1. Clean energy in Thailand: Potential, Planning and Policy
Asia Regional Energy Trend Seminar
8 November 2004
Platani Resort & Spa, Rayong – Thailand
Chris Greacen
Palang Thai
Notes – I’m going to talk about

2. Outline Context Potential Planning Policy Actual vs. potential
Conventional approach
Integrated Resource Planning (IRP)
Risk
Policy
Access
Tariff

3. Context – the electricity supply industry in Thailand
SPPs
(11%)
EGAT
(51%)
EGCO
(10%)
RATCH
(16%)
IPPs
(10%)
Import
(2%)
Generaration
(% capacity)
Self regulated monopolies
Transmission
EGAT (100%)
Distribution
PEA
(63%)
MEA
(35%)
Direct Customers
(2%)
Thailand’s power sector is composed of self regulated state-owned monopolies. Gen is dominated by EGAT + subsideraries EGCO & RATCH. Trans is 100% EGAT. Dist is dominated by MEA & PEA. Little intererest in splitting trans & gen, or in forming regulatory body.
Users
Users

4. Clean energy potential
Actual vs. potential
Renewables
DSM
Cogeneration

5. Estimate of installed grid-connected renewables in Thailand (2004)
Resource
Capacity (MW)
Biogas 7
Biomass
215 (to grid) (not including 419 MW self-gen)
Small & micro-hydro
139
Solar PV
1.2
Wind
0.7
TOTAL
363
Source: 2003 Thai government figures + updates for biogas & PV based on recent installations

6. Renewables account for very little of Thailands’ installed generating capacity
0.6% จากพลังงานหมุนเวียน
Big hydro
0.6% grid-connected renewables
lignite
Fuel oil
Natural gas
TOTAL: 26,000 MW
Source: EGAT (2003). Power Development Plan

7. Estimated renewable energy potential in Thailand
Resource
Technical potential (MW)
Commerical Potential (MW)
Year 2011 Government targets (MW)
Biomass (includes biogas)
Solar PV
Wind
Micro- & Mini- hydro
7,000
>5,000
1,600
700
>4,500 ?
350?
1140
250
100
350
Total
>14,000
>4,800
1840
Biomass commercially viable 3727 MW (from Black & Veatch 2000 and NEPO/DANCED 1998) as well as interviews with power plant managers. Biogas additional = 385.
Source: Technical potential and Targets from Thai Ministry of Energy. (2003).“Energy Strategy for Competitiveness” Commercial potential from from Black & Veatch 2000 and NEPO/DANCED 1998 as well as interviews with power plant managers.

8. Breakdown of economically viable biomass resource
Economic potential (MW)
Bagasse
2,500
Wood residues
950
Rice husk
500
Biogas (cassava, pig, food waste)
385
Corncob 54
Distillery slop 49
Coconut 43
Palm oil residues
TOTAL
4,524
Source: Black and Veatch (2000). Final Report: Thailand Biomass-Based Power Generation and Cogeneration Within Small Rural Industries. Bangkok, NEPO; NEPO/DANCED (1998). Investigation of Pricing Incentive in a Renewable Energy Strategy -- Main report. Bangkok. Bagasse figure from interview with interview with Sirisak Tatong, power plant manager at Mitr Phol sugar factory. Biogas from interviews with biogas developers

9. Technology is available…
Steam turbines for direct combustion of biomass
Rice husk, wood chip, palm husk, bagasse, coconut husk, etc.
Size >1 MW
Capital cost $1200/kW
Commercially available in Thailand
Bio-digestors & engines for biogas
Pig manure, cassava, palm oil, municipal wastes, distillery slop
Size > 30 kW
Problems with SO2 resolvable
Gasifiers
Rice husk, wood chip
Size > 50 kW.
Problems with tar in some fuels
Commercially available for wood chip

10. Biogas from Pig Farms Reduces air and water pollution
Produces fertilizer
Produces electricity
Biogas from Pig Farms

11. Biogas from Pig Farms As of Jan 2004: 4 farms legally connected
Potential for hundreds of farms
5000 pigs  $31 / day elec.

12. 100 kW Wind turbine Part of environmental training center
ReCycle Engineering, Chonburi

13. Community micro-hydro
Mae Kam Pong village, Chiang Mai
40 kW
Community cooperative
Expected gross revenues: 30,000 baht/month

14. 40 kW micro-hydro generator at Mae Kam Pong
00-

15. Korat Waste to Energy - biogas
Uses waste water from cassava
Removes 99% of COD
Produces gas for all factory heat + 5 MW of electricity

16. Korat Waste to Energy - biogas
3 x 1 MW Jenbacher gas generators

17. DSM + Cogeneration potential even bigger
2000 to 3000 MW: “Achievable and cost effective DSM” in 1991 (Utility study)
IIEC (International Institute for Energy Conservation) Demand Side Management for Thailand’s Electric Power System: Five-Year Master Plan. Submitted to Electricity Generating Authority of Thailand, Metropolitan Electricity Authority and Provincial Electricity Authority, Bangkok, Thailand. Bangkok, Thailand. November.
Cogeneration
8610 MW cogen installed as of 2001
Since 1998, utilities accepting no new cogen. At least 3,000 MW of additional cogen had applied and have not been accepted.
No systematic evaluation since 1991.

18. Planning
Conventional approach
Integrated Resource Planning (IRP)
Risk

19. Conventional planning approach
Demand forecast – determined by committee comprising mainly government (EPPO), and utilities (EGAT,MEA, PEA)
Power Development Plan (PDP) -- Developed by EGAT.

20. Conventional approach step #1: Demand forecasts (vs. actual demand)
Do they overestimate? Yes, they do!

21. Correcting some blatant errors in conventional process…
6.5% growth figure from govt (for first 5 years). From 5 to 15th year, hired consultant – TDRI.

22. Conventional planning problems
Process
Problem
Citizens and consumers have no role in decisions
No consideration of alternatives:
Renewables
DSM
Cogeneration
No accountability to ensure that the plan is appropriate or least-cost
EGAT
Peak demand
+15% reserve
= minimum generating capacity
Specify new generators & transmission (PDP) Only considers gas/coal/big hydro
Ministry of Energy endorses plan
NEPC
Approve
Cabinet
Acknowledge

23. Conventional approach step #2: Power development plan
Generation capacity = peak demand + 15%
Note, 15% reserve margin may have made sense when whole sys was smaller. But with bigger system, the impact of losing one power plant is lower.

24. Problems Little transparency Little accountability
Little participation
No consideration of alternatives
DSM
Cogeneration
Renewables

25. Integrated Resource Planning (IRP) – a way forward?
Integrated Resource Planning (IRP or least cost planning) has origins in the 1980’s.
The principle of IRP is that customers do not actually need kWh, instead they require the services that are provided by electricity: “warm houses, light, and cold beer”.
Note – focus is on consumers needs for energy services, not simply kWh of supply.

26. Integrated Resource Planning (IRP) – what is it?
Services can either be met by building new power plants, or by increasing efficiency of use.
IRP is a systematic planning framework to meet consumers needs for energy services in a way that best meets multiple objectives for resource use
Requires consideration of energy demand, energy supply, environment, costs, and other factors all together
An integrated resource plan states a utility’s preferred strategy for meeting consumers’ needs over the long term—for example, 20 years
Goal of IRP: develop plans to meet energy needs of society efficiently, and at lowest possible cost
Note – focus is on consumers needs for energy services, not simply kWh of supply.

27. Overview of the IRP Process: Introduction#

28. Risk and ‘Mean Variance Portfolio Theory’
Fossil fuel prices are volatile
Fossil fuels are negatively correlated to macroeconomic activity
Mean Variance Theory (Harry Markowitz, Nobel Prize 1954): “adding bonds and other low-risk investments enhances portfolio performance over time because annual returns move independently.”

29. Risk and Return for Portfolios of Risky Assets

30. Wind/RE Lowers Mexico Generating Cost

31. Challenge… How to strategically push planning to include:
Greater transparency, accountability, and participation (TAP)
Real inclusion of alternatives in ways that address risk and environmental benefits of these technologies
DSM
Renewables
Cogen

32. Policy
Grid Access for renewables
4 recommendations

33. POLICY RECOMMENDATION 1.
There must be a fully independent and empowered electricity regulatory authority.
The regulator’s responsibilities should include reducing costs and determining tariffs, ensuring system reliability and energy security (including reducing the use of imported fuels), as well as coming up with effective mechanisms to reduce greenhouse gases and implement the government policy of promoting clean, renewable energy.

34. POLICY RECOMMENDATION 2
MEA and PEA should be responsible for purchasing their own power, rather than having the responsibility for bulk power supply provision lie entirely with EGAT.
Currently SPPs connect through PEA and MEA lines, but they sign power purchase agreements with EGAT. But EGAT, as a generator itself, has incentives to discourage competitor generators. Instead, MEA and PEA should be allowed to purchase power from wherever they wish. This would simplify the bureaucratic process and give MEA and PEA more incentives to favor small, decentralized generation located near loads.

35. POLICY RECOMMENDATION 3.
Power generation and supply companies should have no ownership or management interest in the transmission system.
The current situation in which EGAT is both owner and operator of the transmission system, as well as a generator of electricity raises the suspicion that non-EGAT parties may face discrimination in access to the grid. Separating transmission from other parts of the system is vital for the simple reason that unreasonable network pricing or access constraints can be used as a highly effective tool to discourage competition from other generators and/or suppliers of electricity.

36. POLICY RECOMMENDATION 4
All generators of electricity should have fair and non-discriminatory access to the grid.
The regulator must restrain Thai utilities from outrageous charges, unreasonable technical stipulations, or inexplicable delays in processing paperwork. Without straightforward and fair (to both distributed electricity developer and network operator) procedures for enabling access, distributed renewable energy can never flourish.

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38. Adding Wind to EU Generating Mix Lowers Cost and Risk
Generating Costs (Euro Cents)
(Source: IEA, 2001)
GAS: / kWh
COAL: / kWh
WIND: / kWh

40. POLICY RECOMMENDATION 5
Feed-in tariffs are more appropriate for Thailand than RPS for grid-connected renewable energy.
current plans call for an RPS to achieve renewables targets.
international experience: RPS without an independent regulatory body is problematic. An independent and empowered agency (other than the soon-to-be partially privatized monopoly utility, EGAT) is needed to ensure that procurement of renewable energy is fair – especially since EGAT will be able to pass costs directly to consumers.
An approach more suitable for Thailand's weak regulatory environment is to use feed-in tariffs as is done in Germany, Denmark, Spain and China. This approach promises lower barriers to entry to smaller renewable energy companies because it is simpler and entails less risk to renewable energy producers, and better enables the harnessing of Thailand's significant cost-effective distributed biomass waste resources.