NewS UPDATE

Revisiting the corridors of power

1 April 2007



The views of Thailand’s newly appointed energy minister Dr Piyasvasti Amranand suggest grounds for optimism for the country’s energy sector and its aspirations of de-regulation and privatisation. Junior Isles reports.


In November, after a three year spell as Chairman of Kasikorn Asset Management, Dr Piyasvasti Amranand was appointed to the position of Energy Minister in the Thai government's interim cabinet formed after the military coup in September.

Until May 2000 Dr Amranand was the secretary general of the National Energy Policy Office, and again from 2001 to 2003, but he saw his country’s sweeping energy reforms stumble after he left office. He notes that in the meantime “Not much has changed. We still have a single buyer model, there has been no additional IPP solicitation. Since 1997, the government has also put a stop to cogeneration under the SPP [small power producers] programme.”

The provision for renewables has not progressed sufficiently rapidly. The renewable portfolio standard (RPS) was announced three years ago to accelerate the use of renewable energy, but the move away from SPP regulations as the tool to promote renewables, towards the RPS has resulted in the construction of only a few renewable projects.

Under the standard, power producers wanting to sell power to the nation’s only electricity buyer, Electricity Generating Authority of Thailand (Egat), must have 5% of their installed generating capacity in the form of renewables. The RPS forms part of the ‘strategic plan for renewable energy development’, which aims to increase the renewable share of commercial primary energy consumption to 8% by 2011. This target, equivalent to a capacity of approximately 2 800 MW, will be reached through a combination of the ongoing SPP and very small power projects (VSPPs) programmes, the RPS, incentive programmes and increased funding for R&D into renewable technologies.

Regarding the SPP programme, Dr Amranand says, “What we now have to do is revive [it], with amendments to the regulations…. One part will be for VSPPs – whether cogeneration or renewable projects – selling no more than 10 MW into the system. Anything outside of this will come under the old SPP regulations, which will be amended. There are still restrictions on the maximum megawatt sales for each facility but the new moves will open up opportunities for private investment in cogeneration.”

Additional incentives will be provided for small power projects that use renewables. There will be an ‘adder’ to the normal electricity purchase price, the amount of which will depend on the type of facility. Because nationally there are numerous projects using biomass, the adder is expected to be small, that is, about 15% on top of the normal purchase price. The adder will be much higher for electricity from municipal waste and wind projects in order to attract investors.

The Energy Ministry recently set aside a fund of 1bn Baht ($32.5m) to support renewable projects under the VSPP programme.

Dr Amranand notes that the scope to increase the use of renewables is large, given that they only account for 2% of the country’s total 26 000 MW installed capacity.

More provision for coal

In addition to increasing the role of renewables, the Thai government recently announced its commitment to construct more coal fired power plants. This will help reduce reliance on gas, which accounts for more than 70% of generating capacity.

Three scenarios have been set for the national power development plan for the period 2011 to 2021, each including increased provision for coal fired plants. The first scenario states that only coal fired plants could be constructed after 2014. The second states that both gas and coal fired plant would be permitted after 2014, whilst the third calls for both gas and coal plant to be built from 2016 to 2021. The scenarios are to be forwarded to Egat, which will assess the cost-efficiency of each option, before making recommendations to the National Energy Policy Council. If approved, Egat’s conclusions will be used as guidelines for bids for new IPP plant construction licences.

IPP solicitation

Over the past few years, much attention has focussed on the stop-start IPP bid solicitation. This solicitation was expected more than two years ago, but was delayed owing to uncertainty of expected demand. Until last year, it was forecast that an additional

13 000 MW would be required in Thailand during the 2011-2015 period. However, that estimate was downgraded after the GDP forecast was reduced by 2 800 MW following the 2006 bird flu outbreak.

The ‘request for proposals, gas supply and power purchase agreements’ was presented at a public hearing in December, whereupon it was specified that Egat would not be allowed to participate in the IPP solicitation, although the IPPs in which Egat has a stake (ie Ratchaburi Electricity Holding Company and Electricity Generating Company (Egco)) would be allowed. The next bid solicitation is likely to be announced at the end of March.

There is discussion at present around whether the IPP bidding round will take place over three or five years from 2011. The Energy Policy and Planning Office has suggested that the new IPP bids are called in April, with further bidding every two years. Some potential industry investors, however, have called for this timeframe to be expanded to five years to encourage competition.

Looking ahead

In addition to new plant, Thailand plans to import more power from neighbouring countries, as Dr Amranand explains. “Commitments have been made to buy an additional 2 000 MW from various projects. Another two power purchase agreements will be signed some time in 2007. This will bring total purchase to over 3 000 MW. With a number of projects in the pipeline, total purchase of 5000 MW is entirely feasible.”

Looking beyond generation requirements, Thailand still lacks an electricity act and independent regulator, which will be required if Egat is to be privatised and meaningful competition is to be introduced. Regarding this, Amranand says, “We are working on enacting the Energy Industry Act to set up an independent regulator for the power and gas supply industries. We hope that this will come within 12 months.”


J-Power Generation's Kaeng Khoi No. 2 gas fired thermal power station in the Saraburi province. The plant's two units, with a combined capacity of 1 468 MW, are expected to begin operation in April. Egat's Bang Pakong combined cycle plant in the Chachoengsao province. Construction of the fifth 700 MW unit is expected to be completed in March 2009.



Linkedin Linkedin   
Privacy Policy
We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.