Laos has significantly advanced its clean energy infrastructure development with a landmark $1.45 billion agreement signed with China Western Power Industrial Co Ltd, a major Chinese power plant equipment manufacturer. This deal, announced in a stock exchange filing on Monday, underscores Laos’s push to diversify its energy sources and strengthen its position as a key electricity exporter in Southeast Asia.

The agreement, which also involves a Singapore-based construction company, tasks the consortium with the design, supply, and construction of a sprawling 1,800-megawatt clean energy power project located in southern Laos. The Xekong Thermal Power Plant is the Laotian partner in this ambitious undertaking. According to the filing, initial designs for the project are expected to be finalized by the end of 2024, with the entire project slated for completion by the beginning of 2030.

While the filing did not explicitly detail the specific energy source for the project, it highlights Laos’s commitment to expanding its clean energy portfolio beyond its traditional reliance on hydropower. This move comes as the nation seeks to address the challenges of scaling up solar and wind power, which have lagged hydropower development in recent years.

In addition to the primary energy project, China Western Power also secured a $228.8 million power transmission deal with the same Laotian company, further cementing the comprehensive nature of the partnership. This deal aims to enhance the efficiency and reliability of power distribution within Laos, supporting the nation’s growing energy infrastructure.

This latest agreement builds upon previous collaborations between China Western Power and Laos. In 2022, the Chinese company signed a $409 million supply and service deal with another Laotian power company, demonstrating a sustained and growing relationship. Moreover, last year, a Chinese state-owned power company entered into an agreement with Laos to expand a wind and solar energy base in the northern region, indicating a broader trend of Chinese investment in Laos’s renewable energy sector.

Laos, a landlocked and mountainous nation, has historically relied on hydropower for approximately 80% of its electricity generation over the past decade. The country’s strategic location and abundant water resources have positioned it as a significant electricity exporter to neighboring Thailand and Vietnam, earning it the moniker “battery of Southeast Asia.”

However, the nation is now actively pursuing diversification to ensure energy security and sustainability. The shift towards clean energy sources like solar and wind reflects a broader global trend and aligns with Laos’s long-term development strategy. The influx of Chinese investment and expertise is expected to play a crucial role in realizing these ambitions.