Presentation on theme: "Rethinking “energy security” and power sector planning: a case study of Thailand 18-19 January 2012 Chuenchom Sangarasri Greacen Palang Thai "Know Your."— Presentation transcript:
Rethinking “energy security” and power sector planning: a case study of Thailand 18-19 January 2012 Chuenchom Sangarasri Greacen Palang Thai "Know Your Power“ International Conference Towards a Participatory Approach for Sustainable Power Development in the Mekong Region
Brief history of Thai power sector 1960s: decentralized coops in close competition with centralized utilities as the model to electrify Thailand. Centralized model chosen not by technical superiority but rather by Cold War politics 1960s-90s: rapid expansion of power system by state-owned utilities World Bank and aid agencies had major roles 1990s: neoliberal reforms Partial divestiture of EGAT’s generation assets (EGCO, RATCH) Small and Independent Power Producers (SPPs/IPPs) Role of private foreign capital
Brief history of Thai power sector (2) 2000s-present: Plan to create Power Pool abandoned Attempt to partially privatize (equitize) monopoly EGAT in the stock market thwarted by civil society’s lawsuit But increasing financialization of electricity in the stock market continued via EGAT’s subsidiaries, other Thai energy companies and their joint ventures with foreign capital Increasing roles of Thai listed non-energy companies (e.g. construction) in power project investment Mushrooming power projects, domestic & trans-boundary
ISSUES AND TRENDS IN POWER SECTOR PLANNING AND DEVELOPMENT
Changing role of electricity Electricity as public service profitable commodity Commons like rivers trans-boundary commodities
Performance of high-level energy officials in serving the government vs. PTT Plc. (Thai gas/oil utility, the largest list company in Thailand) Attendance of PTT board meetings* Attendance of Automatic Tariff (Ft) mechanism mtgs** Permanent Secretary 13/134/6 Director of EPPO 8/95/6 * จากรายงานประจำปีบมจ. ปตท. ปี 2546 ** ตั้งแต่มีการปรับองค์ประกอบคณะอนุกรรมการ Ft โดยแต่งตั้งให้นายเชิดพงษ์เป็นประธาน และนายเมตตาเป็นรอง ประธาน ( ปลายปี 46) 100% 90% 67% 83% Changing role of policy makers: Serving public or corporations?
Hybrid identity, conflict of interest Source: www.ratch.co.th
Power projects and policies driven by companies Power Development Plan (PDP) used to be the master plan for capacity expansion Determines how many of which kind of plants get built when But now some projects were on “fast track” even before being listed in the PDP, e.g. 1,260 MW Xayaburi dam 4,000 MW coal-fired plants in Dawei
Energy policy and plans become tools to drive the stock market and churn profits The coup-installed government announced its policy on energy investment opportunities on 3 Oct 2006 Energy policy, PDP approval and IPP bidding resulted in significant windfall benefits for selected companies 1 year later, the share prices of companies benefiting from the PDP jumped 66% (other companies had a 8.7% rise)
Investment disconnected actual need for electricity Criteria for determining generation requirement: Reserve margin (capacity in excess of peak demand) ≥ 15% Yet Thailand’s PDP2010 adds generation: 920 MW Nam Theun 2 when reserve margin > 28% 597 MW Nam Ngum 2 when reserve margin > 27% 660 MW Gheco1 when reserve margin > 27% 1600 MW SiamEnergy when reserve margin > 25% and many more….
Planned new investments are so excessive despite exaggerated “needs” Used to justify NT2 5,800 MW The year NT2 came online
Over-investment = unnecessary impacts, burden on consumers and economy Thai power sector suffered from “over-capacity worth 400 billion Baht” ( from total assets of 700 billion Baht and annual turnover of 240 billion Baht) – PM Thaksin Shinwatra, 2004
Wasteful inefficiency changing energy intensity over 20-yr period Data source: Energy Information Administration 2008
Electricity production and consumption (GWh) 1700 families relocated Loss of livelihood for >6200 families Loss of 116 fish species (44%) Fishery yield down 80% 65 Mae Hon g Son g Source: MEA, EGAT, Searin, Graphic: Green World Foundation Dams Malls Province Pak Mun Impacts of Pak Mun Dam alone MBK 123 81 75 Siam Paragon Central World Extreme inequality Structural violence in the name of “energy security”
TIME TO RETHINK “ENERGY SECURITY” & POWER SECTOR PLANNING
What is “energy security”? A.The more, the better B.Resource adequacy C.Resource adequacy & affordability. D.Resource adequacy & affordability & efficiency E.Resource adequacy & affordability & efficiency & environmental quality
Government Policy Framework according to Energy Industry Act 2007 4 dimensions of energy security Energy Industry Act 2007Indicators Availability- Resource Adequacy - Min. dependency on imports - Diversification (supply disruption) - Reserve margin ≥15% - % energy imports - Concentration (plant) Affordability- Affordable cost of service - Min. exposure to price volatility - Electricity cost (B/mo.) - % exposure to oil price Efficiency- Energy & economic efficiency- Energy intensity (GWh/GDP) Environment- Min. environmental impacts- GHG emissions - SO2 emissions Need to make “energy security” and PDP accountable to government policy framework Need to make “energy security” and PDP accountable to government policy framework Framework for evaluating PDPs
PDP 2010 New generation includes: 11,669 MW of imports 8,400 MW of coal plants 16,670 MW of gas plants 5,000 MW of nuclear
Avg forecast increase 1,491 MW/yr in PDP 2010 Avg forecast increase 830 MW/yr in PDP2012 Past actual averages: 830 MW/yr (25 yrs) 813 MW/yr (15 yrs) 772 MW/yr (10 yrs) 407 MW/yr ( 5 yrs) Actual Forecast
New & improved PDPs New PDP based on more realistic demand forecast = “PDP2012” Improved PDP based on PDP2010 forecast = “PDP2010v2”
Methodology – Maintain 15% minimum reserve margin – Prioritize investment in energy efficiency (EE)/ demand-side management (DSM) as a resource option – Consider life extension (delayed retirement) of power plants as a resource option Additional investment might be required but only done in cases that are economic compared to building a new power plant. – When additional capacity is needed, prioritize (high-efficiency) cogeneration over (inefficient) centralized generation – New generation not already under construction may be removed if not needed to maintain 15% reserve margin
EE/DSM cumulative savings in PDP2012 and PDP2010v2
Resource potential for generic coal, gas & wind resources shown for typical unit size. Additional potential is available at comparable costs. Northwest Power and Conservation Council Source: Northwest Power and Conservation Council DSM/EE are the cheapest options to meet growing demand (but not yet considered an option in Thailand) Cost comparison for different supply options in Pacific Northwest, USA.
PDP 2010 (Thailand) Pacific Northwest USA DSM saving potential is under utilized in Thailand DSM/EE measures led to savings of over 30,000 GWH/yr ที่มา: Tom Eckman, Northwest Power and Conservation Council, 2009. ที่มา: สไลด์แผ่นที่19, สมมติฐานและภาพรวมร่าง แผน PDP 2010, 17 กุมภาพันธ์ 2553. http://www.eppo.go.th/power/pdp/seminar- 17feb2553/assumptions-PDP2010.pdf 0.3% saving in 20 yrs
Cogeneration in PDP 2012 ApplicationMWProgram Existing signed PPAs3790SPP Approved but not yet signed PPA2835SPP New cooling CHP projects under 10 MW each -- identified in (Menke et al., 2006) 3500VSPP New VSPP in ceramics, paper, pellet and other industries (not counted) VSPP 0.9% per year growth in opportunities over next 18 years 1700SPP+VSPP Total11825 PDP2012 adds 4,800 MW of cogeneration beyond what was already in the plan
Plant life extension (1) Power plants to be decommissioned in PDP2010 MW Plant life at decommissioni ng Extended life to delay decommissioning and construction of new plants* EGAT Nam Pong CC #1 ้้ 32525 Nam Pong CC #2 ้ 3252530 Bang Pakong TH #1-21,05230 Bang Pakong TH #357630 Bang Pakong TH #457630 Bang Pakong CC # 331425 Bang Pakong CC # 43142530 South Bangkok CC #13162530 South Bangkok CC #25622530 Mae Moh TH # 414040 Mae Moh TH # 5-628040 Mae Moh TH #714040 Mae Moh TH # 827040 Mae Moh TH #927040 Wang Noi TH #1-31,9102530 * Plant life extension may require additional investments and time to maintain and upgrade equipment. The time and resources required to extend plant life are usually significantly less than building a new one. However, more detailed assessment should be done on a case by case basis to ensure technical and economic feasibility of plant life extension.
Plant life extension (2) Power plants to be decommissioned in PDP2010 MW Plant life at decommissionin g Extended life to delay decommissioning and construction of new plants* IPPs Khanom TH #17015 Khanom TH #27020 Khanom CC #167820 Eastern Power3502030 Glow IPP7132530 Independent Power (Thailand) (IPT)7002530 Tri Energy Co., Ltd7002030 Hauay Ho12630 Theun Hinboun21425 Rayong CC #1-41,17520 Ratchaburi TH #1-21,4402530 Ratchaburi CC #1-21,3602530 Ratchabuti CC # 36812530 * Plant life extension may require additional investments and time to maintain and upgrade equipment. The time and resources required to extend plant life are usually significantly less than building a new one. However, more detailed assessment should be done on a case by case basis to ensure technical and economic feasibility of plant life extension.
Renewable Energy Same amount as planned in PDP2010 PDP2010 did acceptable job of including more RE RE projects also have impacts and face community opposition Need to address EIA loophole for projects < 10 MW to address environmental concerns
Summary of different PDPs Generation by fuel type 2010 PDP 2010PDP 2010 v. 2PDP 2012 2030 MW% % % % Coal3,52711%12,66919%6,26913%3,0879% Gas16,09151%21,66833%15,97234%9,57227% Hydro – EGAT3,42411%3,9366%3,9368%3,93611% Hydro – imports1,2604%9,82715%3,8278%1,7375% Cogeneration1,8786%7,02411%11,82425%11,82433% Renewables7672%4,8047%4,80410%4,80414% Oil/gas3,78412%00%0 0 Nuclear00%5,0008%00%0 Others (fuel oil, diesel, Malay)6192%6191%6191%6192% Total generation31,350100%65,547100%47,251100%35,579100% Additional EE/DSM savings- - 13,160 9,923 Total Resources31,350 65,547 60,411 45,502
Cost of service (Baht/month) change in 2030 compared to 2010
Exposure to price volatility risks change in 2030 compared to 2010
Energy intensity change in 2030 compared to 2010
Emissions of air pollutants change in 2030 compared to 2010
Comparing PDPs against different elements of energy security change in 2030 compared to 2010
Concluding remarks Worrying trend of commoditizing electricity “Energy security” and PDP process distorted to generate profits for a few at the expense of – Affected communities - Environment – Consumers- Economy Need framework to hold “energy security” and PDP accountable to Energy Industry Act & the public Need to reform PDP process to prioritize cheaper, cleaner options to meeting demand Proposed PDP2012 better achieves energy security without the need for new green-field centralized coal/ gas/dam/nuclear.