Thailand’s VSPP Program

1. Thailand’s VSPP Program 15March2010 Energy Policy and Planning Office Presented to representatives from Tanzania

2. Thailand’sElectricity Industry Structure

3. Govt. ERC Thailand’sElectricity Industry Structure Generation (% share)‏ EGAT (45%)‏ IPPs (42%)‏ Import (3%)‏ VSPPs (<<1%)‏ SPPs (10%)‏ EGAT (100%) Transmission PEA (66%)‏ MEA (32%)‏ Direct Customers (2%)‏ Distribution Users Users Remarks: Figure of % Share in Fiscal Year 2007

4. Thailand’s Fuel Mix for Power Generation (Jan 2010)

5. History of Thailand’sVSPP Program

6. 2002 • VSPP Regulation introduced • Applicable to renewable and co-generation facilities • up to 1MW contracted capacity • 2006 • contracted capacity extended from 1 MW to 10 MW • Feed-in Tariffs (“ADDER”) introduced • 2009 • Adder rates adjusted • Some rules and regulations adjusted (bid bond, , dispatch, and rooftop solar)

7. Thailand’s Adder Program Type of Renewable Energy 2007-2008 Adder Rate (Baht/kWh)‏ 2009 Adder Rate (Baht/kWh)‏ Special Adder for Diesel Replacement (Baht/kWh)‏ Special Adder For Three Southernmost Provinces (Baht/kWh)‏ Years Supported 1. Biomass - Installed Capacity ≤ 1 MW 0.30 0.50 1.00 1.00 7 - Installed Capacity > 1 MW 0.30 0.30 1.00 1.00 7 2. Biogas - Installed Capacity ≤ 1 MW 0.30 0.50 1.00 1.00 7 - Installed Capacity >1 MW 0.30 0.30 1.00 1.00 7 3. Waste (MSW and Industrial Waste, excluding Hazardous Waste and Organic Waste)‏ - Landfill and Digestor 2.50 2.50 1.00 1.00 7 - Thermal Process 2.50 3.50 1.00 1.00 7 4. Wind - Installed Capacity ≤ 50 kW 3.50 4.50 1.50 1.50 10 - Installed Capacity > 50 kW 3.50 3.50 1.50 1.50 10 5. Small / Microhydro - 50 kW ≤ Installed Capacity < 200 kW 0.40 0.80 1.00 1.00 7 - Installed Capacity < 50 kW 0.80 1.50 1.00 1.00 7 6. Solar 8.00 8.00 1.50 1.50 10

8. Thailand’s VSPP Status

9. VSPP – types of technology & fuels SOLAR Biogas Biomass • PV • Thin-Film • Crystalline • -Solar Thermal • Parabolic Through • Stirling Engine • Animal manure • Industrial waste • Rice Straw • Rice husks/rice straw • Bagasse • Jatropha • Palm fiber/Empty palm bunch • corncobs/corn shells • woodchips/wood slaps • cassava rhizhomes/pulps • coconut fiber • short-rotation plants MSW • Thermal process • Landfill Wind Hydro • high-speed • low-speed • mini, micro, pico • (up to 200 kW)

10. VSPP Capacity – before and after ADDER

11. Recent Changes and Lessons Learned

12. Some Recent Changes, Lessons Learned, and the Way Forward • VSPP’s simplified application process has been updated to discourage speculators • Rooftop solar systems now receive adder based on total kWh generated, not on net-metered kWh • Financial measures not enough • Technical regulations subject to revision • “ADDER” rates set to balance investment against other public policy objectives • Certain benefits of RE have yet to be quantified and integrated into long-term power supply adequacy plan

13. 1. Simplified rules updated • VSPP regulation was previously designed to simplify the application process in order to encourage small-scale RE systems to develop • Previously designed for up to 1 MW contracted capacity • Previously designed before ADDER was introduced • In 2009, some modifications to the rules have been made to discourage speculators: • Bid bond 200 Baht/kW sale except system sized <100 kW • No adder will be given if the project cannot start selling power within 1 year after the SCOD (applicable to proposals without PPAs after Aug 2009)

14. Example: 6 Largest Solar Energy Proposals that Have Been Accepted 80% of solar projects that have been accepted or have PPAs

15. 2. Rooftop Solar Systems • Residential rooftop solar systems previously received adder based on the net-metered kWh • As of Aug 2009, rooftop solar energy systems can receive adder based on total kWh generated • some controversies regarding “residential rooftop” definition • Official definition: residential rooftop systems belong to those systems that subscribe to residential meters • Implementation? Abuse?

16. 3. ADDER as one of the supporting measures for RE • Other financial measures and non-financial measures are needed to accelerate RE development The majority of biomass VSPPs are large-scale projects. Solar VSPPs, dominated by solar farms The majority of biomass VSPPs that have come online or already have contracts are owned by rice mills and sugar mills.

17. 4. Technical Regulations Subject to Revision • Interconnection limits: • 8 MW ceiling for 22 kV feeder • 10 MW ceiling for 33 kV feeder • Technically acceptable level of RE may vary from feeder to feeder • Technical regulation based on “passive integration” rather than “active integration” • Benefits of RE for each feeder not taken into account • Benefits: line loss reduction, voltage regulation, peak cutting.

18. 5. ADDER Rates Subject to Revision • In response to changing market conditions, technological change, and remaining RE potential Benefits of increased in RE investment are balanced against: BENEFITS COSTS -reduction of energy imports -increase in FDI -potential job creation and new business models -potential local innovation -reduction of GHGs and air pollution -technical benefits to power systems -pass-through to ratepayers -trade deficits -loss of agricultural land -local air pollution ( systems <10 MW not subject to EIA)

19. 6. Certain benefits of VSPPs still yet to be quantified and integrated into long-term power supply adequacy plan Peak Load Reduction Line Loss Reduction GHG emissions Reduction Power plants deferral T&D deferral

20. Thank youfor your attention!

21. VSPP Status (Jan 2010)

22. Solar VSPP by type of technology