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A Hypothetical Enhanced Renewable Energy Utilization (EREU) Model for Electricity Generation in Thailand

Masterarbeit 2008 213 Seiten

Umweltwissenschaften

Leseprobe

TABLE OF CONTENTS

Preface

Abstract

Acknowledgements

Table of Contents

List of Figures

List of Tables

Chapter

1 Introduction
1. Background Information and Statement of the Problem
2. Research Objectives
3. Scope and Boundaries
4. The Research Question
5. The Significance of this Thesis
6. Operationalization of the Terminology
7. The Thesis Structure

2 Review of Literature
1. The Definition of Renewable Energy
1.1 Focus: Renewable Energy for Electricity Generation
2. Thailand - Country Overview
2.1 Digression: Economic Development 1997 -
3. The Electricity Industry and Electricity Consumption in Thailand
3.1 Thailand’s Electricity Supply Industry (ESI)
3.2 Electricity Consumption Development 1990 -
4. Renewable Energy for Electricity Generation in Thailand
4.1 The Beginning of Energy Conservation and Renewable Energy Promotion (1992 - 2000)
4.2 The Reform of the SPP Program, VSPP Legislation and Enforcement of Renewable Energy Promotion (2000 - 2004)
4.3 The Energy Policy and Development Plan and the Upgrade of the VSPP Regulation (2005 - 2007)
4.4 Current Data and Statistics
4.5 Recent Development: Latest Events in the Year
5. Summary, Forecast and Conclusion
5.1 The Importance of Renewable Energy for Electricity Generation in the Kingdom of Thailand
6. Pre-Assessment of an Enhanced Renewable Energy Utilization Model
6.1 Need Assessment: Abolition of Barriers to Enhance RE Utilization
6.2 Conceptual Framework

3 Research Methodology
1. Expert Interview Survey: Research Design
1.1 Introduction
1.2 Research Type and Participants
2. Research Instruments
2.1 Population and Sampling Methodology
2.2 Data Gathering: The Questionnaire and Interview Procedure

4 Data Analysis and Synthesis
1. The Interviewee Profiles
2. Restructuring Thailand’s ESI
3. Creation of Enhanced RE Support Mechanisms
4. Removal of Major Barriers against RE Development
5. Strategic Planning and Thailand’s Future Energy Portfolio
6. Compliance to International Goals and Targets

5 The Hypothetical Enhanced Renewable Energy Utilization (EREU) Model and Strategic Implications
1. Introduction
2. Restructuring of Thailand’s ESI and Regulatory/Administrative Measures
2.1 Establishment of an Independent Regulation Authority (IRA)
2.2 Liberalization and Decentralization
2.3 EGAT Restructuring and other Amendment Measures
2.4 The Further Development of the SPP and VSPP Program
2.5 Conclusion: EREU Module
3. Enhanced RE Support Mechanisms and Incentive Measures
3.1 Enhanced Quota Mechanism: Update of the RPS
3.2 Bidding Mechanism
3.3 Enhanced Tariff Mechanism: Establishment of a Comprehensive Feed-in Support Scheme for RE
3.4 Production Tax Credits: Creation of Tax- and Investment Incentives
3.5 Conclusion: EREU Module
4. Removal of Major Barriers against RE Development and Information Measures
4.1 Provision of Enhanced Financing Options for RE Projects
4.2 Establish Enhanced Local Workforce Training and Expertise
4.3 Increase Consumer Awareness Towards RE Utilization
4.4 Foster Community and Stakeholder Participation in RE Decisions and Projects
4.5 Conclusion: EREU Module
5. Strategic Planning for Enhanced RE Utilization and Technology-Specific Measures
5.1 Reform the Power Development Macro Planning Process
5.2 Realistically Plan with Renewable Alternatives
5.3 Consider Technology-Specific Measures
5.4 Conclusion: EREU Module
6. International Goals and Monitoring Measures
6.1 Ratification and Compliance to International Goals
6.2 Take the Consequences from the Result of the 2011-Target
6.3 Conclusion: EREU Module
7. The Enhanced Renewable Energy Utilization (EREU) Model
7.1 Expert Verification
8. Strategic Implications

6 Discussion and Recommendation
1. Closing Discussion
2. Final Recommendation

References

List of Acronyms

Appendices

Appendix A: Secondary Research Documents

Appendix A-1: Excerpt: Thailand’s Energy Strategy for

Competitiveness (2003)

Appendix A-2: The Energy Development and Policy Plan (2006)

Appendix A-3: Selected Newspaper Articles (2007)

Appendix A-4: The Bali Action Plan (Decision -/CP.13 – Bali roadmap)

Appendix B: Primary Research Documents

Appendix B-1: Expert Interview Survey Questionnaire

Appendix B-2: Reference of Organizations

Affidavit xi

PREFACE

This thesis presents a research project entitled ‘A Hypothetical Enhanced Renewable Energy Utilization (EREU) Model for Electricity Generation in Thailand’. This research is motivated by Thailand’s rapidly increasing electricity consumption caused by the country’s long-standing above-average economic growth. Consequently, the rising electricity demand can only be satisfied by continuously growing electricity imports and thus creating a significant burden to Thailand’s national budget. Furthermore, Thailand is heavily dependent on natural gas reserves for electricity generation, however, these are expected to be depleted within only three decades and global price levels for conventional fuels are increasingly volatile with an ascending tendency as well. Therefore, Thailand faces an urgent need to strategically plan for the broad utilization of domestic renewable energy resources, which is essential for a more diversified and thus sustainable electricity generation, as well as for the nation’s endeavor to become an energy hub within the South East Asian region.

Under these circumstances this research conducts a comprehensive literature review regarding the past development as well as the current situation of renewable energy utilization in Thailand, which concludes in the identification of the importance of renewable energy in the given context and closes with both a distinctive need assessment and a conceptual framework for Thailand’s future renewable energy strategy. Subsequently, the research introduces a unique primary research endeavor in the form of an explorative expert interview survey, which succeeds in a substantial collection of qualitative and in-depth data. These valuable data is first objectively analyzed and second subjectively interpreted and summarized to become the major source for the derivation of a multitude of potential strategic recommendations for an enhanced future renewable energy utilization development in Thailand. Finally, the entirety of theses recommended strategic approaches, based on both the secondary and primary research, are assembled to develop the Enhanced Renewable Energy Utilization (EREU) model for electricity generation in Thailand as the fundamental finding of this thesis and research project respectively. Ultimately, this research aims to give a strong impetus to the future role of renewable energy and its proper development for a truly diversified, independent and thus sustainable electricity supply for the Kingdom of Thailand on its way to become a regional energy hub.

Research Project Title: A HYPOTHETICAL ENHANCED RENEWABLE ENERGY UTILIZATION (EREU) MODEL FOR ELECTRICITY GENERATION IN THAILAND

Researcher/Author: DI (FH) Thomas Andexer Major Advisor: Prof. Dr. Chaiyong Brahmawong Degree: Master of Science in Management (MSc-Mgt.) School: School of Management, College of Internet Distance Education (CIDE) Year: 2008.

ABSTRACT

Objectives: The objectives of this study are (1) to examine and understand both the past 15 years and the current situation of RE utilization in Thailand in order to being able to target questioning several field experts, (2) to create strategic approaches for Thailand’s future RE utilization development, (3) to raise the importance of a clear RE strategy onto the level of public discussion, (4) to stimulate additional research and (5) to give a strong impulse to the future role of RE in Thailand.

Methodology: The research is initiated with a secondary research to the RE utilization development in Thailand, followed by a primary research in the form of an expert interview survey, including seven field expert participants from several interest groups. The gained qualitative data is used to create strategic approaches which are in the last step assembled to a framework model for enhanced RE utilization in Thailand.

Major Findings: The research has found that the importance of RE utilization in Thailand is underlined by 13 major issues ranging from limited domestic conventional energy resources until Thailand’s chance to become a regional (renewable) energy hub. Ultimately, the research has established and verified the Enhanced Renewable Energy Utilization (EREU) model for electricity generation in Thailand, consisting of five distinctive modules, namely (i) Regulatory/Administrative Measures, (ii) Incentive Measures, (iii) Information Measures, (iv) Technology-Specific Measures and (v) International Goals and Monitoring Measures.

Key Words: Electricity Generation, Enhanced Renewable Energy Utilization (EREU) Model, Kingdom of Thailand, Renewable Energy.

ACKNOWLEDGEMENTS

I would like to thank all those who have contributed to the development of this research. I am particularly indebted to all expert interviewees who took their time to answer my survey questionnaire, namely Mr. Chris Greacen, Ph.D. from Palang Thai, Mr. Benjagoon Pongpoon from the Energy for Environment Foundation (EFE), Prof. Dr. Chumnong Sorapipatana from the Joint Graduate School of Energy and Environment (JGSEE), Mr. Magnus A. Staudte from Envima (Thailand) Co., Ltd., Mr. M.K. Balaji from Retech Energy Co., Ltd., Prof. Dr. Thierry Lefevre from the Centre for Energy Environment Resources Development (CEERD) and Mr. Thanawat Yanisrangkul from Thai Renewable Engineering Co., Ltd. In generously spending their precious time for my interviews they have provided the necessary input as the fundamental basis of this research project.

I give special thanks to Dr. Chaiyong Brahmawong, my tutor at the Assumption University of Thailand (ABAC) for the ongoing and motivating support, productive comments and feedback. I also would like to thank the Assumption University of Thailand as an open-minded, international oriented and inspiring education centre in Thailand and in specific the staff of the College of Internet Distance Education (CIDE) for the ongoing administrative support throughout the entire M.Sc. process.

Above all I owe the biggest thanks to my parents and brothers for their support and encouragement which have always given me the motivation to pursue.

Bangkok, in March 2008

Thomas Andexer, DI (FH)

LIST OF FIGURES

Figure 1: Thesis structure: The Seven-Step Approach of an R&D project

Figure 2: Content structure - Question/Answer Framework (Chapters 1-2)

Figure 3: Content structure - Question/Answer Framework (Chapters 3-6)

Figure 4: Renewable vs. Non-Renewable Energy

Figure 5: Percentage of total energy usage derived from renewable energy sources

Figure 6: Relative share of electricity generation capacity in Thailand (as of July 2007)

Figure 7: Thailand’s total electricity consumption 1990 - 2006 in GWh

Figure 8: Thailand’s electricity imports 1990 - 2006 in GWh

Figure 9: Growth Comparison between GDP and Electricity Consumption in Thailand

Figure 10: Shares distribution in Thailand's ESI structure (as of fiscal year 2006)

Figure 11: Changing Paradigm: From the centralized ESB model to decentralized utilities

Figure 12: Cumulative renewable energy SPP contracts signed 1993 – 2006 (MW)

Figure 13: Biogas storage under a polyethylene cover at a pig farm in Ratchaburi province

Figure 14: Fuel shares in electricity generation in Thailand (2007)

Figure 15: Growth development of types of fuels for electricity generation in Thailand
(1997 – 2007)

Figure 16: Key barriers to Thailand's renewable energy utilization development

Figure 17: Conceptual Framework of the EREU Model

Figure 18: Expert Interview Survey: Participants from multiple interest groups

Figure 19: Interest groups distribution of the interview participants

Figure 20: Work experience classification distribution of the interview participants

Figure 21: Expert opinion tendency towards the establishment of an IRA within 2008

Figure 22: Expert opinion tendency towards the general liberalization of Thailand’s ESI

Figure 23: Expert opinion tendency towards EGAT’s current strategy

Figure 24: Top renewable energy resources with the biggest long term potential in Thailand (expert’s relative priority ranking)

Figure 25: The experts’ opinion towards Thailand’s compliance to the MDG

Figure 26: Organization chart of EGAT (as of 2005/2006)

Figure 27: OECD Europe: Development of final electricity generation under the energy [r]evolution scenario

Figure 28: OECD Europe: Growth of final RE electricity supply under the energy
[r]evolution scenario, by source

Figure 29: Recommended technology-specific actions

LIST OF TABLES

Table 1: Quick Facts on Thailand

Table 2: SPPs selected for subsidy by fuel type (May 2002)

Table 3: Thailand MDG: Goal 7 Target 9 – Indicator Developments

Table 4: Subsidy adder for renewable VSPPs

Table 5: Average tariffs paid to firm and non-firm generators (1995-2006)

Table 6: Status of SPPs using renewable energy as fuel (as of December 2006)

Table 7: VSPPs having received notification of acceptance, by fuel type as of 2006

Table 8: Extract of Thailand’s 2007 Constitution to the power sector regulation

Table 9: The 2011-target and necessary RE capacity increase as of basis year 2004

Table 10: The 2011-target and necessary RE capacity increase as of basis year 2007

Table 11: Expert interview survey participants

Table 12: Gross electricity generation and purchase of EGAT

Table 13: EREU Module 1: ESI Restructuring and Regulatory/Administrative Measures

Table 14: EREU Module 2: Enhanced RE Support Mechanisms and Incentive Measures

Table 15: Economics of biomass electricity generation including CDM

Table 16: Changes in the IRR on project after inclusion of CDM

Table 17: EREU Module 3: Removal of Major Barriers against RE Development and Information Measures

Table 18: EREU Module 4: Strategic Planning for Enhanced RE Utilization and
Technology-Specific Measures

Table 19: Thailand’s ratification status under the UNFCCC

Table 20: EREU Module 5: International Goals and Monitoring Measures

Table 21: The Enhanced Renewable Energy Utilization (EREU) Model

CHAPTER

1 INTRODUCTION

Chapter 1 of this thesis embraces a general introduction divided into seven sub-chapters. In sub-chapter 1 the background and the problem of this research document are broadly introduced. S ub-chapter 2 outlines the research objectives, whereas sub-chapter 3 provides the thesis’ scope and boundaries. In sub-chapter 4 the research question is discussed and sub-chapter 5 explains the significance of the thesis. Finally, sub-chapter 6 provides the definitions of the most important terms followed by sub-chapter 7 which closes with a detailed description of the document structure.

· 1. Background Information and Statement of the Problem

The world is facing a crucial decision concerning the future of energy supply. Today’s apparent global climate change, the increasing dependency on oil, gas and other fossil fuels, growing electricity imports and rising energy costs are making the world’s societies and economies vulnerable. The sum of these challenges call for a comprehensive and ambitious response on all national levels. In the complex picture of energy policy, the renewable energy sector is, without doubt, the one sector which stands out in terms of ability to exploit domestic and decentralized energy sources, reduce greenhouse gas emissions and pollution and stimulate world-class high-tech industries. ‘Renewables’ are largely indigenous, they do not rely on uncertain projections on the future availability and prices, and their predominantly decentralized nature helps making both the society and economy less vulnerable. It is thus undisputed that renewable energies constitute a key element of a sustainable energy-future, all the more for developing countries, where economies and electricity demands are simultaneously growing with - in many cases - breathtaking speed. Hence, also the Kingdom of Thailand has compelling reasons to set up, maintain and continuously improve a practical framework or model respectively, to promote enhanced renewable energy utilization.

In February 2007, the European Office of the Konrad-Adenauer-Stiftung and the EastWest Institute organized a conference to the potential and benefits of renewable energy for developing countries. In this course, Mr. Anders Wijkman, previously Policy Director of the United Nations Development Program and current Member of the European Parliament, held an introductory speech, which properly outlines the importance of the present research topic. Therefore, an extract of Anders Wijkman’s (2007) key speech should be quoted in here:

“The role of energy in development is crucial. Energy fuels economic growth and is therefore of paramount concern for all countries. … In fact, no country has been able to substantially reduce poverty without significantly increasing its use of energy. … Energy use in developing countries is closely linked to a range of social issues: poverty alleviation, education, health, population growth, employment … climate and the environment. Most current forms of energy generation and use cause environmental problems at local, regional and international levels, threatening the health and well-being of current and future generations. … Finding ways to expand energy services, while addressing the environmental impacts associated with energy use, represents a critical challenge for humanity. … Renewable energies have the important potential of allowing development and environmental challenges to be dealt with jointly. … Renewable energies have the potential to provide increased security and economic stability. Increased use of renewable energy sources would reduce dependence on expensive fossil fuel imports and would help many countries improve their balance of payments. ... The potential for Renewables in poverty reduction, the fight against climate change and in working towards development goals, give cause for optimism among politicians, economists, environmentalists and investors around the world. On a global level, investment in renewable energy has seen an explosive increase during the past few years, doubling since 2004. A further 20 % increase is expected for 2007 alone. However, continued interest is largely dependent upon oil prices and, significantly, on governments creating the right frameworks to foster long term business engagement. … In other words, policy matters. … We have to think big. There is desperate need for modern energy services all over the developing world. … What are we waiting for?” (Wijkman A., Conference Proceedings, 2007, p. 11 f).

By accounting for this given background of the global importance of renewable energy, with a focus on developing countries, the following research project narrows down the scope to the importance of renewable energy for electricity generation in the Kingdom of Thailand. Thailand is characterized by a long term above-average economic growth, except the crisis years of 1997 until 1999, and thus also by an even faster growing electricity demand. As a matter of fact, this rapid growth could and still can only be accommodated by growing imports, posing a significant financial burden to the country’s national budget. The choice of the appropriate renewable energy utilization strategy is thus a critical key decision in the process of reforming Thailand’s electricity industry and crucial for managing and securing a financial- and environmental-friendly, sustainable and independent future electricity supply.

2. Research Objectives

The present research presents an explorative research endeavor with the main research objectives to examine and understand both the past 15 years and the current situation of the renewable energy utilization in Thailand in order to being able to target questioning several field experts, affiliated to different interest groups, and to create strategic approaches for Thailand’s future renewable energy utilization development. Moreover, this research aims to raise the importance of a clear renewable energy strategy onto the level of public discussion, to stimulate additional research and to give a strong impulse to the importance of the future role of renewable energy in Thailand.

Hence, this research’s endeavor is of explorative nature; therefore it neither provides the utter best strategy for the future of renewable energy in Thailand nor a universal solution for current problems or quantitative statements. The value of this research rather lies in the conflation of multiple opinions and perspectives of experts affiliated to different interest groups. Moreover, the strength of these research consequents from the opportunity to understand past developments, analyze the current situation and thus being able to target questioning several experts, who are intensively working in the area of renewable energy. This methodical framework enables the researcher to think ‘ outside-the-box ’ and to create new and innovative strategic approaches to finally develop a promising model for Thailand’s future renewable energy utilization strategy for electricity generation. The major outcome of this research is thus the Enhanced Renewable Energy Utilization (EREU) Model, highly customized to the very own situation of Thailand by broadly taking into account regional matters.

3. Scope and Boundaries

This research project focuses on the use of renewable energy resources for grid-connected electricity generation, rather than conducting a broad view on the entire scope of the possible renewable energy use. Due to this chosen focus the research discusses neither the broad topic of the utilization of all kinds of bio fuels, nor the use of renewable energy for non grid-connected applications, for example in rural areas, in detail. Nevertheless, a few general and compact inputs to previously mentioned topics prove necessary, as it is essential to understand the broad framework of which this thesis and its fundamental research problem are an integral part of. Furthermore, a compact look at Thailand’s past economic development, the country’s electricity supply industry as a whole as well as a short outlook to the international level are implemented, in order to achieve the aimed target of an effectual analysis and to ensure the referential integrity of this research paper. Above all, the use of renewable energy or electricity generation in the Kingdom of Thailand will be emphasized as the core focus throughout the entire research, with the intention to answer the given research problem to a satisfactory degree. Further specific boundaries include the straight exclusion of large-scale hydro power projects and nuclear energy from potential renewable energy sources, which will be further commented in the course of the literature review.

4. The Research Question

The present and proposed thesis is going to deliver an answer to following unique research question, which is characterized by its bilateral nature:

‘Which factors constitute the importance of renewable energy for electricity generation in Thailand and which kind of model needs to be developed to enhance renewable energy utilization?’

By answering this question and the provision of the corresponding explanations, this document seeks to present a scientific contribution and leads us to a unique attempt to find a consolidated answer. Hence, the raised research question is divided into two main parts. In reference to the above mentioned definition of the research attempt at hand, two sub-questions are defined:

- Sub-question 1: ‘Which factors constitute the importance of renewable energy for electricity generation in Thailand?’
- Sub-question 2: ‘Which kind of strategic model needs to be developed to enhance renewable energy utilization?’

This division reflects the division of the whole thesis document, whereas chapter 2 provides the answer to sub-question 1 and chapter 5 to sub-question 2.

5. The Significance of this Thesis

The present research aims to demonstrate in particular how potential strategic approaches for the nation’s future renewable energy framework can be derived from a targeted expert interview survey, and how the collection of these strategic thrusts can be combined to develop a guiding model for enhanced renewable energy utilization in Thailand. The major outcome of this research is an Enhanced Renewable Energy Utilization (EREU) Model, which ultimately ought to present a guide for all related interest groups and policy makers on how to critically review Thailand’s current renewable energy strategy and model, respectively. In addition, the discussed model should help to find out and summarize the necessary adaptations which need to be implemented into the country’s renewable energy strategy, in order to make a significant contribution for a sustainable development in the Kingdom of Thailand.

6. Operationalization of the Terminology

In order to guarantee a flawless information flow to the reader, this sub-chapter explains the most important (technical) terms of this thesis (Note: The term Renewable Energy is going to be defined in detail in the course of the literature review).

Anaerobic (Biogas) Digester: A device used to harvest biogas. These digesters, or bio-digesters, are made in various ways, using a wide variety of organic materials available (http://en.wikipedia.org/wiki/Digester).

Biogas: A gas produced by the anaerobic digestion or fermentation of any biodegradable organic matter under anaerobic conditions. Biogas is comprised primarily of methane (CH4) and carbon dioxide (CO2). Depending on where it is produced, biogas can be called differently; e.g. landfill gas or digester gas etc. (http://en.wikipedia.org/wiki/Biogas).

Clean Development Mechanism (CDM): An arrangement under the Kyoto Protocol allowing industrialized countries with a greenhouse gas reduction commitment to invest in projects that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries ("The Kyoto Protocol: What Next?." Encyclopædia Britannica. Chicago, 2008).

Combined Heat and Power (CHP): The use of a heat engine or a power station to simultaneously generate both electricity and useful heat; also referred to as cogeneration. While conventional power plants emit the heat created as a byproduct of electricity generation, CHP or a bottoming cycle captures the heat for domestic or industrial heating purposes. Cogeneration is a thermodynamically efficient use of fuel (http://en.wikipedia.org/wiki/Chp).

Demand Side Management (DSM): The energy demand management, also known as demand side management (DSM), entails actions that influence the quantity or patterns of use of energy consumed by end users, such as actions targeting reduction of peak demand during periods when energy-supply systems are constrained (http://en.wikipedia.org/wiki/Demand_Side_Management).

Kilowatt, Kilowatt-hour, Megawatt and Gigawatt: The unit of power in the International System of Units (SI) equal to one joule of work performed per second, or to 1/746 horsepower. An equivalent is the power dissipated in an electrical conductor carrying one ampere current between points at one volt potential difference. It is named in honor of James Watt, British engineer and inventor. ("watt" Encyclopædia Britannica. Ultimate Reference Suite. Chicago, 2008). Multiples for watt are e.g. Kilowatt (kW = 103 W), Megawatt (MW = 106 W) or Gigawatt (GW = 109 W). Because a joule as a quantity of energy does not have a readily imagined size to the layperson, the non-SI unit watt-hour, often in its multiples such the Kilowatt-hour (kWh), is frequently used as a unit of energy, especially by energy-supply companies which often quote charges by the kilowatt-hour.

Municipal Sewage Waste (MSW): A waste type that includes predominantly household waste (domestic waste) with sometimes the addition of commercial wastes collected by a municipality (municipal entity) within a given area (http://en.wikipedia.org/wiki/Municipal_solid_waste).

Net-Metering: An electricity policy for consumers who own, generally small, renewable energy facilities, connected to the larger (national) grid. "Net", in this context, is used in the sense of meaning "what remains after deductions" -- in this case, the deduction of any energy outflows from metered energy inflows. Under net metering, a system owner receives retail credit for at least a portion of the electricity they generate. The ideal has your existing electricity meter spinning backwards, effectively banking excess electricity production for future credit. In reality, the rules vary significantly by country. Net Metering is generally a consumer-based renewable energy incentive. (http://en.wikipedia.org/wiki/Net_metering).

Non-Fossil Fuel Obligation (NFFO): A collection of orders requiring the electricity distribution network operators in England and Wales to purchase electricity from the nuclear power and renewable energy sectors. Similar mechanisms operate in Scotland (the Scottish Renewable Orders under the Scottish Renewables Obligation) and Northern Ireland (the Northern Ireland Non-Fossil Fuel Obligation). (http://en.wikipedia.org/wiki/NFFO)

Non-Governmental Organization (NGO): A voluntary group of individuals or organizations, usually not affiliated with any government that is formed to provide services or to advocate a public policy. ("nongovernmental organization (NGO)" Encyclopædia Britannica. Ultimate Reference Suite. Chicago, 2008).

Non-Profit Organization (NPO): A legally constituted organization whose primary objective is to support or to actively engage in activities of public or private interest without any commercial or monetary profit purposes. NPOs are active in a wide range of areas, such as the environment, humanitarian aid, animal protection, education, the arts etc. (http://en.wikipedia.org/wiki/Non_profit_organisation).

Photovoltaic (PV): A solar power technology that uses solar cells or solar photovoltaic arrays to convert light from the sun directly into electricity. With the help of converters (DC/AC), PV devices can be connected to the electricity grid.

Primary Energy: The kind of energy that has not been subjected to any conversion or transformation process. Primary energy is energy contained in raw fuels and any other forms of energy received by a system as input to the system. The concept is used especially in energy statistics in the course of compilation of energy balances (http://en.wikipedia.org/wiki/Primary_energy).

Renewable Energy Portfolio Standard (RPS): A regulatory policy that requires the increased production of renewable energy sources. The RPS mechanism generally places an obligation on electricity supply companies or private producers to generate a specified fraction of their electricity from renewable energy sources (http://en.wikipedia.org/wiki/Renewable_Portfolio_Standard).

7. The Thesis’ Structure

The thesis at hand constitutes a Research and Development (R&D) project. Hence, the entire structure of the research document will be oriented to Brahmawong’s (2007) distinctive Seven-Step Approach of a typical R&D project, as visualized in Figure 1. In order to follow this structure and to answer the research question clearly and sequentially, this thesis paper is divided into six main chapters.

illustration not visible in this excerp

Figure 1: Thesis structure: The Seven-Step Approach of an R&D project

Current Chapter 1 provides a general introduction to this thesis and its structure. While studying the review of literature in Chapter 2, the reader will gain a fundamental understanding of the complexity of Thailand’s electricity industry, today’s role of renewable energy resources and past strategy implementations to support the renewable energy development. After providing an answer to sub-question 1 of the main research question, Chapter 2 closes with a need assessment and the creation of a conceptual framework for an enhanced renewable energy utilization model for Thailand. Chapter 3 delivers the explanation of the research methodology and thus the complete framework of the expert interview survey. Consequently, Chapter 4 contains the detailed outcome of the expert survey, hence the objective analysis of all findings as well as commonalities and discrepancies, respectively. As the key chapter of this thesis, Chapter 5 will then provide the interpretation of the results of the expert interview study, the derivation of strategic thrusts and their combination to the development of a potential model for enhanced renewable energy utilization for electricity generation in Thailand; finally providing the answer to sub-question 2 of the fundamental research question. Ultimately, this thesis is going to close with Chapter 6, including a closing discussion and a final recommendation.

To ensure a clear understanding of the structure and methodology of this thesis, and to guarantee a logical information flow to answer the given research question, an alternative illustration of contents follows subsequently. In an integrated question-answer framework each sub-chapter is individually legitimized, as shown in Figure 2 and 3 below.

illustration not visible in this excerp

Figure 2: Content structure - Question/Answer Framework (Chapters 1-2)

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Figure 3: Content structure - Question/Answer Framework (Chapters 3-6)

2 REVIEW OF LITERATURE

The following literature review is divided into six major sub-chapters, in order to guarantee a structured and logical information flow. In sub-chapter 1 the definition of renewable energy in addition to an introduction of a focus area is provided, thus building the initial basis for all further discussions. Sub-chapter 2 includes a brief overview of Thailand, including a selection of country facts as well as a short digression of Thailand’s economic development over the last decade, in order to provide a sufficient demographic and geographical framework to the reader. Sub-chapter 3 analysis Thailand’s Electricity Supply Industry (ESI) in addition to highlighting the country’s electricity consumption development over the last 15 years. Sub-chapter 4 constitutes the main part of this review in examining the development of renewable energy for electricity generation in Thailand, by broadly covering significant country specific matters in chronological sequence, before closing with current data and statistics. Sub-chapter 5 provides a conclusion of Thailand’s renewable energy development and ultimately the answers to sub-question 1 of the research question in summarizing all facts accounting for the importance of renewable energy utilization in Thailand. Finally, sub-chapter 6 constitutes a distinctive pre-assessment of an enhanced renewable energy utilization model divided into a need assessment and a conceptual framework.

1. The Definition of Renewable Energy

The term renewable energy (RE) summarizes all energy derived from regenerative resources, which cannot be depleted. Therefore, all ‘renewable energy sources’ are reproducible non-fossil energy sources, such as solar, wind, biomass (and biogas), hydropower, geothermal, wave, tidal, landfill gas and sewage treatment plant gas (European Parliament and the Council of the European Union, 2001). Another common definition says renewable energy is from an energy resource that is replaced by a natural process at a rate that is equal to or faster than the rate at which that resource is being consumed. Thus, RE will never run out ‘as long as the sun shines’, unlike the so-called ‘conventional sources’ of energy which refer to fossil fuels (oil, coal or gas) and nuclear energy.

illustration not visible in this excerp

Figure 4: Renewable vs. Non-Renewable Energy (Source: EIA, URL: http://www.eia.doe.gov/kids/energyfacts/sources/whatsenergy.html [22.3.2008])

The use of the term ‘conventional’ when referring to fossil fuels and nuclear power is perhaps surprising, since before the industrial revolution renewable energy was the only form of power available apart from labor from human and animals. In fact, renewable energy is nothing new. It was overtaken for a century or more by fossil fuels, but recently a number of important factors, including the major threats of climate change, exhaustion of fossil fuels, and the environmental, social and political risks of fossil fuels and nuclear power (Note: Despite ongoing discussion of whether nuclear power could be defined as a renewable energy source, this thesis clearly excludes any form of atomic power from the definition of RE), have combined to ensure that renewable energy is again likely to make a very substantial contribution to the world’s future energy supply (Cotton R., Boyle S. and Carey-Wood J., 2004). In order to get an overview and feeling of the current status of the use of renewable energy, Figure 5 indicates the relative share of total energy usage derived from RE sources in selected European countries as an illustrating example.

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Figure 5: Percentage of total energy usage derived from renewable energy sources (Source: modified adopted from Cotton et al, 2004)

To be emphasized are the substantial shares of renewable energy sources in e.g. Sweden, Finland and Austria. Indeed, these countries are often seen as pioneers in the planning and implementation of nationwide renewable energy strategies. Due to the wide spectrum of alternative renewable energy sources, the following sub-chapter introduces and explains a specific focus area, which will be emphasized from now on throughout the entire research.

1.1 Focus: Renewable Energy for Electricity Generation

Renewable energy resources may be used directly or may be used to create other more convenient forms of energy. Examples of direct use are solar ovens, geothermal heating, and water- or windmills. Examples of indirect use, which require energy harvesting, are electricity generation through wind turbines or Photovoltaic (PV) cells, or production of fuels such as ethanol from biomass (Australian International Green Build & Renewable Energy Exhibition Conference Paper, 2007). Along this main categorization, this research paper will mainly focus on the indirect use of RE, specifically on the electricity generation from renewable energy sources. Accordingly, the following Renewable Energy Technologies (RETs) will be henceforth set in focus.

1.1.1 Biomass/Biogas

Despite multiple ways of using biomass as a form of energy (e.g. the direct use for cooking and heating or the production of bio fuels etc.) this research will emphasize the use of biomass for electricity generation. In the process of Anaerobic Digestion (AD) certain strains of bacteria digest the biomass and produce so called biogas in the absence of oxygen. Almost any organic material, such as agricultural wastes, municipal waste or animal residues, can be processed in this manner. Biogas is primarily composed of methane and carbon dioxide and can be utilized to generate electricity via conventional gas generators (Natural Resources Canada, 2002). Other applications to win electricity from biomass are for instance biomass based cogeneration plants with a back pressure steam turbine or biomass based power generation plant with a condensing steam turbine (DANIDA, DEDE, Technology Catalogue, 2006).

1.1.3 Municipal Solid Waste (MSW)

The use of MSW for electricity generation is realized through thermal treatment/combustion called incineration. The thermo-chemical incineration process is suitable for organic and combustible waste. The waste-to-energy facilities can use incinerators (a furnace for burning waste) that burn waste to produce steam for electricity generation. Furthermore, the thermal energy from the incineration can, among others, also be used for heating or cooling purposes. A typical application will be in cities and urban areas with a minimum population requirement, as the costs of establishing and operating a landfill as well as the environmental impact of a landfill servicing around 200,000 people are considered big enough to justify the investment in an incineration plant (DANIDA and DEDE, 2006).

1.1.2 Solar Electric – Photovoltaic (PV)

The focus is set on the use of sunlight for electricity generation with the help of PV technologies. Solar electric PV systems convert sunlight into electricity and are mainly comprised of PV panels, which may be ground-mounted or integrated directly into buildings, and DC/AC converters, which can be connected to the national electricity grid. PV installations constitute one of the most rapidly expanding applications in the area of renewable energy technologies (Thailand Board of Investment (BOI), 2006).

1.1.3 Wind Power

Wind Power is the extraction of energy from the wind by the use of turbines to produce electrical power. Modern wind power turbines use advanced aerospace technologies and materials, which allows them to operate in a wide range of environments. Additionally, the use of relatively low wind speeds becomes more feasible due to technological innovation (Cotton et al, 2004).

1.1.4 Hydropower

Hydro is a long established form of harnessing the natural environment to generate electricity with the help of moving or falling water. There are various different forms of hydro-electric plants which use either the stream of a river, the water pressure build up behind huge dams or even of the tides. In all forms, the physical power of water is converted into electricity in hydro-electric plants equipped with turbines and generators (Note: In the scope of this research solely micro and mini-hydro systems (< 200 kW) will account as form of renewable energy source, due to the negative environmental impacts of huge dams flooding entire valleys and landscapes).

2. Thailand - Country Overview

The Thai Kingdom was established in the mid-14th century, formerly known as Siam until 1939. Thailand is the only South East Asian country to have never been occupied by a European power and became a constitutional monarchy in 1932, following a bloodless revolution. The Thai population is approximately 65 million with an urbanization rate of 31 %. The total land area is around 514,000 square meters and the country shares boundaries with Myanmar (Burma), in the west and north-west, Laos in the east and north-east, Cambodia in the south-east and Malaysia in the south. Geographically Thailand can be considered in four natural regions: Northern Thailand is a complex system of forested mountain ranges divided by four precipitous, fertile river valleys. The central plains are the Chao Phraya river basin and support the major part of the population and industry, as well as the majority of agricultural production. The North-east, which is defined by the Korat Plateau, is sparsely vegetated and largely infertile. The Southern Peninsula is dominated by dense tropical forests. The average climate is essentially tropical with a wet, warm south-west monsoon from May to September and average temperatures vary from 20 to 37°C throughout the year (BCSE, 2005).

2.1 Digression: Economic Development 1997 - 2007

Following the 1997 Southeast Asian financial crisis, Thailand implemented substantial reforms in its financial sector, strengthening corporate governance, reforming lending practices, and boosting incentives for increasing competition. The resilience of the Thai economy facilitated a quick recovery. After contracting more than 10 % in 1998, Thailand's economy grew at a rate of more than 4 % in both 1999 and 2000, and grew by more than 2 % in 2001 despite a global slowdown. Thailand’s real GDP growth has averaged 5.8 % since 2002 with per capita income exceeding its pre-crisis levels in 2003 (World Bank Thailand, 2007). GDP grew by 5 % in 2006, modestly better than 4.5 % in 2005; however, GDP is projected to fall to 4.3 % in 2007, driven mainly by exports. Average annual GDP growth rate of 4.6 % during 2005-07 will be nearly 1.5 percentage points below Thailand’s own annual average during 2002-04. This slowdown is in part because the easy gains from increased utilization of excess capacity have been exhausted and in part because new capacity is expanding slowly as confidence of investors has turned to be relatively low (Kirida B., Cheanchom T., Ruangrong T. & Wallada A., 2007).

Concluding, Table 1 provides a fact selection about Thailand, underlining previous statements. The increase in electric power consumption is obvious.

Table 1: Quick Facts on Thailand

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Sources: World Bank Thailand, 2006 and Energy Information Administration (EIA), 2004

3. The Electricity Industry and Electricity Consumption in Thailand

3.1 Thailand’s Electricity Supply Industry (ESI)

Thailand’s ESI is basically overseen by three state-owned entities. The predominant generating capacities as well as transmission facilities are owned by the Electricity Generating Authority of Thailand (EGAT). EGAT was established in 1969 by the promulgation of the Electricity Generating Authority of Thailand Act B.E. 2511 which merged assets and operations of the three previous state enterprises, namely Yanhee Electricity Authority, Lignite Authority and the Northeast Electricity Authority. Presently, EGAT is a state enterprise under the Ministry of Energy (MoEN) (EGAT, 2007). The responsibility of distribution in Greater Bangkok is undertaken by the Metropolitan Electricity Authority (MEA), whilst distribution for the rest of the country is overseen by the Provincial Electricity Authority (PEA). EGAT still owns and operates the majority of the power generation capacity in Thailand, but also buys electricity from private power producers, so called Independent Power Producers (IPPs) and Small Power Producers (SPPs). The difference between IPPs and SPPs as well as further details to both programs will be provided at a later stage of this review. EGAT, as the sole transmission element, sells the electricity to some direct customers and to MEA and PEA for distribution to end-users (Wathanyu A. & Chuenchom S. G., 2002).

As of July 2007, approximately 28,500 Megawatt (MW) of generating capacity have been installed in Thailand, whereas EGAT still owns a majority of more than 15,700 MW, followed by IPPs with slightly more than 10,000 MW, SPPs with around 2,070 MW and approximately 650 MW from imports and exchange. Figure 6 illustrates the relative share of generation capacity among these major generating elements of Thailand’s ESI.

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Figure 6: Relative share of electricity generation capacity in Thailand as of July 2007 (Source: modified adopted from EPPO, 2007)

3.2 Electricity Consumption Development 1990 - 2006

Since 1990, Thailand’s total electricity consumption (expressed in Gigawatt-hours – GWh) showed a skyrocketing development, except a short slow down resulting from the Asian economic crisis from 1997 until 1999, as visualized in Figure 7. With an average annual growth rate of 7.9 %, Thailand’s overall annual electricity consumption grew from just above 40,000 GWh in 1990 up to almost 130,000 GWh in 2006 (EPPO, 2007). Moreover, the according values for the first six months of 2007 let assume that this development characteristic is likely to continue, due to Thailand’s growing middle class and its ongoing increase of demand for all kinds of consumer goods and appliances.

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Figure 7: Thailand’s total electricity consumption 1990 - 2006 in GWh (Source: modified adopted from EPPO, 2007; Original source: EGAT, MEA and PEA)

Despite Thailand’s efforts to continuously draft new strategies and programs to promote energy conversation, renewable energy and private sector participation, the country’s rapidly increasing electricity demand could only be accommodated with accordingly increasing electricity imports. In fact, Thailand’s electricity imports showed a total growth of more than 850 %, with an average annual growth of more than 18 %, in the period from 1990 to 2006. As for example, the French Oil Corporation Total is actively extracting natural gas at the Yadana gas field in Burma’s South since 1992, selling the entire gas volume (17.4 million cubic meters per day in 2007) to Thailand’s gas power plants (Spiegel Online, 2007). The following figure visualizes Thailand’s electricity imports development over the past 15 years. The indicated growth characteristics of electricity imports from the past few years is likely to continue as well, as Thailand’s attempt to build up sufficient new generating capacity can hardly catch up with the rapidly growing electricity demand of the entire nation.

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Figure 8: Thailand’s electricity imports 1990 - 2006 in GWh (Source: modified adopted from EPPO, 2007; Original source: EGAT)

The above illustrated tremendous increase of both, the overall electricity consumption and the electricity imports can be explained by Thailand’s rapidly growing economy. Typically, energy demand grows at a higher rate than GDP, which is clearly valid also for Thailand (Economist Intelligence Unit (EIU), 2004). In the period between 2000 and 2005 Thailand’s GDP showed an average growth rate of 5 %, whereas the country’s electricity consumption growth averaged 6.6 % in the same period, as shown in Figure 9. The continuous over-proportionally growth development of the electricity consumption compared to the GDP growth rate of approximately 1.4 to 1 has further given ground for concerns about Thailand’s future electricity supply. The ratio of energy consumption growth rate to the GDP growth rate is also referred to as energy elasticity (EPPO, 2003). Hence, the ratio of electricity consumption growth to GDP growth is here defined as electricity elasticity.

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Figure 9: Growth Comparison between GDP and Electricity Consumption in Thailand (Source: EGAT, 2005)

With entering the 21st century, the Royal Thai Government (RTG) continued implementing fundamental reforms and releasing a range of connected strategic plans and common targets to proceed with the restructuring of the country’s energy sector. Following sub-chapter summarizes the most important developments concerning RE for electricity generation in Thailand over the last 15 years in a chronological order. It should be noted, that the following milestone collection aims to provide a sufficient overview of the most noticeable events in the view of the writer, and hence it is in any case contingent to subjectivity and might not be entirely exhaustive.

4. Renewable Energy for Electricity Generation in Thailand

4.1 The Beginning of Energy Conservation and Renewable Energy Promotion (1992 - 2000)

4.1.1 The Energy Conservation (ENCON) Program

In the beginning of the 1990s, Thailand constituted one of the world’s fastest growing industrial economies, consequently it was estimated that about 1,200 MW of new generating capacity will be required annually, in order to assure an adequate level of electricity supply and to sustain growth. Therefore, the Royal Thai Government’s (RTG’s) strategy of 1992 called for substantially increasing power sector investments, accelerating the pace of privatization of the power supply industry, making a strong thrust towards energy conservation and emphasizing environmentally friendly and sustainable development (Global Environment Facility (GEF), 1993). Hence, in 1992 the RTG approved legislation establishing the Energy Conservation Promotion Act with the main objective to promote energy conservation and renewable energy. These fundamental concepts have finally been translated into actual programs and projects under the Energy Conservation Program (ENCON Program); (Note: The ENCON Act was not made effective until the Ministerial order was released in 1995). It is here where specific plans to promote the introduction and popularization of renewable energy technologies commenced to be developed and implemented.

Until today, the main objectives of the ENCON Program include, amongst others, the provision of financial assistance and incentives for energy conservation, energy efficiency and renewable energy projects; the support of the promotion and dissemination of proven energy conservation and RETs and the increase of research and development as well as training in the stated areas. The above mentioned financial assistance is provided through the Energy Conservation Promotion Fund (ENCON Fund) financed through taxes on refinery products. This fund finances and thus helps to materialize all objectives listed under the ENCON Program (Sukit Angsuwan, 2000). From 1995 until 2000 more than 100 different projects on energy efficiency and renewable energy have been approved and financially supported by the ENCON program in Thailand. To mention only one example, the Biogas Advisory Unit (BAU) of Chiang Mai University implemented a project named ‘Biogas for Power Generation in Large Livestock Farms’, which has been initiated to support the high demand of electricity for various activities in such farms in addition to enhance proper treatment of effluent and other kinds of pollution. With a biogas output of around nine million cubic meters from animal wastes approximately ten Gigawatt-hours (GWh) of annual electricity supply could be generated. In this context Sukit Angsuwan (2000) from the former National Energy Policy Office (NEPO) concluded:

“Since renewable energy is environmentally friendly, promotion of renewable energy technology research and development is considered to be of great importance to protect our deteriorating environment. It will also help reduce the country’s [Thailand’s; Writer’s note] dependency on imported energy; the country will be able to save foreign currency while the security of energy supply still remains.” (Sukit Angsuwan, 2000, p. 8).

4.1.2 The Demand-Side Management (DSM) Program

Alongside Thailand’s primary internal commitment for an energy reform through the ENCON Program, a whole range of further projects, partly including international cooperation and support, have been established, whereas one of them should be further examined in here. In 1993 Thailand has initiated a US$189 million D emand-Side Management (DSM) program to help curb electricity demand growth and promote more energy-efficiency within the country. Since then, EGAT has developed a strong portfolio of DSM measures, including multiple programs targeting a wide range of sub-sectors and types of end-use. Furthermore, EGAT has created substantial public awareness of energy conservation and has actively promoted private sector participation. The DSM program was mainly financed by an automatic tariff mechanism in Thailand; however, it also received a $9.5 million grant from the Global Environment Facility (GEF), an organization jointly implemented by the United Nations Development Program (UNDP), the United Nations Environment Program (UNEP) and the World Bank (Singh J. & Mulholland C., 2000). The GEF granted the financial support to Thailand under the Thailand Promotion of Electrical Energy Efficiency Project initiated in 1993 as well; with two major objectives: To build sufficient institutional capability in the Thai electric power sector and the energy-related private sector to deliver cost-effective energy services throughout the economy; and to pursue policies and actions that would lead to the development, manufacture and adoption of energy efficient equipment and processes. Thereby, this project has also built the basis for broad private sector participation and the development of private sector capabilities in the area of electricity conservation and renewable energy. Furthermore, the GEF aimed to demonstrate on a large scale, and within a reasonable time frame, the potential for electricity savings to replace substantial fossil fuel power generation, thereby avoiding additional C02 emissions (GEF, 1993). EGAT has established the Demand-Side Management Office (DSMO), which exceeded its savings target of 238 MW in load reduction and achieved 566 MW in avoided capacity through improved efficiency gains. The energy savings from this program avoided an estimated 2.3 million tons of CO2 emissions until the project closure in the year 2000 (The World Bank Asia Alternative Energy Program (ASTAE), 2001).

4.1.3 Private Sector Participation: Power Purchase Programs

Aware of the importance to increase private sector participation, the RTG has already created the policy basis for a power purchase program with the Amendment of EGAT Act and the Royal Act on Private Sector Participation in 1992 as well (Pacudan R., 2003). The amendment of EGAT Act opened up the opportunity for other private-sector companies to generate and sell electricity. Consequently, the SPP Program was introduced, with the major objectives, amongst others, to encourage participation by SPPs in electricity generation and to promote the use of indigenous by-product energy sources and RE for electricity generation. Under the SPP regulations, which were approved by the cabinet on 17 March 1992, EGAT would purchase power from generating facilities which produce power using the cogeneration systems or using renewable energy (Wathanyu A. & Chuenchom S. G., 2002). The IPP Program was initiated at the same time as the counterpart of the SPP program and thus valid for large power producers in the private sector. However, IPP contracts are generally designed for larger generating capacities, and therefore use exclusively commercial energy, such as natural gas or coal, as fuel. Due to this reason the IPP program is of minor importance in the context of this research.

4.2 The Reform of the SPP Program, VSPP Legislation and Enforcement of Renewable Energy Promotion (2000 – 2004)

4.2.1 Ministerial Restructuring

Following a bureaucratic reform of the RTG, various energy-related agencies that used to be scattered under the auspices of different ministries have been transferred to be under one single ministry in 2002. Therefore, after more than one year of governmental workshops and meetings, the Thai MoEN was officially inaugurated under the royal mandate and the according governmental acts on 3 October 2002 (MoEN, 2007). In a speech, to the 4th Association of South East Asian Nations (ASEAN) Forum 2002, the first Minister of Energy, Phongthep Thepkanjana (2002) stated:

“For the electricity supply industry (ESI), Thailand has promoted greater private sector participation in the power industry; especially in the generation business … At present … 50 SPPs are supplying electricity to the national grid. Furthermore, Thailand has been promoting the use of Renewables in order to reduce dependency on imported energy and environmental impacts arising from the use of fossil fuel.” (Phongthep Thepkanjana, Power Economics Magazine, 2003, p. 18).

4.2.2 The Subsidy Program for Renewable Energy SPPs

Eight years after the introduction of the SPP Program a considerable number of SPP projects, with a total capacity of around 2,000 MW, have started operations and supplying electricity to the grid. However, only 176 MW of this power is fueled by RE. Consequently, Thailand’s former National Energy Policy Office (NEPO) issued a request for proposals to attract the private sector to invest in SPPs using RE in July 2001. Potential investors and small power producers, using e.g. non-conventional energy, residues from agricultural activities or RE as fuel, were invited to submit a proposal to NEPO for a subsidy on energy payment. In this regard, NEPO has allocated a budget of around two million THB from the ENCON Fund to provide subsidization to applicants who have viable projects. Two rounds of project proposal selections were completed in May 2002 and a total of 32 SPPs, with a total proposed capacity sale of 521 MW, have been selected, as show in Table 2 (Wathanyu A. & Chuenchom S. G., 2002). The enhancement of the SPP Program should mobilize investment by public and private entities in alternative energy facilities.

Table 2: SPPs selected for subsidy by fuel type (May 2002)

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Source: Modified adopted from Wathanyu A. and Chuenchom S. G., 2002; Original source: NEPO, unpublished.

4.2.3 The VSPP Legislation

In May 2002, Thailand's Cabinet passed landmark RE legislation requiring the country's electric utilities to allow solar, wind, micro-hydroelectricity, biomass or biogas generators up to 1 MW per installation to connect to the grid. According to the Very Small Power Producer (VSPP) Program, generators that produce less than they consume in a monthly period receive the retail tariff rate for electricity fed onto the grid. For net excess production, producers are compensated at the bulk supply tariff - which is the average cost of generation and transmission in Thailand (about 80 % of the retail rate). The Thai context of this net metering policy is quite promising, as the national grid reaches over 99 % of all Thai villages, making it economically and technically feasible for virtually any community to connect their own RE generator (Greacen C., Chuenchom S. G. & Plevin R., 2003). Moreover, Thailand still relies on natural gas for around 70 % of electricity production, however, domestic reserves are expected to be depleted within three decades, and the country has been severely affected by the volatility of gas and oil prices. In this course, Chris Greacen, Chuenchom S. Greacen and Rich Plevin (2003) underlined:

“Thailand is blessed with abundant untapped renewable energy. The country is the world's second largest exporter of rice, and a major producer of cassava, sugarcane, palm, coconut, and livestock. Agricultural residues, which are currently burned in fields or discarded, have the potential to meet 9 % of Thailand's demand for electricity (NEPO 2001). Solar rooftops, wind energy, and community micro-hydroelectric projects also present significant opportunities.” (Greacen C., Chuenchom S. G. and Plevin R., Refocus, 2003, p. 34).

Shortly after the regulations were passed, the utilities adopted them and announced that they would begin accepting applications from net metered generators, thus the entire process – from research to enactment - took less than nine months. The Thai utilities are members of the Institute of Electrical and Electronics Engineers (IEEE), which has quickly created a set of technical standards and requirements to set a standard. The VSPP regulation contains the following essential features (Greacen C. et al., 2003):

- RE generators are allowed to export up to 1 MW of electricity, whereas systems larger than 1 MW are allowed to connect as long as the customer consumes sufficient electricity on-site.
- Aggregate net metering: Allows an entire RE generating community to connect as a single customer and manage their own distribution.
- Combined Time-Of-Use (TOU) metering: Allows for increasing revenues by generating electricity during peak tariff hours.

Despite this new promising regulation, significant barriers have been still in place, such as the general lack of knowledge about net metering, the shortage of high-quality and affordable equipment suitable for creating grid-connected RE systems as well as expertise in the design and installation of such systems. Nevertheless, Chris Greacen, Chuenchom S. Greacen and Rich Plevin (2003) concluded:

“Thailand's net metering laws provide an exciting vehicle for harnessing Thailand's plentiful renewable energy resources for cost-effective electricity generation – in ways that draw on the creativity and entrepreneurial spirit of small businesses and communities. While much work lies ahead, the future looks bright for small-scale Renewables in Thailand.” (Greacen C. et al., 2003, p. 37).

4.2.4 Thailand’s Strategic Plan for Renewable Energy Development

By the end of 2002, the Thai electricity market has been open to private sector participation and international investors for some time, however, the majority of the 70 % of the installed capacity was still owned by EGAT (Bradley W. S., Merritt N. and Keerati K., 2003). In addition to the introduction of net metering and proceeding privatization reforms of Thailand’s ESI, the RTG announced a ‘Strategic Plan for Renewable Energy Development’ (BCSE, 2005) involving ambitious targets for both energy efficiency and RE development in August 2003. This plan also got known under ‘Energy Strategy for Thailand’s Competitiveness’. Specifically, the strategy has aimed (and still aims) to reduce Thailand’s energy elasticity from the current level of 1.4:1 to 1:1 by 2007. In addition, in order to increasingly replace non-renewable energy from fossil fuel with alternative energy, the RTG aspires to increase the share of RE in total final energy consumption from only 0.5 % of the commercial primary energy in 2002 to 8 % by 2011 (UN Department of Economic and Social Affairs, 2005). This would request an average annual growth rate of 8 %, compared to a growth rate of only 2 % per annum for various types of fossil fuels (World Bank Thailand, 2007). The sub-target for RE power production was stated to be 6 % of the total power generation in the year 2011 – equal to approximately 12,400 GWh (DANIDA and DEDE (PRET), 2006).

In reaching this target for RE, biomass-based energy is expected to provide a share in excess of 60 %, reflecting the fact that Thailand is highly dependent on the agricultural sector and hence has access to large amounts of waste agricultural material. The other sources of RE are expected to be e.g. biogas, wind, mini-hydropower, solar power as well as bio-fuel energies. In fact, Thailand depends substantially on imported crude oil, which amounted to US$ 10.7 billion representing 6.5 % of the GDP in 2004. In order to achieve the 8 and 6 % goal, respectively, the RTG is encouraging the power generating sector to produce some 1,900 MW from RE sources. IPPs are required to adhere to the Renewable Energy Portfolio Standard (RPS), which has been introduced to accelerate renewable energy utilization. Under this standard, power producers that wish to sell power to EGAT must produce at least 5 % of their installed energy generating capacity from RE sources (Sorawit Nunt-Jaruwong, 2005).

Thailand’s strategy and some of its significant targets have also been included and officially stated in Thailand’s Millennium Development Goals (MDG), which were created for 189 nations due to the Millennium Declaration endorsed in the course of the UN Millennium Summit in New York in September 2000. In this agenda for the start of the 21st century, Thailand has set eight ambitious goals to be achieved by 2015, whereas Goal 7 oversees the area named Ensure environmental sustainability (United Nations Country Team Thailand, 2004). One of the targets within this goal set is named ‘ Integrate the principles of sustainable development into country policies and programs and reverse the loss of environmental resources’; including specific indicators as presented in the following Table.

Table 3: Thailand MDG: Goal 7 Target 9 – Indicator Developments

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Source: United Nations Country Team Thailand, 2004

Furthermore, Thailand has committed itself to a set of even more ambitious targets, called MDG Plus (MDG+), whereas the target to increase the share of RE to 8 % in total final energy consumption by 2011 was directly included in the MDG+ framework (UNDP, 2005). Finally, the Strategic Plan for Renewable Energy Development has initially mentioned the long term target to establish Thailand as the regional energy centre for the entire South East Asian region.

4.3 The Energy Policy and Development Plan and the Upgrade of the VSPP Regulation (2005 – 2007)

In 2005, EGAT was still the country’s biggest power producer, owning a generating capacity of 15,795 MW or almost 60 % of the country’s total generating capacity. The following graph shows Thailand’s ESI structure by the percentage share of the utilities in fiscal year 2006. This structure is also referred to Thailand’s Enhanced Single Buyer (ESB) model, with EGAT and its distribution utilities PEA and MEA as the sole purchaser of electricity, besides a few exceptions of direct sales from SPPs to end users and/or VSPPs to the distribution facilities, as visualized below.

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Figure 10: Shares distribution in Thailand's ESI structure as of fiscal year 2006 (Source: Narupat Amornkosit, 2007; Original source: EPPO)

With a little year-on-year change, the RE sources (except large-scale hydro) accounted for only 1 % of the total electricity generated in 2005 (Royal Danish Embassy Bangkok, 2007). Hence, in April 2006, Siriporn Sailasuta, General Director of the Department of Alternative Energy Development and Efficiency (DEDE) noted to the benefits of the use of RE:

“I should emphasize that most of the money we [the government] put into promoting renewable energy will create jobs and income in the country — unlike imported oil. Moreover, the technology developed and expertise gained from renewable energy projects can be exported to our neighbors, thus creating an additional source of income for Thailand. … To promote the use of these technologies, we need to have a strong support policy and suitable measures that support RE technologies — enabling them to be competitive with conventional energy technologies.” (Siriporn Sailasuta, Thailand Investment Review, BOI, 2006, p. 1 and 11).

Consequently, Thailand’s Board of Investment (BOI) re-issued its promotion incentives for alternative energy by 2007. Energy efficient technologies will henceforth be supported by up to eight years income tax exemption, e.g. for (BOI, 2006):

- Manufacturing of solar cells.
- Electricity or steam power generation through the use of alternative energy sources.
- Renewable energy equipment and machinery.
- Energy service consulting companies providing services in the use and/or installation of RETs and alternative energy equipment.

The two latter points are waiting for approval by the Ministry of Industry.

4.3.1 Thailand’s Energy Policy and Development Plan

Under the administration of Prime Minister General Surayud Chulanont, the RTG set up a new Energy Policy and Development Plan, which has been approved by the National Energy Policy Council (NEPC) and the Cabinet on 6 November 2006 and 21 November 2006 respectively. This plan includes a range of short-term and long term objectives, where as the short-term objectives are target for implementation during the present government office. Amongst others, the short-term policies include the promotion of energy conservation and efficiency as well as the promotion of alternative energy suitable for Thailand in order to diversify fuel types and reduce dependency on energy imports. Moreover, it aims to establish an energy price structure to guarantee that energy pricing would be transparent, fair and would reflect the actual costs; the establishment of measures pertaining to clean energy to reduce the environmental impact resulting from various forms of energy industry operation; and the promotion of private sector and general public participation in policy-making to create understanding and cooperation in the energy development of the country. Accordingly, a range of long term objectives have been established, whereas the support and promotion of the use of RE as well as the study and research & development of other new alternative energies in addition to sustainable energy development and the enforcement of competition in the energy business are of primary importance regarding this research (RTG & NEPC, 2006).

In the context of Thailand’s Energy Policy and Development Plan, Figure 11 visualizes Antonie de Wilde’s (2007) suggested change of paradigm for the creation of Thailand’s future Power Development Plans (PDP) from the centralized to a future decentralized ESI in Thailand.

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Figure 11: Changing Paradigm: From the centralized ESB model to decentralized utilities (Source: Antonie de Wilde’s, 2007)

4.3.2 The Upgrade of the VSPP Regulation

On 20th November 2006 the Thai Energy Policy Committee (EPC) under the National Energy Policy Council (NEPC) approved a significant upgrade of Thailand’s VSPP regulations, which will make it easier for clean electricity generation to connect to the grid, and will substantially expand the scope of the regulations to include larger size generators and efficient clean Combined Heat and Power (CHP) generation. CHP generators that connect under the VSPP program must prove a Primary Energy Savings (PES) of at least 10% to avoid penalties. Primary energy savings refers to the energy savings from CHP compared to a reference case in which an equivalent amount of electricity and heat are produced by conventional means, e.g. with separate power plant and boiler. Another supporting resolution, issued simultaneously, offers significant subsidy adders for renewable energy VSPP generators (Palang Thai, 2006). In December 2006, the NEPC approved the above indicated adder rates for all VSPPs smaller or equal than 10 MW, which are interested to supply power to the grid under the VSPP regulations. The official announcement has been issued by PEA and MEA in February 2007 (Narupat Amornkosit, 2007).

Table 4: Subsidy adder for renewable VSPPs

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Source: Modified adopted from Palang Thai, 2006

From this regulation on, renewable energy VSPP generators have enjoyed the same rates as before plus the subsidy adder, which will be paid for seven years. These subsidies are financed through additions to the ‘FT charge’, a fuel price adjustment mechanism built into the Thai tariff system. Under the original VSPP regulations, generators were limited to 1 MW net export. Under the upgraded regulations the net export threshold is now expanded to 10 MW, which opens up tremendous opportunities for generators which would not have been cost-competitive at a 1 MW level. Accompanying the expansion is a requirement that these generators meet Thai air quality standards as well as simplified interconnection requirements. These new clean energy regulations have the potential to lower the pressure to develop centralized fossil fuel power plants and large hydropower projects to feed Thailand’s growing demand for electricity (Palang Thai, 2006).

4.4 Current Data and Statistics

In November 2006, Dr. Piyasawat Amranand, former secretary general of the NEPO (until 2003), was appointed to the position of Energy Minister in RTG’s interim cabinet formed after the military coup in September. In April 2007, Dr. Amranand criticized:

“Not much has changed. We still have a single buyer model …. What we now have to do is revive it [the SPP program, Writer’s note], with amendments to the regulations. 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. We are working on enacting an 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.” (Piyasawat Amranand, Modern Power Systems Journal, 2007, p. 9).

Dr. Amranand thus criticized the fact, that Thailand still lacks an electricity act establishing an independent regulator in order to advance the privatization as well as the decentralization of the country’s ESI, in addition to introduce certain levels of meaningful and productive competition.

4.4.1 Present Data of Significant Resources for Renewable Energy Generation in Thailand

The following short paragraphs provide a brief input of selected important developments regarding the different RE sources in Thailand (Royal Danish Embassy Bangkok, 2007).

1) Biomass and Biogas

Biomass power plants have increased significantly over the past few years, whereas Thailand’s installed biogas systems generated approximately 20 MW of power, with an estimated potential of 278 MW. Furthermore, Thailand has an installed biomass electricity generating capacity of about 670 MW, with sales to the grid of 246 MW as of 2005. It is estimated that the nation has potential to generate an additional 1,400 MW, for a total potential of more than 2,000 MW.

2) Solar energy

EGAT has a policy to support VSPPs to use solar cells for electricity generation. As a result, there were 33 VSPPs selling a total of around 1,000 kW (at about THB 1.70/unit) to the power grid in September 2005. A solar cell power plant with a capacity of 500 kW, representing the largest plant in Southeast Asia, has opened in a remote area in the north of Thailand in July 2006. Solar energy plants are expected to increase in remote areas that do not have access to the power grid. In fact, the adoption of solar power in Thailand is currently hindered by its cost, which is up to five times higher than e.g. conventional biomass power generation.

3) Wind energy

DEDE is planning to conduct a demonstration project for wind energy in accordance with the MoEN’s strategy and proposed by the ENCON Fund. Vertical axis wind turbines have also been developed for wind speeds lower than 5 meters per second. Although Thailand’s installed wind power capacity is less than 500 kW as of 2005, some windmill manufacturers see high potential for this energy source due to technological advances in turbine size and efficiency.

4) Hydro power

The Ministry of Agriculture and Cooperatives (MoAC) is in collaboration with the MoEN promoting hydropower generation from 6,000 irrigation dams throughout Thailand. According to a preliminary investigation, about 30 small dams with a total capacity of approximately 1 MW are currently ready for installation. The Energy for Environment Foundation (EFE) estimates that Thailand’s installed mini- and micro-hydropower capacity is approximately 350 MW (EFE, 2007). Herby it should be noted, that various literatures show differences in data due to the differing definitions of micro- and mini hydro installations.

4.4.2 Current Status of the SPP and VSPP Programs

In here, the latest status of the SPP and VSPP programs should be highlighted. The reader should be able to gain a clearer picture of the (non-) commonalities of the various strategic plans, policies and regulations compared to the actual implementation level of electricity generation with the use of RE resources in Thailand. During the last decade, the average tariffs paid to SPP generators showed a positive development, whereas in the following Table, no differentiation between conventional and renewable energy sources is made.

Table 5: Average tariffs paid to firm and non-firm generators (1995-2006)

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Source: Modified adopted from EPPO, 2007

In the area of RE SPPs, the development has been positive as well, however, with a total generating capacity of less than 1,000 MW, as illustrated in Figure 12, the share of renewable energy resources for electricity generation is still far away of the ambitious target to reach 8 % of Thailand’s total electricity generating capacity until 2011.

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Figure 12: Cumulative renewable energy SPP contracts signed 1993 – 2006 in MW (Source: Greacen C., 2007; Original source: EPPO)

In order to gain a more detailed picture of the status of all power purchases from the SPPs using renewable energy as fuel, Table 6 provides a detailed overview of the situation, as of December 2006. The predominant majority of the SPP projects implemented uses different kinds of biomass, such as bagasse, paddy husk or palm residues. In Table 6 the term Installed Capacity is used for projects which are already in operation, whereas the Proposed Capacity describes the additional ‘plan’ capacity of further SPP projects in case of completed installation and full operation, according to the application data.

Table 6: Status of SPPs using renewable energy as fuel (as of December 2006)

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Source: Modified adopted from Narupat Amornkosit, 2007; Original source: EPPO

Similarly, Table 7 presents the latest status of all projects under the VSPP program, as of December 2006. So far, notifications of acceptance have been issued to more than 40 solar projects and one significant biogas project under the authority of MEA. Parallel, PEA has accepted more than 50 projects, covering technologies reaching from solar cells and biogas until the effective use of various types of biomass. In total, these projects will be able to reach a cumulated capacity of nearly 17 MW. Obviously, as of current status, the VSPP program plays a much more significant role for the provincial areas of Thailand.

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Titel: A Hypothetical Enhanced Renewable Energy Utilization (EREU) Model for Electricity Generation in Thailand