Power Sector in Thailand

An Expert's View about Electricity Generation and Distribution in Thailand

Posted on: 27 Sep 2010

Thailand has been pushing to increase the growth of its oil and gas industry. The growing Thailand is the biggest and second fastest growing consumer of electricity in ASEAN.

Power Sector ? Thailand Sector Report Power Sector Thailand Produced by: Vanchai Tanasoontararat, Trade & Investment Manager, British Embassy Bangkok Last revised: 3 September 2009 Whereas every effort has been made to ensure that the information given herein is accurate, UK Trade & Investment or its sponsoring Departments, the Departments of Business, Innovation and Skills and Foreign & Commonwealth Office, accept no responsibility for any errors, omissions or misleading statements in that information and no warranty is given or responsibility is accepted as to the standing of any firm, company or individual mentioned. www.uktradeinvest.gov.uk Power Sector ? Thailand Table of Contents OVERVIEW 3 CHARACTERISTICS OF MARKET OPPORTUNITIES 4 KEY METHODS OF DOING BUSINESS 6 MORE DETAILED SECTOR REPORTS 8 EVENTS 9 CONTACT LISTS 10 www.uktradeinvest.gov.uk Page 2 of 12 Power Sector ? Thailand OVERVIEW Thailand is the largest energy consumer in ASEAN, recording the highest peak demand of 22,586.1 MW in 2007, followed by Malaysia (13,623 MW), Vietnam (13,152 MW), the Philippines (8,986 MW), Singapore (5,921 MW) and Indonesia (3,890 MW). For the other ASEAN countries - Burma, Brunei, Laos and Cambodia - the peak demand forecasts are less than 1,000 MW each. In 2025, the projected peak demand of Thailand will drastically increase by 265% from the 2007 level. In terms of energy demand, Thailand topped the list of ASEAN countries at around 146,925 GWh (the 2007 actual value), followed by Malaysia (90,762 GWh), Vietnam (66,773 GWh), the Philippines (59,612 GWh), Singapore (41,524 GWh) and Indonesia (19,625 GWh). The rest of the ASEAN countries are forecast to see the energy demand at less than 6,000 MW each. The projections for ASEAN's energy demand in 2025 are substantial, especially for Vietnam, whose figure may increase to almost 600,000 GWh (around 9 times that in 2007). Thailand's energy demand growth is expected to jump 264% to 388,432 GWh. CHARACTERISTICS OF MARKET Thailand is the biggest and second fastest growing consumer of electricity in ASEAN. At about 22,000 MW its power consumption is roughly two thirds of the UK and even allowing for weakening in the economy since late 2008, demand for electricity is forecast to grow by 5-7% per year over the next few years. To meet these energy demands, Thailand is heavily dependent on imported energy supplies. Natural gas presently accounts for 74% of fuel in power production, imported and domestic coal 18%, hydroelectricity 6%, with the rest renewable energy and power purchase from Laos and Malaysia. The energy ministry has revised the 15-year power development plan (PDP) for 2007-2021 to place greater emphasis on coal, nuclear and renewable fuels and less emphasis on natural gas. Under the revised PDP, natural gas usage would be reduced to 38% of total power output by 2021, with imported power from neighbouring countries 28%, coal 21%, nuclear power 10% and renewables the rest. Electricity Generating Authority of Thailand Over the past 40 years, the Electricity Generating Authority of Thailand (EGAT), a state power enterprise under the Ministry of Energy, has been the country's monopoly provider of dependable energy. EGAT is responsible for the stability and reliability of the national electric power supply system including the reserved capacity. It is the sole investor in domestic transmission system operation. According to the 2007 PDP - Revision 2, EGAT will have a share of about 50% of the country's total generation, with the rest coming from private power plants, and purchases from neighbouring countries. www.uktradeinvest.gov.uk Page 3 of 12 Power Sector ? Thailand OPPORTUNITIES Thailand's 15 year Renewable Energy Plan With concerns over the price and supply of fossil fuels, the government of Thailand has been working to secure the country's energy through additional renewable energy sources. The government's latest 15-year renewable energy development plan (2008-2022) has set objectives to turn renewable energy into the main energy source for Thailand and replace oil imports. The plan also wants to strengthen the security of energy provision for the country and promote the use of energy for an integrated green community. It also includes support to industry for the development of renewable energy technology production and to research, develop and promote the high efficiency technology for renewable energy. 15.6 Billion Baht for Renewable Energy Development The Energy Ministry will set up a budget of 15.6 billion Baht (£284 million) for renewable energy development under the 15-year renewable energy development plan. The aim of the plan is to increase the proportion of renewable energy in total energy use to 20% by 2022 from 5% currently. The Ministry of Energy has set a target to increase electricity generated by renewable energy to 5,608 MW in 2022 from the present 1,750 MW. Of the overall 5,608 MW, 500 MW will be generated by solar power, 800 MW by wind power, 324 MW by hydropower, 3,700 MW from biomass, 120 MW from biogas, 160 MW from waste and 3.5 MW from hydrogen. In particular, 7.11 billion Baht (approx. £128 million) will be allocated to developing biomass through upgrading technology, building pilot projects and improving the efficiency of raw material consumption. The target for power generation from biomass is to generate 3,700 MW of electricity and a heat output of 6,725 million tons of oil equivalent (toes) in 2022, up from 1,760 MW and 2.665 million toes presently. For power from municipal solid waste, a budget of 4.83 billion Baht (approx. £87 million) has been estimated, with a target of increasing output to 160 MW in 2022 from 5 MW at present. Biogas development is projected to require 2 billion Baht (approx. £36 million) to raise power generation capacity to 120 MW and a heat output to 600,000 toes from 35 MW and 100,000 toes currently. Wind turbines, meanwhile, could be developed through investing 1.46 billion Baht, (approx. £26 million) mainly on R&D to lower production costs. 800 MW in 2022 has been targeted for wind power, up from 2.5 MW. Finally, 3.5 MW generated from fuel cells and hydrogen fuel are estimated to require a budget of 203 million Baht (approx. £3.66 million) - mainly for pilot projects. As incentives for renewable energy producers, the Energy Ministry has set up adder rates, which beef up the prices it pays to producers for electricity generated from renewable energy sources, e.g. 8.50 Baht/kWh (approx. 1.5p) for solar power, 3.50 Baht/kWh (approx. 0.6p) for wind 2.80 Baht/kWh (approx. 0.5 p) for biomass. www.uktradeinvest.gov.uk Page 4 of 12 Power Sector ? Thailand EGAT to spend £400 million for power plants EGAT is planning to spend 22 billion Baht (£400 million) over the 15-year period (2008-2022) to construct renewable energy-driven power plants with a combined capacity of 258 MW. The plan will focus on 4 types of power plants: mini- hydropower plants with a combined 170-MW capacity, waste power plants with a combined 15-MW capacity, wind power plants with a combined 65-MW capacity and solar power plants with a combined 8-MW capacity. EGAT divides its plan for developing renewable energy into 3 phases: 2009-2012, 2013-2017 and 2018- 2022 with total budget of 7.4, 7.9 and 6.7 billion Baht (approx. £134, £144 and £121 million) for each phase respectively. Hydropower is a significant power source that EGAT places great importance on. More than 4.4 billion Baht (approx. £80 million) has been allocated for the construction of six small hydropower plants to be installed downstream of irrigation dams across the country. The generating capacity of these projects is expected to be 78.7 MW or 380 million units per year. The largest wind power project in ASEAN Ratchaburi Electricity Generating Holding Plc, Thailand's largest private power producer is planning to build Southeast Asia's largest wind farm power generator in Phetchabun province in a venture worth 4.274 billion Baht (£78 million). The project is proved to be commercially viable since wind strength at the site averages 5 metres/second. The site will have 30 units of 110-metre high piles with blades 100 metres in diameters. The company is presently selecting contractors and appropriate technology for the wind turbines. The construction is expected to start late 2009 and the 60-MW wind power plant is scheduled to be on stream in 2011. Thailand's second coal-fired power plant Gheco-One, an independent power producer, is continuing work to build its 660-MW coal-fired power plant. The company is confident that the plant, which is already 15% complete, will meet the schedule to begin supplying electricity to the national grid late 2011. The project construction cost is estimated at US$1.15 billion as the company has already signed the power purchase contract with EGAT. Doosan Heavy Industries and Construction is the main constructor. Cross-border hydropower projects Since Thailand signed MOUs with its neighbours over the past several years, various cross-border hydropower projects have been proposed for development to sell electricity to Thailand, totalling approximately 12,000 MW, mainly from Laos. The Thai government signed MOUs for hydropower-development co-operation with the government of Lao PDR to purchase electricity amounting to 7,000 MW by 2015. Two projects - Theun Hinboun and Huay Ho - were commissioned in 1998 and 1999 respectively. The Nam Theun 2, Nam Ngum 2, and Theun Hinboun www.uktradeinvest.gov.uk Page 5 of 12 Power Sector ? Thailand (expansion) projects, which are under construction and expected to be commissioned in 2009, 2011 and 2012 respectively. In addition MOUs have been signed and the Power Purchase Agreements (PPAs) are under negotiation for the Nam Ngum 3, Nam Theun 1, Nam Ngiep 1 and Nam Ou projects. For Thailand and Burma, the initial hydropower-development co-operation involves the projects to sell 1,500 MW to Thailand. They are the Hutygi (1,190 MW) and Tasang (7,000 MW) projects totalling 8,190 MW. China and Thailand also signed a hydropower-development MOU to sell 3,000 MW to Thailand by 2017. For Cambodia, some potential hydropower projects have been proposed to sell electricity to Thailand. Several projects to export power to Thailand are being studied for their feasibility and negotiations for their electricity tariffs are underway. Among them is the Stung Menum project with a capacity of 120 MW. In addition to the cross-border hydropower projects Thailand has committed with its neighbours as part of the regional energy co-operation, there are prospective hydropower projects in Laos and Burma totalling around 11,000 MW. There is plenty of hydro-energy potential along the Mekong River known as the Greater Mekong River Basin, promising up to 27,601 MW. The potential hydropower projects in the area are located in China, Laos, Thailand and Cambodia. Nuclear Power According to the 2007 PDP, two nuclear power plants are to come online in 2020 and two more in 2021. The combined electricity generation of all four units will be 4,000 MW. In 2021, the nuclear power will account for about 10% of the total electricity production. Since the country's GDP growth will likely contract by 1-4% this year following the current economic recession, the Ministry of Energy has revised the plan, as the power demand in the industrial sector has sharply dropped. As a result, output from the nuclear power plant has been halved to 2,000 MW if it comes online in 2020 and 2021 as planned. Presently in the first phase of the Nuclear Power Program Implementation, Thailand is in the process of laying the infrastructure work with potential sites are being surveyed and evaluated. A feasibility study, which covers power consumption trends, technology and safety standards, the impact on the environment, reactor types and suitable locations, has been commissioned and is expected to be completed in May 2010. KEY METHODS OF DOING BUSINESS The Thai government's policies and the National Economic and Social Development Plan aim to support the free market, and to encourage an increasing role for the private sector in economic and social development on the basis of a self-sufficiency philosophy. The government is strongly committed to the development of alternative energy and efficiency as www.uktradeinvest.gov.uk Page 6 of 12 Power Sector ? Thailand indicated above. Moreover, private participation in power generation and the use of renewable sources is being promoted. UK companies that are interested in doing business in Thailand are encouraged to co-operate with strategic local partners or agents, in order to understand local needs and to be able to operate the business in line with local culture. To operate a business, or work successfully with local companies, cultural aspects should not be neglected. Thais like to build relationships with potential business partners, so it is not a market where you are likely to send out a few brochures and watch the orders roll in. But for those that are ready to do the initial research and develop relationships with Thai companies, the opportunities are clearly there. It is very important that UK companies appear to have a local presence in Thailand, either through local representatives, representative office or joint venture companies. Such a presence shows that UK companies are serious about the market and are willing to provide local technical support to their partners and customers. The Thai market is still a price-oriented market. Technical support is the second most important issue after pricing. The principal forms of business organisations under Thai law are sole proprietorships, partnerships, private limited companies and public limited companies, i.e. similar to most countries. Additionally, branches of foreign corporations may be registered for business in many sectors. A representative or liaison office of a foreign company may also be recognised. However, the most popular form of business organisation among foreign investors is the private limited company. To form a private limited company requires a minimum of seven shareholders who must file a memorandum of association, convene a statutory meeting, register the company and obtain a company income tax identity card. They must also follow accounting procedures prescribed in the Civil and Commercial Code, the Revenue Code and the Accounts Act. A balance sheet must be prepared once a year and be filed with the Department of Revenue and the Department of Business Development. Moreover, companies are required to withhold income tax from the salary of all regular employees. When visiting Thailand, research the market and the companies you intend to contact. ? Many Thai companies have websites - some of them in English. Much information is therefore readily available on both government and corporate websites. ? Plan your visit - organise appointments before you depart the UK. Follow up with telephone calls on arrival to confirm availability. Meetings can be arranged over breakfast, lunch or dinner. ? Arrange a market discussion with the relevant UKTI Trade & Investment Manager at the British Embassy in Bangkok. www.uktradeinvest.gov.uk Page 7 of 12 Power Sector ? Thailand ? Take plenty of business cards and corporate literature. ? Follow up meetings by letter/fax on return to the UK. If possible, keep the Embassy informed of progress. ? Do not expect to be able to do business immediately, or necessarily on the first visit to Thailand. ? Think about intellectual property rights issues. ? Get professional legal advice on setting up a local company and research business partners thoroughly. Due diligence investigations are recommended. UK companies are not disadvantaged in this marketplace and often are still seen as natural partners by the Thai business community. However, this is changing rapidly and there is a strong European (e.g. France, Norway, Belgium), and American presence in the country. Therefore, UK companies need to be pro-active in the marketplace, if they feel that their skills and technologies are appropriate. UK companies interested in the market are strongly recommended to use the services available, both commercially and through UK Trade & Investment to assess their specific market sectors in advance of market visits. They should avail themselves of the support from UKTI for Vertical Trade Missions. They should also attend appropriate exhibitions and seminars so that they can see, at first hand, if the market is suitable for their products and services. These websites also offer useful guidelines to doing business in Thailand: The Board of Investment - www.boi.go.th The Ministry of Foreign Affairs - www.mfa.go.th Other background information on doing business in Thailand can be found on UKTI?s website. Simply go to the Thailand country page where you will find information on: ? Economic background and Geography ? Customs & Regulations ? Selling & Communications ? Contacts & Setting up ? Visiting and Social hints and tips MORE DETAILED SECTOR REPORTS Research is critical when considering new markets. UKTI provides market research services, which can help UK companies doing business overseas including: ? Overseas Market Introduction Service (OMIS). Bespoke research into potential markets, and support during your visits overseas www.uktradeinvest.gov.uk Page 8 of 12 Power Sector ? Thailand ? Export Marketing Research Scheme. In depth and subsidised service administered by the British Chambers of Commerce on behalf of UKTI Contact your local International Trade Advisor if you are interested in accessing these services, or for general advice in developing your export strategy. When considering doing business in Thailand, it is essential to obtain legal, financial and taxation advice. A useful contact list of lawyers and other relevant professional bodies as well as further information on the Oil & Gas sector in the country is available from the Embassy. To obtain further information on doing business in the oil and gas industry in Thailand, please contact: Vanchai Tanasoontararat Trade & Investment Manager British Embassy 14 Wireless Road Bangkok 10330 Thailand Tel: +(66) 2305 8333, +(66) 2305 8257 (direct) Fax: +(66) 2255 8619, +(66) 2253 7121 Email: vanchai.tanasoontararat@fco.gov.uk Websites: www.uktradeinvest.gov.uk and www.ukinthailand.fco.gov.uk EVENTS th The 17 POWER-GEN Asia & Renewable Energy World Asia - The leading exhibition and conference in the power generation and transmission & distribution industries across the ASEAN region. Date: 7-9 October 2009 Venue: IMPACT Exhibition & Convention Centre Bangkok, Thailand Organiser: PennWell Group PO Box 973059 Dallas, TX 75397-3059 USA Web: www.powergenasia.com Renewable Energy Asia 2010 - The conference and exhibition on renewable energy and the latest technologies on biomass, hydro and geo- thermal power, solar, wind and waste-to-energy. Date: 2-5 June 2010 Venue: BITEC, Bangkok, Thailand Organiser: UBM Asia (Thailand) Co Ltd th 503/23 KSL Tower, 14 Floor www.uktradeinvest.gov.uk Page 9 of 12 Power Sector ? Thailand Sri Ayuthaya Road Phyathai Bangkok 10400 Thailand Tel: +662 642 6911 Fax: +662 6919-20 Email: entech@cmpthailand.com Web: www.ubmthailand.com Industrial Energy & Environment Asia 2010 - International Trade Exhibition and Conference on Renewable Energy and Environment Management Technologies and Solutions for Manufacturing Industry. Date: 24-27 June 2010 Venue: BITEC, Bangkok, Thailand Organiser: Reed Tradex nd 32 fl., Sathorn Nakorn Tower 100/68-69 North Sathorn Road Silom, Bangrak Bangkok 10500 Thailand Tel: +66 2686 7299 Fax: +66 2686 7288 Email: rtdx@reedtradex.co.th Web: www.reedtradex.com CONTACT LISTS UKTI Energy Sector Contacts Bob Bish Deputy Director Energy and Advanced Engineering Sector Directorate UK Trade & Investment India, China, Asia Pacific Email: Bob.Bish@ukti.gsi.gov.uk And/or Karen Smith Operations Manager, Energy Sector Team UK Trade & Investment 66-74 Victoria Street London SW1E 6SW Tel: +44 (0)207 215 4642 Fax: +44 (0)207 215 4064 Email: karen.smith@ukti.gsi.gov.uk Web: www.ukti.gov.uk www.uktradeinvest.gov.uk Page 10 of 12 Power Sector ? Thailand Local Energy Contacts Mr Viraphol Jirapraditkul Secretary General Energy Policy and Planning Office (EPPO) 121/1-2 Phetchaburi Road Ratchathevi Bangkok 10400 Tel: +66 (0) 2612 1555 Fax: +66 (0) 2612 1352 Email: Viraphol@eppo.go.th Web: www.eppo.go.th Mr Krairit Nilkuha Director-General Department of Alternative Energy Development and Efficiency (DEDE) 17 Rama I Road Patumwan Bangkok 10330 Tel: +66 (0) 2223 0021-9 Fax: +66 (0) 2226 1416 Email: krairit@dede.go.th Web: www.dede.go.th Mr Sombat Sarntijaree Governor Electricity Generating Authority of Thailand (EGAT) 53 Moo 2, Charan SanitWong Road Bang Kruai Nonthaburi 11130 Tel: +66 (0) 2436 0000 Fax: +66 (0) 2436 4723 Web: www.egat.co.th; www.egat.com Mr Pornthape Thunyapongchai Governor The Metropolitan Electricity Authority (MEA) 30 Soi Chidlom Ploenchit Road Pathumwan Bangkok 10330 Tel: +66 (0) 2253 6548 Fax: +66 (0) 2256 3676 Email: pornthape@mea.or.th Web: www.mea.or.th Mr Adisorn Kiatchokewiwat Governor www.uktradeinvest.gov.uk Page 11 of 12 Power Sector ? Thailand Provincial Electricity Authority (PEA) 200 Ngam Wong Wan Road Chatuchak Bangkok 10900 Tel: +66 (0) 2589 3439; 2590 5126 Fax: +66 (0) 2590 5133 Email: adisorn@pea.co.th Web: www.pea.co.th www.uktradeinvest.gov.uk Page 12 of 12
Posted: 27 September 2010