1. Practical Policies for Decentralized Electricity Generation Chris Greacen Palang Thai MEE-Net Workshop 18 January 2012 Bangkok

2. Outline What is decentralized electricity? Centralized vs. decentralized Practical policies for decentralized electricity

3. 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. 4 Decentralized Technologies Computing: Internet vs. Mainframes Telecommunications: Cell phones vs. land lines Broadcasting: TelevisionEg. You Tube Radio Eg. Podcasts Electricity: Decentralized energy technologies

5. 5 The Move to Decentralized Technology vs.

6. Energy efficient end-use Solar Wind power Biomass Customers Power plant Old way New way Power plant Biomass

7. 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).

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

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

10. Cogeneration (Combined Heat and Power – CHP)

11. 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.

12. 14 MW cogeneration at University of Massachusetts, Amherst, USA 75% efficient. Provides heating for 200 buildings

13. DE Benefits – Energy Access

16. 16 Denmark – a transition to decentralized energy Source: Danish Energy Center

17. Decentralized electricity policies and outcomes -- Thailand

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

19. $ Access to grid

20. 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

21. 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

22. 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 + 4152 MW with signed PPAs... 75% fossil fuel

23. 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 http://www.eppo.go.th/power/vspp-eng/http://www.eppo.go.th/power/vspp-eng/ for English version of regulations, and model PPA Access to grid Feed-in tariffs

24. EPPO24 Feed-in tariffs

25. Feed-in tariff policies worldwide Feed-in tariffs

26. 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

27. 27 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

28. 28 Tax Incentives Tax incentives

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

31. 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)

32. 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

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

34. 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

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

36. Feb 2007 Thailand VSPP Status 18 MW online

37. June 2008 Thailand VSPP Status

38. June 2009 Thailand VSPP Status

39. Mar 2010 Thailand VSPP Status

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

41. Solar trends in Thailand

42. 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: http://tinyurl.com/SPPevaluator (developed by World Bank for use in Africa) http://tinyurl.com/SPPevaluator

43. 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.

44. 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

45. For more information, please contact chris@palangthai.orgchris@palangthai.org This presentation available at: www.palangthai.org/docs