Thailand’s electricity production has relied heavily on natural gas for the past several decades. In an attempt to increase energy security, the most recent Power Development Plan (2015) proposed a transition away from natural gas and towards a more diversified portfolio of renewable, hydro and coal.
However, the government’s plans to build two coal-fired power plants in the South, suspended now for three years, have met with fierce opposition from the public. Local opposition has happened concurrently with the global trend to phase out coal in response to climate change and a sharp drop in the cost of renewable technology (especially solar photovoltaics). Together, they act as a disruptive force that will transform the existing traditional electricity grid into a modernised one that is clean, decentralised and more efficient.
The old electricity grid can be characterised as dirty, centralised and inefficient. Its electricity generation relies mainly on fossil fuels such as natural gas and coal, which emits a non-trivial amount of greenhouse gases and local pollutants. It mainly uses centralised large power plants to generate electricity for consumers. Its only strategy to meet demand at each instant in time is to ramp power plants up and down, which can be costly especially during timed of peak demand.
A modernised electricity grid would rely mainly on renewable energy such as wind, solar, hydro and biomass. Electricity is generated from both centralised power plants and distributed generators (DG) installed at the consumption sites (such as solar rooftops). Electricity consumers will also become producers (or “prosumers”). The grid will employ modern energy storage technologies, Internet of Thing devices and data analytics to coordinate consumption and production at various points in a way that minimises the cost.
At the heart of the modernised electricity grid lies enabler technology – energy storage. Energy storage possess three main capabilities that can transform the way an electricity system works.
First, energy storage can shift power across time, charging electricity when it’s cheap and discharging when it’s costly to produce.
Second, some energy storage technologies can charge/discharge rapidly, making them suitable for regulating grid stability.
Lastly, energy storage is modular, meaning that investment can start small and stack up. Unlike power plant constructions that have to be done on a large scale, the modularity of energy storage helps avoid wasteful investment in the form of excess capacity.
Energy storage technologies support a clean electricity grid by allowing more renewable energy to be integrated. By storing “green electricity” produced during a low-demand period for use during a peak period, energy storage makes renewable electricity more valuable and reliable. Some fast-response energy storage technologies can also help smooth out short term fluctuations from wind or solar electricity, allowing the grid to remain secured even at a higher renewable share.
Energy storage supports a decentralized electricity grid by allowing consumers to rely more on electricity which is generated locally and manage their electricity production and consumption in a more efficient manner.
For example, energy storage technologies can allow excess electricity from rooftop solar photovoltaic systems to be stored for use later when in demand or for trading with local consumers. Energy storage can work with buildings’ energy management systems to charge or discharge electricity in a way that minimises the electricity cost. Lastly, energy storage can provide backup power (uninterrupted power supply, or UPS) to factories and commercial buildings.
Energy storage supports a more efficient electricity grid by reducing costs associated with procuring electricity and maintaining stability of the grid. By charging energy storage when electricity is cheap and discharging it when electricity is expensive, utilities can reduce the overall cost of electricity supply. Moreover, by supplying electrical power during a peak period, energy storage can defer some investment in peak capacity.
Despite numerous potential benefits of energy storage on an electricity grid, its deployment in Thailand has not been widespread. The primary reason is that the investment cost is still high while the return on investment is limited. More specifically, energy storage can only provide benefits in the form of operational cost savings described above. The current rules do not allow them to generate additional revenue by providing services to the Thai electricity grid.
Looking ahead, fierce competition among energy storage producers is expected to drive down the cost of energy storage within the next few years. A technology with the greatest market potential in the short run are lithium-based batteries, which feed into the ever-expanding consumer electronics market and the electric vehicles (EVs) market. The declining cost means that using energy storage for some applications in an electricity grid will soon become economically feasible.
In fact, a rough calculation indicates that using an appropriate amount of energy storage with an existing solar photovoltaic generator can produce a reliable electricity output 24/7. Such a configuration can be used to defer investment in the coal-fired generation and serve as a conflict-free solution that could become feasible within the next few years.
The optimistic cost trend and anecdotal evidence in various countries suggest that the transformation towards a clean, decentralised and efficient electric grid is unstoppable.
In preparation for such transformation, the Thai government and the regulator need to be open-minded on at least two fronts.
First, long-term energy planning needs to include energy storage and other novel energy technologies as viable options.
Second, existing rules and regulations in electricity grids need to be revised to allow for participation from the emerging energy technologies as soon as they become cost-competitive.
This article is first published in Bangkok Post on Thursday, April 12, 2018