1. GMS Power Grid Who gains, who loses?
Chuenchom Sangarasri Greacen
17 July 2005
Piyawan Resort

2. Implementation of GMS Power Trade Operation Agreement- Stage 1
Leaders from 6 countries met GMS Summit in Kunming, China 4-5 July 2005
MOU
Implementation of GMS Power Trade Operation Agreement- Stage 1

3. Implementation of GMS Power Trade Ageement – stage I
What is ?
MOU
Implementation of GMS Power Trade Ageement – stage I
Purpose
“To set an implementation framework for bilateral power trade between countries with transmission links in accordance with the draft GMS Power Trade Operation Agreement – stage I”
For Thailand, EGAT is the designated entity responsible for plan implementation

4. Asian Development Bank (ADB)
Norconsult June 2002

5. Indicative Master Plan on Power Interconnection in the GMS
Benefits :
Exchange energy e.g. during different peak periods
Reduce shared reserve margin
Maximize efficient utilization of resources in the GMS

6. Reality of GMS Power Grid: expensive, risky investment
US$billion
Project cost
Cost savings*
% benefit of total cost
1.0 – 2.1%
Costs excluded in analysis:
Control center
Water usage
Regulator & reliability coordination
Transitional costs
Increased vulnerability: events in Laos/Cambodia determine reliability of Thai Grid
*Cost savings of extended power cooperation scenarios over base case
Source: Comments on Indicative Master Plan on Power Interconnection in GMS Countries by Bretton W. Garrett, P.Eng., Ph.D.

7. PPA and Regional dispatch
Regional Power Trade Operating Agreement in the Greater Mekong Sub – Region: GMS RPTOA
PPA and
Regional
dispatch
Institutions
Performance
Standards
Planning
Transmission
Tariffs

8. Goals for Stage # 1 PTOA: Bilateral Power Transactions;
Tariffs for cross-border transmission facilities;
Regional and Operational transmission planning;
Putting in place regional institutions: Regional Regulatory Board, Planning Working Groups, Management Committee
Recommended:
Agree and apply rules for Long-term PPA
Arrangements for facilitating building of cross-border transmission facilities.

9. Stage 2-4 Stage 2: power trade among more than 2 countries
Stage 3: All GMS countries are connected by HV transmission links and independent power producers can sell electricity
Stage 4: Complete competitive power trade in Regional Power Pool

10. Analyses of Dr. Brettron Garrett
Transmission expert from BC, Canada

11. 1. “The most serious concern is the wisdom of committing to an expensive, long-term electricity trade arrangement without certainty of the economic benefits”

12. ADB’s assumptions on benefits of the GMS grid
Peak sharing can reduce costs, need for reserve margin
Lots of cheap hydropower will be built in Laos, Burma and Yunnan, and can displace electricity generation from gas and coal.
Competition among different dam projects in the region will drive cost down so consumers will enjoy low, competitive price

13. Assumption 1. peak sharing
Opportunity for peak reduction
Something to be gained from sharing of peak load
Hydro is cheaper than thermal and that there are plenty of hydro projects in Yunnan, Lao, Burma
Once these are built and a transmission grid is in place there will be a market and costs will

14. Assumption 2 Hydropower is cheap Hydropower is plentiful
Cheap power from dams will displace power generation from gas and coal plants

15. Assumption 3. GMS grid+competitive trade will drive the price down

16. Fact 1. peak sharing can reduce peak by only 2.5%
Something to be gained from sharing of peak load
Hydro is cheaper than thermal and that there are plenty of hydro projects in Yunnan, Lao, Burma
Once these are built and a transmission grid is in place there will be a market and costs will

17. Fact 2.”Cheap hydropower” is only an assumption, not findings from studies

18. Fact 3.No competition
Stage 4 is difficult/impossible to reach and there is no set timeline for it to happen
With no competition, there is opportunity for price gouging as seen in California

19. Conclusion: Extremely risky investment
Total investment 200,000 million baht (incld. Building dams)
May result in benefits worth 90,000 million baht but highly uncertain
What is certain is consumers in the GMS have to pay 48,000 billion Baht

20. 2. Regulatory body Balance interests of investors against consumers
RPTOA suggests against having a highly independent regulatory
No public participation
No consideration of other greener, cheaper alternatives

21. 3. Extremely difficult and expensive to harmonize grid standards across the region
Split-second decisions by operators in one country can affect the whole region
The Canadian economy lost 16,000 million Baht in August 2003 when a negligent USA utility caused a massive blackout.

24. 4. Vulnerability of power interconnection to political situation

26. Who gains, who loses?
GMS consumers are sure to foot the bill of 48,000 million baht to build the grid
Economic benefits are highly uncertain and unlikely
High risks: technical, environmental & social, political
Benefits from dam construction go to multinational corporations, investors, contractors

27. Who gains, who loses?

28. Win-win trade?
To communicate the concept of a regional grid to the public, a Thai utility used an advertisement campaign featuring the common Thai dish kraprao gai khai dao, or "chicken stir-fry with basil and fried egg." To eat the stir-fry without fried egg, or fried egg without chicken stir-fry, is considered incomplete. In the advertisement, an exchange between two countries with complementary electricity resources is likened to two people, one with chicken stir-fry and the other with fried egg, sharing to create a win-win situation.
Is the Mekong Power Grid a case of sharing chicken stir fry and basil with our neighbors? Most likely not. It's caviar and fine French wine for lunch at the Mekong Country Club. But it looks like we ratepayers are buying. And we're not invited to the table.

29. Without GMS Grid, Thailand’s energy security would be at risk?
บันทึกความเข้าใจ
แนวทางการดำเนินงานตามข้อตกลง
ด้านการปฏิบัติการเพื่อการซื้อขายไฟฟ้าระหว่างประเทศในกลุ่มอนุภูมิภาคลุ่มแม่น้ำโขง ระยะที่ 1
Without GMS Grid, Thailand’s energy security would be at risk?

30. ADB: Peak demand in 2020
Source: Norconsult, Indicative Master Plan on Power Interconnection in GMS Countries, June 2002

31. Energy security or business expansion ?

33. Thailand’s current demand forecast (Jan04) Annual increases (MW)

34. Source: Thai Ministry of Energy, 2003

35. Biogas from pig farms Reduces air and water pollution
Produces fertilizer
Produces electricity
Biogas from pig farms

36. Village-scale microhydro
Mae Kam Pong village, Chiang Mai
40 kW
Community cooperative
Expected gross revenues: 30,000 baht/month

37. What is Decentralized Energy (DE)?
Electricity production at the point of use, irrespective of size, fuel or technology – on-grid or off-grid:
On-site renewable energy
High efficiency CHP / cogeneration
On-site industrial energy recycling

38. Decentralized Energy – The Main Choices
Reciprocating Engines
Small Gas Turbines PV
Stirling Engines
Microturbines
Fuel Cells

39. Global DE Development Data from WADE’s ‘World Survey of DE - 2005’60 50 40
DE share as % of total power generation 30 20 10 US UK
Finland
Russia
China
Chile
India
Mexico
Brazil
France
Denmark
Germany
Canada
Portugal
WORLD
Netherlands

40. Worldwide energy losses
Electricity Generation Worldwide (TWh) (source: International energy Agency 2002)

41. World All-Energy Investment, 2001 - 2030
Network investment needs exceed generation needs by 17%
46%
Power generation
54%
Network T&D
$5.2 trillion of investment
Source: International Energy Agency, 2003
Reference Scenario – Business-as-Usual

42. Utilities expect network costs to increase sharply
Historical Utility Cost Base
Expected

43. IEA Analysis - DE Scenario is lower cost
OECD Investment in Reference (BAU) and Alternative Policy Scenarios,
20% lower investment need; CO2 emissions remain at 2000 level
Alternative scenario:
More DE
More efficiency
More renewables
Source: International Energy Agency, 2003

44. Ireland – retail costs for new capacity to 2021

45. China – retail costs for new capacity to 2021

46. Ireland – CO2 emissions from new capacity to 2021

47. China – CO2 emissions from new capacity to 2021