Over the years the government has introduced a wide range of plans, programmes and initiatives that outline goals and set targets for the power sector. These plans are continuously being reviewed and amended in response to shifting dynamics in the industry, such as advancements in renewable energy technology and the depletion of domestic resources.
Sector Plan
The Power Development Plan (PDP), created by the Electricity Generation Authority of Thailand and the Ministry of Energy (MoEn), lies at the centre of efforts to grow and manage the industry in a sustainable way. It has been updated periodically, and the most recent version runs from 2015 to 2036.
The strategy complements – and to a great extent, incorporates – similar sectoral plans. These include the Energy Efficiency Development Plan (EEDP), which also runs from 2015 to 2036 and calls for a 30% reduction in energy use by 2036 using 2010 consumption as a baseline; the Alternative Energy Development Plan (AEDP), which runs over the same period and targets renewables comprising 20% of installed generation capacity by 2036, a goal that is likely to be revised upwards due to rapid progress; the Natural Gas Supply Plan; and the Petroleum Management Plan.
The PDP is, above all, a document of expansion and evolution. For years Thailand’s priority has been squarely centred on meeting the needs of a growing and developing economy, and compensating for declining natural gas resources in the Gulf of Thailand. The PDP targets the doubling of generation capacity to 70 GW by 2036, using new sources to counter dwindling domestic gas reserves.
It also places the environment at the forefront of policymaking, mandating that the country pursue an energy mix that is both robust and sustainable. As part of this, the contribution of renewables, including hydropower, to the mix is expected to more than double from 8% in 2014 to 15-20% by 2036. Imported hydropower, largely from Laos, will also rise from 7% to 15-20%. Clean coal will contribute as much as 25% – up from 20% in 2014 – while natural gas will drop from 64% to as low as 30%. “Clean coal technology is ready in Thailand,” Bundit Sapianchai, president and CEO of local green energy company BCPG, told OBG. “In the medium term the country will see smaller power plants run by the private sector.” Making nuclear power compose a small percentage of the mix (0-5%) by the end of the plan’s timeframe is also a consideration.
2018 Updates
Taking into account changes in technology since the current PDP was conceived, the ministry of energy announced in July 2018 that a revised plan would be released the following September. This iteration will target an increase in the share of clean energy from 10% to 30% in the next 15 years. Given the resistance to increased coal use in some communities and the progress being made on the commercialisation of renewable sources, clean energy’s greater role in the breakdown of the future energy mix was anticipated.
Very small power producers (VSPPs) – which have a generation capacity of less than 1 MW – will also be further encouraged under the revised PDP via a range of initiatives. These include a programme to encourage the deployment of photovoltaic rooftop power, to be launched later this year, and a plan to utilise blockchain technology to enable VSPPs to engage in peer-to-peer trading, whereby generators and consumers can buy and sell surplus electricity.
Indeed, the new strategy is partly being driven by the introduction of disruptive technologies, such as blockchain, as well as the expectation that the cost of renewables will continue to fall to become increasingly competitive with conventional sources.
Storage technologies are also improving rapidly and helping to ensure that output from renewables is more reliable. “The grid infrastructure can support a lot of solar projects, but investment should instead be geared towards grid stability,” Varut Tummavanakub, CEO of Sermsang Power, told OBG. “The solar business has come to a point where batteries are of a workable quality. A grid upgrade may not be feasible at the moment, but the government can improve batteries for use in solar projects. Battery costs are still high and the feed-in tariff is still not competitive.”
According to Twarath Sutabutr, director-general of the Energy Policy and Planning Office of the MoEn, the new PDP will also take into account consumption patterns of other nations, as well as domestic developments, such as the Eastern Economic Corridor megaproject (see Trade & Investment chapter). Goals of the next edition include smarter grids, more efficient systems and better managed power production.
While significant investment is expected during transition, it is also projected that the payback period will be relatively quick as a result of reduced consumption and increased efficiency.
Six-point Plan
In January 2018 the National Energy Reform Committee conceived a six-point energy reform plan for the next five years, calling for fundamental changes that will alter the dynamics of the sector and boost Thailand’s role in the regional and global energy markets. The document is focused on transparency, competition and alternative power sources. The six main tenets cover improved governance and information accessibility; energy security through competition; becoming a hub for liquefied natural gas (LNG); promoting alternative energies; conservation; and innovation. The government hopes that the plan will generate BT200bn-300bn ($5.8bn-8.7bn) in investment in the industrial sector.
Like the PDP, the reform plan supplements and builds upon the AEDP and the EEDP. The authorities hope that the road map – which will guide the market through to 2022 – will improve the sector and make the country more competitive as a whole.
The plan is seen as having broad implications for current players, regulators and stakeholders. Of immediate interest is the liberalisation of the markets, including those for natural gas and electricity, and revision to production and electricity transmission activities that will see more purchases from independent power producers and households with rooftop solar installations (see overview).
The liberalisation of LNG trade has already begun, ending the monopoly held by state-owned PTT by granting additional companies import licences. However, deregulation will be a step-by-step process to avoid destabilising changes, and it will likely be years before LNG is traded on a fully commercial basis.
The reform plan addresses public protests as well, which often concern the fact that power plant construction can be excessively harmful to the environment. To this end, a process will be laid out so that communities have a significant say in the location of fossil fuel-fired plants. Having public buy-in should help projects avoid delays and cancellations.
Committee Considerations
While recognising the need for energy imports, the reform committee calls for a degree of self sufficiency and diversification. It is looking to new technologies and conservation efforts to help the country limit its dependence on any single resource or region.
Along these lines, the body is contemplating the development of a so-called “smart grid”, which would allow for the two-way sale of solar electricity, and it will examine the use of waste-to-energy technologies. Furthermore, bureaucratic reforms are being considered, such as the separation of the Department of Mineral Fuels from the MoEn to ensure that the former body oversees effective negotiation of production-sharing agreements.
Energy Reserves
While is widely acknowledged that the various sector plans will take the country in the right direction, especially in terms of renewables, some are pushing for more, saying that the mantra should be “improve, not import”. This goes hand-in-hand with criticism that by buying hydropower from neighbours and importing coal, Thailand is merely containing the negative environmental impacts to those countries and communities.
Thailand’s power plans are based on the assumption of a rapidly growing economy, and another concern is that this will result in too much energy capacity being built and a reserve margin wider than what is necessary. “The forecast for energy needs is overestimated because of the evolution of manufacturing activities in Thailand,” Syahir Luthfi Chan, managing director of Schlumberger Overseas, told OBG. “With the digitalisation of manufacturing processes, industrial demand for energy should be lower than it was in the past.”
According to the 2017 report “Thai Power: Excess Supply Lingers” by the Development Bank of Singapore, Thailand’s energy reserve margin under the PDP is 34%, which is higher than the international standard of 15%. Supporters, however, say capacity is being built as a buffer against dwindling natural gas resources, and that additional supply is needed to fill any gaps from output disruptions to renewable sources.
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