Dam projects require serious debate
Areview of Thailand’s energy plans reveals an abundant electricity supply that vastly exceeds demand. So in the midst of this energy glut, why are we pushing hard to build more problematic hydroelectric dams in our neighbours’ territories?
In Myanmar, the Electricity Generating Authority of Thailand (Egat) has been pushing forward the controversial Mong Ton Dam — a project it has jointly invested in with three other investors — on the Salween River in Myanmar’s war-torn Shan state, not far from the Thai border. Egat plans to purchase 90% of the electricity from the dam.
Meanwhile, the 1,360MW Hat Gyi Dam, a joint investment by Thailand, China and Myanmar on the Salween River in Myanmar’s Karen state, has stalled due to ongoing conflict between the Myanmar army and armed ethnic groups. According to Energy Ministry permanent secretary Areepong Bhoocha-oom, Thailand is waiting for Myanmar to ease the tensions with ethnic minorities before reviving this long-awaited project.
Close to Thailand’s northern border, the 1,285MW Xayaburi dam on the Mekong River in Laos is planned for completion in 2019. As the dam’s main client, Egat has signed a 29-year power purchase agreement (PPA) with the developer, a Thai consortium led by Ch Karnchang Plc.
Another proposed hydropower project on the Mekong mainstream, the 912MW Pak Beng Dam in Laos, would also export electricity to Thailand. It awaits construction by Thai and Chinese developers, despite serious concerns over environmental impacts in Thailand. None of these projects is controversy-free. The Mong Ton Dam has faced widespread resistance from local communities due to concerns over extensive social and environmental impacts, which has dogged progress. The Thai Energy Ministry permanent secretary now says that at Myanmar’s request, the hydroelectric dam will be reduced from 7,000MW to 3,000MW and divided into two smaller dams to reduce social and environmental impacts. But no environmental impact assessment studies are available on the new design, and the project continues to face local opposition.
The Xayaburi and Pak Beng dams in Laos face ongoing opposition from Thai communities along the Mekong, and are the subject of lawsuits in the Thai Administrative Court.
Despite the rush to push forward these projects, Egat recently admitted Thailand’s peak power demand has dropped dramatically and the country needs to revise its power development plan (PDP). Key reasons cited for the decrease in demand are lower-than-expected GDP, a slowdown in economic growth, and increased prominence of alternative energy sources, such as rooftop solar power. According to Egat, Thailand’s current installed capacity is 41,903MW, while peak demand for this year is 28,578MW. This means Thailand’s reserve margin is currently as high as 46.6%.
The country has almost two times the installed capacity that it actually needs. So why the rush to push for more power plants in neighbouring countries?
“The rationale of the energy planner tends to be that future demand will eventually increase anyway, and building new capacity now is cheaper than doing so later, regardless of future uncertainty. For private investors, profits are guaranteed by PPAs which will pass additional costs on electricity consumers or externalise them to the local environment,” says energy advocate Witoon Permponsacharoen of the Mekong Energy and Ecology Network.
Nowadays, he said, public debate on the pros and cons of constructing power plants is critically absent, especially when these plants are located outside Thailand.
According to Mr Witoon, the landscape of decision-making on building new power plants has changed in recent years. In the past, a project developer had to carefully analyse and weigh up a project’s costs and benefits. Financiers needed to review the project’s risks, and economic viability was a key issue. Now, a deal for a power plant in a neighbouring country can be made by just a handful of people, with little regard for rigorous cost-benefit and risk assessments, or public scrutiny and debate.
Mr Witoon emphasises a single-buyer system is pushing these developments forward, countering market economy principles. The state electricity utility is the key buyer and the guarantor of new projects. Once a PPA is signed, the developer secures a 25-30-year financial commitment from the state utility which will buy the electricity — regardless of the project’s economic viability. Banks are also secured as the utility guarantees the project loans.
“There is no bidding process or competition mechanism for projects developed abroad, only PPA deals. No one takes on the risks except we consumers who will pay energy bills,” he said. This is reflected in a plan for a proposed 2,400MW coal-fired plant in Koh Kong, Cambodia. An energy industry source was cited in the media as saying the plant and its 400-km transmission line to the Thai border would boost the electricity tariff in Thailand in the next 25 years. The source said the deal has been revived recently and negotiations are proposed for completion by the end of October.
There are also unused energy reserves elsewhere in the region. News reports in July indicate that China has offered Thailand electricity exports from an energy glut in its southwestern provinces at a selling price that is cheaper than electricity currently generated in Thailand.
With the drop in power demand and the high reserve margin, Thailand may need new markets to absorb excess power that Egat has committed to purchase from new power plants. In June, the Thai Energy Ministry announced plans to promote development of the “Asean Power Grid”. Under a new agreement, Thailand would act as a middleman, transmitting electricity it purchases from Laos through its national grid to Malaysia. The initial proposal is to transmit 100MW to the southern neighbour.
Thailand’s energy planning and approvals process needs careful scrutiny — not least from communities who bear social and environmental impacts of poorly planned projects. It’s high time to bring greater transparency and public debate to this issue. Thailand’s Electricity Regulatory Commission is a key channel to raise questions over decision-making and approval for new projects. The first question should be whether the proliferation of dams and power plants is needed in the first place.