Thailand Experience: Feed in Tariffs (FITs) Policy for promoting Renewable Energy

8/14/2019 Thailand Experience: Feed in Tariffs (FITs) Policy for promoting Renewable Energy

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Dr.Montchai Pinitjitsamut (B.Elec.Eng./ PhD.Economics)Faculty of Economics, Kasetsart University, Bangkok

Thailand


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RenewableEnergy

Thermal Energy

ElectricityGeneration (RE-E)

As a Fuel (e.g.Transportation)


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Environmental Protection

Reduce GHG Emission / Risk - Nuclear Power / Investmenton Fossil Power Plant

Energy Supply Security

Reduce Import Dependence of the Energy System (Scarcityof Fossil and Nuclear Fuels)

Economic Competitiveness Enhancing Agricultural Sector Energy Crop /

Technological Leadership / Private Investment / EconomicGrowth /Job Creation/ etc.

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Initiated and be approved by Government

Entitlement => Increase Renewable Energy in 20% Proportion of

Final Energy Consumption of Thailand

With 3 Stages of Development Framework

Year 2011

15.6%

Year 2016

19.1%

Year 2022

20.3%

Year 2030

25%

1 st Stage

FinancialMechanism tosupport proven

RE technology

2 nd Stage

Promote in-housetechnology &investment

R & D in Technology

/BiofuelsDevelop GreenCommunity

3 rd Stage

Promote Advancetech.-Hydrogen

Develop RE Market

Extent GreenCommunity

AdditionExpand RE Electricity

Expand BiofuelsBattery systemGeothermal


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6Source: Department of Alternative Energy Development and Efficiency


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RE forElectricity

Potential(MW)

2007Existing

Target Installed

2008-2011

2012-2016

2017-2022

2012

(MW) (MW) (MW) (MW) (MW)Solar 50,000 32 55 95 500 376.72

Wind 1,600 1 115 375 800 111.73

Hydro 700 56 165 281 324 101.75

Biomass 4,400 1,610 2,800 3,220 3,700 1,959.95

Biogas 190 46 60 90 120 193.40

Waste 400 5 78 130 160 42.72

Hydrogen 0 0 0 0 3.5 0

TOTAL 57,290 1,750 3,273 4,191 5,608 2,786.27

Source: Annual Report -Department of Alternative Energy Development and Efficiency & Author Calculation


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Distribution System

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Generation System Transmission System

Small PowerProducers

(SPPs) 8.26%

Electricity GenerationAuthority of Thailand

(EGAT) 49.05%

Independent PowerProducers

(IPPs) 40.5%

Electricity Import

(Laos & Malaysia)2.2%

Very Small PowerProducers

(VSPP)


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(1) Electricity generationcosts

Investment for theplant

Other costs related tothe project

Operation andMaintenance

Fuel costs Inflation Invested capital Interest payment for

invested capital Profit margin

(2) Avoided external costs Climate change Health damage from sir

pollutants Agricultural yield loss Material damage Effect on the energy

supply security

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Optimal return on

investment


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Stepped FITs

Technologyspecific

Plant Capacity

Local Condition

Degression

Others

Specific details in each type of RE-Ee.g. Storage & Run-off.

To group/ categorize each type of RE-Ebased on the distribution of total cost.

Difference among local conditionsrelating to total cost, e.g. On-Grid/Off-Grid.

-Annual reduction create an opportunityFor new power plant (higher efficiency)-Learning curve

-Technology Improvement

Additional Premiums-Certain policy goals (e.g. reduce DieselPower plant in provincial area)-Promote Innovative technology-Community Involvement

Difference in RE-E (Type of Fuel)


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ADDER: First implemented in 2007 and revisedin 2010

Avoided cost basis Calculation conditions : IRR 11%

D/E ratio = 3:1

Interest rate 6%

Exchange rate 40 THB/ USD (Now about 30 THB/USD)

Project period 15-25 year

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RE for Electricity

ADDER 2007 ADDER 2010

Normal(THB/kWH)

+ Extra 1(THB/kWH)

+ Extra 2(THB/kWH)

Duration(Year)

Normal(THB/kWH)

+ Extra 1(THB/kWH)

+ Extra 2(THB/kWH)

Duration(Year)

1. Biomass

Installed Capacity 1 MW 0.30 1.00 1.00 7 0.30 1.00 1.00 7

2. Biogas

Installed Capacity 1 MW 0.30 1.00 1.00 7 0.30 1.00 1.00 7

3. Waste

Anaerobic Digestion/Land Fill 2.50 1.00 1.00 7 2.50 1.00 1.00 7

Thermal Process 2.50 1.00 1.00 7 3.50 1.00 1.00 7

4. Wind

Installed Capacity 50 kW 3.50 1.50 1.50 10 3.50 1.50 1.50 10

5. Small HydroInstalled Capacity 50 kW -


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Base Tariff + Ft (Avg.Generation)

Feed-in Tariff (Fixed)

Year

Price

ADDER = Feed-in Tariff (Premium)

Purchase Price = Base Tariff + Ft (Average Generation)+ ADDER

Ft* = Float time cost = uncontrollable component in generation cost,such as fuel cost, exchange rate, Inflation rate, etc., including RE-E.


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MW

Result of the Policy: RE-E Estimate Installed Capacity

Source: Power Development Plan 2010-2030(PDP2010 Rev3 June 2012) 16

-

5,000.0

10,000.0

15,000.0

20,000.0

25,000.0

Waste

Biogas

Biomass

Hydro

Wind

Solar

2022 Target

RE-E =16,892.5 MW

Year Solar Wind Hydro Biomass Biogas Waste

2011 138.0 3.0 5,322.5 747.3 106.0 21.42012-2022 1,806.4 1,774.3 3,061.4 2,378.7 22.1 334.5

ACTUAL

ACTUAL 2012:RE-E=

2,786.92 MW


17/2117Source: Annual Report -Department of Alternative Energy Development


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Sector CO2 CO NOx CH4 SO2

Transportation 53,379 514 237 20 11

Electricity 83,370 68 261 7 353

Manufacturing 45,023 200 219 5 295Residence &

Commerce 6,389 2,484 35 52 0Others 10,984 105 171 1 4

GAS Emission fromEnergy by Sector(x1,000 ton) in 2008Source: Energy Planningand Policy Office (2011)

1997-

20062007 2008 2009 2010 2011 2012

Private Investment (mil.THB) 38,500 11,000 20,000 13,800 13,900 5,900

RE-Electricity (mil. kWH) 2,645.5 6,519.4 9,474.3 11,599. 13,360.

Accumulated CO2 Reduction(mil.KG.)

1,264.5 4,380.8 8,909.5 14,454. 20,840.

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000 RE-E Investment / RE-E Production amount /Acc. CO2 Reduction

Source: Annual Report -Department of Alternative Energy Development and Efficiency & Author Calculation


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Burden to End User -> Higher adopt Higher electricity cost Fluctuation/ Uncertainty to Electric Grid (e.g. solar PV)

EGAT have to control the system by investing additionalcapacity.

Protest against Biomass power plant. Current mechanism not favor an adoption of high efficiency

technology, since its fixed in the same group & purchaseprice.

Waste Segregation / Waste ManagementLocalAdministration; political issues Information about existing RE-E generation cost to revise

FITs Equally distribution of support mechanism among RE-E

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Revised FITs More Market Compatible with lowtransaction cost.

Set-up Incentive mechanism for technologyimprovement and/or cost reduction.

Create suitable supporting scheme that allow to adoptmore variety of technologyespecially, New/ Highefficiency; High cost but low emission; e.g. for Biomass.

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Thailand Experience: Feed in Tariffs (FITs) Policy for promoting Renewable Energy