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Thailand situation analysis and initial idea for case study

Thailand situation analysis and initial idea for case study. Chris Greacen Sopitsuda Tongsopit Chuenchom Greacen. Palang Thai. Outline. Drivers Status Constraints Case study ideas. Drivers. AEDP 2012-2021: 25% of final energy consumption by 2021.

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Thailand situation analysis and initial idea for case study

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  1. Thailand situation analysis and initial idea for case study Chris Greacen SopitsudaTongsopit Chuenchom Greacen Palang Thai

  2. Outline • Drivers • Status • Constraints • Case study ideas

  3. Drivers

  4. AEDP 2012-2021: 25% of final energy consumption by 2021

  5. Small Power Producer (SPP) and Very Small Power Producer (VSPP) regulations $

  6. Thailand’s ADDER (FiT) Rates (in USD/kWh)

  7. Revolving Fund • Thai Government loans funds at 0% interest to commercial banks for investment in: • Energy efficiency improvement projects • Renewable energy development and utilization projects • Low cost financing 11 local financial institutions have participated. • Max loan amount: 50 MB • Max. interest rate: 4% • Max. loan period: 7 years January 2003 – present 7000 M Baht

  8. Investor Investor Investor Investor ESCO Fund A source of venture capital for ESCOs to jointly invest with private operators in energy efficiency & renewable energy projects. The program targets SMEs & small projects. • Low cost financing Energy Conservation Promotion Fund ESCO Fund Investment Committee Fund Manager ESCO Venture Capital Equity Investment Equipment Leasing Carbon Market Technical Assistance Credit Guarantee Facility 9

  9. Tax Incentives • Tax incentives 10

  10. Status

  11. Biogas from Pig Farms Reduces air and water pollution Produces fertilizer Produces electricity 8 x 70 kW generator

  12. Biogas from Pig Farms

  13. Uses waste water from cassava to make methane Produces gas for all factory heat (30 MW thermal) + 3 MW of electricity 3 x 1 MW gas generators Korat Waste to EnergyCassava biogas

  14. Micro hydropower • 40 kW • Mae Kam Pong, Chiang Mai, Thailand

  15. Rice husk-fired power plant • 9.8 MW • Roi Et, Thailand

  16. Lopburi solar PV – 73 MW (over 1,000 rai = 160 hectares) • Signed PPAs for 767 MW of PV (SPP + VSPP)

  17. Construction underway for 207 MW wind farm

  18. Feb 2007 18 MW online Thailand VSPP Status

  19. Mar 2012 1222 MW online (68-fold increase since 2007) PPAs signed for additional 3820 MW Thailand VSPP Status

  20. VSPP results in Thailand

  21. Comparison between the current on-grid RE status or pipeline status vs. target.

  22. Thailand’s Solar Goldrush:Systems by Stage of Applications

  23. Constraints

  24. Management Committee (June 2010) • New committee set up after PV ‘gold rush’ • Role: to decide which projects proceed • Lack of clear criteria • Political connections and intervention • Composition: utilities, government • Results: all types of RE projects that are under different stages of development are experiencing bottlenecks in the permitting processes. • Allegations of corruption

  25. Department of Factories New! all types of power projects (though mostly renewable energy) are experiencing severe bottlenecks in the permitting processes.

  26. Trend of MW in the Pipeline (All Renewables) bid bond introduced Formation of Managing Committee June 2010 “Healthy Pipeline?”

  27. Micro-hydropower • Constrained by water rights • Grid-connection of DEDE village micro-hydropower projects constrained by anti-corruption rule that prohibits a group of individuals from receiving revenues from government assets.

  28. Biomass • Constrained by high biomass fuel prices • Business plan: biomass = 800 baht/tonne • Actual: biomass = 1000 baht/tonne • Low CO2 price

  29. Solar • No new solar applications accepted since June 2010. • No price differentiation for smaller projects (solar farms account for 99% of installed grid-connected capacity).

  30. PDP 2010 New generation includes: 11,669 MW of imports 8,400 MW of coal plants 16,670 MW of gas plants 5,000 MW of nuclear

  31. PDP 2010 (revision 3)

  32. Choice of supply options considered in the PDP by EGAT 700 MW Coal-fired power plant 700 MW gas-fired combined cycle plant 230 MW gas-fired open cycle plant 1,000 MW nuclear plant Hydro imports are politically negotiated outside of PDP process DSM/EE, RE, Distributed generation not considered as supply options

  33. EGAT’s cost assumption for planning Cost (Baht/kWh) Nuclear Coal Gas CCGT Oil (Thermal) Gas turbine RE Solar Wind Waste Biomass Source: EGAT, PDP 2007 Presentation at Public Hearing, 2 April 2007.

  34. หมายเหตุ 1. ใช้สมมติฐานว่าต้นทุนร้อยละ 12.4 ของค่าไฟฟ้ามาจากธุรกิจสายส่ง 2. ใช้สมมติฐานว่าต้นทุนร้อยละ 14.5 ของค่าไฟฟ้ามาจากธุรกิจจำหน่าย 3. ค่า CO2 ที่ 10 ยูโร/ตัน 4. ค่า Externality ตามการศึกษา Extern E ของสหภาพยุโรปและนำมาปรับลดตามค่า GDP ต่อหัวของไทย 5. 5. The World Bank, Impact of Energy Conservation, DSM and Renewable Energy Generation on EGAT’s PDP, 2005. 6. ตามระเบียบ SPP 7. ที่มา : กฟผ. 8. California Public Utilities Commission (CPUC), 2050 Multi-Sector CO2 Emissions Abatement Analysis Calculator, 2009 9. Cost of liability protection, Journal “Regulation” 2002 – 2003.

  35. Incentive structure for utilities:the high their investment budget, the more profits • Financial criteria for utilities link profits to investments • Thailand uses outdated return-based regulation • WB’s promoted financial criteria such as self financing ratio (SFR) also have similar effects • ROIC (Return on Invested Capital means: the more you invest, the more profits 5.8% Result: EGAT favors capital-intensive investments (centralized plants) by its organization or subsidiary companies. Allowing more EE or RE generation hurts EGAT’s bottom line

  36. Summary of structural issues • Utilities are incentivized to prioritize capital-intensive, centralized generation • Lack of integration of EE/RE in planning process • Arbitrary quota system • Costs • Exclusion of T&D costs (not to mention externality costs) makes cost comparison between RE and other generation unfair

  37. Other RE issues • Creation of “Management Committee” to screen VSPP applications creates governance problems • Lack of clear criteria • Political connections and intervention • Lack of enforceable environmental safegard framework for <10MW generation • Lack of policy certainties • Lack of predictability and periodic updates of purchase prices to reflect changes in costs • Lack of price differentiation for smaller-scale RE • Lack of financial support for community/small-scale RE

  38. Ideas for research

  39. Research question What regulatory changes will be necessary to rapidly scale up renewable energy investment by the year 2021? • Framework: • Pricing structure • Permitting process • VSPP + SPP regulations and tariffs: fair, streamlined, transparent, accountable • Monitoring and evaluation

  40. Thank you For more information, please contact chris@palangthai.org chomsgreacen@gmail.com

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