The Study of Alternatives concluded that as the then existing power demand of the Lao PDR was approximately 100 MW - and was expected to increase to no more than approximately 350 MW by the year 2010 - the hydropower and lignite resources in the country would far exceed the domestic requirements over the foreseeable future.

As such, the development of new large-scale hydroelectric power projects for export was confirmed by the Study of Alternatives as the most viable option for the long term economic development of the Lao PDR as the dams would provide for the sale of competitively priced electricity to neighbouring countries, generating foreign exchange revenue but without impacting the non-sustainable resources of the country.

The report further considered that, as at 1997 the GOL had developed approximately 2.3% of the potential hydrological resources and, therefore, there was significant opportunity to develop this further. The existing development comprised the Nam Ngum 1 150 MW project, the Theun Hinboun 210 MW project, the Nam Leuk 60 MW project and the Xe Set 45MW project; the Houay Ho 150 MW project reached commercial operations after the publication of the report.

The Study of Alternatives conducted a detailed assessment of all possible hydropower projects under the GOL’s consideration. These were analysed against a number of factors, including environmental aspects arising from existing and proposed natural conservation areas.

Each of the potential projects was evaluated using the same standards through comprehensive analysis on the basis of:

    * the project design as proposed by the developer;
    * the state of preparedness of the project;
    * the cost of the project;
    * the hydrological impact;
    * the environmental and social impact;
    * the regional development contribution; and.
    * the expected revenue for the GOL.

The attractiveness of each project was then ranked according to the collective performance of the projects making up the scenario. Therefore, the most attractive group of projects was not necessarily simply the group with the least cost, but the ones with the best all round benefits.
The overall project comparison matrix presented in the Study of Alternatives indicated that the Project along with Theun Hinboun ranked the highest in terms of technical, environmental, social, financial and economic criteria. This was a clear recommendation for the development of the Nam Theun 2 Project. The Lahmeyer and Worley study also found that the most attractive scenarios – such as the Project – did not necessarily deliver the maximum revenue to the GOL but contributed the maximum benefits to the Lao PDR and Thailand.
The analysis also reviewed three alternative project options for the Nam Theun 2 dam, two other potential project configurations, and an alternative plan of there being no project.

The three alternative project options that were considered were:

   * the construction of upstream reservoirs in each of the major tributaries of the Nakai Plateau, which was rejected because of the encroachment of the      reservoirs into the Nakai-Nam Theun NBCA and the high cost entailed in building a number of dams and associated reservoirs;
   * the diversion of water flows into the Nam Hinboun instead of the Xe Bang Fai, which was rejected because of insufficient discharge capacity of the Nam
    Hinboun, uncertain geology and economic costs; and
   * the development of the Nam Theun 2 Project as a pumped storage scheme, which was rejected as there were more suitable sites near Theun Hinboun.

The two other project configurations that were considered were:

   *  a dam at Ban Signo with a full water supply level of 532 masl and a reservoir area of 211 km2; and
   *  a run-of-river configuration with a full water supply level of 523 masl and a reservoir area of 37 km2.