thailand situation analysis and initial idea for case study chris greacen sopitsuda tongsopit...
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Thailand situation analysis and initial idea for case study
Chris GreacenSopitsuda TongsopitChuenchom Greacen
Palang Thai
Outline
• Drivers• Status• Constraints• Case study ideas
Drivers
5
TypeOf Energy
AEDP2012-2021
Solar 2,000Wind 1,200Hydro 1,608Biomass 3,630Biogas 600MSW 160Other (tidal, geothermal)
3
Total 9,201(by 2021)
% of installed capacity 19.3% of installedcapacity in 2021
AEDP 2012-2021: 25% of final energy consumption by 2021
Solar2,000 MW 22%
Wind1,200 MW 13%
Mini-Micro-hydro324,
MW4%
Pumped Storage1,284 MW14%
Biomass3,630 MW 39%
Biogas600 MW 6%
MSW160 MW2% Tidal Wave Geothermal
Solar Wind Mini+Micro hydroPumped storage Biomass BiogasMSW Tidal Wave Geothermal
$
Small Power Producer (SPP) and Very Small Power Producer (VSPP) regulations
7
2007 Adder Rate
2009 Adder Rate
2010 Addder
Rate
Special Adder for Diesel
Replacement
Special Adder for Three
Southernmost Provinces
Installed Capacity ≤ 1 MW 0.010 0.017 0.017 0.033 0.033 7Installed Capacity > 1 MW 0.010 0.010 0.010 0.033 0.033 7
Installed Capacity ≤ 1 MW 0.010 0.017 0.017 0.033 0.033 7Installed Capacity > 1 MW 0.010 0.010 0.010 0.033 0.033 7
Landfill and Digestor 0.083 0.083 0.083 0.033 0.033 7Thermal Process 0.083 0.117 0.117 0.033 0.033 7
Installed Capacity ≤ 50 kW 0.117 0.150 0.150 0.050 0.050 10Installed Capacity > 50 kW 0.117 0.117 0.117 0.050 0.050 10
50 kW <Installed Capacity < 200 kW 0.013 0.027 0.027 0.033 0.033 7Installed Capacity ≤ 50 kW 0.027 0.050 0.050 0.033 0.033 7
Solar 0.267 0.267 0.217 0.050 0.050 10
Small/Micro Hydro
Type of RE
Unit: US Dollars per kWh
Years Supported
Biomass
Biogas
Waste
Wind
Thailand’s ADDER (FiT) Rates (in USD/kWh)
• Thai Government loans funds at 0% interest to commercial banks for investment in:
• Energy efficiency improvement projects• Renewable energy development and utilization projects
January 2003 – present
7000 M Baht
11 local financial institutions have participated.
Max loan amount: 50 MBMax. interest rate: 4% Max. loan period: 7 years
Revolving Fund
Low cost financing
9
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.
Investor
Technical Assistance
ESCO Venture Capital Equipment Leasing
Carbon Market
Equity Investment
Credit Guarantee Facility
Fund Manager
Investor
InvestorInvestor
ESCO FundInvestment Committee
Energy Conservation Promotion FundEnergy Conservation Promotion Fund
ESCO FundLow cost financing
10
Thailand’s Board of Investment (BOI)’s tax incentives for renewable energy projects:
• Corporate income tax holidays up to 8 yrs. Additional 50% reductions of corporate income tax for 5 yrs
• Import duty reductions or exemptions on equipment and raw materials
Tax IncentivesTax
incentives
Status
Biogas from Pig Farms
Reduces air and water pollution
Produces fertilizer
Produces electricity
8 x 70 kW generator
Biogas from Pig Farms
• 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
•40 kW•Mae Kam Pong, Chiang Mai, Thailand
Micro hydropower
Rice husk-fired power plant• 9.8 MW• Roi Et, Thailand
Lopburi solar PV – 73 MW (over 1,000 rai = 160 hectares)
•Si
gned
PPA
s fo
r 767
MW
of P
V (S
PP +
VSP
P)
Construction underway for 207 MW wind farm
Feb 2007
Thailand VSPP Status
Application pendingReceived permission, awaiting PPA
PPA signedGenerating electricity
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Mi-cro-
hydro
Natural gas co-
gen
Coal cogen
Biogas
Garbage
Wind
Solar
Biomass
18 MW online
Application pendingReceived permission, awaiting PPA
PPA signedGenerating electricity
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Mi-cro-
hydro
Natural gas co-
gen
Coal cogen
Biogas
Garbage
Wind
Solar
Biomass
Mar 2012
Thailand VSPP Status
1222 MW online (68-fold increase since 2007)
PPAs signed for additional 3820 MW
VSPP results in Thailand
Comparison between the current on-grid RE status or pipeline status vs. target.
Thailand’s Solar Goldrush:Systems by Stage of Applications
Proposed Accepted (Waiting to Sign PPAs)
PPA Signed (Not yet Connected)
Connected and Selling to the Grid
SPP 45 40 272.16 90.41
VSPP 912.25 39.2 1589.03 271.33
100300500700900
11001300150017001900
Thailand's Solar Capacity(Status as of October 2012)
Inst
alle
d Ca
paci
ty (M
W)
Constraints
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
Department of Factories
New! all types of power projects (though mostly renewable energy) are experiencing severe bottlenecks in the permitting processes.
28
Trend of MW in the Pipeline (All Renewables)
“Healthy Pipeline?”
Formation of Managing Committee June 2010
bid bond introduced
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.
Biomass
• Constrained by high biomass fuel prices– Business plan: biomass = 800 baht/tonne– Actual: biomass = 1000 baht/tonne
• Low CO2 price
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).
PDP 2010
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
nuclear
EE/DSM
Others
Oil/gas
RE DEDE
Cogen
Hydro imports
Hydro
Gas
Coal
New generation includes:11,669 MW of imports 8,400 MW of coal plants16,670 MW of gas plants 5,000 MW of nuclear
PDP 2010 (revision 3)
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 processDSM/EE, RE, Distributed generation not considered as supply options
EGAT’s cost assumption for planning
Source: EGAT, PDP 2007 Presentation at Public Hearing, 2 April 2007.
NuclearCoalGas CCGTOil (Thermal)Gas turbineRE Solar Wind Waste Biomass
Cost(Baht/kWh)
Supply options
Cost estimate (Baht/kWh)
Generation
Transmission1
Distributio
n2
CO2 3 Other
envi impacts
4
Social impact
s
Total
DSM 0.50 – 1.505 - - - - - 0.50 -1.50
SPPcogeneration(PES > 10%)
2.60 6 - 0.44 0.08 0.71 - 3.83
VSPP(Renewable)
Bulk supply tariff
(~ 2.62) +Adder
(0.3 – 8)
- 0.44 - 0 – 0.63 0 – low 2.92 – 10.62
gas CC 2.25 7 0.37 0.44 0.09 0.79 low – medium
3.93
Coal 2.11 7 0.37 0.44 0.15 2.76 High 5.82
Nuclear 2.087–7.308 0.37 0.44 - 0.15 + 1.009
High – very high
4.04-9.26 หมายเหตุ� 1. ใช้สมมตุ�ฐานว่�าตุนทุ�นร้อยละ 12.4 ของค่�าไฟฟ�ามาจากธุ�ร้ก�จสายส�ง
2. ใช้สมมตุ�ฐานว่�าตุนทุ�นร้อยละ 14.5 ของค่�าไฟฟ�ามาจากธุ�ร้ก�จจ�าหน�าย 3. ค่�า CO2 ทุ ! 10 ย"โร้/ตุ$น
4. ค่�า Externality ตุามการ้ศึ&กษา Extern E ของสหภาพย�โร้ป และน�ามาปร้$บลดตุามค่�า GDP ตุ�อห$ว่ของไทุย 5. 5. The World Bank, Impact of Energy Conservation, DSM and Renewable Energy Generation on EGAT’s PDP, 2005. 6. ตุามร้ะเบ ยบ SPP 7. ทุ !มา : 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.
• 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
Incentive structure for utilities:the high their investment budget, 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
ROIC = Net profit after tax Invested capital EGAT 6.4%
MEA PEA
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
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
Ideas for research
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
