Renewable Energy in Thailand: Green Policies Take off
by Jon Fox
Thailand is establishing itself as the region’s leader in sustainable energy resources, attracting Thailand business investment through innovative polices and a transparent regulatory system.
Today, Thailand is a regional leader in the global search for new, cleaner, and more sustainable energy sources. It follows a global refocusing on renewable energy. In the period between 2004 and 2008, global investment in renewable energy quadrupled, reaching US $155 billion per year. Amazingly, by the end of 2008 investment in renewable and clean energy surpassed global investment in traditional fossil fuels.1 Clearly the trend of the future is moving away from high-emission coal burning plants, towards low impact and sustainable renewable energy resources.
Thailand was one of the first to understand this shift, and has taken the lead in renewable and sustainable energy management. Innovative polices and a transparent regulatory system enables local entrepreneurs to invest in – and profit from – alternative and renewable energy production.
Safety in diversity
In the 1970s approximately 90% of Thailand’s commercial primary energy consumption depended on imported petroleum products. When large deposits of natural gas were later discovered in the Gulf of Thailand, the Kingdom reduced its import dependence to about 60%. While Thailand has discovered more and more oil and gas reserves from the 1980s onwards, these failed to meet the ever-increasing domestic demand for commercial energy. Thus the country’s dependence on imported energy has hovered around 60% since the late 1980s despite the discovery of new resources.2 Following the rise in the global price of oil in 2008, Thailand’s net energy import costs were US$35.4 billion, equivalent to 6.4% of the nation’s GDP.3
With about 70% Thailand’s electricity generated from natural gas, there have been increased concerns that over-reliance on a single source of energy will put the Kingdom at risk. The present incorporation of renewable sources in electricity production has been relatively low: 4.7% from hydropower and 1.4% from Bio-gas.4 To address these fears, the current government of Abhisit Vejjajiva has called for an increase in renewable energy sources in the Kingdom’s 2010 Power Development Plan.
While still a small percentage of total energy production, investment in renewable energy has brought about a significant increase in the amount of renewable energy produced, up from around 200 Mega Watts (MW) in 1995 to nearly 1600MW in 2007. Today Thailand leads the region in production of solar energy (6 MW per year) and bio-mass (560 MW per year).
Experts agree that renewable energy is the way of the future. But when compared to the energy production costs of dirty fossil fuels, going green is not cheap. It costs US $5 million to produce a single MW of energy from solar panels, US $2 million for a MW of hydro electricity, US $1.8 million for a MW of bio-mass, and $1.2 million for a MW of wind energy. While long-term investment in renewable energy stands to benefit both the environment and the economic development of Thailand, it requires government support. Fortunately, successive governments have provided various incentives to the private sector to join the green energy production cycle.
Thailand’s energy regulatory authorities
The terms “climate change”, “energy security”, “energy diversity”, and “sustainable solutions” encompass a wide spectrum of issues and problems. To help explain this complex and technical issue it helps to look at a specific problem that illustrates wider trends. Energy production in Thailand serves this purpose well, and illustrates the success of clear government regulation when combined with the innovative spirit of the private sector. Yet to understand the contribution of current energy polices, we need to understand Thailand’s energy structure first.
The Kingdom’s energy is supplied by the Electricity Generating Authority of Thailand (EGAT). EGAT owns almost half of the Kingdom’s power generation capacity, all of the transmission systems, and most importantly is the single buyer of all the electricity produced in Thailand. EGAT sells its energy resources to two distribution utilities: the Metropolitan Electricity Authority (MEA) – which provides electricity to consumers in Bangkok and its surrounding areas – and the Provincial Electricity Authority (PEA) – who provides electricity to the rest of the country. All of the electricity produced and sold in Thailand goes through these mechanisms.
Before 1991, not a single private power producer supplied electricity into the national grid. In 1992, the government of Anand Panyarachun approved the Regulation to Purchase Power from Small Power Producers (SPP). Criteria for SPP qualification encouraged use of renewable energy sources and rewarded high production efficiency. The SPP program actively promoted investment in small scale privately owned renewable energy production of up to 60 MW, which was later increased to 90 MW. For comparison, Mae Moh in Thailand’s Lampang Province, Southeast Asia’s largest coal-fired power plant, bears a production capacity of 2,625 MW.
