Page 1

Thailand's Alternative Energy In order to heighten its economic competitiveness both regionally and globally, the Kingdom of Thailand has emerged as one of the first countries in Asia to encourage alternative energy investment. As early as 2008, the Thai government introduced its Alternative Energy Development Plan (AEDP), which aims for renewable sources to provide 25% of the country's total energy consumption by 2022, significantly reducing dependence on fossil fuels. Indeed, Thailand's energy consumption continues to grow but in comparison with last year, the total imported value dropped. It also is projected that the overall energy consumption of 2014 would surge by 2.5%. Compared with 2012, the total primary energy consumption in 2013 was equal to 2 million barrels of oil equivalent per day, increasing by 1.2%.

The country is highly dependent on imported energy: in 2012 over 67% of energy was purchased from overseas sources. Total energy expenditure in 2012 was US$71 billion, 10% higher than in 2011. The manufacturing and transportation sectors were the largest energy consumers in 2012; absorbing 37% and 36% respectively. Thailand has taken important strides forward in the research and development (R&D) of alternative energy technologies. The Thai government recently established the School of Renewable Energy Technology, which trains students and scholars in this field. With solid public sector commitment to develop a low-carbon society, sound economic fundamentals, and solid industrial expansion expected in the coming years, there is enormous investment and growth potential in the country's emerging alternative energy sector. Presently, the Kingdom's energy resource mix is dominated by natural gas, providing close to 70% of electricity. Even though Thailand exploits its domestic fossil fuel reserves, it still is highly import-dependent, importing almost 19% of its natural gas supply and over 54% of its primary commercial energy supply (measured in tons of oil equivalent) in 2012. The dependence on controversial electricity imports from Laos, natural gas imports from Myanmar, and volatile global fossil fuel markets risks undermining the supply side of Thai energy security. Energy imports also represent an economic burden for the country, consuming almost 18% of GDP, according to 2012 statistics. Furthermore, in 2013, Thailand's final energy consumption has increased 2.6% over the previous year, which was valued at more than 1.79 trillion baht. However, the Thai government has taken steps to correct the imbalances and to stimulate further the progress and prosperity of the Kingdom. The 11th National Economic and Social Development Plan, a 5-year framework guiding government policy, includes the objective to move "toward a lowcarbon society". The power generation sector was responsible for 40% of greenhouse gas emissions in 2012 and will have to make a significant contribution to achieve this objective. Alternative energy sources can be an important part of the answer to these challenges. Resource assessments show a large potential for a number of alternative energy technologies, like solar, wind, biomass, biogas, hydro, and municipal solid waste. This is why the Thai government passed the 15-year Renewable Energy Development Plan (20082022), setting a target of achieving 20% in power production from alternative energy. At the end of 2011, the 10-year Alternative Energy Development Plan (2012-2021) increased these targets to 25% in total energy consumption and 10% in electricity consumption. It is predicted that achieving these targets would achieve the following: • Avoid over US$19 billion in energy imports annually • Encourage around US$15 billion in private investment • Avoid 76 million tons of greenhouse gas emissions per year • Create at least 40,000 new jobs

• Generate extra income and employment in rural areas These policies have led Thailand to become both the leading biofuel producer and user in Southeast Asia. Thailand also is beginning to improve the production of other renewable energy forms such as wind, hydropower and solar energy. In 2011, 8.2% of all energy sources in the Kingdom were renewable. Regulations dealing with the technical challenges of alternative energy sources are being updated periodically. Equally significant, public universities and national research institutes are exploring continuously how to improve alternative energy technology. A key goal for the Thai government is the strengthening of energy related industries and businesses to be next generation value-creators. It is worth mentioning that Thailand's comprehensive alternative energy schemes are divided into 3 phases, which are tied to a particular timetable. The first stage was short term and took place from 2008 to 2011. Its focus was on promoting proven technologies and high potential renewable energy such as biofuel, biomass and bio-energy. The second stage is medium term and currently in progress (2012 to 2016). It aims to develop investment in the renewable energy industry and innovative renewable energy technologies so that they are commercially feasible, to increase investment in new alternative energy research and development, and to boost the quality of life in Thailand through the introduction of "Green Cities" (low carbon dioxide emissions). The third stage is long term and scheduled to occur from 2017 to 2022. Its objectives will be enhancing upcoming technologies, concentrating on expanding and maximizing "Green City" models, and aiming to be a hub for biofuel exports and renewable technology development.

In 2011, natural gas was mainly consumed for electric generation shared 67.7% of the total fuel consumption of electric generation, followed by coal/lignite 22.7%, fuel oil and diesel 1.4% and the rest was alternative energy 8.2%. The Energy Efficiency Target is to reduce the total final energy consumption of 38,200 kilotons of oil equivalent (ktoe) by 2030. To actualize the government's policies, the Ministry of Energy will take the lead in implementing the AEDP, especially with regards to power generation totaling 9,201 megawatts from alternative energy sources. For the country's revised Power Development Plan (2013-2033) the portion of power purchases from neighboring countries is set to be not higher than 15% of total contract capacity from 2020 to 2030. After spiking in 2008, energy consumption fell in 2009 but then climbed steadily and by 2012 had experienced 1.3% growth. According to the figures provided by the Ministry of Energy (as of July 2012), Thailand imported about 1.23 trillion baht worth of fuel for energy and pre-generated energy in the form of electricity into the country. Of this amount, 13.86 billion baht was for electricity, 109.49 billion baht for gas, 42.34 billion baht for coal, 94.28 billion baht for refined oil and 977.37 billion baht for crude oil. The import of these fossil fuels is increasing every year. Indeed, the Ministry of Energy has set a target of 25% renewable energy within 10 years to reduce the purchase of imported fossil fuels. Ethanol and biodiesel are renewable energy outputs from particular crops; therefore, biofuel promotion will help increase the prices of agricultural products while reducing oil import and hence saving foreign currency of the country. Moreover, their retail prices are not expensive and these biofuels are clean energy, contributing to the reduction of environmental impacts and global warming problems. Particularly, E85 will be an important energy option for Thai people amidst oil price hikes. In the past, 48 ethanol licenses were given which had a total capacity of ethanol production about 12.5 ML/day. They can be classify from their feedstock which are from molasses 16 companies, cassava 24 companies and both cassava and molasses was 8 companies. From the nice picture up there, you can see that most of ethanol plants are located around central and northeast Thailand in order to get rid of their feedstock logistic problem. At the moment, there are only 19 existing plants that are installed now,

9 plants from molasses 4 plants from cassava and 6 plants from both molasses and cassava with total capacity 3.375 million liters per day. Solar is a clean natural energy source that can be transformed into heat and electricity. There are two main methods for generating electricity from solar energy. One is photovoltaic (PV) cells and the other method is a concentration system using lenses or mirrors to reflect and collection sun radiation. In 2012 Thailand has solar power production capacity of 316.12 megawatts. The Kingdom's AEDP targets a solar energy capacity of 2,000 megawatts in 2021. Additionally, there is potential for the utilization of wind turbines for power generation throughout the country, particularly along the sea shores and on the islands either in the Gulf of Thailand or Andaman Sea. By 2012, Thailand had commercial wind power capacity of 7.28 megawatts and the Kingdom aims to reach 1,200 megawatts by 2021. Finally, hydropower is a renewable energy source with significant potential and relatively low production costs. Thailand has abundant seasonal rainfall and reservoirs providing suitable locations for the generation of electricity. In 2012 the Kingdom's small hydropower energy output totaled 95.70 megawatts. The AEDP has a target to increase power generation from hydropower to 1,608 megawatts by 2021. The Board of Investment (BOI) provides incentives and services to investors in a wide range of sectors. Under the Investment Promotion Act B.E. 2520, the BOI is authorized to grant tax incentives and provide benefits to juristic entities keen on doing business in the Kingdom. In addition, no restrictions are made on foreign equity in manufacturing or designated services, and exemption from land ownership restrictions and a series of guarantees and protections are provided to mitigate risks to investors. Investment privileges include provision of information, contacts and coordination with other public agencies. Tax incentives included in the Investment Promotion Act include: • Exemption/reduction of import duties on machinery. (Section 28/29) • Reduction of import duties for raw or essential materials. (Section 30) • Exemption of juristic person's income tax and dividends. (Section 31 and 34) • A 50% reduction of the juristic person's income tax. (Section 35 (1)) • Deductions from the costs of transportation, electricity and water supply. (Section 35 (2)) • Additional 25 percent deduction of the cost of installation or construction of facilities. (Section 35 (3)) • Exemption from import duty on raw or essential materials for use in production for export. (Section 36) Recognizing the importance of alternative energy to Thailand's future development, the BOI has identified the following fields as priority activities: biomass, biogas, and wind power. Accordingly, this policy support for alternative energy has encouraged significant investments from both local and foreign companies. Likewise, the country's alternative energy consumption has increased 7.9% from the previous year with a total consumption of 8,226 ktoe in

2013. There also is a domestic alternative energy equipment manufacturing industry emerging. For instance, Thailand now has three companies manufacturing solar cells and modules using imported wafers, and another four assembling imported cells into modules. In addition, a number of components and services can be supplied by Thai firms. On average, most of the equipment used in solar projects (by value) continues to be imported and other steps as well as policy stability will be necessary to build a stronger domestic industry. This is an opportunity for the intrepid entrepreneur. The Kingdom of Thailand was among the first countries in Asia to introduce incentive policies for the generation of electricity from alternative energy sources, leading to rapid growth, particularly in solar power. As a matter of fact, Thailand's support policies for alternative energy in the power sector have allowed individual small projects to add up to something substantial and highlighting the pioneering efforts of the country. Furthermore, Thailand also frequently updates technical regulations, provides preferential financing, and invests in research and training. The Thai government is in the habit of adapting its policies to take account of recent technological progress and market growth. As such, it is considering a wide range of tariff programs to better control costs, while continuing to offer an enabling environment for alternative energy investments.

Thailand's Alternative Energy  
Thailand's Alternative Energy