4 minute read
Energy transition needs a push
Thomas Hundt
In Thailand larger renewable energy projects are currently making slow progress. Nonetheless many smaller grid-connected projects and numerous solar power systems for captive consumption are currently implemented.
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Thailand’s Power Development Plan (PDP) aims for a considerable expansion of renewable energy by more than 17 gigawatts from 2021 to 2037. Accordingly, the proportion of renewable energy in the total generation capacity would increase from 10 per cent to 34 per cent. However, the plan can be adjusted if necessary. The most important energy source for electricity producers is currently gas with a share of more than 50 per cent, followed by coal and hydropower.
Observers have suggestions and comments. Investing in energy efficiency would often make more sense than expanding capacities. Thailand also has already high power reserves. In 2020 an installed capacity of 50 gigawatts met a peak load of only around 30 gigawatts.
Energy demand has been growing as well more slowly than expected. Electricity consumption has even decreased since the beginning of the Covid-19 pandemic. In order to achieve the planed energy transition and to balance the fluctuating electricity from the solar and wind power plants, old power plants have to be replaced by more efficient and flexible ones.
Experts believe that the terms and conditions for investments in grid connected renewable energy systems should also be improved. The Department of Alternative Energy Development and Efficiency and the Energy Policy and Planning Office, Ministry of Energy are responsible for the energy policy, while the independent Energy Regulatory Commission (ERC) oversees and regulates the sector. Thus, ERC sets the electricity prices and supervises the implementation of projects.
Feed-in electricity is not a sure-fire success
Only the three state-owned electricity utilities operate the power grids. The Electricity Generating Authority of Thailand (EGAT) is the largest utility and is responsible for all high-voltage lines. The Metropolitan Electricity Authority (MEA) distributes the electricity via its low-voltage grids in the greater Bangkok area, while the Provincial Electricity Authority (PEA) connects the rest of the country.
Private energy companies (independent power producers) with power plants of more than 90 megawatts (MW) and small power producers (SPP) with plants of between 10 MW and 90 MW are allowed to sell their electricity only to EGAT or directly to industrial consumers. The very small power producers (VSPP) with projects below 10 MW sell their electricity to the MEA or PEA.
These companies implemented numerous renewable energy projects from 2006 to 2017, since they could sign long-term purchase agreements with attractive fixed feed-in tariffs. Thereafter, the financial support and number of medium and large renewable energy projects was reduced. Since then, the bidders are going through a limited number of bidding and approval processes with a diverse feed-in tariff structure. Thus, the larger Thai energy companies have been focusing their investments on more profitable foreign markets.
In 2018, EGAT, MEA and PEA launched the National Energy Trading Platform for direct electricity trading. In small pilot projects, electricity producers are able to exchange and trade electricity with each other. Such peer-to-peer systems are of particular interest to independent operators of solar power systems, since feeding their surpluses into the grid is complicated, and a purchase price of Baht 1.68 (about 5 US cents) per kilowatt hour (kWh) is not attractive for the net metering.
Photovoltaic systems for private consumption pay off
Photovoltaic systems (PV) that are designed for self-consumption are worthwhile, considering high electricity prices. Rooftop PV systems can supply electricity that is at least one-third cheaper than grid power.
However, investors design their PV systems without feeding power into the public grid.
Factory owners, real estate companies and other businesses with vacant spaces perceive the benefits of their own solar systems. In 2020, ERC already registered 1,057 solar power systems installed by independent power suppliers (IPS) with a total capacity of 526 MW. However, an IPS must also apply for an operating permit and several licences but will receive tax subsidies.
System providers, who sell systems based on an operator model, and consulting firms have been focusing on this growing market for industrial rooftop systems. Therefore, the PV industry has joined forces and formed for example the Thai Photovoltaic Industries Association, which has more than 100 members.
More biomass and biogas projects to be implemented
Over 1,000 MW of biomass and biogas plants for captive consumption have been already installed. And more than 3,500 MW of bioenergy systems are connected to the grid. Thailand is for example the fifth-largest producer of sugar in the world. Mitr Phol, Khon Kaen Sugar, KTIS and other sugar companies already installed several bioenergy thermal power plants using sugar cane. In addition, ERC has registered another 30 projects for which electricity purchase agreements have already been signed or notified and have not yet started operations. The biomass power plants will have a total capacity of 434 MW and the two approved biogas plants can generate 7 MW.
Thailand is an agricultural country with rich and various biomass sources. Depending on the region, important fuels for biomass power plants are bagasse, rice straw, corn, cassava, oil palm and rubberwood. The renewable energy department of the Ministry of Energy promotes also the cultivation and energy use of Napier grass.
Contact details: Thomas Hundt, Director Thailand, Cambodia, Myanmar, Laos, GERMANY TRADE & INVEST, www.gtai.com
