LAOS – To feed its growing hunger for electricity, Thailand is close to completing one of Southeast Asia’s largest coal-fired power plants. The location? Just over the border in Laos.
The $3.7 billion project can supply power for two million households in Thailand. But heavy resistance to toxic emissions from burning coal, the dirtiest of all fossil fuels, has prompted power companies there to build it in Laos, where standards and opposition are weaker.
The move shows the lengths countries in the region are going in the search for new energy sources as rural populations abandon traditional fuels like firewood and agricultural waste and get on the electricity grid.
The shift makes Southeast Asia a rare growth market for coal, which has plummeted to its lowest price in over a decade as demand slows from big buyers like China.
Thailand already relies on Laos and Malaysia for around 7% of its electricity, with plans to add Myanmar and southern China to its list of providers. Building a power plant outside its borders allows Thailand to avoid delays associated with large industrial projects.
This isn’t the first time the country has used that strategy. Thailand used a similar approach with hydropower in the 1990s when it faced concerns that dams would damage ecosystems and uproot communities, said Aviva Imhof, Pacific coal-network coordinator at the Sunrise Project, an Australia-based group that campaigns against the use of fossil fuels.
While Thailand hasn’t been able to build many large-scale coal plants in recent years, the state-run Electricity Generating Authority of Thailand has lined up plans to import electricity from coal-fired plants in neighboring countries, in addition to hydropower projects; 7,000 megawatts of hydropower will come from Laos alone.
The Hongsa coal plant, which took five years to build, will generate 1,878 megawatts. It is due to start operations in June and to be fully operational by early 2016, said Bangkok-listed Banpu Public Co. Ltd., which has a 40% stake in the project. Ratchaburi Electricity Generating Holding Public Co. Ltd. has another 40%, and state-owned Lao Holding State Enterprise has the remaining 20%.
The project illustrates the energy dilemma that growing Southeast Asian economies are facing in picking a fuel mix that is both cheap and clean. The plant will burn the dirtiest type of coal called lignite from nearby mines. Songkrant Pongboonjun, a lawyer at EarthRights International, a group that helps communities displaced by industrial projects, says the plant hasn’t assessed the environmental fallout on Thailand as it is 30 kilometers, or about 19 miles, from the Thai border.
Banpu said the Hongsa plant and mines meet international environmental and compliance standards. It said reports have been regularly submitted to the Laos government, which has worked closely with stakeholders concerned.
Ratchaburi, Lao Holding and the Electricity Generating Authority of Thailand didn’t respond to requests to comment.
For an impoverished country like Laos that has little industry, selling electricity provides much-needed revenue. At full capacity, Hongsa will be the largest power plant ever built in the tiny country and its first to burn coal. Laos currently gets most of its energy from hydropower, and sells two-thirds of that to Thailand. Activists say there is little organized resistance against big power projects in Laos.
Viraphonh Viravong, the Laotian vice minister for energy, said in October that Laos was pushing ahead with plans to export electricity—mostly hydropower—to Thailand, which can provide the large capital investment needed to develop its energy resources. He said the Hongsa project will generate jobs and income for the Laotian people.
Around 88% of the power generated at the Hongsa plant will go to Thailand, and Laos will benefit from a “constant stream of income,” said Chanin Vongkusolkit, chief executive of Banpu. He said the plant will also mean better roads, schools and other services and training opportunities.
Thailand’s own coal phobia runs deep, in large part due to a controversial project in the country’s north. In the mid-1970s, a coal plant and mine was built in Mae Moh in northern Thailand’s Lampang province, displacing tens of thousands of people. Hundreds have died due to respiratory diseases, and groups like Greenpeace have blamed the project for widespread ecological damage.
A senior Thai government official said the impact of the project on public health and the environment has been overstated.
Thailand now gets more than half of its electricity from natural gas, which costs up to three times as much as coal to generate the same amount of power, but is far cleaner. Nevertheless, Thailand is now also pushing for other coal plants, including one near the scenic southern Thai town of Krabi.
Its push for coal projects in other parts of Southeast Asia also continues. In October, a consortium of Thai, Burmese and Japanese firms agreed to conduct a study for a massive 2,640-megawatt coal-fired power plant in the seaside town of Myeik in southern Myanmar.
—Nopparat Chaichalearmmongkol and Warangkana Chomchuen in Bangkok contributed to this article.