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

2. 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. What is ? 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 MOU Implementation of GMS Power Trade Ageement – stage I

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 Costs excluded in analysis: –Control center –Water usage –Regulator & reliability coordination –Transitional costs Increased vulnerability: events in Laos/Cambodia determine reliability of Thai Grid US$billion Project cost43.50 - 44.96 Cost savings*0.45 - 0.91 % benefit of total cost 1.0 – 2.1% *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 Institutions Performance Standards Regional Planning Transmission Tariffs Regional Power Trade Operating Agreement in the Greater Mekong Sub – Region: GMS RPTOA

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 http://www.palangthai.org/en/policy

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

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% Reduce Peak by only 2.5%

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

18. 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 Fact 3.No competition

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?

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

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. ที่มา : กรมพัฒนาพลังงานทดแทนและอนุรักษ์พลังงาน

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

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

38. 2000 MW = ? เขื่อนภูมิพล 780 MW เขื่อนปากมูล 136 MW แม่เมาะ 2400 MW จะนะ 700 MW