THAILAND’S APPROACH TO PROMOTING CLEAN ENERGY

IN THE ELECTRICITY SECTOR

Dr. Pallapa Ruangrong. Energy Regulatory Commission of Thailand

In Thailand, efforts have been made to diversify away from the use of oil and natural gas for power
generation by, among others, increasing the use of indigenous renewable energy resources and using fuel
energy-efficient technologies for power generation so as to enhance the security of national power
supply as well as to reduce environmental impact. Various incentive and promotional measures have
been applied -- most importantly the provision of pricing subsidy/feed-in tariffs via the Small &
Very Small Power Producer (SPP & VSPP) programs using renewable energy or cogeneration and
micro-hydro projects, promotion of the use of clean coal technology for power generation, including
the recent serious deliberation on the use of nuclear power generation.
PROVISION OF PRICING SUBSIDY FOR RENEWABLE SPPS VIA COMPETITIVE BIDDING
In 2001, consideration was made by the government on the past achievement and SPP
participation in the SPP program since its launch in 1992. A number of SPPs, using fossil fuel e.g.
coal and natural gas or using renewable energy e.g. bagasse, rice husks, wood chips and palm shells,
had proposed sale of capacity to the grid system. However, it was recognized that capital cost was the most
important barrier affecting the competitiveness and hence the viability of the renewable energy power generation.
Therefore, in May 2001, the government initiated the “pricing subsidy” in the form of energy
payment adder for electricity generated by renewable energy for a period of five years at a maximum
rate of 0.36 baht/kWh, under a competitive bidding. A budget of 3,060 million baht (about US$ 90
million, at a rate: US$ 1 = 34 Thai Baht) was allocated from the Energy Conservation Promotion Fund
for this purpose. About 300 MW generated from renewable energy was expected under this pilot
scheme.
As at 31 October 2001, that is, prior to the final consideration of the proposals submitted under
this project, 47 SPPs (1,958 MW) had supplied power to the grid, but only 24 SPPs (282.4 MW) used
renewable energy as fuel.
Under this pilot scheme, 20 new SPPs, with a total proposed sale of 243.3 MW to the grid, have
been awarded the pricing subsidy, accounting for a total subsidy of 1,401 million Baht, or an average
adder rate of 0.17 Baht/kWh. However, only biomass projects could participate in the competitive
bidding because the cost of energy, using biomass as fuel, was cheaper than other renewable energy
projects, so the aim of fuel diversification, which is the key to affordable and reliable electricity, had
not been fully achieved.
PROMOTION OF GREATER USE OF RENEWABLE ENERGY FOR POWER GENERATION THROUGH
THE VSPP PROGRAM

In mid-2002, the government, via the two power distribution utilities i.e. the Provincial Electricity
Authority (PEA) and the Metropolitan Electricity Authority (MEA), announced power purchase
from VSPPs with capacity supply to the grid <1 MW.
This program has been initiated because the existing SPP regulations of EGAT are not designed
for power producers that are smaller than 1 MW. If small-scale power producers using renewable energy,
wastes or residues as fuel have to comply with the SPP regulations, a substantial cost for grid connection will be
required, making the projects uneconomic. This is aimed, among others, to promote greater use of non-
conventional energy for power generation, to promote efficient use of domestic energy sources and
to distribute power generation to rural areas and encourage public participation in the power
generation. The main targets of this program are pig farms and food processing industries. The

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manure and organic wastes from the farms and factories can generate biogas which can then be used
as fuel for power generation.
Later, on 4 September 2006, the government, via the National Energy Policy Council (NEPC),
approved the increase of capacity purchase from VSPPs from ≤1 MW to ≤10 MW each. Also, the technical
interconnection restrictions and requirements were revised to facilitate power purchase from VSPPs.
PROVISION OF “ADDERS” TO STIMULATE MORE POWER GENERATION USING RENEWABLE
ENERGY
On 26 December 2006, the NEPC approved the increase of power purchase from SPPs (as a
whole) from 3,200 MW to 4,000 MW.
In order to induce more investors to produce electricity from renewable energy, in 2007 the
Ministry of Energy set a target to purchase power from SPPs using renewable energy,
totaling 530 MW. Also initiated was another supportive scheme, “Adder Provision” -- an additional
energy purchasing price on top of the normal prices that power producers will receive when selling electricity to the Power
Utilities. The amounts of adders vary, depending on the technology used. The provision of adders
will be for a period of 7 years as from the Commercial Operation Date (COD).
Adder Rates for SPPs Using Renewable Energy
For the required 530 MW from SPPs using renewable energy, the provision of Adder is divided
into:
- “Fixed Adder” (230 MW) -- the adder rate for SPPs using municipal solid waste & wind is
2.50 Baht/kWh (about US¢ 7.35), and for SPPs using solar energy is 8.00 Baht/kWh (about US¢
23.53).
- “Adder Bidding” (300 MW) -- for SPPs using other types of renewable energy, such as rice
husks or wood chips, the adder is provided via a competitive bid. However, the maximum adder
rate is set at 0.30 Baht/kWh (about US¢ 0.88).

Fuel Adder Purchase Capacity

(Baht/kWh) (MW)
MSW 2.50 ⎫ 100
Wind 2.50 ⎬ Fixed 115
Solar 8.00 ⎭ 15
Other RE Types 0.30 } Bidding 300
Total 530

To implement the Adder Bidding for purchase of 300 MW, a Request for Proposals (RFP) from
SPPs using renewable energy (other than MSW, wind and solar energy) to bid for the Adder was
issued on 1 May 2007. The Adder Bidding has been finalized since 12 October 2007, with 7 SPP
proposals approved, accounting for a total proposed sale of 335 MW (average price = 0.297 Baht/kWh).
The selected SPPs are obliged to sell electricity to the grid by 2012.

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Adder Rates for VSPPs
On 6 December 2006, the government approved the Adder Rates for ≤10 MW VSPPs that
supply power to the grid, at the following “fixed rates”:

Fuel/Technology Adder (Baht/kWh)

Biomass 0.30 (US¢ 0.88)
Biogas 0.30
Mini-hydro (50-200 kW) 0.40 (US¢ 1.18)
Micro-hydro (< 50 kW) 0.80 (US¢ 2.35)
MSW 2.50 (US¢ 7.35)
Wind 2.50
Solar 8.0 (US¢ 23.53)

Remarks: 1) PEA/MEA announcements issued on 1Feb07 and 2Feb07 respectively.

2) VSPPs must submit the proposal to sell electricity by Dec 2008.
3) Rate used: 34 Baht/US$.

After the announcement was made in early February 2007 by the two Distribution Utilities, i.e.
the Metropolitan Electricity Authority (MEA) and the Provincial Electricity Authority (PEA), on the
provision of “Adder,” overwhelming response has been received. The number of participating
VSPPs has considerably increased from 23 VSPPs (13 MW) in March 2007 to 264 VSPPs in
December 2007, making a total proposed sale of 804.83 MW. Of these, 67 VSPPs are already on
stream, accounting for a total of 74.60 MW supply to the grid.
Special Adder Rates for Renewable Energy SPPs/VSPPs in the Three Southernmost
Provinces
In order to alleviate the investment risks for power generation from renewable energy in the
three southernmost provinces, i.e. Yala, Pattani and Narathivath, the NEPC passed a resolution on 4
June 2007 approving the Special Adder Rates for renewable energy SPPs/VSPPs located in the three
provinces. Accordingly, PEA and EGAT have issued an announcement on these Special Adder
Rates on 13 and 23 July 2007 respectively.

Existing Adder Extra Adder Special Adder for SPPs/VSPPs in

Fuel/Technology the 3 Southernmost Provinces
(Baht/kWh) (Baht/kWh)
(Baht/kWh)
Biomass, Biogas 0.30 1.0 1.30
Mini Hydro (50-200 kW) 0.40 1.0 1.40
Micro Hydro (< 50 kW) 0.80 1.0 1.80
MSW 2.50 1.0 3.50
Wind 2.50 1.50 4.00
Solar 8.00 1.50 9.50

REVIEW OF ADDERS FOR WIND AND SOLAR ENERGY PROJECTS

So far, there has been no SPP/VSPP using wind or solar energy participating in the power
purchase program although the designated adders have been announced. Following a policy
research study, it is found that, although the designated adders is added to the purchasing prices for
SPPs/VSPPs, power generation using wind or solar energy is still not cost-effective. To address this
problem and to enhance fuel diversification, on 16 November 2007, the NEPC approved the
adjustment of adder rates to encourage investment in power generation using wind or solar energy as
fuel. That is, for wind-energy power generation, the adder is increased from 2.50 to 3.50 Baht/kWh;
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 for solar-energy power generation, the adder is 8.00 Baht/kWh still; however, the duration of adder
provision for both wind and solar energy projects is extended from 7 years to 10 years as from the
COD.
For the three southernmost provinces, the adder adjustment for wind/solar energy projects is
also applied, and the extra adders, as per the 4 June 2007 resolution, remain unchanged. Hence, the
adder rates for wind/solar energy projects in the three provinces are currently as follows:

Fuel/ Existing Adder Extra Adder Special Adder for SPPs/VSPPs in the Duration of
Technology 3 Southernmost Provinces Adder
(Baht/kWh) (Baht/kWh)
(Baht/kWh) Provision
Wind 3.50 1.50 5.00 10 years
Solar 8.00 1.50 9.50 10 years

PROGRESS OF POWER PURCHASE FROM SPPS USING COGENERATION SYSTEM

As for SPPs using cogeneration system, the adder scheme is not applied. After a power purchase
announcement was issued in early 2007 for a total required capacity of 500 MW from cogeneration
SPPs, considerable response was received, i.e. 28 SPPs had submitted proposals with a total
proposed sale capacity of 2,191 MW, which was 1,691 MW more than the announced amount.
Hence, acceptance of proposals has been discontinued since 31 August 2007.
On 16 November 2007, the NEPC approved the selection of the first lot of 9 projects, with 760
MW of proposed sale capacity and also gave consent to increasing the purchase from cogeneration
SPPs, but not exceeding the previously approved overall purchase amount from SPPs, i.e. 4,000
MW. Consequently, additional cogeneration SPPs have been selected, making altogether 16
cogeneration SPPs approved for sale of electricity, with a total proposed supply of 1,314 MW to the
grid.

FORESIGHT OF RENEWABLE ENERGY-FUELED POWER GENERATION

Generation of 81.7 MW of electricity from renewable energy projects (solar/wind: 3 MW; small
hydropower: 78.7 MW) by EGAT has been incorporated into Thailand’s Power Development Plan
(2007-2021). In addition, more money will be allocated from the government’s Energy Conservation
Promotion Fund to be used as soft-loans for investors interested in renewable energy projects, such
as biogas generation from wastewater in tapioca starch factories to generate electricity.
The potential of power generation from biomass is remarkable. So far, rice husks and bagasse
have been the main feedstock; however, potential
Target of Renewable Energy-Fueled Power Generation
during 2008-2011
of other biomass still exists, such as rice straw,
Existing in 2006 Target in 2011
sugarcane leaves, cassava rhizomes and emptied
Fuel Type
MW ktoe MW ktoe
palm bunches. A study is now being undertaken
Solar 30 3 45 4
on the effective collection system and
Wind 1 - 115 13 management of these types of biomass scattered
Mini/Micro Hydropower 44 5 156 17 here and there. In addition, the trend of biogas
Biomass 1,977 664 2,800 941 generation from industrial wastewater is rising
Municipal Solid Waste 4 2 100 45 since the industrial operators have better
Biogas 5 2 60 27
recognized the benefits of the biogas system
Total 2061 676 3,276 1,047
installation instead of the former wastewater
• Promotional Measures: - Provision of “Adder” for power generation using RE &
- Provision of Soft Loans for RE use
treatment system, in terms of effective
• Speed up implementation via: assistance in designing/subsidizing investment capital/ environmental impact solution and by-product
publicizing past achievements/provision of related information & technical advice
Source: Thailand’s Energy Conservation Program, Renewable Energy Development
energy that can be used on site and/or sold to the
Program 2008-2011, revised September 2007. grid.

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 The target is to increase the use of renewable energy for power generation from 2,061 MW in
2006 to 3,276 MW in 2011, or an increase of 1,215 MW, being able to replace commercial energy
consumption at the expected amount of 1,047 ktoe.
Thailand has much potential to generate power from renewable energy. Nevertheless, systematic
support and promotional policy guidelines of the government is currently necessary to help alleviate
the investment cost for renewable energy-fueled power generation development so as to eventually
enhance its commercially competitiveness, which will be a key mechanism to further promote the
development of appropriate technologies for power generation from each type of potential domestic
renewable energy sources.

PROMOTION OF THE USE OF CLEAN COAL TECHNOLOGY

The Thai government will encourage EGAT and new IPPs to use imported coal for power
generation to reduce pollution problems. In addition, efforts will continue to promote the use of
Clean Coal Technology. Government support will also be given to R&D on Clean Coal Technology
to help open up new opportunities for developing coal-based fuels, which can help utilities to meet
more stringent clean air requirements.

NUCLEAR POWER GENERATION DEVELOPMENT

In addition, in order to be prepared for the rising energy demand in the country and to alleviate
the global warming due to fossil fuel combustion, Thailand is contemplating on the road map for
nuclear power generation development, which is divided into two phases:
1st Phase (2007-2014) -- a preparatory stage, involving:
− a feasibility study for the development of a nuclear power generation project;
− human resources development;
− selection of an appropriate technology to be used as well as the identification of possible plant
sites;
− establishment of the standards of nuclear power plants (NPP) and related laws to create
confidence of the public; and
− public campaigns to create accurate understanding of the use of nuclear energy together with
its advantages and the necessity of its application to Thailand.
nd
2 Phase (2015-2020) -- construction of a nuclear power plant (6 years).
As there are concerns over the use of nuclear energy, particularly its safety and waste disposal,
before making a final decision on the construction of an NPP, public consultations will be organized
and a final approval from the cabinet must be obtained.

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