Thailand Energy Production Trends

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How Thailand’s Energy System Is Structured

The national energy and environmental policies are government-level policies that are adopted for implementing environmental and energy-related objectives in Thailand. Thailand’s energy policies, which include electric power and renewable energy policies, are drafted and created by the Ministry of Energy (MoE).  Similarly, energy policies that include electric power and natural gas transmission are regulated by the Energy Regulatory Commission (ERC).

The ERC is a governmental organization chaired by the Prime Minister. The overall management of the energy sector is the responsibility of the National Energy Policy Council and the Energy Policy Committee, two organizations established to work in conjunction to manage the sector. The Department of Energy Business is responsible for regulating the quality of service provided by the various companies and organizations operating in the energy sector.

The Energy Policy and Planning Office (EPPO), which is under Thailand’s Ministry of Energy, oversees all aspects of Thailand’s energy policies, which includes oil, natural gas, and power sectors. The National Economic and Social Development Board of Thailand oversee large energy infrastructure projects and contribute to the policy planning process. Similarly, the National Energy Policy Council (NEPC) approves all energy-related plans. Finally, the Department of Mineral Fuels regulates the upstream sector of Thailand’s hydrocarbons. Its main function is to promote oil and gas exploration and development, including licensing rounds.

Thailand’s Ministry of Energy also looks into the management of Thailand’s Oil Stabilization Fund, which regulates and, in effect, subsidizes retail and wholesale petroleum product prices. The government of Thailand is attempting to limit the subsidies for LPG and diesel, and the government’s pricing reforms are caught between the dual pressures of protecting consumers and industry against inflation and the fund’s depletion. As a first step, the government’s goal is to raise LPG prices, at least for industrial and petrochemical consumers, as part of government’s pricing reforms.

There are various organizations (i.e., state-run/government, public companies, and independent companies), which are responsible for providing energy in Thailand. These organizations include:

• Office of the Minister — responsible for coordination with the Cabinet, the parliament, and the general public
• Office of the Permanent Secretary — establishes strategies, translates policies of the ministry into action plans, and coordinates international energy cooperation
• Department of Alternative Energy Development and Efficiency (DEDE) — promotes the efficient use of energy, monitors energy conservation activities, explores alternative energy sources, and disseminates energy-related technologies
• Department of Energy Business — regulates energy quality and safety standards, environment and security, and improves standards to protect consumers’ interests
• Department of Mineral Fuels — facilitates energy resource exploration and development
• Energy Policy and Planning Office (EPPO) — recommends economy-wide energy policies and planning
• Electricity Generating Authority of Thailand — the state generation enterprise
• Petroleum Authority of Thailand (PTT) Exploration and Production (E&P) Public Company Limited and the Bangchak Petroleum Public Company Limited — two autonomous public companies
• Energy Fund Administration Institute — a public organization
• Energy Regulatory Commission and the Nuclear Power Program Development Office — two independent organizations

On June 28, 2010, the National Energy Policy Commission (NEPC) passed a resolution to reduce the Adder rate for solar projects and to establish a new committee to oversee policy formulation and regulation of renewable energy policy. The Managing Committee on Power Generation from Renewable Energy Promotion (hereafter, the “Managing Committee”) was appointed to coordinate, follow-up, and ensure that the implementation and establishment of measures promoting power generation from renewable energy is in compliance with policy.

The national energy/environmental policy of the Thailand government favors the regulatory frameworks dealing with the growth and expansion of renewable energy within the country. In terms of specific measures for promoting renewable energy in electricity production, Thailand enacted a Small and Very Small Power Purchase Agreements act, which regulates the connection of small producers to the electricity grid and the sale of their electricity. This framework also serves as a base for the feed-in tariff for solar, wind, waste, biomass, biogas, and mini and macro hydro power, which was passed in 2007 and amended in 2009. The law for a premium feed-in tariff regulates the payment of technology specific premiums on top of a regular electricity tariff. This policy awards power producers with an extra “adder” for systems installed in three provinces in Southern Thailand as well as for systems generating Renewable Energy (RE) electricity, replacing diesel in the Provincial Electricity Authority (PEA) system.

Finally, the regulatory framework also includes the new Thailand Power Development Plan 2015 – 2036, which was created by the government of Thailand in 2015. This plan states that the Thai government has a growing interest in attracting foreign investments in the renewable energy sector, particularly in solar photovoltaic projects. In this regard, the national energy/environmental policy enables renewable energy producing companies to receive government fundings, subsidies, and grants in order to promote the growth of renewable energy.  Renewable energy producing companies like SPCG will thus benefit from these regulatory frameworks in place, in terms of enhanced production activities and practices.

Energy Sources

The Ministry of Energy’s 2012 data reveals the percentage of Thailand’s energy use that is provided by fossil fuels. Around 10% of Thailand’s energy consumption was from coal and coal-related products. Petroleum products comprised majority of Thailand’s energy consumption at 47%. Natural gas provided around 6% of Thailand’s energy consumption. Thailand’s traditional renewable energy, which is composed of biomass, provided 12% of energy in 2012, whereas renewable energy comprised of wind, solar, hydro, and geothermal, provided 6% of energy. Thailand’s energy use with respect to nuclear power is still on hold. There are plans to add 2 GW of nuclear power that have been on hold since 2007, and the Fukushima nuclear plant accident in Japan has driven Thailand’s specific investment costs for nuclear to unfeasible levels.

Thailand is increasingly dependent on energy imports, which are expected to grow from 42% in 2013 to 78% in 2040. The share of natural gas imports will almost double due to declining domestic production and the high demand for power generation. To limit energy imports, the national power plan (AEDP 2015-2036) foresees that by 2040, biomass will have the largest share of Thailand’s energy at 13% (11 GW), followed by PV at 9% (8 GW), wind at 6% (5 GW) and hydropower at 5% (4 GW).

Profiles of Leading Energy Companies

Petroleum Authority of Thailand (PTT) or PTT Public Co. Ltd.: PTT Public Co. Ltd was established on December 29, 1978, and its primary mission was to procure adequate oil for domestic consumption. Following the privatization of the state enterprise Petroleum Authority of Thailand, PTT Public Co. Ltd, or PTT, was registered on October 1, 2001, under Corporatization Act B.E 2542 (A.D. 1999). PTT inherited from its predecessor  business operations, rights, debts, liabilities, and assets. PTT has an initial registered capital of Baht 20,000 million (10 Baht/share). PTT also has a very strong link with the government of Thailand as the Ministry of Finance has 51.1% ownership in the company. The ministry thus has considerable influence on PTT’s policies and direction through strong representation on the company’s board. Finally, the government-supported equity fund Vayupak also owns 15.3% of PTT, thus the total government ownership in PTT is at 66.4%.

SPCC Public Co Ltd:  SPCG Public Co. Ltd is a company which began developing and operating mega-solar facilities in Thailand in 2010. SPCG is a pioneer in solar farm and solar roof development in Thailand and Asean. SPCG has developed 36 solar farm projects in Thailand totalling about 260 Mw in 10 provinces throughout the Northeast of Thailand and Lopburi, with a total land area of about 5000 rais (2000 Acres). SPCG is a pioneer in the solar roof business in Thailand. Solar Power Company Limited (SPC) is a subsidiary of SPCG that holds 34 licenses to develop solar farms, with a connected output of 200 mWp.

PTT Public Co. Ltd: PTT Public Co Ltd  produces non-renewable energy from petroleum, natural gas and oil products. A newspaper report stated that the PTT board approved investments in floating liquid natural gas storage facilities located at Map Ta Phut, in Rayong province, where Thailand’s largest petrochemical complex is located. PTT is currently expanding the Map Ta Phut Terminal to accommodate 10 million metric tons of Liquefied Natural Gas (LNG) per annum by 2017. The Chairman of PTT Piyasvasti Amranand stated that “the company’s capacity to accommodate Liquefied Natural Gas would eventually reach 20 million in the near future.”. PTT’s cost of energy, which they provide to consumers, is expected to increase over the next five years as its rate of production and distribution will increase proportionally. PTT mostly serves individual consumers and large numbers of customers in the industrial sectors.

PTT’s long-term goal is to reduce greenhouse gas (GHG) emissions by 15% by 2020 against the business as usual projection. The target has been designed to be in line with the shared vision of the global community and international scientific research in order to prevent the global average temperature increase to below 2 degrees Celsius.

PTT Public Co. Ltd is committed to reducing GHG emissions both in scope one and scope two from its operations. Increasing energy efficiency, changing fuel types, generating power from co-generation power plant, and utilizing waste heat are some of the measures PTT introduced for reducing GHG emissions. In addition, PTT aims to reduce GHG emissions from scope three activities by offering low-carbon products. In 2012, PTT conducted a comprehensive review of its GHG emission management. Based on the results of the study, the CCC introduced carbon intensity index to measure the organization’s effectiveness in reducing GHG emission. PTT conducted a pilot project to determine the ratio of GHG emission per unit of product or ton of carbon dioxide equivalent per barrel of oil equivalent (tCO2/BOE). The short-term target will be based on the average carbon intensity in the past. Long-term targets will be set to support carbon intensity index reduction in order to reflect PTT’s GHG management efforts. Additional analysis of GHG emission will be conducted by PTT to determine appropriate indicators for setting the company’s carbon intensity goal.

SPCG Public Co Ltd: SPCG Public Co. Ltd produces renewable energy and its source is from solar power. SPCG has a combined output capacity of 36 facilities, which it operates across the country. In recent years, SPCG’s combined output capacity has reached at 260 megawatts which provides around one-fifth of Thailand’s total solar-generated electricity. SPCG’s CEO Wandee Khunchomyakong stated that the “company aims to double the solar power generation capacity to a total of 500 MW by 2020.” SPCG launched two solar farms in Surin Province in June 2014 with an output capacity of 7,460 KW each. Tens of thousands of solar panels are lined up in an agricultural district in the northeastern province. Electricity generated in this region is sold solely to Thailand’s Provincial Electricity Authority, which brings revenue of 240 million baht ($6.92 million) annually to the power plant operator. Finally, SPCG’s stable, efficient power generation has been highly appreciated in the market. Its consolidated revenue boosted to roughly 4.4 billion baht, and the net profits to 1.7 billion baht, for the period that ended December 2014. SPCG has broad range of customers, which includes individual consumers, private firms and government agencies.

In 2014, SPCG Public Co. Ltd implemented the construction of 36 PV solar farms in northeast Thailand, which accounted for 250 MW of installed capacity. This made possible potential savings of 200,000 tons of CO2 equivalent per year compared to Thailand’s fossil-fuel driven electricity generation.

SPCG Public Co. Ltd installed solar farms, which provide potential savings of 200,000 tonnes of CO2 equivalent per year. The Korat 2 and Loei 1 solar farms of SPCG will provide clean and renewable energy for the local population in future time. These two solar farms have replaced some of the electricity produced from fossil fuel generation thus improving local air quality and helping mitigate the effects of climate change. SPCG is playing a key role in placing Thailand on a low-carbon growth path and reducing its reliance on imported energy, and at the same time enhancing economic growth in some of the most impoverished regions of Thailand. SPCG’s financing granted by the Clean Technology Fund (CTF) will also be significant in reducing greenhouse gas emissions. The CTF, which is a multi-donor facility administered by the World Bank, will assist SPCG through scaled-up financing for demonstration, deployment, and transfer of low-carbon technologies, with significant potential for long-term savings in greenhouse-gas emissions.

Submitted by Climate Scorecard Country Manager Neebir Banerjee


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