Interview : Preeyanart Soontornwata

What areas of the national power infrastructure need the most investment?

PREEYANART SOONTORNWATA: The most recent official numbers show that Thailand has a 40% reserve margin, but the south still experiences power shortages. The government understands that this is not how the macro supply should be, so it will move towards implementing geographic-based zoning. The reserve misunderstanding has been a long-term issue in Thailand. Luckily, the new power development plan will fix this, and both local and foreign investors welcome the governmental changes.

SPPs also encourage the government to look at the different types of energy users. If you only base the reserve margin on the household user, it doesn’t reflect industrial needs; both need reliable power. We think the government will encourage zoning to cover the power demand, and we also support basing it on geographical data and user types. In the long term, the trend will move toward distributed generation, where SPPs will be located at the centre of usage to provide a reliable power supply directly to industrial users. For instance, if a household user has a power cut, it doesn’t affect them much. However, if an industrial user experiences that, the impact is completely different. The shift towards distributed generation will be the future power supply trend.

How can independent power producers (IPPs) be incentivised to expand their generation capacity?

PREEYANART: Nowadays, industries tend to utilise automation and data centres, both of which need highly reliable power supplies. Private power-purchasing agreements (PPAs) – where industrial users are directly connected to SPPs rather than the national grid – will be the next step. Moving forward into the macro picture, a business-to-business model will prevail rather than the current government-to-government model. SPPs will no longer have to sell to power to the national grid but will be able to sell directly to industrial users. If there is a surplus, SPPs can then sell the extra power supply back to the national grid. However, the government’s SPP replacement plan, announced in 2017, will halt private PPA development. If the government doesn’t amend their plans, Thailand may lose potential foreign investors because it needs to either guarantee a steady supply of power or support the development of SPPs. Without this backing it will be difficult for the country to secure future investment.

How do you assess Thailand’s efforts to diversify its energy mix through alternative power sources?

PREEYANART: Similar to other markets, IPPs and SPPs in Thailand have expanded into the renewable business. Many countries have a target to reduce their carbon footprint, so renewables have been added to their grids. Furthermore, renewable energy is less complicated in terms of construction, operation and maintenance than other sources. With more renewable energy being introduced to the grid, the short-term outlook is positive, as the proportion of renewable energy plants to those that use fossil fuel is low.

However, with the percentage of renewables expected to increase in the long term, we may have difficulty with stabilising the power supply. Therefore, the government needs to promote a firm renewables framework. So, if you build a solar plant, you shouldn’t supply electricity at just peak times, as it happened in the past. For biomass and biogas, both should also be promoted with a clear structure in place, but issues still remain with securing the feed-stock supply for a whole 20 to 25-year PPA.

In the short term, the most realistic renewable energy source will be solar power because of the cheaper cost of land up-country. That being said, the provision of solar power also needs to be firmly structured and also introduce battery storage. Unfortunately, the tariff Thailand proposes for resale is not sustainable for conventional solar power generation.