Rethinking “energy security” and power sector planning: a case study of Thailand

1. 18-19 January 2012 ChuenchomSangarasriGreacen Palang Thai "Know Your Power“ International Conference  Towards a Participatory Approach for Sustainable Power Development in the Mekong Region Rethinking “energy security” and power sector planning:a case study of Thailand

2. Brief history of Thai power sector • 1960s: decentralized coops in close competition with centralized utilities as the model to electrify Thailand. • Centralized model chosen not by technical superiority but rather by Cold War politics • 1960s-90s: rapid expansion of power system by state-owned utilities • World Bank and aid agencies had major roles • 1990s: neoliberal reforms • Partial divestiture of EGAT’s generation assets (EGCO, RATCH) • Small and Independent Power Producers (SPPs/IPPs) • Role of private foreign capital

3. Brief history of Thai power sector (2) • 2000s-present: • Plan to create Power Pool abandoned • Attempt to partially privatize (equitize) monopoly EGAT in the stock market thwarted by civil society’s lawsuit • But increasing financialization of electricity in the stock market continued via EGAT’s subsidiaries, other Thai energy companies and their joint ventures with foreign capital • Increasing roles of Thai listed non-energy companies (e.g. construction) in power project investment • Mushrooming power projects, domestic & trans-boundary

4. Issues and trends in power sector planning and development

5. Changing role of electricity • Electricity as public service  profitable commodity • Commons like rivers  trans-boundary commodities

6. Changing role of policy makers: Serving public or corporations? Performance of high-level energy officials in serving the government vs. PTT Plc. (Thai gas/oil utility, the largest list company in Thailand) 67% 100% 90% 83% *จากรายงานประจำปีบมจ. ปตท. ปี 2546 **ตั้งแต่มีการปรับองค์ประกอบคณะอนุกรรมการ Ft โดยแต่งตั้งให้นายเชิดพงษ์เป็นประธาน และนายเมตตาเป็นรองประธาน (ปลายปี 46)

7. Hybrid identity, conflict of interest Source: www.ratch.co.th

8. Power projects and policies driven by companies • Power Development Plan (PDP) used to be the master plan for capacity expansion • Determines how many of which kind of plants get built when • But now some projects were on “fast track” even before being listed in the PDP, e.g. • 1,260 MW Xayaburi dam • 4,000 MW coal-fired plants in Dawei

9. Energy policy and plans become tools to drive the stock market and churn profits • The coup-installed government announced its policy on energy investment opportunities on 3 Oct 2006 • Energy policy, PDP approval and IPP bidding resulted in significant windfall benefits for selected companies • 1 year later, the share prices of companies benefiting from the PDP jumped 66% (other companies had a 8.7% rise)

10. Investment disconnected actual need for electricity • Criteria for determining generation requirement: • Reserve margin (capacity in excess of peak demand) ≥ 15% • Yet Thailand’s PDP2010 adds generation: • 920 MW Nam Theun 2 when reserve margin > 28% • 597 MW Nam Ngum 2 when reserve margin > 27% • 660 MW Gheco1 when reserve margin > 27% • 1600 MW SiamEnergy when reserve margin > 25% • and many more….

11. Planned new investments are so excessive despite exaggerated “needs” Used to justify NT2 5,800 MW The year NT2 came online

12. Over-investment = unnecessary impacts, burden on consumers and economy Thai power sector suffered from “over-capacity worth 400 billion Baht” (from total assets of 700 billion Baht and annual turnover of 240 billion Baht) • – PM ThaksinShinwatra, 2004

13. Wasteful inefficiencychanging energy intensity over 20-yr period Data source: Energy Information Administration 2008

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

15. Time to rethink “energy security” & Power sector planning

16. What is “energy security”? • The more, the better • Resource adequacy (availability) • Resource adequacy & affordability. • Resource adequacy & affordability & efficiency • Resource adequacy & affordability & efficiency & environmental quality

17. Source: Brown, Marilyn A., 2011

18. What is “energy security”? • The more, the better • Resource adequacy • Resource adequacy & affordability. • Resource adequacy & affordability & efficiency • Resource adequacy & affordability & efficiency & environmental quality

19. Government Policy Frameworkaccording to Energy Industry Act 2007 Need to make “energy security” and PDP accountable to government policy framework Framework for evaluating PDPs

20. MAKING New & improved POWER DEVELOPMENT PLANS

21. PDP 2010 New generation includes: 11,669 MW of imports 8,400 MW of coal plants 16,670 MW of gas plants 5,000 MW of nuclear

22. Past actual averages: 830 MW/yr (25 yrs) 813 MW/yr (15 yrs) 772 MW/yr (10 yrs) 407 MW/yr ( 5 yrs) Avg forecast increase 1,491 MW/yr in PDP 2010 Avg forecast increase 830 MW/yr in PDP2012 Actual Forecast

23. New & improved PDPs • New PDP based on more realistic demand forecast = “PDP2012” • Improved PDP based on PDP2010 forecast = “PDP2010v2”

24. Methodology • Maintain 15% minimum reserve margin • Prioritize investment in energy efficiency (EE)/ demand-side management (DSM) as a resource option • Consider life extension (delayed retirement) of power plants as a resource option • Additional investment might be required but only done in cases that are economic compared to building a new power plant. • When additional capacity is needed, prioritize (high-efficiency) cogeneration over (inefficient) centralized generation • New generation not already under construction may be removed if not needed to maintain 15% reserve margin

25. EE/DSM cumulative savings in PDP2012 and PDP2010v2

26. DSM/EE are the cheapest options to meet growing demand (but not yet considered an option in Thailand) Cost comparison for different supply options in Pacific Northwest, USA. 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

27. DSM saving potential is under utilized in Thailand Pacific Northwest USA PDP 2010 (Thailand) DSM/EE measures led to savings of over 30,000 GWH/yr 0.3% saving in 20 yrs ที่มา: สไลด์แผ่นที่19, สมมติฐานและภาพรวมร่างแผน PDP 2010, 17 กุมภาพันธ์ 2553. http://www.eppo.go.th/power/pdp/seminar-17feb2553/assumptions-PDP2010.pdf ที่มา: Tom Eckman, Northwest Power and Conservation Council, 2009.

28. Cogeneration (Combined Heat and Power – CHP)

29. Cogeneration in PDP 2012 PDP2012 adds 4,800 MW of cogeneration beyond what was already in the plan

30. Plant life extension (1) * Plant life extension may require additional investments and time to maintain and upgrade equipment. The time and resources required to extend plant life are usually significantly less than building a new one. However, more detailed assessment should be done on a case by case basis to ensure technical and economic feasibility of plant life extension.

31. Plant life extension (2) * Plant life extension may require additional investments and time to maintain and upgrade equipment. The time and resources required to extend plant life are usually significantly less than building a new one. However, more detailed assessment should be done on a case by case basis to ensure technical and economic feasibility of plant life extension.

32. Renewable Energy • Same amount as planned in PDP2010 • PDP2010 did acceptable job of including more RE • RE projects also have impacts and face community opposition • Need to address EIA loophole for projects < 10 MW to address environmental concerns

33. Summary of different PDPs

34. Comparing PDPs

35. Dependency on electricity/fuel imports

36. Cost of service (Baht/month) change in 2030 compared to 2010

37. Exposure to price volatility risks change in 2030 compared to 2010

38. Energy intensity change in 2030 compared to 2010

39. Emissions of air pollutantschange in 2030 compared to 2010

40. Comparing PDPs against different elements of energy security change in 2030 compared to 2010

41. Concluding remarks • Worrying trend of commoditizing electricity • “Energy security” and PDP process distorted to generate profits for a few at the expense of • Affected communities - Environment • Consumers - Economy • Need framework to hold “energy security” and PDP accountable to Energy Industry Act & the public • Need to reform PDP process to prioritize cheaper, cleaner options to meeting demand • Proposed PDP2012 better achieves energy security without the need for new green-field centralized coal/ gas/dam/nuclear.

42. Thank you www.palangthai.org

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

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