THE NEXT GENERATION

Thailand 2017 | INDUSTRY & ENERGY | FOCUS: RENEWABLE ENERGY

Thailand's energy generation matrix has successfully kept up with demand, but has become reliant on imported natural gas. Renewables may be the answer.

The government has set out ambitious targets to reduce the country's dependence on imported natural gas and push green energy alternatives. Growth in demand for power grows at around 4% a year currently, and has increased by 44% over the past decade. A substantial 70% of electricity is generated using natural gas, with the Alternative Energy Development Plan (AEDP) a 25% renewable energy rate in consumed power by 2021, and even more ambitious targets for 2036.

As of the beginning of 2014, Thailand's total power generation capacity stood at 33,681 MW, with 7,490.4 MW generated from renewable sources, including hydro (2,906.4 MW), biomass (2,541.8 MW), solar (1,298.5 MW), biogas from waste (311.5 MW), and municipal solid waste (65.7 MW). And by 2036, according to the AEDP, under the wider Power Development Plan 2015-36 (PDP2015), the figure for renewable generation will increase to 19,634.4 MW, with wind, solar, and biomass the focus, increasing to 3,000 MW, 6,000 MW, and 5,570 MW, respectively.

To make these dreams a reality, the Department of Alternative Energy Development and Efficiency (DEDE), under the Ministry of Energy, hopes to promote the construction of small solar projects at the household or community level, including solar rooftop panels. In terms of wind power, DEDE hopes to encourage the development of wind turbines and other systems in more remote areas and on islands that are yet to be hooked up to the national grid. And when it comes to biomass, the plan is to promote the establishment of Distributed-Green-Generation-DDG (DGG) at the community level, while establishing plants in empty areas that will sell fuel to community enterprises for generation. DEDE is also looking into geothermal options, as well as tidal and current energy.

And as far as the plan goes, the private sector is already answering the call. Energy Absolute, a traditional biodiesel producer, has announced significant plans to increase its investment in renewable energy thanks to the advantage of easier access to the national grid and financing. The company currently has a capacity of 100 MW, which is set to rise to 570 MW by 2017. The company is spending USD478 million on two new solar projects with a combined capacity of 180 MW. And if that wasn't enough, it is also aiming to pump USD815 million into wind farms with a total capacity of 390 MW. The firm is already operating a 90 MW solar farm, the largest in the country, in Nakhon Sawan province.

Wind Energy Holdings is another pioneer on the renewables scene, currently generating 207 MW with its two wind farms in Nakhon Ratchasima, with another 650 MW being developed. The firm has thrived partly thanks to government subsidies, and was pondering an IPO in order to fund regional expansion. Government support for renewables energies includes a one-stop service center with extensive data; the provision of lower-risk capital via DEDE's ESCO Fund, which also provides equity investment via ESCO Venture Capital, equipment leasing, and credit guarantee; special feed-in-tariff premiums paid for renewable power generation (wind: THB6.06/kWh, solar: THB5.66-6.85/kWh, and MSW: THB5.08-6.34/kWh); and exemption from import duty on equipment or machinery, as well as exemption from income/corporate taxes resulting from selling renewable power or saving energy for periods of up to eight years.

But while the plans look solid, DEDE is aware of several sharks in the water that could delay the AEDP. This includes protests by local communities to new plants, a lack of transmission lines on the grid, licensing delays and red tape in the way of power purchase concessions, as well as some problematic laws and regulations and a lack of support from financial institutions and changes in government policy. One thing is for certain, though: for now, Thailand is committed to a more renewable future for its energy matrix.