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Practical Policies for Decentralized Electricity Generation

Practical Policies for Decentralized Electricity Generation. Chris Greacen Palang Thai MEE-Net Workshop 18 January 2012 Bangkok. Outline. What is decentralized electricity? Centralized vs. decentralized Practical policies for decentralized electricity.

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Practical Policies for Decentralized Electricity Generation

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  1. Practical Policies for Decentralized Electricity Generation Chris Greacen Palang Thai MEE-Net Workshop 18 January 2012 Bangkok

  2. Outline • What is decentralized electricity? • Centralized vs. decentralized • Practical policies for decentralized electricity

  3. What is decentralized electricity? • Decentralized electricity: generating electricity from many small, local energy sources • High efficiency cogeneration (CHP) • On-site renewable energy • On-site power • Centralized electricity: large power plants generally located far from loads • Coal • Nuclear • Large hydropower • Natural gas (CCGT)

  4. Decentralized Technologies • Computing: • Internet vs. Mainframes • Telecommunications: • Cell phones vs. land lines • Broadcasting: • Television Eg. You Tube • Radio Eg. Podcasts • Electricity: • Decentralized energy technologies

  5. The Move to Decentralized Technology vs. vs.

  6. Old way New way Power plant Power plant Biomass Wind power Biomass Solar Customers Energy efficient end-use

  7. Cost and size of thermal power plants from 1930 to 1990 • Initial cost declines through increasing scale. • 1990s through mass production of smaller turbines Source: Hunt, Sally and Shuttleworth, Graham. Competition and Choice in Electricity. (England, John Wiley & Sons, 1996).

  8. Decentralized generation brings down costsIreland – retail costs for new capacity to 2021

  9. Worldwide energy waste Electricity Generation Worldwide (TWh) (Source: International Energy Agency 2002)

  10. Cogeneration (Combined Heat and Power – CHP)

  11. CHP cools Bangkok’s airport Suvarnabhumi International Airport in Bangkok cooled by district cooling system powered by a CHP that also generates 52.5MW of electricity.

  12. 14 MW cogeneration at University of Massachusetts, Amherst, USA75% efficient. Provides heating for 200 buildings

  13. DE Benefits – Energy Access

  14. VS

  15. Denmark – a transition to decentralized energy Source: Danish Energy Center

  16. Decentralized electricity policies and outcomes -- Thailand

  17. Practical policies to support distributed electricity • Access to grid • Feed-in tariffs • Low cost financing • Tax incentives Thailand’s SPP+VSPP

  18. Access to grid $

  19. Technical regulations: Allowable voltage, frequency, THD variations Protective relays Communication channels Commercial regulations: Definitions of renewable energy, and efficient cogeneration Cost allocation Standardized tariff determination Invoicing and payment arrangements Arbitration • Access to grid $ + Standardized Power Purchase Agreement (PPA)

  20. Access to grid Small Power Producer (SPP) regulations: • Started 1992 • Fossil-fuel cogeneration and renewable energy up to 90 MW (export to grid) • Low tariff offered for “non-firm” generators made it difficult for most renewables.

  21. Bangkok Cogen, Rayong, 115 MW LaemChabang, Chonburi 100 MW 4494 MW online + 4152 MW with signed PPAs... 75% fossil fuel PluakDaeng, Rayong 70 MW Map Ta Phut Olefins, Rayong, 70 MW

  22. Evolution of Thai VSPP regulations • Access to grid • Feed-in tariffs • 2002 • VSPP regulations drafted, approved by Cabinet • Up to 1 MW export, renewables only • Tariffs set at utility’s avoided cost • 2006 • Up to 10 MW export, renewables + cogeneration • Feed-in tariff “adder” • 2009 • Tariff adder increase, more for projects that offset diesel http://www.eppo.go.th/power/vspp-eng/ for English version of regulations, and model PPA

  23. Feed-in tariffs EPPO 24

  24. Feed-in tariff policies worldwide • Feed-in tariffs

  25. Revolving Fund • Thai Government loans funds at 0% interest to commercial banks for investment in: • Energy efficiency improvement projects • Renewable energy development and utilization projects • Low cost financing 11 local financial institutions have participated. • Max loan amount: 50 MB • Max. interest rate: 4% • Max. loan period: 7 years January 2003 – present 7000 M Baht

  26. Investor Investor Investor Investor ESCO Fund A source of venture capital for ESCOs to jointly invest with private operators in energy efficiency & renewable energy projects. The program targets SMEs & small projects. • Low cost financing Energy Conservation Promotion Fund ESCO Fund Investment Committee Fund Manager ESCO Venture Capital Equity Investment Equipment Leasing Carbon Market Technical Assistance Credit Guarantee Facility 27

  27. Tax Incentives • Tax incentives 28

  28. Bangkok Solar 1 MW PV • Signed PPAs for 767 MW of PV (SPP + VSPP)

  29. Lopburi 73 MW PV (over 1,000 rai = 160 hectares) • Project size: 1 MW • Uses self-manufactured a-Si • Signed PPAs for 767 MW of PV (SPP + VSPP)

  30. Solar thermal electricity • 5 MW, 135 MW planned • 900 Million baht (180 baht/watt) but costs expected to decrease 20 to 30% to 135 baht/watt • Commissioned in Kanchanburi on Nov 2011 • Signed PPAs for 1343 MW of solar thermal

  31. Biogas from Pig Farms Reduces air and water pollution Produces fertilizer Produces electricity 8 x 70 kW generator Ratchaburi

  32. Uses waste water from cassava to make methane Produces gas for all factory heat (30 MW thermal) + 3 MW of electricity 3 x 1 MW gas generators Korat Waste to Energy – biogas… an early Thai VSPP project

  33. Rice husk-fired power plant 9.8 MW Roi Et, Thailand

  34. Feb 2007 18 MW online Thailand VSPP Status

  35. June 2008 Thailand VSPP Status

  36. June 2009 Thailand VSPP Status

  37. Mar 2010 Thailand VSPP Status

  38. Sep 2011 1056 MW online (58-fold increase since 2007) PPAs signed for additional 4318 MW Thailand VSPP Status

  39. Solar trends in Thailand

  40. Policies to encourage decentralized mini-grid electricity in rural areas • Allow off-grid generators to pick their own retail tariff (subject to transparent regulatory approval) • Simple 1-page spreadsheet for regulators to do this: http://tinyurl.com/SPPevaluator(developed by World Bank for use in Africa)

  41. Policies to encourage decentralized electricity in off-grid areas • Lower investment risk to mini-grid generator operators in event that “big grid reaches mini-grid” by: • Allowing formerly off-grid generators to sell back to the grid; and/or • Allowing mini-grid operators to purchase wholesale electricity for resale to retail customers.

  42. Summary • Access to grid • Feed-in tariffs • Low cost financing • Tax incentives • Remote mini-grids: • Flexibility in retail tariff setting • Reduce investment risk by working out details of what happens when “big grid” reaches mini-grid

  43. Thank you For more information, please contact chris@palangthai.org This presentation available at: www.palangthai.org/docs

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