Hydropower remains the backbone of Laos’ power sector and the foundation of its export-driven electricity strategy. According to Laos Power Outlook, Update 2026 by GlobalData, large hydropower accounted for 72.7% of installed capacity in 2025 and 71.5% of annual generation, underlining the technology’s continued dominance.
Yet the outlook to 2035 is not one of simple expansion. Instead, Laos is navigating a more complex landscape: managing dry-season supply risk, responding to sovereign debt pressures, expanding cross-border trade, and accelerating wind and solar deployment. Hydropower will continue to lead, but within a broader and more contested generation mix.
Capacity growth with hydropower at the core
Between 2020 and 2025, Laos’ total installed capacity increased from 9.4GW to 12.3GW. Over the next decade, cumulative capacity is forecast to rise at a compound annual growth rate (CAGR) of 7.2%, reaching 28.7GW by 2035. Hydropower remains central to that trajectory.
Large hydropower capacity rose from 7.3GW in 2020 to 10.4GW in 2025, reflecting a CAGR of 7.4% over the period. Growth continues, albeit at a slower pace, with capacity projected to reach 15.2GW by 2035, expanding at 3.9% CAGR from 2025 onwards. Annual hydropower generation is forecast to climb from 39.8TWh in 2025 to 59.6TWh in 2035.
The Ministry of Energy and Mines (MEM) has set an ambition to reach 12GW of hydropower by 2025 and 20GW by 2030, largely to support exports to Thailand, Vietnam and Cambodia. Hydropower contributes an estimated 30–40% of national exports, making it a strategic economic pillar.
Despite the expansion of wind and solar, hydropower is expected to retain 53.1% of installed capacity and 59.1% of generation in 2035, according to GlobalData’s projections. No pumped storage capacity is currently installed, leaving the system reliant on conventional large hydro.
Laos has built its hydropower fleet around regional trade. In 2025, the country exported 40.8TWh of electricity, compared with imports of just 0.6TWh. Exports have grown steadily from 11.6TWh in 2015, reinforcing the country’s status as a net exporter.
Thailand is the principal off-taker, receiving power via 230kV and 500kV interconnections, followed by Vietnam through 220kV and 500kV lines. The country has 17 interconnection lines with Thailand, two with Vietnam and one with Cambodia, with additional projects planned towards China and Myanmar.
Laos plans to export 9,000MW to Thailand by 2025 and 5,000MW to Vietnam by 2030. These long-term power purchase agreements (PPAs) underpin hydropower investment decisions and provide foreign currency earnings. However, reliance on a limited number of buyers exposes the sector to pricing and policy shifts in neighbouring markets.
Seasonal risk and system constraints
Hydropower’s dominance also creates structural risk. Approximately 80% of Laos’ electricity generation is derived from hydropower, leaving the system exposed to drought and rainfall variability . Dry-season shortages have already prompted a policy pivot towards coal-fired capacity to ensure supply security.
Installed coal capacity remained flat at 1.9GW between 2020 and 2025, but is forecast to reach 3.7GW by 2035. The 1.8GW Kaleum coal-fired power plant is expected online around 2030. Thermal generation is projected to account for 23.3% of total generation by 2035, compared with 25% in 2025.
This balancing role for coal reflects both hydrological risk and financial constraints. Laos’ sovereign debt, reported at $12.6bn in the report, limits its flexibility to avoid coal expansion entirely . At the same time, the country’s updated power strategy aims for 75% hydropower and 11% variable renewables in the domestic generation mix by 2030. The absence of pumped storage and large-scale battery systems heightens the challenge. With no significant storage assets to buffer variability, the grid relies on real-time balancing between hydro inflows, coal generation and cross-border exchanges.
Renewables rising alongside hydro
While hydropower remains the anchor, non-hydro renewables are expanding rapidly from a low base. Renewable capacity (including small hydro) increased from 0.3GW in 2020 to 2GW in 2025. It is forecast to reach 9.8GW by 2035, growing at a CAGR of 17.1% over 2025–2035.
Onshore wind led this shift in 2025, accounting for 10.5% of total installed capacity after 1.5GW was added in a single year. Wind capacity is projected to rise from 1.5GW in 2025 to 5.1GW in 2035, while solar PV expands from 0.3GW to 4GW over the same period. Renewable generation is forecast to increase from 2TWh in 2025 to 17.6TWh in 2035, implying a CAGR of 24.6%. By 2035, renewables are expected to account for 17.5% of annual generation.
For hydropower operators, this diversification presents both a complement and a competitive dynamic. Wind and solar can reduce dry-season stress and improve domestic supply resilience, but they also require grid adaptation. The transmission network was originally designed around large hydropower exports and lacks strong east–west connectivity within the country. Transmission losses of 10–13% are reported.
Investment flows favour hydro and wind
Investment patterns reflect the dual focus on hydropower and wind. Between 2020 and 2025, hydropower attracted $2.8bn, making it the largest recipient of capital, followed by $1bn for onshore wind
From 2026 to 2030, total investment in the power sector is projected at $8.2bn. Hydropower is expected to account for 35% of that total, onshore wind 32.9%, coal 16.3% and solar PV 15.9%. These figures indicate continued commitment to hydro expansion, but with wind now close behind in capital allocation.
As of early 2026, 3,657MW of hydropower capacity was under construction, with a further 2,480MW in permitting and 3,899MW announced. Major upcoming schemes include the 1,460MW Luang Prabang project and the 912MW Pakbeng plant.
Market structure and governance
The sector remains dominated by state-owned Électricité du Laos (EDL), which oversees transmission and distribution and leads generation. Independent power producers (IPPs), including regional and Chinese firms, play a major role in project development under concession agreements and PPAs. EDL held 13.25% of generation company market share in 2025, with RATCH Group, Power Construction Corporation of China and Lao Holding State Enterprise also significant players.
Policy support for hydropower is embedded in the National Policy on Sustainable Hydropower Development, which applies to plants above 15MW and covers technical, environmental and social requirements. Laos’ updated climate strategy commits to net-zero greenhouse gas emissions by 2050, with hydropower central to that pathway.
Outlook: consolidation with recalibration
Hydropower’s role in Laos is not diminishing. Installed capacity and generation will continue to expand through 2035, and exports will remain a core economic driver. However, the context is changing.
Rising wind and solar capacity, coal additions for dry-season stability, financial pressures, and regional market dynamics are reshaping the operating environment. Without storage deployment, hydropower will continue to shoulder balancing responsibility across seasons and borders.
For developers, investors and equipment suppliers, Laos remains one of the most hydro-intensive markets in Asia. The next phase will hinge less on rapid build-out alone and more on system integration, cross-border optimisation and financial sustainability.
As the GlobalData report concludes, hydropower will continue to dominate Laos’ capacity and generation mix through 2035 – but increasingly as part of a broader, more diversified power system.
