Integrated electricity planning: introduction & demonstration Tira Foran, PhD Unit for Social and Environmental Research, Chiang Mai University Mekong Energy and Environment Network Workshop 14 May 2009

Purpose of talk Review power development plan (PDP) process in Thailand Introduce IRP ~ integrated electricity resource planning Demonstrate how it might work Review governance challenges

Motivation: during the 1990s, Thailand’s EGAT built a controversial dam... During the “5 month, 9 day rally” Dec Source: Buchita After the “win-win” opening solution, June 2004

... But also successfully implemented energy efficiency!

Can Thailand find more clean, efficient, sustainable options? Integrated electricity planning may help What is it? Who does it and in what context? What governance obstacles exist?

Part I: Review and critique of Thailand’s (EGAT’s) PDP

EGAT’s planning objectives

EGAT’s PDP: Six limitations 1 Definition of basic objectives 2 Costs 3 Role of energy efficiency 4 Role of renewable energy 5 Role of scenario thinking ( เหตุการณ์จำลอง ) 6 How to deal with risks

1 Basic emphasis is on supply-side options

Thailand power development plan (EGAT 2007)

Example of “ 20-year load forecast and resource plan”

Basic emphasis is on supply-side options

2 PDP still discloses little data to public about costs  Real fuel price assumed constant  or slight increase for inflation Cost is financial cost of EGAT, not society’s economic costs  Many externalities not included

3 PDP still does not take energy efficiency seriously EGAT’s DSM division does a 5-year plan, but PDP is a 15-year plan Energy efficiency is not modeled in a detailed manner  Assumption that “elasticity” of economy will improve  Top-down approach

... But top-down assumptions must link to bottom- up program design!

Energy Efficiency is <50% of cost of new supply capacity or energy Source: EGAT’s DSM Division 2008

4 PDP still does not consider renewable energy seriously Many small power producers (“non-firm”) are not counted as supply option in the PDP Very small power producers (VSPP) are not counted as supply in the PDP  They are accounted for on the demand-side (which is external to the optimization)  analyzed in a superficial manner in the Load Forecast Long-term planning by Dept of Alternative Energy Dvmt (DEDE; กรม พพ.) not in the PDP

5 Limited use of scenario thinking  “Scenarios”  Stories about different possible futures (social and/or technical), based on what is already known  Help improve understanding about different factors that planners cannot control  Economic conditions  Fossil fuel markets  Political changes  For example: How would the power system look if...  EGAT cannot just build any power station it wants to  renewable energy is subsidized more strongly (“feed-in tariff”)  energy efficiency is planned and implemented more vigorously

6 PDP does not explicitly deal with risk

Reasons for limitations of PDP  Institutional limitations 1  Financial model: rate-of-return หรือ ROIC  Institutional limitations 2  Many units, many plans, no integration  Power of discourse ( วาทกรรม )  “energy efficiency is not as reliable as building new power plant”  If you want cheap electricity, you need to build large power stations

Part II: Introducing integrated electricity resource planning

IRP: what is it? Comprehensive options assessment Balanced treatment of demand-side and supply- side options Invest in least-economic cost first Can be done for energy, water

IRP: who typically does it & in what context? Requires engineering and economic data... utilities typically do it In North America: required to do so by strong regulators Hasn’t always been popular  belief that privatization makes detailed planning unnecessary

Demonstration of IRP Work in progress (see Foran 2008 [in Thai]) How much electricity (kWh, MW) from large stations could be avoided if Thailand were to attain its ‘practically achievable potentials’ in  energy efficiency +  renewable energy +  CHP (combined heat and power) ? Timeframe: ; (for RE) Practically achievable potential  It is < Commercially viable potential < Economically viable potential < Technical potential  การประหยัดพลังงานไฟฟ้าที่คุ้มค่าทางการเงินและบรรลุได้ในทาง การตลาด ... thus it is an estimate

IRP can be designed as an integrated, participatory assessment

Step 1 Create reference scenario Business-as-Usual (BAU) scenario = Thailand power development plan (EGAT 2008)

Step 2 Review demand forecasting I took the official load forecast (pink line) as a BAU scenario Ideally forecasting would be bottom-up (based on regular user surveys) as well as top- down (macroeconomic)

Step 3 Estimate the achievable potential energy efficiency options Review literature  Du Pont 2005  Foran, du Pont & Parinya 2006  Bundit Limmeechokchai 2006

Review energy efficiency cost data Lack of recent data But Thai data show energy efficiency is much cheaper than new supply International data confirm SourceCostNotes du Pont THB / kWhbased on EGAT (2000) & earlier EGAT THB/ kWhIncludes new ESCO start-up 0.49 THB / kWhEGAT’s Long-run marginal cost

Energy efficiency options: achievable potential by 2018

Step 4 Estimate the achievable potential renewable energy options Review literature  du Pont 2005  JGSEE 2007  Jepsen et al. 2006

Review renewable energy cost data (THB / kWh)

Step 4a Estimate the achievable potential renewable energy options New modeling: explore effect of different prices for renewable energy, biomass feedstock and crude oil Same model as Jepsen et al. (2006), revised assumptions  Crude oil  Biomass  Base tariff  Feed-in tariff

Achievable renewable energy potential Case: year-1 base tariff: 3.34 THB/kWh + Feed-in tariff: Southern provinces rate Assumptions: Crude oil: 110  146 USD/barrel Biomass: 1000  1200 THB/ton

Step 5 Estimate achievable potential of combined heat and power (CHP) options Review literature: Dusan Gvozdenac et al  Study of Thailand’s existing ‘designated buildings’  42% are suitable for CHP installation  Estimated 3633 MW (23,565 GWh) potential I took 30% of this as achievable potential

Step 6 Review other data for near-term achievable potential Ministry of Energy has small power producer (SPP) and very small power producer programs (VSPP) Private-sector apply to sell power to grid Popular with private-sector (favorable prices: ‘feed-in tariffs’) Some applications already in PDP; many not NGOs criticize arbitrary limits on SPP (= 1700 MW) I assumed all bids submitted to Ministry but not yet in the PDP power are achievable ‘Near-term potential’ : 3023MW

Step 7 Sum the clean, distributed, domestic options achievable by 2018 Near-term potential: 3023 MW (previous slide) Medium-term potential: 4890 MW Total clean domestic achievable by 2018: 7913 MW (~ 33,000 GWh)

Step 8 Compare clean domestic options with reference case (EGAT 2008) Thailand needs total net new supply of 30,413 MW, according to reference case  EGAT’s PDP 2007, Revision 1 Clean domestic options: total achievable by 2018 = 7913 MW (~ 33,000 GWh)  Can substitute large central stations (coal, gas, hydropower, nuclear) If demand grows according to reference case (5.5% per annum)  tremendous challenge! But it may not New imports – hydro + coal Clean domestic (EE +RE +CHP

If all clean domestic (7913 MW) substitutes for imports, might avoid: 2011 ~ Nam Ngum 2 (597 MW) 2012 ~ Theun Hinboun Expansion (220 MW) 2013 ~ Nam Ngum 3 (440 MW) + Hongsa 1 (490MW) 2014 ~  Either: Nam Theun 1 (523 MW), Nam Ngiap (261 MW), Nam Ou 1 (200 MW)  Or: Hongsa 2 & 3 (2 x 490 MW) 2015 ~ Nam Ou 2 (843 MW) 2017 ~ Unspecified (510MW)

But may also want to use clean domestic (7913 MW) as substitute for ‘dirty’ domestic Reference case:  Nuclear: 4000 MW (2020 and 2021)  Old coal: Mae Moh  New thermal (coal + natural gas)

IRP: governance challenges  Basic regulatory framework = “rate-of- return”  Profits are a fixed percentage return on invested assets (8.4%)  Institutional preference for large scale, supply- side options  Political tension  Challenges are institutional, but also involve powerful discourses E.g., ‘Energy efficiency not as reliable as power plant’ ‘Very small power producers not as reliable’

IRP: institutional challenges Preference for large scale, supply-side options Governance problems  Basic regulatory framework = “rate-of- return”  Lack of meaningful participation  Conflicts of interest  La rge scale (PDP model options): 700 MW Coal-Fired Thermal Power Plant 700 MW Gas-Fired Combined Cycle Power Plant 230 MW Gas Turbine Power Plant 1,000 MW Nuclear Power Plant  Demand forecast: Low Medium (“Base”) High

Summary: clean, distributed, domestic options achievable by 2018 for Thailand Total clean domestic achievable by 2018:  7913 MW (~ 33,000 GWh)  Based on detailed review + modeling Near-term potential:  3023 MW (SPP + VSPP programs) Medium-term potential:  4890 MW (our analysis)  Enhanced feed-in tariffs for RE  Enhanced support for EE Already have successful DSM Need to implement new building code Need to mainstream EE building design

Summary: IRP presents opportunities & challenges Opportunities (1) Provides structure for meaningful public participation - Lots of interest in civil society (2) Coherent framework - Boost legitimacy - helps identify gaps in analysis (3) Helps communicate to policy-makers Challenges (1) Legitimacy (2) May need additional data (3) Time-intensive; requires modeling

IRP should be designed as an integrated, participatory assessment

Recent + recommended steps for pro- sustainability advocacy in Thailand Build good relations with elite actors  Energy Regulatory Commission: Palang Thai, CMU-USER, AWISH organized 2008 study tour to USA + January 2009follow-up visit by U.S. experts  Demand Side Management Division with EGAT Promote integrated electricity planning to other actors  Private sector: SPP + VSPP Increase public interest in energy efficiency and micro- generation