Government renewable energy policy and support for wind

1
Government renewable energy policy and support
for wind

• Somkiat Sutiratana
• Senior Engineer
• Department of Alternative Energy Development and
  Efficiency,
• Ministry of Energy,
• Seminar on Development of Wind Energy Utilization
  in Thailand
• 6-7 July, 2006

2
Presentation Outline
1. Overview of Thailand Energy Situation
2. Thailand Renewable Energy Strategy
3. RE Policies and Incentives
4. ENCON Fund for RE supportation
3
Final Energy Consumption by Economic Sector
MTOE
7
32
27
34
4
Oil use by sector
Mlitre
Transport
66
57
6
7
15
13
14
10
8
5
Gas use by sector
Mft3
14
9
16
12
Power Generation 77
15
49
79
6
Electricity use by sector
GWh
7
22
25
7
21
25
46
Industry
47
7
Larger Burden from Energy Import
Unit Billion Baht
8
Thailands Energy Strategies for Competitiveness

• STRATEGIES
• Increase Energy Efficiency Elasticity 1.41
  to 11
• Transport Sector Road to Rail
• Industrial Sector Ind. Restructuring, Energy
  Saving in Buildings and Industries
• Alternative Energy NRE from 0.5 to 8
• Energy Security Secure Energy Supply gt
  50 Yrs
• Power Security Diversification, Tran -
  Power Grid
• Energy Supply Security Secure NG Reserves
  gt 50 Yrs
• Regional Energy Center Buyer to Trader

Cabinet Resolution on September 2, 2003
9
Renewable Energy Policy
Commercial Energy
TE Traditional Energy NRE New Renewable
Energy
(265 ktoe)
TE
2003
11
52,939 KTOE
Commercial
Energy
NRE
8 (7,530 KTOE)

81
2011 91,877 kTOE
2554
81,753 KTOE
10
RE Targets (2011)
RE Power 1,000 KTOE (2,200 MW)
CHP RE for process heat
10 Ethanol 10 Biodiesel (2012)
Heat 4,200 KTOE
Liquid Biofuels 2,500 KTOE
7,530 KTOE 8 of final energy use in 2011
(91,877 KTOE)

• Transport
• Agriculture

• Industry
• Agriculture

Existing RE Power 900 MW
11
RE Power
Target
6 of Total Installed Capacity in 2011 2200 MW
Existing 900 MW
Solar Wind Biomass MSW Small Hydro
RPS 3-5 (280MW)
New RE 1300 MW
Incentives (1020)
12

• Policy on the Promotion of the Private Sectors
  Participation
• In Renewable Energy Power Generation

13
Barriers of Renewable Energy Promotion

• High Generation Cost
• Lower Installed Capacity
• Dispatch ability
• Low Reliability
• Availability of Fuel Supply and High Cost
• Lack of Experience
• Less Attention in Environmental

14
Supporting Measures

• Power Purchase Agreement Investment Subsidies,
  Investment Tax Credits, Preferential Finance
• Investment Incentives
• Production Incentives
• Renewable Set-Aside
• Externality Adders NFFO, RPS
• Environmental Taxation
• Research, Development and Demonstration
• Green Marketing

15
Policy on Renewable Energy Portfolio Standards
(RPS)

• A mandatory requirement on RPS is established.
• 5 of energy to be dispatched to the grid after
  2010 by new power plants under EGATs Power
  Development Plan 2004-2015 (PDP 2004) must be
  generated by renewable energy.

16
Incentive through Board of Investment ( BOI )

• Import duties and Cooperate tax exemption on new
  investment in
• Energy conservation business
• High efficiency machine or equipment and
  renewable energy equipment manufacturing
• Solar PV manufacturing
• Energy Service Company ESCO
• Renewable energy production business
• Alcohol or fuels from agricultural products
• Electricity or steam generation
• Incentive last for the max period of 8 years

17
ENCON Fund support Projects

• Small Power Producers /Feed in Tariff
• Very Small Power Producers
• Revolving Fund
• Value Engineering
• Tax incentive
• Demonstration Projects

18
Small Power Producers (SPPs) Project
19
Regulations for the Purchase of Power from SPPs
(Phase 1)

• Co-generation Renewable
• Co-generation Efficiency gt45 and steam gt10
• Renewable may use up to 25 commercial energy
• SPPs are allowed to sell excess power to direct
  customers in their respective vicinities
• Each sale into the transmission system lt 60 MW
  (90 MW on case by case)

20
Promotion of Power Purchase from SPPs Using
Renewable Energy as Fuel (Phase2)

• The ENCON Fund provides RE-fuelled SPPs with
  subsidies in the form of energy payment adder to
  the normal purchasing rates from SPPs, at a max.
  rate of 0.36 baht/kWh for a five-year period,
  under a competitive bidding. 300 MW is expected.

• To date, 20 SPPs using RE are approved by ENCON
  Fund with a total proposed sale of 243.3 MW ,
  requiring a total subsidy of 1,401 million baht.
  Most projects use biomass.

?
21
SPP Tariffs

• Based on EGATs Avoided Cost
• Firm Contract Long Run Avoided Cost
• Non-Firm Contract
• No Capacity Payment
• Terms of Contract lt 5 years
• Contracted Capacity Not Specified

• Power purchasing rates for SPPs using RE as fuel
  will be based on the price of natural gas

?
22
Power Purchase from SPPs(June 2005)
23
Share of SPPs Supply by Fuel types (As of June
2005 including SPPs Non-Firm)
24
SPPs Already Supplied Power to Grid by Fuel
Type (June 2005)
25
New Renewable Energy Target in 2011
Increasing Ratio of Renewable Consumption from
0.5 2002 to 8 in 2011
1
4
3
Electricity 2,200 MW
Thermal 4,200 ktoe
Bio Fuel 2,500 ktoe

• Existing 820 MW
• RPS 140 MW
• Solar 10 MW
• Wind 10 MW
• MSW 20 MW
• Biomass 25 MW
• Hydro 75 MW
• Incentive 1,240 MW
• Solar 60 MW
• Wind 35 MW
• MSW 80 MW
• Biomass 805 MW
• Hydro 260 MW

• Gasohol 3 Million Litres/day
• Bio Diesel 4.6 Million Litres/day

Electricity Tariff Impact 0.04 Baht/kWh

• Feed-in Tariff
• Solar 17.00 Bath/kWh
• Wind 6.00 Bath/kWh
• MSW 6.00 Bath/kWh
• Biomass 3.10 Bath/kWh
• Hydro 3.00 Bath/kWh

Sample
26
Very Small Power Producers (VSPPs) Project
27
Power Purchase from VSPPs (1)

• Objectives
• To promote the economical and efficient use of
  domestic energy resources
• To reduce energy import
• To decrease the environmental impact
• To spread out the electricity generation to rural
  areas to encourage public participation in the
  generation
• To increase the reliability of electricity supply
  

28
Power Purchase from VSPPs (1)

• Max. Capacity Sale to PEA/MEA lt 1 MW
• Types of Fuel
• Wind, Solar, Mini/Micro Hydro, Biogas
• Agricultural waste or residues, or residues from
  agricultural or industrial production processes
• Products converted from agricultural waste or
  residues, or residues from agricultural or
  industrial production processes
• Municipal solid waste
• Wood from tree plantation
• Waste steam

29
Proposed Power Purchase from VSPPs(June 2005)
30
Status of Power Purchase from VSPPs(already
supplied to the grid)
31
VSPP Tariff Calculation

• Net Metering Principle is applied.
• A prospective VSPP must install a meter
  configured to record both buying
  and selling units.
• The Energy Payment to VSPPs is calculated in 2
  parts
• (1) Selling Units Buying Units
• Normal tariff user Average retail tariff
  rate Retail Ft
• TOU tariff user TOU tariff Retail Ft

(2) Selling Units gt Buying Units Normal
tariff user Average bulk supply tariff rate for
all voltage levels average wholesale Ft TOU
tariff user Bulk supply tariff rate for
11-33 kV average wholesale Ft

• Other non-energy components of the power tariff
  shall be paid by the VSPP based on the VSPPs
  customer category.

32
Revised Legislation on Power Purchase from VSPPs
(2)

• EPPO has revised the legislation on power
  purchase from VSPPs to further promote the use of
  renewable energy. Major alterations are
• To extend the characteristics of electricity
  generation processes to include co-generation or
  combined heat and power (CHP)
• To increase max. capacity sale to MEA/PEA from 1
  MW to 6 MW

33
Revolving Fund
34
Revolving Fund for REEC Projects (1)

• Present Status
• 79 approved and under
• construction projects
• with leverage 80 million
• USD of EC Investment
• Average investment
• 1 mill USD / a project
• average payback 2.3 yrs
• Annual savings gt 250 GWh
• and 91 mill. liter of fuel oil

• Budgets allocation from ECP Fund
• Loan approval by Bank
• Technical assistance by DEDE
• Key conditions
• Loan size lt 1.2 mill USD/project
• Interest rate less than 4 (fixed rate)
• Repayment in the defined time frame (7yr)

6 Banks supported
35
Revolving Fund for REEC Projects (2)

• Present Status
• 20 approved and under
• construction projects
• Average investment
• 0.6 mill USD / a project
• average payback 1.5 yrs
• Annual savings gt 80 GWh
• and 45 mill. liter of fuel oil

• Budgets allocation from ECP Fund
• Loan approval by Bank
• Technical assistance by DEDE
• Key conditions
• Loan size lt 1.2 mill USD/project
• Interest rate less than 4 (fixed rate)
• Repayment in the defined time frame (7yr)

11 Banks support w/ 300 MUSD
36
Cost Based Tax Incentive

• 25 Tax Break for the Investment in EE Projects
  Result in Efficiency Improvement
• Applicable for the First 50 mill baht Investment
  ( 1.25 mill USD )
• Incentive Spread Over 5 Years

37
Performance Based Tax Incentive

• 100 of achieved energy saving will become tax
  deduction
• Max Incentive of 2 mill baht (50,000 USD) /
  Facility
• Pre and Post Audit will be required

38
Promotion of ESCOs

• BOI Tax Incentive
• Maximum 8 years tax exemption for ESCO projects
  Cooperate Income tax
• Access to Revolving Fund
• Eligible to borrow the low-interest loan from RF
  program on project-by-project basis
• ESCO promotion activities
• Website
• Seminars, workshop
• Publications
• Lists of ESCOs and successful cases

39
Wind Energy Demonstration Project
40
Wind Potential in Thailand
Average Wind Potential Map in Thailand
Height Level at 50 meters Average annual wind
speed over 6.4 meter/sec Nakorn Sri Tamarat,
Songkla, and Pattani Average annual wind speed
over 4.4 meter/sec Pangnga, Phuket, Trang and
Satool
41
Present On-shore Project (Total installed
capacity 350 kW)
KMITT 2.5 kW X 1 Unit (Hybrid) Pukradueng Loey
150 kW Wind Turbine at Recycle Engineering Co.,
Ltd.. K. Amphor King Chan Chol Buri Province
EGAT 10 kW x 2 Units (Hybrid) 150 kW X 1 Unit
(Grid) Promthep A. Muang Phuket
KMITT 10 kW X 1 Unit (Hybrid) Tarutao National
Park Stool Province
42
Wind Energy Demonstration Project
250 kW x 1 Unit 1.5 MW x 1 Unit
Wind Energy Demonstration Project
A. Hua sai Nakhon Si Thammarat
Average Wind speed gt 5 m/s C F gt15
Near East Coast and utility grid
Flat area and good road condition
Public land
43
Wind to Power

• Thank you for your attention