Taking Stock: Thailand's Experience in Scaling up the Implementation of Renewable Energy

6th Asia Clean Energy Forum

Session 15 Renewable Energy: Policy, Regulation and Institutional Issues

ADB, Manila, 23 June 2011

Bundit Fungtammasan

The Joint Graduate School of Energy and Environment (JGSEE) and Center for Energy Technology and Environment (CEE) King Mongkuts University of Technology Thonburi, Thailand

Thailand is at the forefront of RE deployment in the region.

IEA Report: Deploying RE in SEA, 2010

Leading in RE targets and policy support

Indonesia Malaysia RE targets (quantitative objectives) Financial incentives Non-financial incentives
High Medium Low

Philippines Singapore Thailand Not applicable

Vietnam

Source: Samantha Olz and Milou Beerepoot, IEA, 2010

Less significant deployment challenges

Indonesia Malaysia Administrative & regulatory Market-related Technical & infrastructure Financial Socio-cultural
Low importance Medium importance High importance

Philippines Singapore Thailand

Vietnam

Source: Samantha Olz and Milou Beerepoot, IEA, 2010

Tangible results in new RE deployment

7% of total PES (11% traditional biomass) 1,850 MW installed capacity (1.5% of total generation) Biofuels accounts for 2.5% of transport fuel - 1.37 Ml/d ethanol - 1.7 Ml/d biodiesel
Source: DEDE

Total PES: 114 Mtoe (2009)

RE & biofuels 18% Hydro 1% Natural gas 31%

Coal 13%

Oil 37%

Scope of this talk

Driving forces for RE deployment Support policies Results on RE deployment

Barriers and challenges

Driving forces for RE deployment

Import dependence: half of its energy needs Transport sector consumes 37% of final energy Vulnerable to oil price volatility Abundant RE resources, biomass in particular Need for balancing agricultural commodity prices and prospects for sustainable rural development Need for clean cities and GHG mitigation

Support policies in place

Regulatory framework
Policy targets Financial incentives Non-financial incentives

Regulatory framework since 1992 for renewable heat and power

Energy Conservation and Promotion Act (1992), amended 2007
Basis for ENCON programs and ENCON Fund (1995) Power Purchase Regulation for SPPs (1992, < 60MW, later 90 MW) obligating grid operators to accept SPPs to the grid Power Purchase Regulation for VSPPs (2002, initially < 1 MW, later 10 MW)

Energy Business Act (2007) (oil & gas)

Energy Regulatory Commission (ERC)

Regulatory framework for biofuels

National Ethanol Committee (2002) Grant licenses for the construction of ethanol production plants and the distribution of fuel ethanol Biofuel mandates: B3 for biodiesel E10 initially proposed, later backtracked Biofuel standards Biofuel pricing structure

Setting policy targets to accelerate RE deployment

First significant RE targets under the Energy Strategy for Competitiveness (2003) 8% RE share of final energy consumption by 2011 (from < 1%), with specific targets for electricity, heating and biofuels RE Development Plan (2008 2022) targets 14% RE by 2022 - Renewable electricity; 6,000 MW (3Xpresent) - Renewable heat: 7,400 ktoe (3X present) - Biofuels: 13.5 Ml/d (4.5 present)

Financial Incentives
Tariff subsidies for firm and non-firm Feed-in premiums (adder) (2007) for
SPPs, pricing based on bids and other criteria

VSPPs and SPPs additional purchasing price guaranteed on top of normal tariff for 7 10 years technology and capacity differentiated (price fixed for VSPPs; for SPPs, fixed for some fuels, otherwise bidding required)

Adder for renewable electricity (on top of normal tariff of ~ 10 US Cents/kWh)

Technology Us Cents/kWh Duration (y)

Biomass <=1MW
Biomass > 1MW Biogas <=1MW Biogas > 1MW Wastes Landfill/anaerobic digestion

1.7
1.0 1.7 1.0 8.3

7
7 7 7 7

Wastes - Thermal Process

Wind <=50 kW Wind > 50kW Hydro 50-<200 kW Hydro < 50 kW Solar

11.6
15.0 11.6 2.7 5.0 26.7*

7
10 10 7 7 10

* Being revised to reflect the lowered cost of PV

Other financial incentives

Tax exemptions Import duty exemptions and 8-year tax holidays on RE equipment Reduction of excise tax and Oil Fund contribution for biofuels, excise tax reduction for E20 and E85 vehicles Capital grants Projects related to RE, R&D, public awareness and and training 30% investment grants for commercial solar thermal systems, biogas installations, and 10% for MSW

Other incentives
CDM
Thailand Greenhouse Gas Management Office (TGO) set up as part of national strategy on climate change in 2009

Information provision
One-stop clearing house e.g. Energy for Environment Foundation set up with GEF support to provide technical and financial information on RE

Results on RE deployment
Early SPP and VSPP schemes (until mid-2008) promoted on-grid generation
No. Installed Generators Capacity (MW) SPP VSPP 35 100 615 215 Fuel Biomass Biomass, biogas

Since redefining capacity range and introducing adders in 2007 (as od March 2011)
No. Installed Generators Capacity (MW) SPP VSPP 26 221 Fuel

637 Biomass 954 Biomass, biogas, solar, MSW

Huge interest in wind farm applications for SPPs (up to 90MW)

1600 1400 1200 1000 800 600 400 200 0 MW

As of March 2011

Operating: 637 MW Accepted: 427 MW Pending: 2,394 MW

Source: EPPO 2011

VSPPs (<10 MW) focus on biomass and PV farm

3,500 3,000 2,500 2,000 Operating: 952 MW Accepted: 4,197 MW MW

As of March 2011

1,500
1,000 500

Pending: 1,785 MW

Source: EPPO 2011

CDM projects on the rise but yet to see real dollars (as of 7 June 2011)
No. of Projects LoI LoA Registered 261 138 51 CERs (MtCO2eq/y) N.A. 8.5 3.1

CERs issued

0.85

Type of project dominated by biogas and biomass

Source: TGO, June 2011

Rapid rise in ethanol production with surplus

1.4
1.2 1

ml/d (average)

Mainly from molasses, some from cassava 17 plants: 100,000 200,000 l/d

0.8
0.6 0.4

Total capacity: 2.8 ml/d

11 molasses

1 sugar
5 cassava (2 in operation)
2006 2007 2008 2009 2010

0.2
0

Source: DEDE

Biodiesel production constrained by domestic palm oil supply

1.8
1.6

Ml/d (average)

1.4
1.2 1 0.8 0.6 0.4 0.2 0 2007 2008 2009 2010

13 plants: 100,000 300,000 l/d range, also 600,000 & 1,200,000 l/d Total capacity: 4.5 ml/d Mostly palm stearine, CPO, some used VO

Source: DEDE

Major concerns and possible solutions renewable electricity

Technical and infrastructural, economics Concerns
Grid stability: current grid code burdensome for connectors Grid access
Adder too high for some RETs, too low for others Land use (wind)

Possible solutions
Role of regulators; infrastructure upgrade; capacity building Micro-grid; smart grid
Review adder (regression, differentiate type of biomass resource); Review land use policy

grid-code puts too much cost burden on

Major concerns and possible solutions renewable electricity

Administrative, policy, etc Concerns
Permit procedures: duration

Possible solutions
Remove redundant authorities;

Non performing licensee Harsher penalty for no-show; RET cost effectiveness
Lower cost, high local content RET before higher cost, lower local content RETs

grid-code puts too much cost burden on

Major concerns and possible solutions biofuels

Concerns
Low demand

Possible solutions
Get rid of subsidies for petroleum products with special measures to address the disadvantaged sector; introduce fuel mandates and subsidize conversion kits
Energy crop production yield improvement,

High feedstock cost

grid-code puts Crop yield improvement, ecologicalFood security vs too much cost burden on fuel economic zoning, 2nd generation biofuels

bundit@jgsee.kmutt.ac.th

Thank you