Power Sector in Thailand: from Problematic Planning and Governance to Feed-in Tariffs Chris Greacen Palang Thai Helvetas seminar Power Sector Governance in the Mekong Region: Challenges and Opportunities in Thailand and implications for Laos 1 March 2011 Vientienne, Laos
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Power Sector in Thailand: from Problematic Planning and Governance to Feed-in Tariffs Chris Greacen Palang Thai Helvetas seminar Power Sector Governance.
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Power Sector in Thailand: from Problematic Planning and
Governance to Feed-in Tariffs
Chris GreacenPalang Thai
Helvetas seminarPower Sector Governance in the Mekong Region:
Challenges and Opportunities in Thailand and implications for Laos
In Thailand the dominant narrative concerning Lao hydropower goes more or less like this…
ที่��มา กฟผ.
1. “Thai demand for electricity will rise a lot”2. “Thailand needs to diversify its fuel sources from natural gas”3. “Thai people don't want any more dams”4. “Lao people will benefit from sale of hydro-electricity to Thailand”5. “Therefore, Laos should build dams and Thailand should buy from dams in Laos.”
“Thailand’s electricity demand is projected to increase over 34,000 MW (2.5 times) by 2030”.
Outline• Where Thailand’s electricity comes from• Structure of Thai power sector• Centralization and its problems• Governance issues in Thai power sector• Thai electricity consumption patterns• Planning
– Load forecast– Power Development Plan (PDP),– Over-investment
• Decentralized generation alternatives• Renewable energy
– Target– Very Small Power Producer (VSPP) regulations
• Some Thai clean community energy examples
Generation by sourcesGeneration by fuel
type
EGAT, 13,615 MW (48%)
IPP 12,151 MW (43%)
Import & Exchange 640 MW (2%)
SPP 2,073 MW (7%)
Total: 28,482 MW
Oil,0.1%
Natural Gas,
70%
Hydro,6%Coal &
Lignite, 21%
Import &
Others, 3%
Power generation (May 2009)
ที่��มา: EPPO Aug 2009
• Thailand has cooperated in hydropower development with neighboring countries, on a bilateral basis.
• MOUs on power purchase have been signed with Laos, China and Myanmar, with a total power purchase of 11,500 MW.
MOUs on Power Purchase Signed
Country Signing Date Purchase Cap. (MW)
Within Year
LPDR 22 Dec 2007 7,000 2015
Myanmar 14 Jul 1997 1,500 2010
PR China 12 Nov 1998 3,000 2017
• Imported power being supplied to Thailand’s Grid: LPDR 313 MW Malaysia 300 MW [High Voltage Direct Current (HVDC)]
Power Purchase from Neighboring Countries
ที่��มา: EPPO Aug 2009
Project Sale to Thailand (MW) COD
1) Currently supplying power to Thailand
1.1 Nam Theun-Hinboun 187 31 Mar 1998 1.2 Houay Hoa 126 3 Sep 1999
Sub-total 313
2) PPA signed but not yet supplied power to Thailand
2.1 Nam Theun 2 920 Dec 2009
2.2 Nam Ngum 2 615 Mar 2011
2.3 Theun-Hinboun Expansion 220 Mar 2012
Sub-total 1,755
3) Tariff MOU signed
3.1 Hongsa Lignite 1,473 2013
Sub-total 1,473
GRAND TOTAL 3,541
Power Purchase from LPDR
Status as at Jun09.
ที่��มา: EPPO Aug 2009
Import(2%)
EGAT(50%)
IPPs(41%)
Generation(% share)
Transmission
Distribution
EGAT (100%)
PEA(67%)
MEA(31%)
Direct Customers(2%)
Users Users
Remarks: - Figure of % Share in 2008- ERC = Energy Regulatory
Commission
VSPPs(<<1%)
SPPs(7%)
Govt.
ERC
Structure of Thai power sector
ที่��มา: EPPO Aug 2009
Customers
Large power plant
Centralized Power
Electricity flow
Money F
low
Centralized decision-making
Government and utilities
Citizens and consumers
&
(all of the) supply options considered in the PDP by EGAT
700 MW Coal-fired power plant
700 MW gas-fired combined cycle plant
230 MW gas-fired open cycle plant
1,000 MW nuclear plant
Hydro imports are politically negotiated outside of PDP processDSM/EE, RE, Distributed generation not considered as supply options
Problems with Centralized Power
• (more costly)• Separation of consumption and
production leads to inefficient consumption– “Out of sight, out of mind”
• Loss of livelihood/health/forests for local people for the benefits of others, mainly urban commercial and industrial interests– Generate at large power plants
hundreds of km from commerce and industry that uses power
Problems with centralized decision-making
• Lack of accountability, transparency, participation in centralized planning processes– Political decisions masked in technical language– Social and environmental concerns are ignored
• “Cost plus” incentive structure– passes risks to consumers– “Overcapacity worth 400 billion Baht” (from total assets
of 700 billion Baht and annual turnover of 240 billion Baht)
การกระจิายต�วข้องการใชั'ไฟฟ-าแยกตามพ3�นที่��Distribution of electricity consumption by
region
ภาคกลาง75.14%
ใตำ 7.84%เหน�อ
8.11%
อ�สาน8.92%
Source: Figure 19, Statistical Report Fiscal Year 2003 Power Forecast and Statistics Analysis Department System Control and Operation Division. Report No. SOD-FSSR-0404-05
Central
South
North
Northeast
Comparison of electricity consumption of three big malls vs. 16 provinces
4. ค%า Externality ตามการศ์Bกษ์า Extern E ข้องสิหภาพย�โรป แลัะน#ามาปร�บลัดตามค%า GDP ต%อห�วข้องไที่ย 5. 5. The World Bank, Impact of Energy Conservation, DSM and Renewable Energy Generation on EGAT’s PDP, 2005. 6. ตามระเบ�ยบ SPP 7. ที่��มา : กฟผ. 8. California Public Utilities Commission (CPUC), 2050 Multi-Sector CO2 Emissions Abatement Analysis Calculator, 2009 9. Cost of liability protection, Journal “Regulation” 2002 – 2003.
Supply options
Cost estimate (Baht/kWh)
Generation
Transmission1
Distributio
n2
CO2 3 Other
envi impacts
4
Social impact
s
Total
DSM 0.50 – 1.505 - - - - - 0.50 -1.50
SPPcogeneration(PES > 10%)
2.60 6 - 0.44 0.08 0.71 - 3.83
VSPP(Renewable)
Bulk supply tariff
(~ 2.62) +Adder
(0.3 – 8)
- 0.44 - 0 – 0.63 0 – low 2.92 – 10.62
gas CC 2.25 7 0.37 0.44 0.09 0.79 low – medium
3.93
Coal 2.11 7 0.37 0.44 0.15 2.76 High 5.82
Nuclear 2.087–7.308 0.37 0.44 - 0.15 + 1.009
High – very high
4.04-9.26
Office of the National Economic and Social Development Board
O F F I C E O F T H E P R I M E M I N I S T E R
Low Quality
EducationLow Quality labour
Insu
fficient in
R&
D In
vestmen
t
Slow Technology Development
Lo
w Q
ual
ity
for
Raw
-
mat
eria
l, m
ach
iner
y an
d
equ
ipm
ent
(Low margin/return)
Low
Bas
ic
infr
astr
uctu
re a
nd
Logi
stic
dev
elop
men
t
Enabling factors:MACROECONOMICMANAGEMENT
No
im
mu
nit
y/
Hig
h v
ola
tili
ty
Fin
anci
al S
yste
m
La
ck o
f Sa
vin
g
Lack of regulation on
industrial product’s
quality control
Macroeconomic Analysis
Decentralized generation
• Decentralized generation: generation of electricity near where it is used
Energy efficient end-use
Solar
Wind power
BiomassCustomers
Power plant
Old way New way
Power plant
Biomass
Energy waste in a typical pumping system
Sankey Energy Flow Diagram
CogenerationCombined Heat and Power (CHP)
Centralized energy is more costly
Thailand
PDP 2007 requires 2 trillion baht to implement, comprising:
million B
• generation 1,482,000
• transmission 595,000
Transmission adds 40% to
generation costs
Decentralized generation brings down costs
Ireland – retail costs for new capacity to 2021
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
100% Central / 0% DE 75% / 25% 50% / 50% 25% / 75% 0% Central / 100% DE
% DE of Total Generation
Eu
ro C
en
ts /
KW
h
O&M of New Capacity Fuel
Capital Amorization + Profit On New Capacity T&D Amorization on New T&D
Source: World Alliance for Decentralized Energy, April 2005
Very Small Power Producer (VSPP)
$
Technical regulations:• Allowable voltage,
frequency, THD variations
• Protective relays– 1-line diagrams for all
cases:• Induction• Synchronous• Inverters• Single/multiple• Connecting at different
voltage levels (LV or MV)
• Communication channels
Commercial regulations:
• Definitions of renewable energy, and efficient cogeneration
• Cost allocation• Principle of
standardized tariff determination
• Invoicing and payment arrangements
• Arbitration
$
Evolution of Thai VSPP regulations
• 2002– VSPP regulations drafted, approved by Cabinet– Up to 1 MW export, renewables only– Tariffs set at avoided cost (bulk supply tariff + FT)
• 2006– Up to 10 MW export, renewables + cogeneration– Feed-in tariff “adder” – If > 1 MW then utility only pays for 98% of energy
• 2009– Tariff adder increase, more for projects that offset
diesel
http://www.eppo.go.th/power/vspp-eng/ for English version of regulations, and model PPA
• 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
Biogas from Pig Farms
Reduces air and water pollution
Produces fertilizer
Produces electricity
8 x 70 kW generator
Ratchaburi
Biomass Gasification
Rice mill in Nakorn Sawan400 kW
• 40 kW• Mae Kam Pong, Chiang Mai,
Thailand
Micro hydropower
Rice husk-fired power plant• 9.8 MW• Roi Et, Thailand
Bangkok Solar 1 MW PV
• Project size: 1 MW• Uses self-manufactured a-Si
Saving electricity is cheaper than generating it
Source: The World Bank (1993)
2.12.6
4.04.9 5.0 5.1 5.2 5.5
8.2
-
2.0
4.0
6.0
8.0
10.0
DSM Hydro fromLaos
Gascombined
cycle
Lignite withFGD
Low-sulphurcoal w/o
FGD
Low-sulphur fuel
oil w/oFGD
LNG Low-sulphur
coal withFGD
Nuclear
Type of Power Plant
Co
st
of
En
erg
y (
US
ce
nts
/kW
H)
Demand Side Management (saving electricity)
Actual 10-year DSM average cost!!!
1.5
The Arun-3 story
• Planned 201 MW hydro in Nepal• Sell electricity to India, rural electrification• Nepalese NGOs and small business:
“Micro-hydropower cheaper, better for local economy”
• World Bank pulled out of project, project cancelled
• 10 years later…the Nepali power system has seen the addition of:– over a 1/3 more capacity than the Arun-3– at ½ the cost– In ½ the time it would have taken to complete Arun-3
Summary:
• Key tenets of Thailand’s narrative about dams in Laos are flawed:– Thailand’s demand is increasing more slowly than advertised– Thailand has plenty of clean alternatives
• Thailand’s excessively centralized electricity structure leads:– to investments that are more costly– conflicts between those that benefit (industry, commerce) and
villagers who suffer impacts to health and livelihoods
• Thai utilities are perversely incentivized to build, build, build
However…• Decentralized generation has been helped significantly
by VSPP regulations, which Thai utilities have done a good job implementing.