BANGKOK: Higher electricity demand in Laos due to cryptocurrency mining and erratic rainfall have led to power shortages, an advisor to its state-run utility said, revealing challenges to the nation's prospects as a hydropower exporter to Southeast Asia.

Laos is dubbed the battery of southeast Asia for its hydropower export potential, and its supply of the cheapest and most stable source of clean power is crucial to decarbonise the region that is struggling to scale up solar and wind.

A policy push to establish data centres in 2021 led to a boom in cryptocurrency mining, which now makes up over a third of Laotian power demand, while lower rainfall has curbed hydropower output, resulting in power outages, said Somboun Sangxayarath, an advisor at state-run Electricite Du Laos (EDL).

Operators of energy-intensive crypto mining data centres seek cheap non-fossil power sources, making Asian countries such as Laos attractive.

Hydropower accounted for 80% of electricity generated in Laos over the last decade, most of which was sold by independent power producers in cross-border deals with Thailand and Vietnam.

In the domestic market, EDL is the power supplier and has become a net importer since 2021, needing up to 600 megawatts (MW) extra capacity at peak demand times, which has more than doubled costs at the debt-laden utility, Sangxayarath said.

"During the dry season, we're not able to meet our demand, therefore we have been importing more power in the last couple of years than we have in the past," Sangxayarath told Reuters on the sidelines of the Future Energy Asia conference.

Looking to cut imports, Laos is building 720 MW of hydropower projects, due to be completed by the end of next year, Sangxayarath said.

To improve the reliability of generation amid erratic rainfall patterns, the country wants to increase the share of non-hydro generation to 30% by 2025 from a little over 20% currently. With no major projects in the pipeline, that looks unlikely.

"Coal, there are potential projects, but due to the push back by different organisations, getting financing for coal during this period is very, very difficult," he said, adding that the country was also trying to build solar-hydro and wind-hydro hybrid projects.

Laos last year said it would not supply power to cryptocurrency projects that had yet to start operations. While the order is still in place, it is still actively considering new investment proposals and looking to boost power availability, Sangxayarath said. (Reporting by Sudarshan Varadhan; Editing by Sonali Paul)