RECAI: Country focus
Energy options dwindling. This year energy has jumped back up Thailand’s political agenda after the Government was forced to prepare the public for potential power cuts when scheduled maintenance halted gas imports from the Yadana pipeline in Myanmar. While Bangkok has not experienced power shortages for decades, the stark reality of Thailand’s energy vulnerability has unsettled both politicians and the public. It relies heavily on natural gas imports, which currently generate about 70% of electricity, while fierce public opposition is making many hydropower and coal projects very difficult to implement.
Big numbers. Diversification of the energy mix and increased domestic production have therefore become critical political drivers, with 2013 seeing a number of encouraging announcements that put the spotlight firmly on renewables. In July, the Government confirmed a 51% increase in its 2021 renewable capacity target, jumping from 9,201MW to 13,927MW. This is equivalent to 25% of total electricity generation from renewable sources, compared with around 8% now.
According to Energy Minister Pongsak Raktapongpaisal, around THB400b (US$13b) of state and private investment will be needed to reach this. The Government has also broken down the target by technology to highlight available opportunities. Expected contributions are 3GW from solar power, 1.8GW from wind, 4.8GW from biomass, 3.6GW from biogas, and 0.7GW from hydropower and waste.
Fundamental barriers. However, the Government still has a lot to do to come close to meeting these targets. A relatively unstable regulatory environment resulting from an unclear energy agenda has deterred investors, while state-owned Electricity Generating Authority of Thailand’s domination has also slowed deregulation and restricted competition. Additionally, a lack of transparency over policy-making has raised corruption concerns.
Recognition. The Government does seem aware that it needs to improve the investment climate and deal with bureaucratic obstacles in order to incentivize foreign participation. In a speech earlier this year, Energy Minister Pongsak vowed to end regulation hindering the growth of renewables, and introduce more incentives, soft loans, subsidies and project finance.
New FIT boost for solar. The solar sector is already benefiting from July’s introduction of a new FIT for rooftop and village-based solar energy projects. Subsidies will be used to top up the difference between the wholesale power price and guaranteed tariffs. The scheme will support up to 1GW of solar projects under 25-year PPAs, allocating 200MW to rooftop installations that must be built by the end of 2013 and 800MW to community-owned PV plants to come online by the end of 2014.
Also in this article:
- Making its debut
- FITs for every occasion
- Doing more
- Attracting attention
- Infrastructure boost