. In addition, Thailand has a cost-plus tariff system that guarantees EGAT earns revenues based on the amount of electricity it sells, and legal mechanisms that allow the authority to raise tariffs to pass the costs of over-investment on to consumers. This incentive spurs continual expansion in the system and a penchant to overstate demand, which EGAT has done for the past 20 years 6.

Since the late 1980s, local community groups and non-government organisations in Thailand have forcefully opposed the construction of new large power plants, particularly dams, within the country. This increased pressure on EGAT and the limited number of sites left to build dams has driven EGAT to build these large projects in neighbouring countries where there are fewer environmental regulations and less public scrutiny, and whose governments welcome these investments 7.

Thailand’s energy, construction and finance companies have also been playing a role in encouraging hydropower investment in Laos and the region. Hydropower has proven to be lucrative because of the terms of the contracts, enabling these companies to import electricity cheaply into Thailand 8.

Thailand’s energy, construction and finance companies have also been playing a role in encouraging hydropower investment in Laos and the region. Hydropower has proven to be lucrative because of the terms of the contracts, enabling these companies to import electricity cheaply into Thailand.

To be able to invest overseas, these companies need a willing partner, and they have found one in the Laos government. Laos’ economic strategy reflects the interests of the country’s only legal political party, the Lao People’s Revolutionary Party, which has served as a vehicle to enrich the elite while maintaining legitimacy through brisk growth.

Since 2001, the main foundation of Laos’ economic development plan has been an investment-centric strategy to convert large tracts of land to achieve rapid economic growth through production and extractive projects.

A key pillar of this strategy has been the rapid enlargement of the Laos government’s hydropower output over the past decade. Laos currently exports most of this electricity to Thailand and plans to export more as its generation capacity increases. (see figure below 9)

Total number and capacity (MW) of power projects realized, under construction and planned in Laos.  (Source: Smits (2012) “Chapter 8: Hydropower and the Green Economy in Laos: Sustainable Developments?” pp 103-120 in  Hezri, A., Hofmeister, W. (Eds.), 2012, Towards a Green Economy: In Search of Sustainable Energy Policies for the Future. Singapore: Konrad Adenauer Stiftung http://mekong8.org/k-base/wp-content/uploads/2014/07/Smits_-_2012_-_Hydropower_and_the_Green_Economy_in_Laos_-_Sustainable_Developments_Chapter_in_Towards_a_Green_Economy-libre.pdf)

Total number and capacity (MW) of power projects realized, under construction and planned in Laos.

The number of dams already built in Laos have had numerous detrimental environmental impacts, such as the rapid depletion of fish stocks 10 and damaged biodiversity through forest clearance 11. Furthermore, villagers who have been resettled to make way for dam projects are, in many cases, worse off as a result of inadequate compensation and loss of livelihood 12.

The beneficiaries of this development are Bangkok consumers, shopping mall and real estate developers, shareholders and executives of EGAT and Thai energy, construction, and finance companies, and Lao Communist Party leaders. The losers are local Lao communities, the wildlife and ecosystems affected by the dams, and perhaps if more dams are built on the Mekong mainstream, downstream Cambodian communities and wildlife.

The Pak Mun Dam’s infamous “fish pass” structure, which failed to enable fish to pass the dam structure. (Photo by Carl Middleton.)

The Pak Mun Dam’s infamous “fish pass” structure, which failed to enable fish to pass the dam structure. (Photo by Carl Middleton.)

However, few Bangkok electricity consumers are aware of the injustices they are helping to perpetuate, and rarely question the sources of their electricity. While they have protested against dams planned for Thailand, they have, mostly, been silent when it comes to dam-building in Laos. Some villagers sued the government for signing an agreement to purchase power from a new hydroelectric dam, under construction on the Lower Mekong River at Xayaburi in northern Laos, but all of them lived in northeast Thailand, near the Mekong 13.

Given how little opportunity exists for dissent in Laos, fomenting further dissent in Bangkok by exposing the perverse logic and injustices behind the construction of dams in Laos, and the purchase of power from them, could be one avenue to begin addressing these inequalities.

An earlier version of this article was published on Asian Currents.

Show 13 footnotes

  1. See, for example, International Rivers. 2008. Power Surge: The Impact of Rapid Dam Development in Laos. International Rivers.
  2. Sirichotpundit, Pattana, Chamlong Poboon, Dujduen Bhanthumnavin & Wisakha Phoochinda. 2013. Factors Affecting Energy Consumption of Households in Bangkok Metropolitan Area. Environment and Natural Resources J 11.31-40.
  3. CBRE Global Research and Consulting (2014) “Bangkok Overall Marketview” Q2 2014.
  4. http://www.energythai.com/2011/departmentstore/.
  5. Ministry of Energy. 2013. “Energy Balance of Thailand 2012” Published by Department of Alternative Energy Development and Efficiency, Ministry of Energy.
  6. Greacen, C. and S. Bijoor (2007). “Decentralized energy in Thailand: An emerging light.” World Rivers Review 22(2): 4-5.
  7. Middleton, C. “Transborder Environmental Justice in Regional Energy Trade in Mainland South-East Asia.” ASEAS-Austrian Journal of South-East Asian Studies 5.2 (2012): 292-315.
  8. Smits (2012) “Chapter 8: Hydropower and the Green Economy in Laos: Sustainable Developments?” pp 103-120 in Hezri, A., Hofmeister, W. (Eds.), 2012, Towards a Green Economy: In Search of Sustainable Energy Policies for the Future. Singapore: Konrad Adenauer Stiftung.
  9. Smits (2012) “Chapter 8: Hydropower and the Green Economy in Laos: Sustainable Developments?” pp 103-120 in Hezri, A., Hofmeister, W. (Eds.), 2012, Towards a Green Economy: In Search of Sustainable Energy Policies for the Future. Singapore: Konrad Adenauer Stiftung.
  10. Sarkkula, J., et al. (2009). “Hydropower in the Mekong region: what are the likely impacts upon fisheries.” Contested Waterscapes in the Mekong Region: Hydropower, Livelihoods and Governance. London, Earthscan: 227-249.
  11. Goldman, Michael. “Constructing an environmental state: Eco-governmentality and other transnational practices of a’green’World Bank.” Social Problems 48.4 (2001): 499-523.
  12. International Rivers (2014) “Failure to Restore: An Assessment of the Impacts of the Theun-Hinboun Hydropower Dam Projects on Downstream Communities in Laos” Published by International Rivers: Berkeley (Last accessed 10.12.14).
  13. LeFevre, A. S. 2014. Thai court takes villagers’ case against power firm, Laos dam. Reuters.
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7 Comments

  1. Tove Selin said:

    Thailand does not even need more energy, it has had over 5 years already some 10 000 MW oversupply, the consumption is around 26 000 MW and the supply is 34 000 MW at the moment, even if Thailand closes its coal fired power plants the reserve stays. The only reason for this dams is corruption and other perks for the companies involved and the EGAT, there is no need for them.

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