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(Last updated: 12 Nov 2008)
Trends and opportunities
The market
Thailand continues to be one of the most stable countries in Asia. Ongoing domestic political stability, a government focus on poverty reduction (particularly in rural regions), and improved economic management has resulted in an economic upturn and corresponding substantial increases in power demand. The Thailand Government is proceeding with its policy to restructure the Thai power industry and encourage private participation in power generation.
Thailand’s energy industry has shown strong growth in line with the advent of the economic recovery. The demand for power supply has also increased considerably due to the expansion in the manufacturing sector. Although the current power reserve margin is at a high level, the continuously high economic growth rate necessitates proper planning and management to ensure power supply stability.
Use of renewable and co-generation fuels is expected to increase over the next decade as the focus on environmentally-friendly electricity generation develops.
The Electricity Generating Authority of Thailand (EGAT) encourages private investment through the establishment of independent power producer (IPP) and small power producer (SPP) programs. Though currently a small contributor to overall energy use, the introduction of SPPs has seen the use of renewable energies grow significantly.
EGAT works closely with local and foreign companies and agencies to develop renewable energy sources, pursuing investment and research in solar cells, wind, geothermal, solar water heating and fuel cells.
The Energy Policy and Planning Office (EPPO) encourages the participation of local communities in renewable energy-fuelled power projects and will support research and development initiatives on renewable energies including micro-hydropower, solar and biomass (agricultural and municipal waste).
Australian businesses with experience and commercial capability in renewable development are well suited to the current policy environment and the opportunities that exist in the Thai electricity supply industry, including:
- Photovoltaic energy generation
- Transmission and distribution equipment including cables, switchgear and transformers
- Solar hot water systems
- Small power producers using renewable energy or agricultural residues
- Waste to energy conversion
- Remote area power supplies
- Services
The Thai Department of Energy Development and Planning (DEDP) estimates that Thailand’s domestic energy reserves will not be able to adequately accommodate increasing demand from increasing economic growth. It is forecast that by 2017 the value of energy consumption will triple.
Natural gas is Thailand’s most significant fuel source. Fuel oil and coal/lignite generated 27 per cent of total power output, with cogeneration, hydro, diesel oil and renewable sources making up the remainder.
The Thai Government seeks to establish Thailand as the regional energy centre for South East Asia and has implemented a ‘Strategic Plan for Renewable Energy Development’, which aims to increase the renewable energy percentage of commercial primary energy to 8 per cent by 2011. It is currently 0.5 per cent, with hydropower accounting for most of this amount. The intended contribution from renewable energy is 2400 MW, of which 560MW are already installed.
The ‘Strategic Plan for Renewable Energy Development’ aims to:
- Apply regulation to new power plants to ensure that four per cent of their generation capacity comes from renewable energy such as solar, wind or biomass.
- Devise incentive measures, such as tax credits and subsidies, to encourage the purchase of power generated by renewable energy.
- Support research and development on sectors with high potential for Thailand such as solar, micro-hydropower, wind and biomass.
- Encourage community participation and partnerships in renewable energy power plants.
- Enforce minimum energy performance standards for electrical appliances, energy efficiency labelling for cars and promoting co-generation systems in industrial estates and in heating/cooling systems.
Opportunities
Opportunities exist for Australian suppliers with capabilities and expertise in:
- Clean coal-fired power plant, coal and coal handling systems (eg. conveyors)
- Small Power Producer(SPP), Very Small Power Producer (VSPP)
- Substations and transformers
- Transmission lines
- Consultancy services
- Wind energy, solar energy, small scale hydropower (min-and micro-hydro)
- Biomass for energy
- Maintenance and rehabilitation of existing power plants
Opportunities for Australian products and services will also come from independent power producers and small power producers.
The future structure of electricity generation will be more open for private participation. EGAT forecasts that 50 per cent of generating capacity will be privately owned by 2011.
The future additional demand will be served by power projects implemented by private power producers with the backdrop of deregulation and privatisation of the electricity supply industry. Power purchase from Lao Nam Thuen two hydropower projects are scheduled in 2010 and Salween hydropower development project in Myanmar will be considered as an alternative power source.
An example of a renewable energy project already underway is a 42.5MW solar power plant under construction in Mae Hong Son – the mountainous province (not linked to the national transmission grid) in the north-west of the country, bordering Burma. It will be the largest such facility in the ASEAN region and generating 500 kilowatt hours (kWh) of power in the first phase and will ultimately be expanded to be able to produce 1750 kWh.
Production costs are put at five times that of fossil-fuelled power, but construction costs will still be significantly lower than if the government had to transmit electricity to the province from outside. A large portion of the cost of the pilot project is being funded by the EPPO's Energy Conservation Promotion Fund (ECPF) with the remainder coming from EGAT.
Competitive environment
The primary organisations in the energy industry are EGAT, the Metropolitan Electricity Authority (MEA), and the Provincial Electricity Authority (PEA).
EGAT is responsible for power generation and transmission. MEA and PEA are responsible for power distribution in the Bangkok metropolitan area and the rest of the country, respectively.
The government is likely to open up the power retail industry for private participation. The private power retailers will compete with MEA and PEA in operating low voltage transmission systems below 22 kV capacity.
PEA has plans to set up retail electricity distribution companies to provide low voltage power sales service and metering and power billing.
PEA distributes electricity to consumers outside MEA’s service area and is also responsible for rural electrification. PEA has been concentrating on reinforcing its system to support the decentralisation of industry and increasing rural demand while maintaining system reliability and system losses at satisfactory levels.
Major competitors are international equipment manufacturers and consultancy companies from Japan, Germany, USA, Italy and Canada.
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