Thailand’s Power Development Plan (PDP)

1. Thailand’s Power Development Plan (PDP)

2. ... Steps involved to deliver electricity to end-users Retail, Meter Reading, Billing & settlement Power Generation Fuel procurement Transmission Distribution

3. Centralized generation Cogeneration

4. Problem analysisof current unsustainable energy practices

5. Problems of “Development” • “Growth” ≠ “Prosperity” • GDP ≠ well-being • Economic vs Environmental & Social goals • Boundless economic expansion with no heeds to natural limits and violence against fellow human beings • Lack of democratic political processes • Lack of local access and control of resources Need paradigm change, political reform

6. Problems of Current Power Systems • Decision making process • Centralized planning • Not participatory (affected communities have no say, no right/access to local resources) • Lack of information, transparency • Industry structure • Centralized, monopoly (central planners have power and force to appropriate resources nation-wide and beyond to serve the urban, industrial and commercial consumers) • Consumers are captive customers but have no say • Bound to expand (financial criteria such as SFR, ROIC tie profits to boundless expansion) • Lack of proper checks and balances (weak regulatory framework) • Planning objectives • Narrow objectives (energy security, least-cost), environmental and social goals not considered • Role of electricity/energy poorly defined (shifting from a public service (serving basic needs) to a commodity) – and this gets worse when utilities are corporatized and privatized • Over-consumption of electricity and energy • Excessive consumption not addressed and even subsidized through lack of proper pricing structure (generation cost subsidized, marginal costing not used for new gas) • Out of sight, out of mind (consumers are disconnected and removed from impacts of their own consumption) • Demand forecast (over projections) • Linking of power demand and GDP growth • Deterministic model (top-down), politically driven • Distorted incentives to over-forecast • Lack of accountability • Annual peak = basis for planning but no sufficient incentives/measures to cut peak • PDP process • Use of Reserve Margin, not LOLP, as a main planning criteria arbitrary, wasteful • Focusing on large-scale, capital intensive supply options • Hydropower imports politically driven • DSM/EE, RE, discentralized generation not considered as supply options • Alternative PDPs not considered, discussed • Arbitrary methodology with bias towards large-scale, non-renewable options (unrealistically low fuet cost assumptions Cost structure • Residential, rural customers forced to pay for same costs for high reliability standards set by commercial and industrial consumers • Cost used in planning not reflective of cost of serving new demand (use of avg gas cost instead of marginal costs) • Unlevel playing field for comparing costs of different resource options (only generation cost considered but not T & D) • Externality costs not considered • Favorable treatment of nuclear compared to RE • Governance • Conflict of interests • Trans-national private capital (e.g. powerful Chinese energy firms) not accountable to local people

7. Problems of current power systems (1) • Decision making process • Centralized planning • Not participatory (affected communities have no say, no right/access to local resources) • Lack of information, transparency • Industry structure • Centralized, monopoly (central planners have power and force to appropriate resources nation-wide and beyond to serve the urban, industrial and commercial consumers) • Consumers are captive customers but have no say • Lack of proper checks and balances (weak regulatory framework) • Bound to expand (financial criteria such as SFR, ROIC tie profits to boundless expansion)

8. Current Electricity Supply Industry SPPs IPPs Generation R E G U L A T O R EGAT Power Plants E P P O Power Purchase System Operation Transmission Bulk Power Supply Power Purchaser, System Operation, and Transmission EGAT Distribution/ Retail Supply PEA MEA Direct Customers End Users End Users

9. Power Grid & Pipelines are analogous to a monster’s arms reaching and grabbing resources to feed its bottomless appetite. Cross-border exploitation is often facilitated by IFIs such as ADB.

10. Problems of current power systems (1) • Decision making process • Centralized planning • Not participatory (affected communities have no say, no right/access to local resources) • Lack of information, transparency • Industry structure • Centralized, monopoly (central planners have power and force to appropriate resources nation-wide and beyond to serve the urban, industrial and commercial consumers) • Consumers are captive customers but have no say • Lack of proper checks and balances (weak regulatory framework) • Bound to expand (financial criteria such as SFR, ROIC tie profits to boundless expansion)

11. Incentive structure for utilities:the more expansion, the more profits • Financial criteria for utilities link profits to investments • Thailand uses outdated return-based regulation • WB’s promoted financial criteria such as self financing ratio (SFR) also have similar effects • ROIC (Return on Invested Capital means: the more you invest, the more profits 4.8% Result: Demand forecast have systemic bias toward over-projections Too many expensive power projects get built

12. Cycle of over-expansion under the centralized monopoly system Deterministic planning based on demand forecast leads to over-investment in capital-intensive power projects Power demand (over-)projections 1 2 Utilities’ Profits 3 Tariff structure that allows pass-through of unnecessary investments

13. Problems of current power systems (2) • Planning objectives • Narrow objectives (energy security, least-cost), environmental and social goals not considered • Role of electricity/energy poorly defined (shifting from a public service (serving basic needs) to a commodity) – and this gets worse when utilities are corporatized and privatized • Over-consumption of electricity and energy • Excessive consumption not addressed and even subsidized through lack of proper pricing structure (generation cost subsidized, marginal costing not used for new gas) • Out of sight, out of mind (consumers are disconnected and removed from impacts of their own consumption)

14. The Champagne Glass UNDP, Human Development Report, 1998

15. Unlimited living? http://www.soho-properties.com/condobangkok-leraffine31/

16. Siam Paragon 1700 families relocated 123 Loss of livelihood for >6200 families MBK 81 Loss of 116 fish species (44%) Central World Mae Hong Song Fishery yield down 80% 75 65 Electricity production and consumption (GWh) Impacts of Pak Mun Dam alone Source: MEA, EGAT, Searin, Graphic: Green World Foundation Pak Mun Dams Malls Province

21. Nam Theun 2 1000 MW Mainly to serve Thailand 6,200 people in Laos resettled Dam will dry Nam Theun River and swell Xe Bung Fai River Endangered species, elephant habitat to be flooded

22. Problems of current power systems (3) • Demand forecast (over projections) • Linking of power demand and GDP growth • Deterministic model (top-down), politically driven • Distorted incentives to over-forecast • Lack of accountability • Annual peak = basis for planning but no sufficient incentives/measures to cut peak

23. International Comparison of Power Generation per GDP

24. Gov’t gives subsidy to polluting industries with low value added to economy and low competitiveness BOI investment privileges should take into account energy and environmental considerations Steel industry High energy intensity Low value added Low competitiveness

25. Power demand projectionSep 2007(PDP 2007revision 1) MW 48,958 MW 2,477 2,399 2,287 37,382 MW 2,235 2,178 2,131 2,035 27,996 MW 1,832 Demand increase per year 1,759 1,629 1,361 1,410 1,268 1,444 1,449 2550 – 2554 average increase 1,386 MW 2555 – 2559 average increase 1,877MW 2560 – 2564 average increase 2,315MW แผนพัฒนาฯ ฉบับที่ 10 แผนพัฒนาฯ ฉบับที่ 11 แผนพัฒนาฯ ฉบับที่ 12 ที่มา กฟผ.

26. Why assume exponential growth?Linear vs. exponential extrapolation

27. Power Demand: Projections vs. Actual1992 – 2008If no systemic bias, the chance of over-projecting demand 12 times in a row should be 1/4096!! MW

28. Cycle of over-expansion under the centralized system with return-based regulation Deterministic planning based on demand forecast leads to over-investment in capital-intensive power projects Power demand (over-)projections 1 2 Utilities’ Profits 3 Tariff structure that allows pass-through of unnecessary investments

29. Lack of accountability in demand over-projection and over-investment made of possible by guaranteed rate of return for utilities • ROIC (Return on Invested Capital means: the more you invest, the more profits 4.8% Guaranteed rate of return means central planners are rewarded, not held accountable, for their repeated errors in demand forecast

30. A look at load duration curve:Only the absolute peak of the year is used as the basis for planning > 1,000 MW in 66 hours

31. Problems of current power systems (4) • PDP process • Use of Reserve Margin, not LOLP, as a main planning criteria arbitrary, wasteful • Focusing on large-scale, capital intensive supply options • Hydropower imports politically driven • DSM/EE, RE, decentralized generation not considered as supply options • Alternative PDPs not considered, discussed • Arbitrary methodology with bias towards large-scale, non-renewable options (unrealistically low fuet cost assumptions

32. Planning of capacity additions (Total capacity requirement = peak demand + 15% reserve margin)

33. Loss of Load Probability (LOLP) • LOLP is the probability that generation will be insufficient to meet demand at some point over some specific time window. • It is a method to calculate power system (electrical network) reliability. It combines the probability that certain load could occur with the probability that certain amount of generation could deliver it. • Thailand: LOLP < 24 hours in a year (0.27%) • India (Andra Pradesh 2002): LOLP < 1.14% • USA (Texas): LOLP < 1 day in 10 yrs (0.03%)

34. A Few Definitions • EUE – Expected Unserved Energy – the expected number of megawatt-hours of load that will not be served in a given year • LOLP – Loss of Load Probability – the probability that there will be a loss of load event in a given year • LOLE – Loss of Load Events – the number of events in which some system load is not served in a given year. A Loss of Load Event can last for one hour or for several contiguous hours, and can involve the loss of one megawatt of load or several hundred megawatts of load. • Generally-accepted criteria: a target reserve margin that resultsin an agreed level/number of LOLP or LOLE

35. Reserve Margin Simulation Results * ENS = Energy not served Data from ERCOT (Texas, USA)

36. Reserve Margin Simulation Results LOL = Loss of Load Data from ERCOT (Texas, USA)

37. Problems of current power systems (4) • PDP process • Use of Reserve Margin, not LOLP, as a main planning criteria arbitrary, wasteful • Focusing on large-scale, capital intensive supply options • Hydropower imports politically driven • DSM/EE, RE, decentralized generation not considered as supply options • Alternative PDPs not considered, discussed • Arbitrary methodology with bias towards large-scale, non-renewable options (unrealistically low fuet cost assumptions

38. Choice of supply options considered in the PDP by EGAT 700 MW Coal-fired power plant 700 MW gas-fired combined cycle plant 230 MW gas-fired open cycle plant 1,000 MW nuclear plant Hydro imports are politically negotiated outside of PDP process DSM/EE, RE, Distributed generation not considered as supply options

39. Centralized & decentralized generation Cogeneration Gasifier

40. Centralized & decentralized generation Cogeneration Gasifier

41. Many questions for PDP2007 New capacity added to the PDP 2007 • Why only 1700 MW of distributed generation allowed? • Why 4000 MW of nuclear in all options? • Why DSM/energy efficiency not considered as an option? L = low case B = base case H = high case 1=“lowest cost” 2=“as much coal as acceptable” 3=“LNG + imports”

42. Centralized energy is also more costly Decentralized generation brings down costs Ireland – retail costs for new capacity to 2021 Thailand PDP 2007 requires 2 trillion baht to implement, comprising: million B • generation 1,482,000 • transmission 595,000 Transmission adds 40% to generation costs Source: World Alliance for Decentralized Energy, April 2005

43. Total at end of 200728,530.3MW Hydro import 1.2 % Hydro 3,424.2 MW 12.0 % Combined cycle 13,540 MW 47.5 % Import from Malaysia 1.0 % Gas turbines, diesel 971.4 MW 3.4 % Thermal 9,666.6 MW 33.9 % Renewables 288.1 MW 1.0 % Centralized generation wastes a lot of energy (~70% of heat value is lost & adds to climate change problem) Installed capacity by types of generation in 2007

44. Problems of current power systems (4) • PDP process • Use of Reserve Margin, not LOLP, as a main planning criteria arbitrary, wasteful • Focusing on centralized, large-scale, capital intensive supply options • Hydropower imports politically driven • DSM/EE, RE, decentralized generation not considered as supply options • Alternative PDPs not considered, discussed • Arbitrary methodology with bias towards large-scale, non-renewable options (unrealistically low fuet cost assumptions

45. Energy waste in a typical pumping system

46. Source: www.eppo.go.th/power.html

47. Source: The 5th NW Electric Power and ConservationPlan Supply options in NW USA

48. Source: The 5th NW Electric Power and ConservationPlan Supply options in NW USA

49. Supply curve of Pacific NW Resource potential for generic coal, gas & wind resources shown for typical unit size. Additional potential is available at comparable costs. Source: Northwest Power and Conservation Council

50. Thai civil society created an alternative PDP that meets govt’ objectives, is more economic and cleaner. But it was not considered by the government ที่มา มูลนิธินโยบายสุขภาวะ 2552