Market liberalisation in the 1990s has created a landscape in which state-owned Electricity Generating Authority of Thailand (EGAT) retains control of transmission and distribution, as well as a good portion of generation capacity, while a growing number of independent power producers (IPP) are taking up an increasing share of national electricity production capacity. To minimise conflicts of interest within EGAT’s various functions, oversight has been tasked to the EPPO, which evaluates each project and awards production contracts in the form of power purchase agreements (PPA).
Negative public perception of coal, nuclear and large hydropower generation facilities has fuelled the rise of natural-gas-fired power plants in Thailand over the past two decades, to the point that the fuel accounted for 63.2% of all electricity generated (126,150 GWh) in 2016. Coal-fired thermal plants ranked a distant second, at 31,107 GWh, with much smaller contributions made by hydro (3543 GWh) and petroleum (491 GWh). Imported electricity also accounted for a significant portion of domestic consumption to the tune of 32,276 GWh, primarily from Laos and Myanmar (see analysis). The small but growing renewable energy (RE) sector contributed 5.01 GWh from sources other than hydro. When hydropower is added to the RE total, it amounts to just over 3548 GWh. “Renewable energy has become a very attractive sector across Thailand’s economic spheres, due to the fact that it is an industry without price wars and with three triple-A customers in the form of EGAT, Metropolitan Electricity Authority and Provincial Electricity Authority,” Jormsup Lochaya, the chairman and acting managing director of renewable energy company Superblock, told OBG.
Investment Opportunities In Power Generation Projects
In completely overhauling the generation mix, the private sector will be presented with significant investment opportunities in the form of IPP contracts over the next 20 years. Some 57.5 GW of new generation capacity is expected to be built by 2036 in order to meet future power requirements and replace the 24.74 GW from ageing power stations.
Significant opportunities are to be found in the RE sector, which accounts for the largest chunk of new capacity, at 21.65 GW. This is split between 12.11 GW of domestic sources and 9.54 GW of RE imports from neighbouring countries, the latter of which will likely consist of large hydro projects. Pump-storage hydro-power plants, which use a series of reservoirs and pumps that act much as a rechargeable battery for plants by pumping water upstream into the reservoir during off-peak hours, account for another 2.1 GW.
The next-largest share of new generation will be allocated to combined-cycle power plants (17.48 GW), which utilise gas and steam turbines to produce more electricity than conventional power plants. Traditional thermal power plants will contribute 12.11 GW to the mix, split between coal (4.72 GW) and lignite (7.39 GW), while nuclear will represent 2 GW, power imports 1.47 GW and gas turbine another 1.25 GW. The remaining 4.12 GW will come from cogeneration power plants.
Thailand’s energy sector is expected to continue to evolve at a rapid pace over the next two decades as the country’s electricity network adapts to the new realities of domestic hydrocarbons scarcity. With no major new oil or gas discoveries to be developed and exploration coming to a crawl, further production declines will be inevitable over the next decade unless the government is able to hammer out a new regulatory regime and launch the much-delayed 21st concession bids. In response, domestic pipeline and LNG regasification infrastructure will be expanded in the short term to accommodate the growing domestic supply and demand gap. “The next crucial step for the sector will be changing the existing business model,” Bundit Sapianchai, the president and CEO of renewable energy company BCPG, told OBG. “I believe strongly in the concepts of distributed energy and peer-to-peer energy, whereby technologies can be mobilised to enhance the efficiency of the sector and help reduce the need for large-scale projects, while offering customers and end users more choice in purchasing.”
Investment opportunities will be available across the utilities sector as supply is built up to meet demand. IPPs will benefit for the foreseeable future. This will be particularly true in the development of renewables and more efficient thermal power plants as the country looks to refashion its power generation composition.