Grid-tied decentralized power generation: experience from Thailand and Tanzania Chris Greacen Palang Thai AEPF 9 17 October 2012 Vientienne, Lao

Outline What is decentralized electricity? Practical policies for decentralized electricity –Thailand –Tanzania

What is decentralized electricity? Decentralized electricity: generating electricity from many small, local energy sources –High efficiency cogeneration (CHP) –On-site renewable energy –On-site power Centralized electricity: large power plants generally located far from loads –Coal –Nuclear –Large hydropower –Natural gas (CCGT)

4 Decentralized Technologies

5 The Move to Decentralized Technology vs.

Energy efficient end-use, or dispatchable loads Solar Wind power Biomass Customers Power plant Old way New way Power plant Biomass

Cost and size of thermal power plants from 1930 to 1990 Initial cost declines through increasing scale. 1990s through mass production of smaller turbines Source: Hunt, Sally and Shuttleworth, Graham. Competition and Choice in Electricity. (England, John Wiley & Sons, 1996).

Decentralized generation brings down costs Ireland – retail costs for new capacity to 2021

Worldwide energy waste Electricity Generation Worldwide (TWh) (Source: International Energy Agency 2002)

Cogeneration (Combined Heat and Power – CHP)

14 MW cogeneration at University of Massachusetts, Amherst, USA 75% efficient. Provides heating for 200 buildings

12 Denmark – a transition to decentralized energy Source: Danish Energy Center

CHP cools Bangkok’s airport Suvarnabhumi International Airport in Bangkok cooled by district cooling system powered by a CHP that also generates 52.5MW of electricity.

Decentralized electricity policies and outcomes -- Thailand

Practical policies to support distributed electricity Access to grid Feed-in tariffs Low cost financing Tax incentives Thailand’s SPP+VSPP

$ Access to grid

Technical regulations: Allowable voltage, frequency, THD variations Protective relays Communication channels Commercial regulations: Definitions of renewable energy, and efficient cogeneration Cost allocation Standardized tariff determination Invoicing and payment arrangements Arbitration $ + Standardized Power Purchase Agreement (PPA) Access to grid

Small Power Producer (SPP) regulations: Started 1992 Fossil-fuel cogeneration and renewable energy up to 90 MW (export to grid) Low tariff offered for “non-firm” generators made it difficult for most renewables. Access to grid

Bangkok Cogen, Rayong, 115 MW Map Ta Phut Olefins, Rayong, 70 MW Pluak Daeng, Rayong 70 MW Laem Chabang, Chonburi 100 MW 4494 MW online MW with signed PPAs... 75% fossil fuel

Evolution of Thai VSPP regulations 2002 – VSPP regulations drafted, approved by Cabinet – Up to 1 MW export, renewables only – Tariffs set at utility’s avoided cost 2006 – Up to 10 MW export, renewables + cogeneration – Feed-in tariff “adder” 2009 – Tariff adder increase, more for projects that offset diesel for English version of regulations, and model PPA Access to grid Feed-in tariffs

EPPO21 Feed-in tariffs

Feed-in tariff policies worldwide Feed-in tariffs

Thai Government loans funds at 0% interest to commercial banks for investment in: Energy efficiency improvement projects Renewable energy development and utilization projects January 2003 – present 7000 M Baht 11 local financial institutions have participated. Max loan amount: 50 MB Max. interest rate: 4% Max. loan period: 7 years Revolving Fund Low cost financing

24 A source of venture capital for ESCOs to jointly invest with private operators in energy efficiency & renewable energy projects. The program targets SMEs & small projects. Investor Technical Assistance ESCO Venture CapitalEquipment Leasing Carbon Market Equity Investment Credit Guarantee Facility Fund Manager Investor ESCO Fund Investment Committee Energy Conservation Promotion Fund ESCO Fund Low cost financing

25 Thailand’s Board of Investment (BOI)’s tax incentives for renewable energy projects: Corporate income tax holidays up to 8 yrs. Additional 50% reductions of corporate income tax for 5 yrs Import duty reductions or exemptions on equipment and raw materials Tax Incentives Tax incentives

Bangkok Solar 1 MW PV Signed PPAs for 767 MW of PV (SPP + VSPP)

Lopburi 73 MW PV (over 1,000 rai = 160 hectares) Project size: 1 MW Uses self-manufactured a-Si Signed PPAs for 767 MW of PV (SPP + VSPP)

Solar thermal electricity 5 MW, 135 MW planned 900 Million baht (180 baht/watt) but costs expected to decrease 20 to 30% to 135 baht/watt Commissioned in Kanchanburi on Nov 2011 Signed PPAs for 1343 MW of solar thermal

Biogas from Pig Farms Reduces air and water pollution Produces fertilizer Produces electricity 8 x 70 kW generator Ratchaburi

Uses waste water from cassava to make methane Produces gas for all factory heat (30 MW thermal) + 3 MW of electricity 3 x 1 MW gas generators Korat Waste to Energy – biogas … an early Thai VSPP project

Rice husk-fired power plant 9.8 MW Roi Et, Thailand

Feb 2007 Thailand VSPP Status 18 MW online

June 2008 Thailand VSPP Status

June 2009 Thailand VSPP Status

Mar 2010 Thailand VSPP Status

Sep 2011 Thailand VSPP Status 1056 MW online (58-fold increase since 2007) PPAs signed for additional 4318 MW

Solar trends in Thailand

Evolution of Tanzania SPP regulations Approved by regulator August 2009 Up to 10 MW export, renewables & cogeneration SPP Tariffs at average of LRMC and SRMC – Grid-connected SPP tariff (2012): $0.096/kWh – In rural mini-grid areas offsetting diesel (2012): $0.243/kWh 3 SPPs in operation, 12+ in pipeline by October for English versions of regulations, and model PPAs

Policies to encourage decentralized mini-grid electricity in rural areas Allow off-grid generators to pick their own retail tariff (subject to transparent regulatory approval) – Simple 1-page spreadsheet for regulators to do this: (developed by World Bank for use in Africa)

Policies to encourage decentralized electricity in off-grid areas Lower investment risk to mini-grid generator operators in event that “big grid reaches mini-grid” by: – Allowing formerly off-grid generators to sell back to the grid; and/or – Allowing mini-grid operators to purchase wholesale electricity for resale to retail customers.

300 kW – remote mini-grid LUMAMA hydropower project Mawengi village, Njombe, Tanzania Micro- hydropower

TPC, Moshi 17.5 MW – selling 4 MW to main grid Cogeneration Sugarcane bagasse 43

Mwenga 4 MW hydro expected to serve 1000 customers by Feb 2013

Summary Access to grid Feed-in tariffs Low cost financing Tax incentives Remote mini-grids: –Flexibility in retail tariff setting –Reduce investment risk by working out details of what happens when “big grid” reaches mini-grid

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