An Alternative Power Development Plan for Thailand

by Chuenchom Sangarasri Greacen1 and Chris Greacen, Ph.D.2 Note: This is a 5-page summary version of a full-length policy brief that will be available in January 2012. Thailand's Power Development Plan (PDP) illustrates a planning process in crisis, out of touch with historic trends in electricity demand and prescribing far too many power plants of the wrong types. As a step towards a rational, clean, and economical Thai power sector, this study explores the key shortcomings of the official PDP and proposes an alternative that meets Thailand's need for electricity security with lower cost and far lower social and environmental impact. The Energy Industry Act, B.E. 2550 (2007) establishes the government's basic policy framework under which the government sets energy policy directives. Pursuant to the Act, successive Thai governments have laid out the following policy objectives for the power sector: energy security, energy self-reliance, increasing renewable energy share, efficient use of energy, fuel diversification, reducing CO2 emissions, minimizing health and environmental impacts, and reasonable costs of service to consumers. There is a disconnect between these policy objectives and the Kingdom's Power Development Plan (PDP). The latest plan, PDP 2010, calls for more than a doubling of electricity demand from 23,900 MW in 2011 to 52,890 MW in 2030. It plans to add a total 54,005 MW of new generation capacity, much of which is expected to come from coal, gas, nuclear and imported hydropower. This document explores the shortcomings of the PDP 2010 and discusses electricity resource options that are cheaper, cleaner and/or less risky. It sketches an Alternative PDP that is more consistent with Thai policy and the interests of Thai people; and compares this Alternative PDP to the PDP 2010 on a variety of economic and environmental criteria. Shortcomings of the PDP 2010 The Electricity Generating Authority of Thailand’s (EGAT’s) latest PDP 2010, which was approved by the Thai Cabinet, is based on an unrealistically high peak demand forecast. This is not new. Every other peak demand forecast ever used in a PDP has also been unrealistically high (see Figure 1). In addition, less expensive, environmentally or socially superior alternatives are not taken into consideration. The PDP is thus likely to lead to both over investment and misallocated investment. The failings of the PDP indicate that the narrow criteria that EGAT employs for planning are inadequate for the critical task of determining Thailand’s power sector investment priorities in a way that is best for the country. The PDP should be revised and the process for developing the PDP should be amended to include broader criteria and accountability to the government's energy policy objectives. Below is an alternative PDP, presented with a discussion of the specific failings of the PDP 2010.

1

Independent energy researcher and formerly a policy and planning analyst at Thailand’s Energy Policy and Planning Office. 2 Energy Consultant to the World Bank, the International Finance Corporation (IFT) and non-profits.

Figure 1: Government forecasts of peak electricity demand (in MW) have consistently over-estimated actual demand (indicated by solid red).

1. Revise Peak Demand Forecast 1.1 The February 2010 power demand forecast, which was used as the basis for planning the PDP, has already over-predicted the 2011 peak demand by 668 MW. The projected demand was 24,568 MW, but the actual peak was only 23,900 MW. The forecast should thus be revised by using the actual 2011 peak figure as the base for projecting demand in future years. 1.2 The forecast was made under the assumption that Thailand’s annual GDP growth rate would stay at 4.4% for the next five years and 4.11% for the next 20 years. This rate is optimistic, considering that average growth in the past five years has been only 2.9%. 1.3 The forecast assumes exponential growth, whereas the historical trend over the past 25 years has been linear, not exponential. The forecast should be revised to use a bottom-up sector-by-sector, end use-by-end use model. Until this is in place, linear projections based on 25-year trend are a better projection of long-term future demand. Based on this analysis, the 2030 Peak Demand can be lowered 13,198 MW to 39,692 MW, equivalent to about 15 nuclear power plants. 2. Revise the Electricity Generation Supply After the demand forecast reduction, the power sector still needs additional resources of 14,387 MW by 2030 in order to maintain a 15% reserve margin. With priority given to lower cost, lower impact, lower risk resources such as demand side management (DSM), renewable energy, cogeneration, and extending life of existing plants, the generation sources included in the Alternative PDP are as follows: • Projects already under construction or low-impact projects (see Table 2 for the list). 2

Demand Side Management (DSM) at levels consistent with the Thai Government's 20year Energy Efficiency Plan– equivalent to savings of 20% of total electricity consumption. The PDP 2010 DSM amount is about 0.3% (deducted from the demand forecast). Renewable energy equivalent to that in the PDP 2010, raising the total installed renewable energy capacity to 4804 MW by year 2030. Renewable energy includes biomass, solar, wind, biogas, geothermal, municipal waste, and small hydropower3. High efficiency cogeneration already planned in the PDP 2010. A cogeneration plant utilizes not only the electricity but also the generated heat in industrial and commercial applications, thereby significantly increasing the plant’s efficiency. In contrast, the heat produced in a typical centralized power plant is wasted through cooling towers. Additional 4,800 MW of gas-fired cogeneration, consistent with the country’s potential and recent large increase in the volume of signed PPAs and applications to the Small Power Producer (SPP) program. Extending the plant life for some existing power plants. Most plants retire at 20 to 25 years. Some plants are selected to extend life to 30 years at no or much lower investment cost and lower impacts than building new power plants at green field sites.
PDP 2010 2030 MW % 12,669 19% 21,668 33% 3,936 6% 9,827 15% 7,024 11% 4,804 7% 0 0% 5,000 8% 619 65,547 1% 100% Alternative PDP 2030 MW % 3,087 9% 9,572 27% 3,936 11% 1,737 5% 11,824 33% 4,804 14% 0 0% 0 0% 619 35,579 9,923 45,502 2% 100%

2010 Generation by fuel type Coal Gas Hydro – EGAT Hydro – imports Cogeneration Renewables Oil/gas Nuclear Others (fuel oil, diesel, Malay) Total generation Additional EE/DSM savings MW 3,527 16,091 3,424 1,260 1,878 767 3,784 0 619 31,350 % 11% 51% 11% 4% 6% 2% 12% 0% 2% 100%

Total Resources 31,350 65,547 Table 1: Generation by fuel type in PDP2010 and Alternative PDP.

A comparison of the PDP2010 and Alternative PDP fuel mix change through year 2030 is shown in the Figure 2 below.

3

Small hydropower in this context means new projects under 10 MW or retrofits on existing irrigation dams.

3

Figure 2: Supply resources in PDP 2010 vs. Alternative PDP

Following the above steps, the Alternative PDP will result in: • • A decrease of the peak demand by 13,198 MW; No new coal, natural gas, nuclear power, or hydropower imports needed. Thailand has sufficient excess surplus capacity and projects in the pipeline (planned renewable energy, cogeneration, and plants under construction) such that no additional resources are needed to maintain a minimum 15% reserve margin until 2017. All load growth met by energy efficiency, renewable energy, and cogeneration; Avoided investment of 2.01 trillion baht or US$67 billion. Electricity bills to consumers lower by 12% in year 2030 compared to PDP 2010; Diversification of fuel risk and reduction of fuel imports, increasing energy security; Reduction in CO2 emissions on a per-capita basis of 7.7% in year 2030 compared to year 2011 in the Alternative PDP, compared with per capita increase of 75% under the PDP 2010; 50% or more reductions in nitrous oxide, sulfur dioxide, particulates, and mercury emissions.

• • • • •

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Table 2: Comparison of resource additions through year 2030 in PDP 2010 vs. Alternative PDP
PDP 2010 Project (MW) Capacity already online since 2010 (as of Oct 2011) Nam Theun 2 North Bangkok CC # 1 Nam Ngum 2 920 670 597 Year 200 9 201 0 201 1 201 2 201 3 201 4 201 5 201 6 201 7 201 8 201 9 202 0 202 1 202 2 202 3 202 4 202 5 202 6 202 7 202 8 202 9 203 0 Installed MW 29,212 31,349 32,992 34,171 37,002 39,720 39,990 41,419 42,374 42,619 44,290 44,843 47,618 48,982 51,235 52,533 52,738 56,957 56,830 61,355 63,824 65,547 Other resource additions EE/DSM Cogeneration Plant life extension (retiring after 2030)* 9,923 4,800 3,104 17,827 Additions of capacity already included in PDP 2010 SPP – cogeneration SPP – renewables VSPP EGAT renewables Gheco One (IPP) Theun Hinboun Expansion Wang Noi CC#4 (EGAT) Bang Lang Dam Expansion Lam Ta Kong (pump storage) 7,340 1,045 2,567 336 660 220 800 12 500 13,479 Project (MW) Capacity already online since 2010 (as of Oct 2011) Nam Theun 2 North Bangkok CC # 1 Nam Ngum 2 920 670 597 Alternative PDP Year 200 9 201 0 201 1 201 2 201 3 201 4 201 5 201 6 201 7 201 8 201 9 202 0 202 1 202 2 202 3 202 4 202 5 202 6 202 7 202 8 202 9 203 0 Installed MW** 29,212 31,350 32,993 33,403 33,457 32,513 32,757 33,438 34,253 34,662 35,232 36,626 37,301 37,565 37,226 37,215 36,428 37,147 37,961 36,527 37,896 35,579 Reserve Margin 27.6% 26.7% 33.9% 31.0% 27.6% 20.9% 19.2% 19.3% 20.2% 19.7% 20.2% 23.3% 24.3% 23.9% 21.8% 20.9% 18.0% 20.1% 22.7% 18.1% 23.7% 15.9%

Additions of capacity considered “clean” or in the pipeline SPP – cogeneration SPP – renewable VSPP EGAT renewable Gheco One (IPP) Theun Hinboun Expansion Wang Noi CC#4 (EGAT) Bang Lang Dam Expansion Lam Ta Kong (pump storage) 7,340 1,045 2,567 336 660 220 800 12 500 13,479 Other capacity additions Gas CC 17 units Coal 13 units Hydro (imports) Lignite (imports) Nuclear 5 units 15,200 7,740 8,090 1,842 5,000

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37,872

*Additional 12,543 MW was extended but retired by 2030 **Excluding savings from EE/DSM

Generation capacity as of December 2009 Total capacity added during 2010 – 2030 Total capacity decommissioned during 2010-2030 Total capacity at the end of 2030

29,212 54,005 -17,671 65,547

Generation capacity as of December 2009 Total capacity added during 2010 – 2030 Total capacity decommissioned during 2010-2030 Total capacity at the end of 2030 (Excluding 10,158 MW savings from EE/DSM)

29,212 20,934 -14,567 35,579

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