Energy oversupply in Thailand
and small-scale CHP power plants
By Jon Fernquest |
The so-called "NIMBY" (Not In My Backyard) debate has been raging since the beginning of the year.
An editorial in the Bangkok Post seems to have started it off on January 2nd and then a response by Bangkok Pundit continued the debate.
Government approval of new power plants at the start of the year ruffled a lot of feathers:
At the start of 2008, the Ministry of Energy approved four new mega-scale Independent Power Producers' (IPPs) power plants totalling 4,500 megawatts (MW). This was 71% higher than the already excessive 3,200 MW announced in the call for bids.
Whether you agree in general with what Greenpeace does or not, today's Op-ed piece in the Bangkok Post on power plants in Thailand makes several good points and contains useful background information on Thailand's energy sector.
The author Tara Buamkamsri, an "energy campaigner" for Greenpeace in Southeast Asia, argues that Thailand suffers from energy oversupply:
"In 2003, then prime minister Thaksin Shinawatra estimated that accumulated unnecessary investment in the power sector totalled 400 billion baht (US$10 billion)...the Ministry of Energy's electricity demand forecasts - which serve as the basis for their approval and ultimate existence of new power plants - are notoriously biased and overestimate how much electricity we need. Every official forecast over a year old (there have been nine since 1993) has predicted demand that has failed to materialise. Thai electricity forecasters seem unable (or unwilling) to recognise that historical demand for electricity has grown linearly for the past two decades. Yet their models always assume exponential growth. Anyone that stayed awake in high school math class can readily explain the huge differences between exponential and linear growth in the long run.If Thailand follows historic trends, peak demand will reach just over 34,000 MW in 2021. Thailand's most recent (exponential) forecast says 49,000 MW. That's a difference of 24 mega power plants!
California's energy crisis of 2000 to 2001 and the shambles it made of the state's finances comes immediately to mind.
Is energy over-supply from reliable government controlled and sponsored projects necessarily a bad thing?
Or more relevant to the author's critique, exactly how much energy over-supply is a good thing?
According to the editorial, over-investment has benefited certain vested interests and that consumers have had to foot the bill for this unnecessary over-supply:
Who pays for the over-investment? Who bears the risk? Because of a variety of incentive structure (cost-plus" and "take or pay" contracts), it is us rate-payers who are saddled with the cost and risk of over-investment. Power plant operators and contractors get paid whether or not the power plants are actually running.
A decisionmaking process that is difficult for the public to understand certainly has a ring of familiarity to it, reminding one of the stalemate in the appointment of the National Telecommunications Commission:
It might come as no surprise in Thailand that power plant developer interests (IPP developers, utilities, gas suppliers) dominate the load forecast committee in a closed door process. This is quite different from North America and Europe, where forecasts are contested in public rate cases by interveners that have their own points of view, and the final result is determined through an open, transparent and participatory process.
Finally, a nice overview of the alternative a promising alternative energy technology is given, a technology that has actually enjoyed some success in Thailand's open climate of innovation:
There is huge potential to build super-efficient small-scale combined heat and power (CHP) power plants at existing industrial sites and commercial ones, using their waste heat to power industry and run chillers to cool big buildings. Minister Piyasvasti's 4,500 MW of IPP mega power projects are at best 40% efficient (the best coal plants) to 55% efficient (the best natural gas CCGT plants). By comparison, CHP plants are routinely 80% or more efficient. Not only are they more efficient, but they are faster to build which, together with their less "lumpy" investment, means that the errors that accumulate from faulty forecasts are minimised.Is CHP some pie in the sky technology? Far from it. There are already over 75 of these plants online in Thailand, some for at least 10 years, supplying over 4,000 MW to the Thai grid.
In Denmark these provide 60% of the nation's electricity. Is there really potential for more in Thailand? Consider that in six months in 2007 alone applications for 2,400 MW of CHP were filed with the Ministry of Energy. But, citing the need to "wait for the results of the IPP bidding programme", only 740 MW were approved by the ministry.
What? Why do small, efficient CHP plants in existing industrial sites take second place in the queue only after large, comparatively inefficient, slow to build, centralised power plants in pristine villages? And why, considering the huge amount of applications filed for CHP, were mega projects granted a huge 4,500 MW, far more than originally allocated?
More emphasis has to be placed energy conservation as a way to reduce energy costs:
The third issue is that in a rational universe, energy efficiency trumps any new power plant - and we're doing far too little about it.Back in the 1990s, a World Bank study looked at the cost of energy efficiency investments (more efficient lighting, motors, cooling systems) in Thailand compared to the cost of generating electricity from different sources. Energy efficiency was the clear winner - about half the cost per kWh of natural gas and about 40% of the cost of coal. It turned out that, in practice, those energy efficiency investments were far cheaper than that.
In over 10 years of running the Electricity Generating Authority of Thailand's electricity saving's programme, the "cost of conserved electricity" is only 0.5 baht/kWh - less than a quarter of the cost of the electricity from the cheapest of the 4,500 MW of approved IPP power plants.
The problem is, while there are committed people in Egat's energy-efficiency programme, they are marginalised by an institution incentivised to sell electricity, not to save it.
Hopefully, there will be a rebuttal from the other side of the "NIMBY" debate.
Throwing a lot of new technology into the argument like today's article leaves a lot unexplained.
Although I found myself nodding my head yes more than once, policy at the national level in Thailand does seem to frequently suffer in a NIMBY sort of way only to have a headstrong unelected Prime Minister like Anand or parliament, in the case of the interim NLA, push needed legislation through before politics lurches back to a normal democratic stalemate.
For further reading check out the Greenpeace article: Decentralizing Thai Power: Towards a sustainable energy system.
(Source: Bangkok Post, Op-ed section, 16-01-08, temp-link)
Vocabulary:
"NIMBY" (Not In My Backyard) - "describes the opposition of residents to the nearby location of something they consider undesirable, even if it is generally considered a benefit for many. Examples include: an incinerator, an ethanol plant, a nuclear-power plant, or a prison" (See Wikipedia)
ruffled a lot of feathers - made people angry
Independent Power Producers' (IPPs) - a privately owned power producer indepdendent of public sector control
forecasts - what is expected to happen in the future (for an example, an event, situation, or statistic)
notoriously - famous in a bad sort of way
biased - tendency to prefer one result when no such tendency is expected (for example, people want to know the actual energy taht will be used in the future, not a number that is 20% higher)
predict - say what you think will happen in the future
failed to materialise - did not appear (or come into existence)
linear growth - increase a steady rate (graphed as a line)
exponential growth - increasing at a faster and faster pace (graphed as a curve that gets steeper and steeper)
historic trends - the direction that something has moved over long periods of time (downwards trend, upwards trend, or flat trend)
peak demand - that maximum amount that people
in a shambles - broken and not working properly
finances - the money that a person or company has and where it is kept (for example, as cash, in a bank, or as stock investments)
vested interests - people who will gain if certain decisions favorable to them are made
foot the bill - pay the bill for someone else
bears the risk - if an unlikely event that costs a lot happens, you have to pay for it
incentive structure - the rewards and penalties in use to get people to do things
rate-payers - consumers paying electricity bills to power company
saddled with - have an unpleasant burden or responsibility
untransparent - cannot see what is happening, details are not made public
has a ring of familiarity - seems like something you've seen before
a stalemate - when neither side in a disagreement can win, no progress can be made
National Telecommunications Commission - an independent committee set up to govern broadcasting under the 1997 People's Constitution that was never appointed, that turned into a battle between vested interests such as the military and NGOs (See Pasuk and Baker, Thaksin: The Politics of Business in Thailand, 2005, 205-210)
the load - what percentage of a machine or electrical network is being used at one time, energy demand as a percent of total capacity
load forecast - how much you think energy demand will be in the future
closed door process - decisions are made in private, so the public cannot see or participate
contested - before a decision is made, people made arguments to convince decisionmakers to decide one way or another
open -
transparent - are the details are made public, so the public can understand what is going on
participatory - a decisionmaking process in which people can voice their opinions and influence the decision made
combined heat and power (CHP) power plants, cogeneration - the use of a heat engine or a power station to simultaneously generate both electricity and useful heat, capturing the byproduct heat for domestic or industrial heating purposes (See Wikipedia)
lumpy - occurs as one large unit (not divisible into smaller pieces)
pie in the sky - very unlikely to happen
pristine - extremely clean, new, untouched, and unused (for example, the house is in pristine condition)
allocated - when pieces of something are divided amongst a group of people
rational - based on reason rather than emotion
X trumps Y - X beats Y by doing better
committed people - people who work hard (without quitting) to reach some goal
incentivised to... - rewards and penalties have been created to...
a rebuttal - a counter-argument (after someone criticises an argument you've given, when you provide an further argument to support yourself, and show why the argument is wrong)
a nod - move head up and down to signal "yes" or "I agree"
headstrong - determined to do what they want
push through - force something like a project or a law through the slow steps of a formal approval
lurch - move quickly and suddenly in an uncontrolled way
