Clean Energy Revolution: How Hydropower is Propelling Lai Chau Province to the Top of the Economic Growth Charts

Dominating the Statistics

According to the Lai Chau Provincial Statistics Office, in the first six months, the province’s GRDP was estimated at over VND 5,857.7 billion, a 5.54% increase, ranking 8th in the Northern Midland and Mountainous region and 44th in the country.

However, after nine months, Lai Chau’s GRDP increased by 11.63%, climbing 41 ranks compared to the first six months, and placed 3rd in the country (after Bac Giang and Thanh Hoa provinces).

The provincial economic structure comprised: agriculture, forestry, and fishery accounting for 10.69%; industry and construction accounting for 51.78% (industry alone accounting for 44.95%); services accounting for 31.92%; and tax and subsidy on products accounting for 5.61%. The industry sector witnessed the highest growth rate, contributing 10.24 percentage points to the overall growth.

According to Mr. Le Lam Bang, Director of the Lai Chau Provincial Statistics Office, the remarkable growth in the industry sector was attributed to the significant added value of electricity production, which holds a substantial proportion in the province’s GRDP scale.

The province’s electricity production volume in the first nine months surged by 43.9% compared to the same period, equivalent to an additional 2,023 million Kwh. This was made possible by the completion and operation of 11 new hydropower plants with an installed capacity of 145.3 MW. Favorable rainy weather conditions also contributed to the increased output of hydropower plants.

To further understand the role of the electricity sector in Lai Chau’s economy, the Lai Chau Provincial Statistics Office provided the following analysis. In the first nine months of 2024, the GRDP scale at current prices reached VND 23,922.8 billion, of which electricity production accounted for VND 10,383.03 billion, making up 43.40% of the province’s GRDP scale.

When excluding the electricity sector from the industry sector (while keeping other sectors unchanged), the overall GRDP growth rate reached 102.85%, with the GRDP scale at current prices amounting to VND 13,539.7 billion.

On the other hand, when excluding hydropower from the industry sector, the growth rate of this sector stood at 139.82%, and its contribution to the overall growth without hydropower accounted for only 0.79 percentage points. This clearly illustrates the province’s heavy reliance on hydropower.

The Need for Sustainable Development

Characterized by its topography of numerous rivers, streams, high slopes, and rapid flows, Lai Chau possesses significant hydropower potential. To harness this potential, the provincial authorities have been actively attracting and supporting investors in constructing hydropower plants in the region.

According to the Lai Chau Department of Industry and Trade, the Prime Minister approved the “Lai Chau Provincial Planning for the Period of 2021-2030, with a Vision to 2050” via Decision No. 1585/QD-TTg dated December 7, 2023. This planning integrates 160 hydropower projects that have been approved by the Ministry of Industry and Trade, with a total capacity of 4,283.75 MW and an average annual electricity output of over 15.5 billion kWh.

Currently, the Lai Chau People’s Committee has granted investment policies for 124 hydropower projects with a total capacity of 3,918.15 MW and an average annual electricity output of 14,312 million kWh. The total investment capital exceeds VND 130,000 billion, contributing approximately 70% to the provincial budget revenue.

Among these projects, 60 have been put into operation with a total capacity of 3,040.85 MW and an average annual electricity output of 11,332 million kWh. There are 33 projects that have been granted investment policies and are under construction, and 31 projects with approved investment policies but have not yet started construction. The remaining 36 projects have been included in the power source planning but have not received investment policies.

According to the Lai Chau People’s Committee, the orientation of energy industry development is in line with the guidelines and orientations of the Central Government and the Provincial Party Committee. The implementation process complies with legal regulations and is consistent with economic, social development strategies, and plans.

The hydropower projects that have been invested in and put into operation have made significant contributions. They play a crucial role in ensuring energy security, promoting socio-economic development, and increasing industrial production value.

Additionally, hydropower has created potential for aquaculture in reservoirs, improved transportation infrastructure, and generated substantial revenue for the provincial budget. It has also provided stable jobs and income for the local population through payments for forest environmental services.

While acknowledging the benefits of hydropower development, the authorities in Lai Chau remain cautious about the construction of small hydropower plants. These projects entail the sacrifice of a significant area of forests (on average, one to ten hectares of forest are cleared for each megawatt of electricity generated) and can have adverse effects on the environment and local livelihoods.

Notably, as the economy heavily relies on hydropower, and hydropower is dependent on natural factors and weather conditions, unfavorable weather can lead to reduced electricity production and, consequently, lower budget revenues. Therefore, to achieve stable and sustainable development, Lai Chau needs to diversify its economic base and attract more factories and industrial parks.