Returning to growth: Power consumption rates are expected to pick up again

The breakneck pace of electricity consumption growth took an uncharacteristic hiatus in 2011 following a decade of strong year-on-year expansion. Total national electricity consumption in 2011 dipped to 148.91 TWh, from 149.30 TWh the previous year, but it was still well above the 2009 level of 135.18 TWh, according to Energy Policy and Planning Office (EPPO) data. This slight hiccup was not, however, indicative of any larger problem in the power generating sector or the economy as a whole, but rather the result of a halt in operations for a significant portion of the manufacturing sector late in the year due to severe floods. As a result, consumption rates are expected to pick up again in 2012 and resume their strong expansion trend, which averaged 5.17% growth from 2002 to 2010.

Although liberalisation efforts are ongoing, the energy sector is still very much dominated by the state-owned Electricity Generating Authority of Thailand (EGAT). Though significant headway has been made in fostering competition among the burgeoning private energy generation sector, similar efforts to open up power distribution to competition and create an electricity trading market have so far been largely unsuccessful. As a result, power producers are reliant on EGAT as their primary purchaser of electricity.

FEEDING FRENZY: The remarkable rise of Thailand’s industry sector is the primary contributor to the country’s large electricity appetite. The sector currently accounts for 45.53% of all electricity used in the country, according to data from EGAT. Since consuming 48.26 TWh of power in 2002, the sector’s electricity requirements have increased at an average rate of 3.97% to 67.8 TWh in 2011. Residential consumers were the second-largest contributors, utilising 32.80 TWh or 22.03% of the total in 2011, followed by business consumers, with 23.63 TWh, (15.87%), small general services, at 15.45 TWh (10.38%), and government and nonprofits, at 4.9 TWh (3.29%). The remaining power is distributed among the agricultural and other sectors in addition to 2.17 TWh given away free of charge.

GENERATION: While not quite up to pace with the growth in demand for electricity, the country’s generation capacity has also been holding its own in recent years, peaking in February 2012, with an installed capacity totalling 31,447 MW. This includes EGAT’s installed capacity of 14,998 MW (48%), 12,081 MW (38%) from independent power producers (IPPs) and 2182 MW (7%) from small power producers (SPPs). The final 2185 MW (7%) is derived from imports and exchange, according to data provided by the EPPO.

The country’s power infrastructure generated 151.57 TWh in 2011, where 10.77 TWh of electricity was imported for a combined total of 162.34 TWh, down 7.39% from the 163.67 TWh (including imports) turned out the previous year. Electricity production remains heavily reliant on natural gas, with this fuel source accounting for 72.81% of all power generated in the country in 2010, according to the latest data from EGAT. Coal-fired power plants were the second-largest contributor, with 17.36% of total output, followed by hydropower, at 3.34%, other renewables, at 1.38%, and oil, at less than 1%. Imports made up the remaining 4.51%.

While EGAT may not be the omnipotent monopoly it once was, the company still accounts for the vast majority of power generation capability in the country. At the beginning of 2011 EGAT had a total installed capacity of 14,998.13 MW, amounting to approximately 48.5% of Thailand’s total installed power supply.

The company’s power plant capacity can be broken down as follows: combined cycle thermal power plants, with a total of 6866 MW (22.21%); standard thermal power plants, with 4699 MW (15.2%); hydropower plants (3424.18 MW, or 11.07%); renewable energy sources (4.55 MW, or 0.01%); and diesel generators with a total of 4.4 MW (0.01%). This power is generated across 39 sites consisting of 21 small and micro hydropower plants, eight renewable energy power plants, six combined cycle thermal power plants, three standard thermal power plants and a single diesel power plant. EGAT’s most recent additions include the new natural gas-fired 670-MW North Bangkok combined cycle thermal power plant, which came on-line in 2010.

As the sole vertically integrated electricity provider in the country, EGAT includes the purchase and importation of power supplies among its duties, which accounts for almost half of its power output. As Thailand looks primarily to Myanmar to shore up its natural gas requirements, so too does the country look northwards to Laos for electrical assistance. Recent power purchase agreements (PPAs) have been signed as quickly as power plants can be constructed across the border. These include PPAs for the 948-MW Nam Theun 2 project, which was completed in 2010, the 596.6-MW Nam Ngum 2 (finished in 2011) and the 220-MW Theun-Hinboun Expansion project (completed in 2011) as well as the 1473-MW Hong Sa project, which is scheduled for completion in 2016. In additional, a number of supplementary memorandums of understanding have been signed for the purchase of extra electricity supplies totalling 2419 MW of coal- and hydro-generated electricity, which are slated to come on-line between 2016 and 2019.

PRIVATE SECTOR: Although EGAT still accounts for the lion’s share of power generation in Thailand, smaller independent power firms have gained a foothold over the past two decades since private power producers were allowed to produce and sell power to EGAT, which started in 1992. These producers come in three forms: IPPs, generating electricity in excess of 90 MW installed capacity for each plant; SPPs, with installed capacities from 10-90 MW; and very small power plants (VSPPs), generating less than 10 MW. This bidding process is conducted by the EPPO, which evaluates each project and awards production contracts in the form of PPAs.

Since these liberalisation measures were enacted and the first independent producers came on-line in 1994, the private sector has grown significantly. SPPs and IPPs produced a combined 577.93 GWh in their inaugural production run, just 0.8% of Thailand’s total output of 71.97 TWh. Over the ensuing years, the private power sector has flourished, with SPP- and IPP-generated electricity making up 48% of all power produced (14.44 and 62.12 TWh, respectively) in 2011.

According to a government energy development plan, private power generation is slated to take on an increasing role in the country’s energy portfolio in the coming decades, and should provide abundant opportunities for private investors. One example of a large-scale project expected to come on-line in 2012 is the 660-MW GHECO-One coal-fired thermal power plant constructed by Glow Energy, a subsidiary of French power giant Gaz de France Suez. Located in the Map Ta Phut industrial port estate, the plant is the latest in a series of IPPs, which will solidify Glow’s position as one of Thailand’s largest power generators. The company operates a combined total installed capacity of 1708 MW generation gas- and coal-fired power plants as well as the 126-MW Houay Ho Power hydropower plant located in Attapeu province in the south of Laos.

POWER TO THE PEOPLE: EGAT also serves as Thailand’s national transmission system operator (TSO), and is responsible for transporting and balancing power transmission throughout the country’s national grid. As of early 2011 EGAT had a system encompassing 30,639.75 km of transmission lines, with voltage levels ranging from 69-500 KV, in addition to a network of 208 substations with 531 delivery points and a total transformer capacity of 75,505.19 MVA. Recent upgrades to the system include the new a 500-KV Nam Ngum 2-Na bong-Udon Thani 3 transmission line system and accompanying Udon Thani 3 substation, which was completed in 2010.

Electricity is subsequently delivered by the TSO to two separate power distributors – the Municipal Electricity Authority (MEA), which serves the greater Bangkok area and the Nonthaburi and Samut Prakan provinces, and the Provincial Electricity Authority (PEA), which covers the rest of the country. MEA consumption totalled 44.20 TWh in 2011, down 1.92% compared to the previous year, while consumption in PEA areas registered 103 TWh, up 0.52% over 2010 levels.

In addition to providing power to the MEA and PEA, EGAT also sells power directly to some individual large-scale industrial clients that have sizeable power requirements. It also sells to neighbouring countries such as Laos, Malaysia and Cambodia.

NUCLEAR OPTION: Under the new energy development plan charting the development of the power sector until 2030, new nuclear power facilities were due to contribute 5000 MW of the country’s electricity needs by 2028. The power plants were to be built by EGAT in stages, with the first of five power units with a capacity of 1000 MW coming on-line in 2020.

However, after the 2011 Fukushima disaster in Japan, the Thai government decided to postpone the project by three years, with the first unit now tentatively planned to come on-line in 2023. The delay is intended to allow the government more time in which to study related issues, in particular nuclear power plant safety, the national legislative drafting process, and any public awareness programmes. Whether or not the plans are eventually shelved or the government does decide to proceed with nuclear power generation will likely depend as much on public perception and political will as on the country’s technical and financial capacities.

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