1. Key SEA framing issues Power demand and power trade development in the LMB and GMS SEA Team

2. Purpose This presentation aims to illustrate the changing character of the demand for power within the LMB and where the mainstream dams fit within the mix of electricity generation

3. LMB Selected indicators 2004 CambodiaLao PDRThailandViet Nam Population (million) (2004) 13.85.864.282.1 GDP (current USD billion) 4.92.2150.141.2 GDP per capita (current USD) 3614202,519551 FDI (USD million)131171,0641,610 FDI/capita (USD)9.52.916.619.6 Electricity use per capita (kWh) 451601,752 (2003)433 (2003) Energy use per capita (kgoe) 180.0355.01,405.7 (2003)544.3 (2003) Fuelwood share in total primary energy 88%67%16%49% Source: Economics of energy integration, ADB, 2008

4. Regional GMS energy issues Dependence on traditional sources of energy (e.g. fuelwood) 20 % of GMs population (74 mil.) no access to electricity Energy consumption in GMS is only 2/3 of the world average for developing countries Energy poverty widespread 1993-2005 8% annual growth in energy consumption 21% of total energy consumed in the region imported Volatile energy prices and limited alternative energy sources mean the region is vulnerable Energy vulnerability high and rising Energy supplies low and unpredictable – overall quality low Lack of competitive pressure on energy suppliers Policy regimes inadequate to address emerging challenges Energy productivity and policy Source: Building a sustainable energy future the GMS, ADB 2008

5. High economic growth in the LMB 1985-2005 Source: Building a sustainable energy future the GMS, ADB 2008

6. Significant differences in electricity consumption CountryPer capita household consumption (Kwh) Share of residential sector in total electricity consumption (%) Cambodia2952.0 Lao PDR9553.0 Thailand40921.0 Vietnam24242.0 Source: Building a sustainable energy future the GMS, ADB 2008

7. Growing demand for power Not consistent between countries All projects in Cambodia and Laos, so will be generating more than they can consume Mainstream project – high proportion of power generated will be exported If projects are planned on basis of export, they must have secure markets, Anticipated markets are at moment are Thailand, Vietnam, China

8. Uncertainty of markets in short-term Thailand in economic crisis and may be some years before want to import more power Already some projects giving anticipated unit cost prices to break even which are well above market prices e.g. Sambor and Vietnam Vietnam in process of multi-year power market reform over many years, e.g. competitive generation by 2005 - 2014 and competitive retail power markets by 2022 China moving towards greater self-provision of energy SO there are uncertainties in use of this capacity from mainstream dams and when they are going to come

9. Significant differences in hydropower potential (MWyr/yr) CambodiaLao PDRThailandViet Nam Regional total (GMS) Low –cost1,6704,6402,7843,24854,102 Medium-cost1,1143,9441,8563,71243,802 High-cost7422,3209281,39223,571 Small6501,0154068125,928 Total4,17611,9195,9749,164127,403 Source: Economics of energy integration, ADB, 2008

10. Limited power trade flows between LMB countries in 2005 (GWh) Exports Imports CambodiaLao PDRThailandViet NamRoWTotal Cambodia-74 Lao PDR-2,628 Thailand2,033-3,2345,267 Viet Nam521- RoW- Total2,6283,234- Source: Economics of energy integration, ADB, 2008

11. Regional power demand Lao –700 MW generated now with 60 MW imported from Thailand 7,000 MW by 2020 90% of 2020 will come from Hydropower 1500 MW of 2020 would come from mainstream dams Domestic demand is 450 MW by 2020, so only about 7% of installed capacity But one major energy consuming project mine might have requirement for 60 MW

12. Cambodia power demand 13 MW generated now 90% of power generated from imported fuels Target to reduce dependence on fuel wood from 80% of population to 52% by 2015 Target to increase domestic provision of electricity from to 20% of population to 70% Potential 10,000 MW from large hydropower projects, plus 3,000 from mini-hydro 3,580 MW of 2020 would come from mainstream dams (Sambor and Stung Treng) But most of this is destined for export

13. Projected growth in power demand in LMB 2005-2025 Source: Economics of energy integration, ADB, 2008 (base case projection)

14. LMB Regional Energy Story time Energy Demand Demand delayed through demand management & efficiency measures Future Coal/thermal? tributaries? nuclear? gas? mainstream hydropower? Oil? biomass renewable? RoW Existing Capacity coal/thermal gas Tributaries Oil biomass RoW Projected energy demand Projected energy demand with demand management Supply *RoW = Rest of World

15. Hydropower in GMS power demand to 2025 Source: Economics of energy integration, ADB, 2008 (base case projection)

16. Projected power trade with integrated power markets 2025 (GWh) Exports Imports CambodiaLao PDRThailandViet NamRoWTotal Cambodia-401555 Lao PDR22-5057129 Thailand9,48242,458-147,269*199,209 Viet Nam3,61225,988-5,91835,518 RoW644584-1,228 Total13,11669,130649153,244- Source: Economics of energy integration, ADB, 2008 (based on IRM modeling) *Thailand is projected to import 139,385 GWh from Myanmar by 2025

17. What about the crisis? Source: World Bank 2009 e – expected f - forecast

18. Changing economic environment? Power sector projections based on the assumption of continuing rapid economic growth in the region (between 6.3 and 7.6 % to 2025 for the GMS region) Can these levels of growth continue to be expected with the global economic downturn? What does this mean for likely future energy demand in the region – especially where growth has been dependant upon exports? What does this mean for investment in the energy sector? And more specifically investment in hydropower?

19. Mainstream dams Provide 11.5% of installed capacity by 2020 9.3% of power produced in the LMB by 2020 60 GW hrs annually of the 644 GWhrs per annum in LMB by 2020 Conditions of BOT, 25 – 30 year handover in which government would have the capacity to manage, but there would be major maintenance and replacements costs