Energising Alternatives

Thailand

Economic News

22 Jul 2010
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With demand for electricity forecast to increase by 7% annually over the next 20 years and fuel consumption also expected to rise sharply, Thailand is trying to diversify its energy mix, with renewables seen as a viable alternative.



Thailand has some 160 renewable power plants in operation, with a combined installed capacity of 792 MW, and a further 180 projects with a total capacity of 840 MW under construction. By the end of 2010, an additional 3600 MW of generating capacity is expected to come on-line, according to figures from the Ministry of Energy (MOEN), with more than 540 new projects listed to become operational.



Though output is on the rise, renewables only provide a fraction of Thailand's present electricity needs. Renewable energy contributes less than 5% of the country's total production, which is dominated by natural gas-fired stations that account for 70% of power, with a further 20% coming from coal-fired plants.



State planning officials are aiming to increase the contribution of renewable power in meeting demand, targeting a mix of generation sources to further bolster production in the coming decade and beyond. By 2022, Thailand's power development plan foresees solar and wind energy plants turning out 1300 MW; mini-hydro, 320 MW; biomass, 4000 MW; and biogas and waste-to-power projects, a further 280 MW.



Though keen to promote alternative energy sources, the state also wants to strike a balance between take-up and viability. In early April, the MOEN announced it would revise its tariff incentive programme for producers of electricity using renewable sources when new technology coming on-line reduced production costs.



Currently, the state pays a special rate to producers using renewable sources for power to be channeled into the national grid, with differing tariffs paid depending on the type of fuel used.



According to Norkhun Sitthipong, the deputy permanent secretary at the MOEN, the revised rates would be finalised by July and would ensure that producers received a fair payment by better reflecting actual costs.



"It is crucial for renewable energy that the government help provide support," Norkhun told local media. "Otherwise these types of energy would never be able to compete with mainstream fuels, as coal-fired and natural-gas plants have far lower costs of fuel and are more commercially viable."



Though the state has been generous in its support for renewable energy, it has set a limit on how far it will go to encourage producers. Under the ministry's tariff programme, producers are only eligible for price support for the first seven years of their operations, after which they will be paid the same rate for their electricity as for power generated by coal-fired plants.



Alternative energy projects received a further boost in late March, when the Board of Investment (BOL) announced it was relaunching a series of tax incentives aimed at promoting investments in sustainable development areas such as energy conservation, alternative energy and high technology.



The incentives, which had lapsed at the end of last year, were aimed at enhancing Thailand's competitiveness in science and technology, and would "encourage existing investors to improve [the] quality of their manufacturing as well as reduce environmental impact", according to Atchaka Brimble, BOL's secretary general.



While the government has been pushing the development of some forms of energy, producers of other non-traditional energy sources feel that they have been sidelined.



In late March, Sirivuthi Siamphakdee, the chairman of the Thai Ethanol Manufacturers Association, said that many of its members had been forced to halt production as a result of stocks hitting 57m tonnes, compared to the normal level of 10m tonnes.



"This is because the demand in Thailand is not as high because lately the government has been promoting the use of alternative energy such as biodiesel and natural gas for vehicles, resulting in lower use of ethanol," Sirivuthi said.



Currently, Thailand has 17 ethanol plants with a capacity of 2.7m litres per day, though with demand low, only 60-70% of capacity is being utilised. In order to strengthen the sector, the government should act to stimulate domestic demand from the current daily average of 1.2m, said Sirivuthi.



The ethanol sector, along with other bio-fuel segments of the industry, is also subject to pressures that do not affect conventional industry, with climatic conditions and pests reducing available raw materials stocks.



Thai ethanol production in the second half of this year could be hit by a shortage of cassava (a tropical plant that produces tapioca), due to an infestation of aphids (small plant-eating insects), which has lowered harvest projections from 30m tonnes to 20m, the Thai Ethanol Manufacturers Association has warned.



The country is pushing ahead with expanding its alternative energy programme, with the state providing incentives to the private sector to further develop production and also offering a market for much of the resulting output. Though questions remain about how some producers will respond after their seven-year price support term expires, renewable energy is expected to play a role in powering Thailand into the future.

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