DECISION TIME
Three units coming to the end of concessions
Energy policymakers consider what to do about three licences for new power plants in the central region nearing expiry.
Energy policymakers are considering what to do regarding three licences for new power plants in the central region that are set to expire in the next few years.
The plants are located in Samut Prakan and Ratchaburi provinces, consisting of 350 megawatts from Eastern Power and Electric Co (EPEC); 700MW from Tri Energy Co (TECO), a subsidiary of Ratchaburi Electricity Generating Holding Plc (Ratch); and 1,400MW from Ratchaburi Power Co, which is wholly owned by Ratch.
A source familiar with the matter said the policymakers will consider two forms of new licences for private investors: renew concession contacts or new auction rounds to seek new players before the three concessions expire.
EPEC and TECO were granted 20-year concession licences as independent power producers (IPPs) from the state-run Electricity Generating Authority of Thailand (Egat) in 1991. Both power plants started commercial operation dates (CODs) in 2000.
Under the concession contact, the 20-year period begins from the first operation day.
Ratch’s first unit, also a subsidiary of Egat, started the COD in 2003, so the plant will expire in 2023.
Moreover, policymakers are also considering expanding capacity of coal-fired power plants operated by BLCP Power Co.
The company is operating at a capacity of 1,350MW in Map Ta Phut, Rayong and it will add a further 1,000MW, for which the environment and health impact assessment report has already been completed.
“They have yet to come to a final decision because all licences must be a part of the wider discussion with energy policy agencies and stakeholders, after which the decision must be proposed to the prime minister, so they have to wait until the end of meeting,” the source said.
According to the source, tentative consideration will be done by the Energy Policy and Planning Office (Eppo) and Egat, and both agencies will consider many factors.
The power market has an oversupply that is expected to persist for the next 10 years.
Thailand’s reserve of power generation is still over 40% and will rise to 50-60% within the next 4-5 years.
Most of the IPPs are located in the central region of the country.
However, in 2013 when Electricity Generating Plc (Egco), a firm affiliated with Egat, saw licences expire, policymakers renewed only one power plant in Khanom, Nakhon Sri Thammarat, while the Rayong unit’s licence was automatically ended because policymakers said there was a high density of power plants in the central region, which covered eastern and western areas.
After receiving the studies from Eppo and Egat, the National Energy Policy Council will soon come to a final decision.
“The most crucial factor in renewing contacts is the power tariff, because the policymakers need to trim down the tariff to maintain consumers’ power bills, so licence renewals may have several conditions for consideration,” the source said. “But the auction to develop on new sites for power plants will be tough and risky, as local communities will oppose the projects and always say ‘not in my backyard’.”
Kijja Sripatthangkura, Ratch’s chief executive, said the company already submitted a proposal to Egat for policymakers’ consideration, but he would not reveal further details.
“Any renewal of power plants also depends on new revisions to the national power development plan,” Mr Kijja said.
He said TECO, a part of Ratch’s business unit, is ready should policymakers open new auctions for the concession, and Ratch is confident that it will offer power tariffs lower than those of new players.
Furthermore, TECO has sufficient plots and financial capabilities to double capacity to 1,400MW, as policymakers require investment per MW of roughly US$2 million (66.5 million baht).
Ratch is planning to expand total operating capacity to 7,500MW by 2018 and reach 10,000MW by 2023.