‘Working for Desirable Future’ : Transparency and participation in electricity sector planning in Thailand Suphakit Nuntavorakarn Healthy Public Policy Foundation, THAILAND 26th September 2011 FESTI International Conference, Bishkek

Installed Capacity by Type of Producers, April 2011 Total 31, MW EGAT 14, MW 47.59% Import 2, MW 6.93% IPP 12, MW 38.56% SPP 2, MW 6.92% From

Power Development Plan (PDP) PDP is the long-term strategic plan of the Thai power sector (15-20 years timeframe) PDP determines the future investment on power generation - how many and which types of power plant – and the transmission network. – For example, total investment of PDP billion USD So PDP also determines the future impacts of the power sector, including environmental, economic, social, and health impacts

PDP2010 : (GDP Base Case) Power Development Plan (PDP2010) Installed Capacity by fuel type Renewables Import Natural Gas Imported coal Nuclear

Drivers and institutional improvements on PDP

Triggering the changes: local communities protesting against large power plant projects Concerns about negative impacts Is the project really necessary? Due to over demand forecast Is there other energy options? Renewable energy in their area instead?

Reference : National Statistic Office Energy expenses and their burden on Thai households Triggering the changes: consumer groups who are questioning about the unfair electricity tariff

Academic contributions and public communication Information and analysis on the electricity sector - to create basic understanding for different social sector and to get their attentions on various issues about PDP Development and impact assessment on Alternative Power Development Plans - to create ‘Choice Awareness’ on many energy options and these can be discuss deliberately as a social learning process Electricity Governance Assessment - focus on transparency, public participation, and accountability in the Thai power sector

GWh 3 Huge Shopping Malls VS. The Whole Province Inequality of Electricity Consumption

Question on Systematic Over-Demand Forecast

The figures of over demand forecast YearPDP2004PDP2007 Actual peak demand (MW) Over forecast (MW) PDP2004PDP , , , , , ,064 1, ,344 22,586 1, ,048 23,957 22,568 3,480 1,389

Using Return on Invested Capital (ROIC) as the main criteria for setting electricity tariff may lead to over investment since more investment means more profit Strong regulation on investment plans is needed, but the Regulators still lack of data, knowledge, and human resources to check and balance ROIC and Investment Efficiency ROIC = Net profit after tax Investment EGAT 8.4% MEA PEA 4.8% Result : Over Demand Forecast and prefer high investment options

The cycle of supporting more investment under ‘monopoly’ power Over Demand Forecast Power Planning that prefer high investment options Electricity tariff that allow the pass on of excess costs to consumers Benefits of utilities, energy companies, etc

Ft : Fuel Adjustment Charge EGAT: a part of the electricity tariff that increase or decrease automatically, according to changes in fuel costs and other uncontrol costs The mechanism to pass on the costs to consumers, which includes – Fuel costs – Electricity price for private producers and import (including profit guarantee, compensation for inflation and exchange rate) – Expenses according to government policies (e.g. Community Development Funds, ‘Adder’ for renewable energy, etc.) – Compensation for lower sale (or over investment)

DSM and Energy Efficiency are the cheapest energy options ที่มา : World Bank, World Development Report 2010

16 DSM in PDP2010 ปี MW240 Saving target of T5 high efficiency light bulb program ปี MW Saving target of DSM program for Save 0.3% of the peak demand in 20 years

Fast Growth of Renewable Energy in Thailand

Example of PDP-Alternative

Installed Capacity of Different PDP Options

GHG reduction measures 1. increase DSM 2. increase Renewables 3. decrease coal GHG reduction measures 1. increase DSM 2. increase Renewables 3. decrease coal Share of Installed Capacity in Different PDP Options

Energy Generation in Different PDP Options

Comparative Impact Assessment on various Alternative PDPs Economics Environment Social

Reduce GHG by 40% Significant Reduction of GHG Emission

Reduce SOx by 50% Good for Reducing Air Pollution (SOx)

Good for Reducing Pollution (Hg) Reduce Hg by 75%

increase GDP by 5.6% Reduce import by 16.9% Higher GDP Contribution and Lower Imported Cost

Good for the Economy and Environment

Create more jobs by 188,000 persons Good for Society, More Job Creation

Institutional Improvements on PDP: The policy network Expanding from mainly local communities against projects, NGOs, and some academics To different parts of the society, for example, consumer networks, community energy movement, National Human Rights Commission, several Ministries, Senate committee, the regulators, as well as EGAT and Ministry of Energy The network itself was transformed from ‘physical’ network to ‘coordinate by contents’ and more open aiming at social learning process on PDP

Institutional Improvements on PDP: The role of private sector The group on renewable energy, SPP and VSPP, was rather active, but conservative on pushing for change. The large power companies, IPP, have been passive to push for changes.

Outcomes on PDP process and key features 1. Goals for the PDP not a clear step as it was done by the same group of authorities and experts The routine goals on energy security and least cost Plus lower CO2 emission and, to some extent, renewable energy and social acceptance of PDP 2. Future demand forecast Systematic over- estimation Lower the forecast of 4,207 MW in 2030 during public participation, equals to 4,800 million USD investment

Outcomes on PDP process and key features 3. DSM and EENot consider in the planning process Integrate DSM in load forecast and the generation expansion (but with extremely low figure) 4. Renewable energy Not consider majority of RE projects as dependable capacity Include the re-estimated RE target and approved dependable capacity of each RE technology 5. Combined Heat and Power (CHP) Problems in the continuity of the policy on buying electricity from new CHP projects Include CHP of 7,177 MW within 2030

Outcomes on PDP process and key features 6. Centralized supply options – coal, natural gas, large hydropower, nuclear Being the key candidate plants and usually with bias assumptions to favor these options Still being the key candidate plants, but with more reasonable assumptions, particularly natural gas 7. Public Hearing in the planning process and draft PDP no public hearing on the draft PDP Only in 2009 and 2010 that the public hearing on the draft PDP was arranged

Future challenges 1) Sharpen the analysis and more effective communications, for example - improve from Forecast to Foresight and more detail analysis for peak and off-peak period, and base-intermediate-peaking supply options - improving dependable capacity and load factor of renewable energy 2) Proactive participation of local communities and policy networks in PDP process as well as other policy and planning process 3) Promote good governance and solving Conflict of Interests of the senior staffs in the Ministry of Energy 4) Ensure accountability of the government on PDP decision-making process as well as share and fair responsibility of each electricity user category

Thank you for your attention 35