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Rethinking “energy security” and
power sector planning: a case study of Thailand
18-19 January 2012 Chuenchom Sangarasri Greacen
Palang Thai"Know Your Power“ International Conference
Towards a Participatory Approachfor Sustainable Power Development in the Mekong Region
Brief history of Thai power sector
• 1960s: decentralized coops in close competition with centralized utilities as the model to electrify Thailand. • Centralized model chosen not by technical superiority but
rather by Cold War politics• 1960s-90s: rapid expansion of power system by
state-owned utilities• World Bank and aid agencies had major roles
• 1990s: neoliberal reforms• Partial divestiture of EGAT’s generation assets (EGCO, RATCH)• Small and Independent Power Producers (SPPs/IPPs)• Role of private foreign capital
Brief history of Thai power sector (2)
• 2000s-present: • Plan to create Power Pool abandoned• Attempt to partially privatize (equitize) monopoly EGAT in
the stock market thwarted by civil society’s lawsuit• But increasing financialization of electricity in the stock
market continued via EGAT’s subsidiaries, other Thai energy companies and their joint ventures with foreign capital
• Increasing roles of Thai listed non-energy companies (e.g. construction) in power project investment
• Mushrooming power projects, domestic & trans-boundary
ISSUES AND TRENDS IN POWER SECTOR PLANNING AND DEVELOPMENT
Changing role of electricity
• Electricity as public service profitable commodity
• Commons like rivers trans-boundary commodities
Performance of high-level energy officials in serving the government vs.
PTT Plc. (Thai gas/oil utility, the largest list company in Thailand)Attendance of
PTT board meetings*
Attendance of Automatic Tariff (Ft) mechanism
mtgs**
Permanent Secretary
13/13 4/6
Director of EPPO
8/9 5/6*จากรายงานประจาป�บมจ. ปตท. ป� 2546** ต��งแต�ม�การปร�บองค์�ประกอบค์ณะอน�กรรมการ Ft โดยแต�งต��งให้�นายเชิ!ดพงษ์�เป$นประธาน และนายเมตตาเป$นรองประธาน( ปลายป� 46)
100%
90%
67%
83%
Changing role of policy makers:Serving public or corporations?
Hybrid identity, conflict of interest
Source: www.ratch.co.th
Power projects and policies driven by companies
• Power Development Plan (PDP) used to be the master plan for capacity expansion• Determines how many of which kind of plants get
built when• But now some projects were on “fast track”
even before being listed in the PDP, e.g. • 1,260 MW Xayaburi dam• 4,000 MW coal-fired plants in Dawei
Energy policy and plans become tools to drive the stock market and churn profits
• The coup-installed government announced its policy on energy investment opportunities on 3 Oct 2006
• Energy policy, PDP approval and IPP bidding resulted in significant windfall benefits for selected companies
• 1 year later, the share prices of companies benefiting from the PDP jumped 66% (other companies had a 8.7% rise)
Index Market Cap.
(M Baht) Index
Market Cap. (M Baht)
SET index 732.3 5,398,975 894.34 6,902,455 22.1%Energy - total 1,549,720 2,416,915 55.4% Energy - PDP-related 1,189,947 1,975,093 66.0% Energy- PTT-related* 1,178,612 1,946,230 65.1% Energy - PDP/PTT-related 1,379,886 2,259,729 63.8% Energy-non-PDP/PTT 25,212 22,126 -13.2%Non-energy SET index 3,849,255 4,485,540 8.7%
*"PTT-related" = PTT having more than 25% shares (voting rights) in the company
Share value increase in 1
year (%)
3-Nov-06 2-Nov-07
Investment disconnected actual need for electricity
• Criteria for determining generation requirement:• Reserve margin (capacity in excess of peak demand) ≥ 15%
• Yet Thailand’s PDP2010 adds generation:• 920 MW Nam Theun 2 when reserve margin > 28%• 597 MW Nam Ngum 2 when reserve margin > 27%• 660 MW Gheco1 when reserve margin > 27%• 1600 MW SiamEnergy when reserve margin > 25%• and many more….
Planned new investments are so excessive despite exaggerated “needs”
Used to justify NT2
5,800 MW
The year NT2 came online
Over-investment = unnecessary impacts,burden on consumers and economy
Thai power sector suffered from “over-capacity worth 400 billion Baht” (from total assets of 700 billion Baht and annual turnover of 240 billion Baht)
– PM Thaksin Shinwatra, 2004
Wasteful inefficiencychanging energy intensity over 20-yr period
Data source: Energy Information Administration 2008
Electricity productionand consumption(GWh)
1700 families relocated
Loss of livelihood for >6200 families
Loss of 116 fish species (44%)
Fishery yield down 80%
65MaeHongSong
Sou
rce: M
EA
, EG
AT, S
earin
, Gra
ph
ic: Gre
en
World
Fou
nd
atio
n
Dams Malls Province
Pak
Mun
Impacts of Pak Mun Dam alone
MBK
123
81
75
Siam Paragon
Central World
Extreme inequalityStructural violence in the name of “energy security”
TIME TO RETHINK “ENERGY SECURITY” & POWER SECTOR PLANNING
What is “energy security”?
A. The more, the betterB. Resource adequacy (availability)C. Resource adequacy & affordability.D. Resource adequacy & affordability &
efficiencyE. Resource adequacy & affordability &
efficiency & environmental quality
Source: Brown, Marilyn A., 2011
What is “energy security”?
A. The more, the betterB. Resource adequacyC. Resource adequacy & affordability.D. Resource adequacy & affordability &
efficiencyE. Resource adequacy & affordability &
efficiency & environmental quality
Government Policy Frameworkaccording to Energy Industry Act 2007
4 dimensions of energy security
Energy Industry Act 2007 Indicators
Availability - Resource Adequacy- Min. dependency on imports- Diversification (supply disruption)
- Reserve margin ≥15%- % energy imports- Concentration (plant)
Affordability - Affordable cost of service- Min. exposure to price volatility
- Electricity cost (B/mo.)- % exposure to oil price
Efficiency - Energy & economic efficiency - Energy intensity (GWh/GDP)
Environment - Min. environmental impacts - GHG emissions- SO2 emissions
Need to make “energy security” and PDP accountable to
government policy frameworkFramework for
evaluating PDPs
MAKING NEW & IMPROVED POWER DEVELOPMENT PLANS
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
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
-500
0
500
1000
1500
2000
Avg forecast increase1,491 MW/yr in PDP 2010
Avg forecast increase 830 MW/yr in PDP2012
Past actual averages:830 MW/yr (25 yrs)813 MW/yr (15 yrs)772 MW/yr (10 yrs)407 MW/yr ( 5 yrs)
Actual Forecast
New & improved PDPs
• New PDP based on more realistic demand forecast = “PDP2012”
• Improved PDP based on PDP2010 forecast = “PDP2010v2”
Methodology
– Maintain 15% minimum reserve margin– Prioritize investment in energy efficiency (EE)/ demand-side
management (DSM) as a resource option– Consider life extension (delayed retirement) of power plants
as a resource option• Additional investment might be required but only done in cases
that are economic compared to building a new power plant.
– When additional capacity is needed, prioritize (high-efficiency) cogeneration over (inefficient) centralized generation
– New generation not already under construction may be removed if not needed to maintain 15% reserve margin
EE/DSM cumulative savings in PDP2012 and PDP2010v2
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
0
1500
3000
4500
6000
7500
9000
10500
EE/DSM cumulative savings in PDP2012 or PDP2010v2 (MW)
EE savings (PDP2010)
Additional EE savings consistent with the gov-ernment's 20-yr EE Plan (PDP2012)
0
2
4
6
8
10
12
245 514 1598 2202 2560 3444 4934 6735 8945
Cumulative Resource Potential (Average Megawatts)
Real Leveliz
ed C
ost
(C
ents/k
Wh - 2
000$
)
EE
Renewables
Coal
Gas turbines
Combined cycle
Resource potential for generic coal, gas & wind resources shown for typical unit size. Additional potential is available at comparable costs.
Source: Northwest Power and Conservation Council
DSM/EE are the cheapest options to meet growing demand (but not yet considered an
option in Thailand)Cost comparison for different supply options in Pacific Northwest, USA.
PDP 2010 (Thailand) Pacific NorthwestUSA
DSM saving potential is under utilized in Thailand
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
GWH/
year
1978 1982 1986 1990 1994 1998 2002 2006
BPA and Utility Programs NEEA Programs State Codes Federal Standards
DSM/EE measures led to savings of over 30,000 GWH/yr
0
5000
10000
15000
20000
25000
30000
35000
2553 2555 2557 2559 2561 2563 2565 2567 2569 2571 2573
ท�'มา: Tom Eckman, Northwest Power and Conservation Council, 2009.
ท�'มา: สไลด�แผ่�นท�'19, สมมต!ฐานและภาพรวมร�างแผ่น PDP 2010, 17 ก�มภาพ�นธ� 2553.http://www.eppo.go.th/power/pdp/seminar-17feb2553/assumptions-PDP2010.pdf
0.3% saving in 20 yrs
Cogeneration (Combined Heat and Power – CHP)
Cogeneration in PDP 2012Application MW ProgramExisting signed PPAs 3790 SPPApproved but not yet signed PPA 2835 SPPNew cooling CHP projects under 10 MW each -- identified in (Menke et al., 2006)
3500 VSPP
New VSPP in ceramics, paper, pellet and other industries
(not counted)
VSPP
0.9% per year growth in opportunities over next 18 years
1700 SPP+VSPP
Total 11825
PDP2012 adds 4,800 MW of cogenerationbeyond what was already in the plan
Plant life extension (1)Power plants to be
decommissioned in PDP2010 MWPlant life at
decommissioning
Extended life to delay
decommissioning and construction of
new plants*EGAT Nam Pong CC #1 � 325 25 Nam Pong CC #2 � 325 25 30 Bang Pakong TH #1-2 1,052 30 Bang Pakong TH #3 576 30 Bang Pakong TH #4 576 30 Bang Pakong CC # 3 314 25 Bang Pakong CC # 4 314 25 30 South Bangkok CC #1 316 25 30 South Bangkok CC #2 562 25 30 Mae Moh TH # 4 140 40 Mae Moh TH # 5-6 280 40 Mae Moh TH #7 140 40 Mae Moh TH # 8 270 40 Mae Moh TH #9 270 40 Wang Noi TH #1-3 1,910 25 30
* Plant life extension may require additional investments and time to maintain and upgrade equipment. The time and resources required to extend plant life are usually significantly less than building a new one. However, more detailed assessment should be done on a case by case basis to ensure technical and economic feasibility of plant life extension.
Plant life extension (2)Power plants to be
decommissioned in PDP2010 MWPlant life at
decommissioning
Extended life to delay decommissioning and construction of new
plants*
IPPs Khanom TH #1 70 15 Khanom TH #2 70 20 Khanom CC #1 678 20 Eastern Power 350 20 30 Glow IPP 713 25 30
Independent Power (Thailand) (IPT) 700 25 30
Tri Energy Co., Ltd 700 20 30 Hauay Ho 126 30 Theun Hinboun 214 25 Rayong CC #1-4 1,175 20 Ratchaburi TH #1-2 1,440 25 30 Ratchaburi CC #1-2 1,360 25 30 Ratchabuti CC # 3 681 25 30
* Plant life extension may require additional investments and time to maintain and upgrade equipment. The time and resources required to extend plant life are usually significantly less than building a new one. However, more detailed assessment should be done on a case by case basis to ensure technical and economic feasibility of plant life extension.
Renewable Energy
• Same amount as planned in PDP2010• PDP2010 did acceptable job of including more
RE• RE projects also have impacts and face
community opposition• Need to address EIA loophole for projects < 10
MW to address environmental concerns
Summary of different PDPs
Generation by fuel type
2010PDP 2010 PDP 2010 v. 2 PDP 2012
2030 2030 2030
MW % MW % MW % MW %
Coal 3,527 11% 12,669 19% 6,269 13% 3,087 9%
Gas 16,091 51% 21,668 33% 15,972 34% 9,572 27%
Hydro – EGAT 3,424 11% 3,936 6% 3,936 8% 3,936 11%
Hydro – imports 1,260 4% 9,827 15% 3,827 8% 1,737 5%
Cogeneration 1,878 6% 7,024 11% 11,824 25% 11,824 33%
Renewables 767 2% 4,804 7% 4,804 10% 4,804 14%
Oil/gas 3,784 12% 0 0% 0 0% 0 0%
Nuclear 0 0% 5,000 8% 0 0% 0 0%Others (fuel oil, diesel, Malay) 619 2% 619 1% 619 1% 619 2%
Total generation 31,350 100% 65,547 100% 47,251 100% 35,579 100%Additional EE/DSM
savings - - 13,160 9,923
Total Resources 31,350 65,547 60,411 45,502
Comparing PDPs
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
PDP 2010
nuclear
EE/DSM
Others
Oil/gas
RE DEDE
Cogen
Hydro imports
Hydro
Gas
Coal
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
PDP2012
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
PDP2010v2
Dependency on electricity/fuel imports
2010 PDP2010 PDP2010v2
PDP20120
50,000
100,000
150,000
200,000
250,000
Uranium (Kazakhstan/Aus-tralia)
Power imports (Laos/Burma/Malay)
Diesel
Fuel Oil
Gas imports (Burma/Middle East)
Coal imports (Indonesia/Australia)
GWH
Cost of service (Baht/month) change in 2030 compared to 2010
2010 PDP2010 PDP2010v2 PDP20120
50
100
150
200
250
300
350
400
450
500Cost of service (Baht/month)
PDP2010 PDP2010v2 PDP2012
-15%
-10%
-5%
0%
5%3.5%
-13.2%
1.3%
Exposure to price volatility risks change in 2030 compared to 2010
PDP2010 PDP2010v2 PDP2012
-35.00%
-30.00%
-25.00%
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
-29.65%
-20.81%-18.87%
Energy intensity change in 2030 compared to 2010
PDP2010 PDP2012v2 PDP2012
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
4.1%
-16.7% -16.7%
Energy intensity (GWh/GDP billion Baht)
Emissions of air pollutantschange in 2030 compared to 2010
GHG Nox SO2 TSP Hg-50%
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
PDP2010PDP2010v2PDP2012
Comparing PDPs against different elements of energy security
change in 2030 compared to 2010
SO2 em
issions
GHG emiss
ions
Import
dependen
cy
energ
y inten
sity
Cost of s
ervice
Exposu
re to
oil pric
e risk
s
Concentra
tion (plan
t disr
uption)
PDP2010
SO2 em
issions
GHG emiss
ions
Import
dependen
cy
energ
y inten
sity
Cost of s
ervice
Exposu
re to
oil pric
e risk
s
Concentra
tion (plan
t disr
uption)
42%52% 56%
-17% -13% -21%
-97%
PDP2010v2
-15%
4%18%
-17%
1%
-19%
-97%
PDP2012
Concluding remarks
• Worrying trend of commoditizing electricity• “Energy security” and PDP process distorted to generate profits
for a few at the expense of– Affected communities - Environment– Consumers - Economy
• Need framework to hold “energy security” and PDP accountable to Energy Industry Act & the public
• Need to reform PDP process to prioritize cheaper, cleaner options to meeting demand
• Proposed PDP2012 better achieves energy security without the need for new green-field centralized coal/ gas/dam/nuclear.
Thank you
www.palangthai.org
Source: The 5th NW Electric Power and ConservationPlan
Supply options in NW USA
Source: The 5th NW Electric Power and ConservationPlan
Supply options in NW USA