Nat­u­ral xgen­er­a­tion,

Norway-Asia Business Review - - Foreword -

The Depart­ment of Min­eral Fu­els re­ported last year the coun­try has 8.5 tril­lion cu­bic feet of proven re­serves, or seven years of power pro­duc­tion at 2015 rates. a year. It is sched­uled to be ready for op­er­a­tion by 2022, said En­ergy Min­is­ter Anan­ta­porn Kan­ja­narat.

Thai­land’s Power De­vel­op­ment Plan (PDP) for 2015-2036 projects the coun­try im­port­ing 22 mil­lion tonnes of LNG a year, up from 3 mil­lion now. PTT was also ap­proved re­cently to in­crease its LNG im­ports to 5 mil­lion tonnes per year, sign­ing 15-20 year con­tracts.

The coun­try is the sec­ond-largest net oil im­porter in South­east Asia be­hind Sin­ga­pore. Thai­land has proven oil re­serves of 3.86 bil­lion bar­rels. Most of the Thai­land’s nat­u­ral gas fields are off­shore in the Gulf of Thai­land, and it im­ports a hefty chunk from Myanmar.

PTT’s up­stream sub­sidiary PTT Ex­plo­ration and Pro­duc­tion has a stake in many of Thai­land’s op­er­a­tional nat­u­ral gas fields, in­clud­ing Bongkot, the coun­try’s largest. But for­eign com­pa­nies sup­ply the bulk of the coun­try’s nat­u­ral gas out­put, with Chevron ac­count­ing for 70% from 22 off­shore fields.

Some 70% of Thai­land’s en­ergy comes from nat­u­ral gas, fol­lowed by 10% from lig­nite, 5% from im­ported coal, 4.5% from Laos hy­dropower, and 4% from lo­cal hy­dropower.

The government has set ex­tremely am­bi­tious goals for in­creas­ing re­new­able en­ergy us­age with a tar­get of 25% of to­tal con­sump­tion by 2021, up from 10% now. Biomass is ex­pected to pro­vide over 60% of this en­ergy, re­flect­ing Thai­land’s de­pen­dence on the agri­cul­tural sec­tor and its ac­cess to large amounts of agri­cul­tural waste.

En­ergy an­a­lysts be­lieve Thai­land has the biomass sources to gen­er­ate be­tween 4,000 megawatts and 7,000 MW per year. But folks in the biomass in­dus­try re­main frus­trated by a lack of government sup­port, cit­ing com­mu­nity re­sis­tance to biomass plants be­cause of a lack of public par­tic­i­pa­tion.

Na­tee Sithiprasasana, the Fed­er­a­tion of Thai In­dus­tries vi­cepres­i­dent, told the Bangkok Post the coun­try lacks mech­a­nisms that bring busi­ness leaders and com­mu­ni­ties to the ta­ble to dis­cuss and ex­change in­for­ma­tion be­fore in­vestors buy land and seek government con­ces­sions. Lo­cals refuse to ac­cept biomass power plants in their com­mu­ni­ties with­out en­vi­ron­men­tal im­pact as­sess­ments, even from small projects of less than 10 MW, he said.

This lack of in­ter­ac­tion leads de­vel­op­ers to keep their projects se­cret for fear of com­mu­nity protests or

spec­u­la­tors driv­ing up land prices. The government needs to fa­cil­i­tate ex­changes be­tween com­mu­ni­ties and de­vel­op­ers if it wants the lat­ter to help build the coun­try’s en­ergy capacity, said Mr Na­tee.

Though Thai­land has vast biomass source ma­te­rial, pioneers in the in­dus­try have com­plained that sup­ply of that ma­te­rial is wildly in­con­sis­tent and the price also varies con­sid­er­ably, hold­ing back de­vel­op­ment of the sec­tor.

In ad­di­tion to set­ting up an LNG im­port­ing busi­ness, the Elec­tric­ity Gen­er­at­ing Au­thor­ity of Thai­land (Egat) aims to de­velop another 2,000 MW of re­new­able en­ergy capacity by 2026, up from its cur­rent to­tal of 2,948 MW that is mostly from hy­dropower plants.

Thai­land is one of the world’s top 10 play­ers in Clean De­vel­op­ment Mech­a­nism (CDM) with 64 reg­is­tered projects with the UN Frame­work Con­ven­tion on Cli­mate Change. The Thai­land Green­house Gas Man­age­ment As­so­ci­a­tion has ap­proved 155 CDM projects with a com­bined capacity to lower car­bon diox­ide emis­sions by 9.47 mil­lion tonnes a year. Bio­gas projects dom­i­nate the reg­is­tra­tions with a 60% share while biomass makes up 23%. CDM is the mech­a­nism that al­lows in­dus­tri­alised na­tions to buy car­bon cred­its from projects in de­vel­op­ing coun­tries to meet their emission reduction com­mit­ments un­der the Ky­oto Pro­to­col by 2012.

The government sup­ports the de­vel­op­ment of re­new­able and non­con­ven­tional elec­tric­ity pro­duc­tion through its Small Power Pro­ducer (SPP) pro­gramme. SPPs can sell elec­tric­ity to Egat for dis­tri­bu­tion or di­rectly to con­sumers near their plants pro­vided it is gen­er­ated us­ing hy­dro, biomass, or ther­mal co-gen­er­a­tion. The buy­back rate is based on the cost to Egat. For ex­am­ple, the En­ergy Min­istry promised to buy back wind power from SPPs for 3.5 baht per unit for 10 years. The tar­iff has since risen to 6.06 baht per unit.

Since the in­tro­duc­tion of its SPP pro­gramme in 2006, Thai­land has signed con­tracts to de­velop 6,300 MW of re­new­able gen­er­a­tion. Some 1,800 MW are for so­lar en­ergy but only 1,300 MW is on­line, while 2,452 MW is from biomass. The En­ergy Min­istry’s Al­ter­na­tive En­ergy De­vel­op­ment Plan calls for 3,000 MW of wind en­ergy by 2036, but Thai­land cur­rently has only 224 MW of in­stalled capacity (see Ta­ble 1). The pro­gramme used the bonus model of feed-in tar­iff de­sign where the fi­nal tar­iff paid is com­posed of sev­eral adders on top of the avoided whole­sale cost of gen­er­a­tion. In 2016 the scheme changed to a feed-in tar­iff plus a pre­mium for biomass, bio­gas and so­lar power projects of 10 MW and be­low.

The tar­iff pro­gramme con­tained a spe­cific adder or bonus for off­set­ting diesel-fired gen­er­a­tion. There was also a lo­ca­tion adder or risk pre­mium for projects in the Deep South and an adder to com­pen­sate for fos­sil-fuel price vo­latil­ity. To in­crease project di­ver­sity, Thai­land pro­vided government-backed loans at 4% in­ter­est up to THB 50 mil­lion per project.

In the fu­ture, lev­elised elec­tric­ity costs are pro­jected to be in the range of LNG.

As at­tempts to ini­ti­ate nu­clear and coal plants do­mes­ti­cally face vo­cif­er­ous op­po­si­tion, Thai­land ap­pears wed­ded to nat­u­ral gas im­ports. The coun­try wants to in­crease its nat­u­ral gas con­tracts in Myanmar from 5,500 MW, es­pe­cially with the mas­sive planned deep-sea port in Dawei re­ceiv­ing sub­stan­tial Thai in­vest­ment. And Egat ex­pects 1,220 MW of its 7,000 MW sup­ply con­tracted from Laos hy­dropower to come from the con­tro­ver­sial Xayaburi dam slated for com­mer­cial op­er­a­tion by 2019.

The En­ergy Min­istry re­cently de­layed plans for five nu­clear plants by three years to 2023, and post­poned plans for nine coal-fired plants to 2019.

Egat wants to ex­pand the capacity of its Mae Moh coal-fired com­plex in Lam­pang, up to 2,400 MW from 600 MW now. The com­pany plans to switch to a clean coal IGCC sys­tem with in­struc­tion from Ja­pan.

Thaioil, a re­fin­ery in which PTT owns 51%, plans to spend USD 300 mil­lion to build two co-gen­er­a­tion power plants that were re­cently granted li­cences from Egat.

Op­po­nents of nu­clear power and coal have ques­tioned the PDP’s fore­casts call­ing for Thai elec­tric­ity de­mand to aver­age growth of close to 2000 MW per year through 2021. Elec­tric­ity de­mand over the last decade has in­creased 4.9% per year, plateau­ing the last few years, ac­cord­ing to the En­ergy Pol­icy and Plan­ning Of­fice. Load growth ap­pears to be slow­ing and the government’s En­ergy Ef­fi­ciency Pro­gramme aims to re­duce en­ergy us­age by 30% (from 2010 lev­els) by 2036.

Egat claims re­new­able en­er­gies need to be more re­li­able and less costly to make up more of the coun­try’s power port­fo­lio, as so­lar pan­els have to be im­ported and the cap­i­tal re­quired for re­new­able projects is mas­sive. Government in­cen­tives will en­able re­new­able en­ergy to in­crease, but the sec­tor makes up such a small por­tion of the coun­try’s capacity it is likely to be in­suf­fi­cient to meet de­mand in the near fu­ture, said Egat.

In Krabi prov­ince, where the government’s plan to lo­cate a coal­fired power plant has faced poi­sonous op­po­si­tion, a lo­cal group called the Public Pol­icy Foun­da­tion re­leased a Green PDP that showed re­new­ables, mainly biomass and bio­gas, could gen­er­ate enough capacity af­ter three years of op­er­a­tion to power the en­tire prov­ince. The re­new­ables could pro­vide 287 MW, roughly dou­ble the peak en­ergy de­mand of the prov­ince in 2015.

But the government has stopped buy­ing en­ergy from biomass pro­duc­ers be­cause it says the power lines are full, charged the Krabi Provin­cial Ad­min­is­tra­tion Or­gan­i­sa­tion. The Provin­cial Elec­tric­ity Au­thor­ity must in­stall more power lines to en­cour­age the re­new­able in­dus­try, said the or­gan­i­sa­tion.

Safe En­ergy Group, the biomass power plant op­er­a­tor, is spend­ing THB 1.2 bil­lion to ex­pand pro­duc­tion in the Deep South where it op­er­ates 40 MW. The group plans to bid for 36 more MW of biomass power plants in the re­gion, which are bid out by the En­ergy Reg­u­la­tory Com­mis­sion this year. State agen­cies are ex­pected to call bids for a com­bined 400 MW of biomass and bio­gas power plants this year.

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