ENERGY CONTEXT

Thailand has explicitly set energy security as the top policy objective, followed by economic affordability and environmental sustainability, in the Thailand Integrated Energy Blueprint (TIEB) underpinned by five individual but interrelated energy plans covering natural gas, oil, energy efficiency, the power sector and alternative energy sources, respectively. Such prioritisation was in response to
the continuous growth in energy demand while depleting domestic reserves of energy resources in Thailand.

Overall energy system Energy consumption and production: For the past decade, Thailand’s total TFEC has been steadily increasing, as illustrated in Figure 2. The industrial and transport sectors consumed largely three-quarters of the total. The secondary axis in the figure shows the energy dependence ratio,9 with more than one-half of TFEC met by imported energy sources. Expenditure on energy imports reached a peak of 12% of Thailand’s GDP in 2008, attributable to the oil price surge. While it had nearly halved from the peak in 2015, the country’s energy dependence ratio,on the other hand, went up in response to the lower oil prices (EPPO, 2016a). This might not be regarded as an alarming signal if it were put into historical perspective. Over the past four decades, Thailand has been relying on imported fuels to meet more than half of its energy demand, having reached a record high of 90% dependence in the 1970s before the discovery and extraction of indigenous oil and natural gas resources.

Thailand has its own fossil energy resources such as crude oil, natural gas and coal, but the oil and
gas are not adequate for domestic consumption and are expected to deplete in a decade if current
production rates were to remain same as they are.10 If only the proven reserves are counted, Thailand
would have about 4-5 years left for either oil or natural gas, according to data from the MoE, while merely 2.3 years for oil and 5.5 years for gas according to BP. Put it into perspective, the world
average for oil or natural gas is about 50 years or so (EPPO, 2016a; BP, 2016).

Figure 3 shows that natural gas, condensate and crude oil accounted for 61% of total energy production from indigenous energy resources in 2015 On the consumption side, oil-derived energy products and natural gas accounted for around 70%11 of Thailand’s TFEC, as presented in Figure 4. This means that imported energy or domestic lignite coal consumption would increase if the other forms of energy were scaled up to fill the gap from the depletion of indigenous oil and gas resources. If so, this might lock Thailand into a carbon-intensive energy system in future, unless carbon capture and storage can present a viable technological option, which does not appear as if it will be the case.

Aside from domestic generation, Thailand signed a memorandum of understanding (MoU) on the
purchase of electricity from Lao PDR in September 2016 The agreement allows for the purchase of up to 9 000 MW, including 1 878 MW from lignite and the rest from hydropower. Hydropower from the Lao PDR is insignificantly affected by seasonal variations in hydrological circulation due mainly to the large capacity of its reservoirs and high surface water run-off. In addition, Thailand has also been increasing its electricity imports from other countries, such as Myanmar and Malaysia. Electricity imports from neighbouring countries would be expected to increase over the next two decades, but will be capped at 15% due to security concerns. With regard to power transmission and distribution, EGAT owns and manages the transmission system, thus acting as the transmission grid operator, while PEA and MEA are responsible for the operation of distribution networks, taking the role of distribution grid operator, although they also own certain transmission lines with a voltage level of 69 kilovolts (kV) and 115 kV.

The National Energy Policy Council (NEPC), chaired by the Prime Minister with the support of the Deputy Prime Minister designated by the Prime Minister as Vice-Chairman, is the ultimate authoritative body for the review and approval of proposals pertaining to national energy policy and regulation, energy sector management and development plans and strategies, with the objective of enhancing energy security and reducing dependency on imported energy while ensuring the affordability and
sustainability of energy commodities. In addition to the Chairs, the council also has among its membership: 11 cabinet ministers who are highly relevant to energy sector policy and management;15
one minister attached to the Office of the Prime Minister; the Secretary-General of the Council of
State, indicating strong engagement from the top management of the administration;16 the SecretaryGeneral of the National Economic and Social Development Board; the Director of the Bureau of the Budget due to the close ties between energy and the country’s economic and budgetary activities; the Permanent Secretary of Energy; and the DirectorGeneral of the Energy Policy and Planning Office.
Each member has one vote in the decision-making process and a decision is made by a majority of votes.

Overview of renewable energy development in Thailand

Thailand has long been promoting and supporting energy development, especially in the field of alternative energy21 and energy conservation, driven primarily by the pursuit of enhanced energy security, stabilised economic prosperity and improved well-being. With the steadily increased use of alternative energy sources and improved energy efficiency, imports of fossil fuels would be expected to decline, and so would the longterm risks of energy expenditure on energy importation. In addition, indigenous clean energy development could bring multiple co-benefits such as environmental, social and economic advantages, including job creation, in comparison to imported fossil fuels. Toward this end, indigenous renewable energy resources, including solar, wind, various biomass-based energy sources and hydropower, have been given priority with clear and ambitious targets and supportive policy schemes in place. By 2015 Thailand had developed a decent share of renewables in primary energy production and more so when traditional biomass for cooking is included, as shown in Figure 3. In 2015 alone, modern renewable energy increased by 11.7% on a year-on-year basis – as much as four times the annual growth rate of the total primary energy supply. Of the total amount of renewable energy consumption in 2015 (10 306 ktoe), about 64% was used for heating, 16% for electricity generation, and nearly 20% for biofuel production.

For non-power sectors, applications of renewable energy are concentrated in heating and transport.
Heating applications of renewable energy are mostly adopted in industry and the buildings sector.
In the buildings sector, the use of solid biomass for cooking (referred to as traditional biomass) represents a significant share of renewable energy use in Thailand. Since Thailand is abundant in
agricultural products, biomass has been the traditional energy source in Thai rural areas, using agricultural residues as a major source of domestic fuel. Households in rural areas use biomass for
cooking and heating purposes. An estimated 30% of the population (or 4 million households) still
rely primarily on traditional bioenergy for cooking and heating. This practice is often associated with
negative impacts on the quality of life of dwellers due to indoor air pollution and the time wasted gathering fuel.

Renewable electricity generation Overall observations Total installed renewable electricity capacity
(excluding large-scale hydropower) would triple over the next two decades, if AEDP 2015 were implemented as planned. To meet the target, total additional capacity of 11 721 MW would be required28 and be expected to deliver 46 902 GWh annually, assuming an overall capacity factor of 45.7%. As illustrated in Figure 11, bioenergy including solid biomass combustion, municipal waste and industrial waste, as well as biogas for electricity generation, account for the lion’s share of electricity output under this scenario, while their corresponding aggregated generating capacity would represent
less than one-third of the total additional capacity. Provided feedstock sourcing is not an issue, biomassbased electricity generating facilities could generally provide a baseload with a relatively high capacity factor. By contrast, combined solar PV and wind capacity represent 63% of the total additional capacity to be installed over the same period, while the electricity output from these two sources accounts for only onequarter of the total, due to the lower capacity factors that these generating systems generally have. Therefore, it would be important to develop a portfolio of different renewable energy sources in the mix that can complement each other in terms of resource availability. This would help
achieve a higher overall capacity factor, reduce the requirements placed on the reserve capacity, and
thus minimise overall system costs.

Several other observations merit further discussion and investigation: Large-scale hydropower (excluding pumped storage29): the political decision was made in the process of developing AEDP 2015 that installed large hydro generating capacity should remain at 2 906 MW with no further capacity to be added due to environmental concerns. The statistical data on electricity produced by large hydropower was adjusted upwards from 694 GWh to 3 409 GWh (equivalent to an increase from 59.7 ktoe to 290 ktoe) in March 2017. Even so, the capacity factor was extremely low for 2015 compared to common practice. This can to some extent be explained by the data in Figure 12, which show how hydroelectric production has been trending downwards since 2012. Solar PV Thailand is endowed with abundant solar energy resource across the country, with high irradiance in the northeast and central parts of the country covering one-quarter of the total land area, as illustrated in Figure 13. The peak density of solar radiation in those areas is in the range of 33 At the rate of 2.50 THB/kWh for seven years. 1 200-1 400 kilowatt hours (kWh) per square metre per year, with seasonal peak in April and low point in December. (DEDE, 2012c). To develop this potential into electricity generating capacity would require the alignment of other variables, including transmission capacity, availability of suitable land, load profile, grid flexibility and a suitable regulatory framework. In view of the variability and potential complementarity of different forms of renewables such as solar, wind, biomass and hydropower, the sector has evolved from a single-source renewable energy development model into a region/zone-based model, also known as the “renewable energy zoning” approach. In Thailand, EGAT has been working in collaboration with the MoE on this in connection with the development of the transmission networks.

Overall, Thailand lacks a dedicated target for rooftop solar PV development. In addition, for residential
households the incentives are less attractive as rooftop solar PV can only be used for selfconsumption, due partly to the lack of net-metering schemes. This basically eliminates the potential use by residential households as they are mostly not at home to use the electricity during the daytime. For commercial and industrial users the story is different, as rooftop solar PV can match their load profile. In general, more economic incentives should be provided for rooftop solar PVs. For connection to the distribution networks, PEA and MEA have set a ceiling of 15% of the transformer’s capacity with the intention to minimise the risk of interfering with power quality for other customers. Yet this limits the potential for VSPPs to develop rooftop PV for commercial and industrial users unless effective energy management can be put in place, including battery energy storage systems.36 Following the appropriate grid stability analysis, PEA and MEA may opt to raise the threshold. In the Reference Case the share of renewables increases in all sectors except in the buildings sector Overall the renewable share of TFEC increases by around two-thirds to 28%, but remains short of the 30% target for 2036. The renewable power share of domestically produced electricity (which excludes imports of large hydropower) increases only marginally to 18%, and despite significant growth in renewable power, its relative share does not increase much due to significant overall growth in power demand of just under 80%. However, if imported electricity is considered, and it is assumed to be mostly hydroelectric, then the share of renewable power increases to around 25%. In the end-use sectors of buildings, industry and transport, increases in the renewable share of fuels and direct uses of energy for thermal applications and transport are largely driven by increased use of bioenergy. In the transport sector, significant increases in biodiesel and compressed biogas, and more modest increases in bioethanol, drive a surge in the share of renewable energy in transport fuel demand from 6% to 26%. This is the most pronounced increase in the renewable share of any sector, and driven entirely by the highly aggressive supply of bioliquids envisioned by AEDP 2015.

Total system power capacity will increase by 60% from 38 GW in 2015 to 62 GW in 2036. Capacity
additions take place for coal, natural gas, solar PV, bioenergy and wind power (see Figure 21). Natural
gas will remain the dominant source of electricity generation, accounting for around 60% of domestic
supply according to the Reference Case in 2036. In the transport sector, fuel demand growth is limited
over the period, only increasing by 14%. Oil products remain the dominant fuel source, supplying around 70% of the sector’s energy needs by 2036. However, significant increases in the supply of liquid biofuels occur, increasing their share of the sector’s energy from 6% in 2015 to 20% by 2036. Biodiesel from oil palm, and bioethanol from cassava and sugarcane molasses are expected to be the main sources of bioliquids, with around two-thirds being in the form of biodiesel. In addition, there is significant growth in compressed biogas from wastes and energy crops that supplies 6% of transport sector energy
by 2036. The remainder is met largely with CNG and some electricity.

Solar thermal is also an important source of renewable energy in the end-use sectors. The technology can provide domestic hot water in the residential sector, but also in sub-sectors such as tourism. In industry, Thailand has a history of solar thermal systems providing low-temperature heat and pre-heating services. The Reference Case does see an increase in both solar thermal systems in the buildings and industrial sectors, providing around 2% of heating demand by 2036 (excluding electricity). In REmap significant additional potential has been identified, raising the share of heating demand met by solar thermal across the two sectors to just over 10%. In total, the amount of renewable energy used
in Thailand will increase from 19 Mtoe in 2015 to 38 Mtoe in the Reference Case, and increase further
to 49 Mtoe in REmap – a 150% increase over the 2015 level. This would lead to an increase in the
share of modern renewables in TFEC from 13% in 2015 to 37% in REmap.

Power sector:Electricity demand will grow by almost 90% between 2015 and 2036 to over 325 TWh annually. Renewable power generation grows significantly in both the Reference Case and REmap; however, due to significant overall growth in electricity demand, the increase in renewable energy share
is modest. The overall renewable energy share in generation from domestic power producers will reach 25% in REmap in 2036, up from 18% in the Reference Case, and 13% in 2015. If imported hydro is also considered, the share would be 4-5 percentage points higher. Power system capacity will increase from 39 GW in 2015 to 62 GW in the Reference Case, and beyond that to 74 GW in REmap. Natural gas will remain the largest power capacity source; however, in REmap the second-largest is solar PV, followed by coal and then wind. The power sector in Thailand will see important and substantive shifts over the next two decades. In an attempt to diversify supply in view of declining natural gas production, the power system sees the need to install more coal- and renewables-based power generation. However, the future of coal is uncertain, and while additions are expected, REmap shows that their additions could be slowed and instead increased power demand met with higher deployment of renewable power technologies such as solar PV and wind.

The REmap Options see power generation additions that differ from the Reference Case. The largest new source is solar PV, followed by wind. Even so, in REmap natural gas remains the largest generation
source, with half of the power system capacity and around two-thirds of generation. However, because of the REmap Options, by 2036 solar PV becomes the second-largest renewable power source (behind bioenergy) and fourth overall. This significant growth in solar PV is largely the result of rapidly improving market conditions for solar PV, and the ability for new plants to be built quickly and in a more distributed manner than traditional central station power plants. It is also important to note the growing importance of wind power, which sees an increase from around 3 GW in the Reference Case to 6 GW in REmap in 2036. Declining wind turbine costs are a driver, and even though 6 GW is significant growth over the 0.4 GW in operation as of 2015, recent studies show wind potential as high as 14 GW in areas with favourable wind speeds (6 m/s). Wind generation will increase in REmap to provide just over 4% of gross electricity generation – roughly half of the 8% supplied by solar PV. In total, these two variable sources of electricity will provide 12% of Thailand’s gross inland supply.

Thailand will need to invest significantly in its energy system over the coming two decades. The
Reference Case will see investments in renewable power and thermal capacity averaging USD 1.3
billion per year to 2036. The REmap Options double that with an additional USD 1.3 billion per year, resulting in a total average investment need of USD 2.6 billion per year between 2015 and 2036 in renewable capacity for power and thermal uses. Of the incremental investment need for the REmap Options of USD 1.3 billion per year, USD 0.4 billion per year will be investments redirected from fossil fuels to renewables. Significant investment in the energy system across Thailand is required due to the growing demand for energy. Investment is required across the entire energy system, in electricity generation, transmission, capacity for thermal uses, cooling and cooking, and in the transport sector.

During the period 2015-36, investment in renewable energy capacity will need to average USD 2.6 billion per year (see Figure 32). Of this, around half, USD 1.3 billion, is expected to take place in the Reference Case. The REmap Options will necessitate the mobilisation of an additional USD 0.9 billion per year in renewable energy investment from new sources, with USD 0.4 billion per year of investment redirected from fossil fuel into renewables.

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