Thailand: If it walks like a duck .

Thailand: If it walks like a duck .

Industry cries foul over Egat's proposal to impose a levy on renewable power
producers for storage.

Private renewable energy firms are crying foul over the Electricity
Generating Authority of Thailand's (Egat) proposal to collect a levy known
as a backup rate on renewable power producers, saying it is unfair as they
have been assisting the government in developing the sector for years.

Renewable power has become a bigger player in the energy mix the past three
years as more private firms were granted licences to develop projects,
mostly solar farms.

Renewable power-generating capacity has skyrocketed to almost 12,000
megawatts in the first quarter this year, or 13% of the country's total
capacity, up from 5% and 7,700MW in 2014.

Renewable power has limited capacity depending on the source, as solar
generates power only during the day, wind mostly at night, while some
agricultural waste is only available during certain months of the year.

However, power demand rarely drops, sometimes peaking when renewable sources
cannot produce power. This creates a burden for Egat to store backup power
to be ready to serve demand. The more renewable power, the more backup power
Egat needs to accommodate.

Renewable power-generating capacity is poised to keep growing as the
country's Power Development Plan aims for a 30% contribution from renewable
by 2036, some 19,635MW. This proportion is expected to be increased shortly
by the energy policymakers to 40%.

Rising renewable generating capacity has forced Egat to carry the costs of
generating backup power for the generators, leading it to propose the backup
rate levy.

Word of the proposal spread on social media, with some commenting that Egat
would collect the rate from all renewable power developers, including
households with solar rooftops. This led to complaints against Egat, saying
the idea would discourage renewable power developers as well as households
to develop renewable power.

Egat said the levy is undergoing a feasibility study and it has not decided
who would be charged and at which rate.

Egat is conducting the feasibility study along with state utilities
Metropolitan Electricity Authority and Provincial Electricity Authority.

Paruhus Vongthanet, Egat's deputy governor for policy and planning, said the
study is considering several scenarios. The study is based on real power
demand and the current renewable business model, which follows the same
pattern as California grid operator's "Duck Curve" in the US, he said.

In 2013, the California Independent Systems Operator (CAISO) released a
report on how the growth of solar power was going to change the state's
energy balance over the coming years. The report referred to a "duck curve"
for its distinctive shape -- a deep midday drop in net load, driven by lots
of solar flooding into the grid, and a steep ramp-up starting in the late
afternoon and extending into evening as solar fades just in time for people
to come home from work and start using a lot of electricity.

Regardless of the model, renewable power developers seem likely to remain
completely opposed to the levy.

Wandee Khunchornyakong, chairman of SPCG Plc, the country's largest solar
developer, said renewable developers should be recognised as helping the
government meet its national goals in transforming the economy, not burdens
that need to be taxed.

"We have been assisting the government for years to achieve its COP21
commitment the prime minister signed in Paris in December 2015," she said,
referring to the global pact to fight climate change to contain the impact
of global warming.

She said private renewable developers have invested massive amounts of money
to help reduce Egat burdens in investing to develop the renewable sector.

BCPG, another SET-listed renewable power developer, voiced similar concerns.

Bundit Sapianchai, BCPG's president, said all relevant parties in the sector
should be allowed to take part in finding an appropriate solution together,
continuing the global trend of renewable power generation.

Prof Dusit Kruangam, chairman of the Thai Photovoltaic Industry Association,
said the association clearly opposes the idea of collecting a levy from
renewable developers.

He said developers entered this sector not only to reap profits but also to
help Thais have their own renewable power generation, particularly from
solar rooftops, cutting dependence on fossil fuels and reducing their
monthly power costs.

TPBI Plc, one of largest rooftop power generators, also disagreed with the
levy collection. The company said it developed its solar rooftop initially
to cut its own power bills and production costs, and insisted there is no
reason for it to be taxed.

TPBI invested some 100 million baht in 2015 to develop solar rooftops with
2MW capacity, which has cut power bills by 10 million baht a year.

"We spent our own budget to save on costs. It doesn't make any sense to
collect a levy from us," said Kamol Borrisuttanakul, the company's chief
financial officer.

Energy Minister Anataporn Karnchanarat played down the issue, saying the
ministry floated the idea to hear the public response. He said there is no
plan to impose such a levy on renewable developers now.

Egat also came out with a softer stance, saying it is conducting another
study to help increase the power-generating efficiency of private developers
to produce more sustainable power, tackling the problem of limited
power-generating capacity from renewable sources.

Mr Paruhus said if the project to increase the efficiency of private
renewable developers works, the backup rate levy would be a plan of last
resort.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1284331/if-it-walks-like-a-duck-%E2
%80%A6

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com