Why has private sector participation in Thailand’s electrical energy market been allowed?
17 April 2018As of January 2018, EGAT’s total installed capacity is 15,757.13 MW, accounting for 37.33% of total capacity of the country. According to Thai Power – DBS Bank Thai Power Excess Supply Lingers (p.4), “private sector participation in Thailand’s electrical energy market has been allowed since early-1990s when the government privatized the power generation business. The government liberalized the sector by introducing open bidding for power projects in 1994 under the Independent Power Producer (IPP) scheme to reduce EGAT’s investment burden in building power plants to accommodate the fast-growing demand in the domestic market at that time. The bidding process was re-opened in 2007 and 2010 with a total installed capacity of 16,000 MW for all three rounds.
In addition to IPP, smaller-scale privately-owned power plants operate under the Small Power Producer or SPP (mostly 90MW-contracted capacity) and Very Small Power Producer (VSPP) schemes. The SPP scheme was designed to allow developers to propose projects with capacity sales of up to 90MW to EGAT. Any additional capacity can either be used internally or sold to industrial customers. As of March 2017, EGAT has signed power purchase agreement with 156 SPP projects with an installed capacity of 13,983MW. About 70% of this capacity is in operation. Normally, SPP plants employ co-generation or renewable energy technologies.
The VSPP scheme was launched in 2002 which allows small-scale renewable energy projects of up to 10 MW to connect to the grid and sell electricity directly to MEA and PEA. The cap was initially set at 1MW and then increased to 10MW in 2006. To date, 981 VSPP projects with an installed capacity of 5,240MW were awarded PPAs, using biomass, solar, wind, biogas, and waste as fuel.”
EGAT as a state-owned enterprise must follow the Thai government’s energy policy to buy electricity from private power producers, Independent Power Producers (IPPS) with more than 90MW-contracted capacity and Small Power Producers (SPP) with 10-90MW – contracted capacity. The large amount of electricity produced by IPPs and SPPs is supplied to the national transmission system that is under the responsibility of EGAT. For the current situation and conditions in Thailand, the grid operation under the government sector is a way to maintain the reliability and security of the national power system. However, the government has allowed small-scale power projects of up to 10MW to connect to the grid and directly sell electricity to Metropolitan Electricity Authority (MEA) and Provincial Electricity Authority (PEA) since 2002.
Reference Thai Power – DBS Bank Thai Power Excess Supply Lingers P.4 https://www.dbs.com/aics/pdfController.page?pdfpath=/content/article/pdf/AIO/042017/170426_insights_neutral_on_thai_power_sector.pdf