thailand profile Experts agree that renewable energy is the way of the future. But when compared to the energy production costs of dirty fossil fuels, going green is not cheap. It costs US $5 million to produce a single MW of energy from solar panels, US $2 million for a MW of hydro electricity, US $1.8 million for a MW of bio-mass, and $1.2 million for a MW of wind energy. While long-term investment in renewable energy stands to benefit both the environment and the economic development of Thailand, it requires government support. Fortunately, successive governments have provided various incentives to the private sector to join the green energy production cycle. Thailand’s energy regulaTory auThoriTies The terms “climate change”, “energy security”, “energy diversity”, and “sustainable solutions” encompass a wide spectrum of issues and problems. To help explain this complex and technical issue it helps to look at a specific problem that illustrates wider trends. Energy production in Thailand serves this purpose well, and illustrates the success of clear government regulation when combined with the innovative spirit of the private sector. Yet to understand the contribution of current energy polices, we need to understand Thailand’s energy structure first. The Kingdom’s energy is supplied by the Electricity Generating Authority of Thailand (EGAT). EGAT owns almost half of the Kingdom’s power generation capacity, all of the transmission systems, and most importantly is the single buyer of all the electricity produced in Thailand. EGAT sells its energy resources to two distribution utilities: the Metropolitan Electricity Authority (MEA) – which provides electricity to consumers in Bangkok and its surrounding areas - and the Provincial Electricity Authority (PEA) – who provides electricity to the rest of the country. All of the electricity produced and sold in Thailand goes through these mechanisms. Before 1991, not a single private power producer supplied electricity into the national grid. In 1992, the government of Anand Panyarachun approved the Regulation to Purchase Power from Small Power Producers (SPP). Criteria for SPP qualification
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encouraged use of renewable energy sources and rewarded high production efficiency. The SPP program actively promoted investment in small scale privately owned renewable energy production of up to 60 MW, which was later increased to 90 MW. For comparison, Mae Moh in Thailand’s Lampang Province, Southeast Asia’s largest coal-fired power plant, bears a production capacity of 2,625 MW. Initial regulations for SPP had only limited success, and did not take off until 1994. Many of the early projects focused on cogeneration using natural gas and steam for nearby industrial estates. Several bio-fuel projects were implemented across Thailand, utilizing the Kingdom’s robust agriculture resources. Instead of being discarded, organic wastes such as bagasse from sugar mills, used rice paddy husk, and woodchips from paper factories were recycled into renewable fuel. The 1997 Asian economic crisis reduced Thailand’s demand for energy, which slowed the progress of the SPP program. To further encourage eco-friendly energy production, the Thai government introduced the Very Small Power Producer Program (VSPP) in 2002. The VSPP supported even smaller private
micro-production of energy, feeding up to 10 MW of energy directly into either the MEA or PEA. By producing energy near the source of consumption, the SPP and VSPP programs contributed to lowering transmission costs and waste for EGAT. Bureaucratic uncertainty, confusing regulations, and apprehensive energy suppliers also slowed the progress of both the SPP and VSPP programs. By the end of 2006, there were only about one hundred SPP and VSPP projects supplying 2,344 MW of electricity to Thailand’s national grid. In 2007 after the military coup installed the Surayud Chulanond government, it made several key changes to the SPP and VSPP policies in order to promote the use of renewable energy. First, the SPP and VSPP regulations were amended to be more “investor friendly”, practical, and transparent. Second, regulations created a financial incentive, called an “adder”, on top of the normal tariffs to encourage SPPs and VSPPs to use renewable energy. The amount of “adder” increases depending on the type of renewable energy being used. For example the “adder” provides an additional 2.5 Baht per Kilo Watt (kWh) of energy produced using municipal waste; 3.5 baht per kWh of wind power; and 8 Baht per kWh produced through solar energy. The new regulations paid smallscale energy producers higher tariffs for feeding electricity into the grid during peak consumption times when most needed. In order to promote the use of domestic resources and reduce dependence on foreign fuel imports, successive governments have distributed additional loans and expanded investment subsides to support renewable energy projects. The government of Prime Minister Abhisit Vejjajiva approved a 15 year Alternative Energy plan in January 2009, placing national importance on producing renewable energy and providing support for initiatives. Large budgets to provide technical assistance as well as pilot project funding for private investors interested in joining the green energy market have been approved. Further, Thai Ministries have been implementing micro hydro power plants in areas too difficult for the private sector to access, setting a goal of creating 112 MW of new green energy capacity by 2011. Based on the criterion of maintaining a system reliability