Thailand: In pursuit of renewable energy

Thailand: In pursuit of renewable energy

Thailand, a net importer of fossil energy, is considering new models to
promote renewable energy. In particular, it is looking at successful
projects in Europe, where consumers are willing to pay higher rates to
support renewable power.

There are many issues that require addressing if the country wants to
support renewable power. Among them is the lack of interest among renewable
power producers because of the low power purchase rates, which are pushing
them to develop renewable power projects overseas instead.

According to Thailand's power development plan for 2015-36, energy
policymakers have set the proportion of renewable power to 20% of the total
power-generating system, or 19,634 megawatts, by 2036. The figure is
relatively high compared with the current 7,490MW.

This implies there is a substantial amount of renewable power that needs to
be developed.

Energy Minister Anantaporn Kanjanarat and senior officials observed a
renewable power project in Denmark's Samso Island, where around 50% of the
power used comes from renewable sources, mostly wind.

According to Samso Energy Academy, the island is on course to be free of
fossil fuels by 2030. More than 50% of energy used for transport on the
island is still from fossil fuels, while power for residential use is mostly
sourced by wind turbines.

Mr Anantaporn said Denmark is one of the world's best countries at managing
energy supply and consumption, with plentiful oil and gas resources. Denmark
is an energy exporting country, yet still has a clear policy to rely on
renewable energy and continue to support the use of renewable power despite
higher costs.

The higher costs come from certain levies imposed by the Danish government
on the renewable power-generating sector, which are accepted by the people.

"The Danes are willing to pay higher prices for renewable energy without
asking for government subsidies," said Mr Anantaporn.

In Samso Island, there are three biomass power plants that use agricultural
waste from rapeseed to generate power for 300 families and two small hotels.
Other major renewable power sources are solar and wind, generating power at
an average price of around 14 baht per unit.

Fossil-generated power prices in Thailand are around four baht per unit,
putting pressure on the government to try to lower renewable power prices to
encourage consumers to switch from fossil.

Thailand tried to introduce a project similar to Samso Island in Koh
Phaluai, located around 18 kilometres from Koh Samui. The project began in
2012 with the introduction of solar farm projects to the island with
cooperation from major private firms. But experiment appears to have
stalled.

Renewable power development in Thailand has weathered a vicious cycle of
boom and bust, with the government providing room for private companies to
step into the sector when oil prices surged and pushed other fossil fuel
prices upwards.

Strong government support for the sector since 2000 has attracted several
players to renewable energy. The attractive power purchasing rate of 8.5
baht -- in line with higher production costs -- lured many companies to the
sector.

Some even diversified from other businesses into renewable energy and listed
on the Stock Exchange of Thailand (SET) to raise more funds. Some players
acquired licences from previous licence holders who failed to get loans.

However, subsequent unclear government policies left the sector in limbo.

And the power purchasing rate, also known as the feed-in tariff (FIT) rate
-- the rate state utilities pay to solar farm developers -- stands at 4.12
baht per kilowatt hour as set last November, down almost 30% from 5.66 in
2013 and against 8.5 baht in 2006.

Increasing investment in the solar farm business has increased production,
leading to lower power-generating costs, which has prompted energy
policymakers to revise down the power purchasing rate from time to time.

Major players are now asking for a higher FIT rate, saying the current one
is too low and deterring investors from launching new projects, even
encouraging some to invest abroad.

Mr Anantaporn, the energy minister, however, poses a different argument over
the issue.

"I don't understand why the [previous] government allowed such lucrative
renewable power generating businesses with high returns to be operated by
private firms. Why is the Electricity Generating Authority of Thailand
(Egat) not allowed to do so?" he asked, indicating that Egat could provide
power at a lower price due to the economies of scale the state enterprise
would be able to generate.

Legal barriers also weigh on Thailand's renewable power development, as many
laws relevant to the renewable power sector seem to be contradictory.

Energy Absolute Plc, a SET-listed renewable power developer and operator,
last year experienced difficulties when its licence for a 260MW wind farm in
Chaiyaphum was suspended as the company's project is located on Sor Por Kor
land, designated for farming purposes only.

The Agricultural Land Reform Office finally settled the conflict, allowing
all developers to continue the projects on Sor Por Kor lands.

However, the issue has raised concerns among wind farm developers over
inconsistent government policy. It has also shaken investor confidence in
the renewable energy business in Thailand, and leads to the broader question
of whether the government will be able to promote clean energy any time
soon.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1258302/in-pursuit-of-renewable-ene
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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com