Areeporn Asawinpongphan

Proposed Improvements to the Draft Power Development Plan of Thailand 2024-2040

As the Thailand Development Research Institute (TDRI) organized a seminar titled “PDP 2024: Accelerating or Hindering Thailand’s Path to Clean Energy?”, the TDRI research team identified that the draft plan lacks sufficient support for increasing the proportion of electricity generated from clean energy sources, particularly in developing decentralized power generation systems. 

These systems are crucial for effectively accelerating the transition to clean energy. The absence of such support could impact the country’s competitiveness, especially in light of the European Union’s Cross-Border Carbon Adjustment Mechanism (CBAM) and the growing demand for 100% clean energy (RE100) from leading private companies investing in Thailand.

The following comments and recommendations on the draft PDP 2024 are synthesized from the seminar. These insights can be utilized to improve the Power Development Plan of Thailand 2024-2040 (PDP 2024).

Comments and Recommendations on the Draft Power Development Plan of Thailand 2024-2040 (PDP 2024)

1. The Energy Efficiency Plan (EEP) Should Precede the Power Development Plan (PDP) 

The Ministry of Energy should begin drafting the PDP by first assessing the Energy Efficiency Plan in alignment with advancements in energy conservation technology. Developing the EEP before the PDP is crucial because the PDP is a supply-side plan, and failing to consider demand-side management through energy conservation may result in overestimating energy production needs.

Effective energy conservation, in line with technological advancements, will help reduce energy consumption, lower the costs of large-scale energy infrastructure, mitigate environmental impact, and enhance energy security.

Recommendations:

Actively promote and implement effective incentives to encourage businesses and the public to conserve energy and maximize energy efficiency. This will help businesses reduce costs, increase competitiveness, and lower energy expenses for the public.

Support research, development, and the adoption of technologies related to energy conservation and the use of clean energy in Thailand.

Develop an effective EEP that aligns with technological advancements in energy savings before drafting the PDP to prevent overestimating energy production needs.

2. Electricity Demand Forecasts Should Not Be Overly Estimated

The electricity demand forecasts in the draft PDP 2024 appear to be overly estimated as they are based on the 2022 economic growth projections, which do not reflect the current reduced economic growth potential. These projections are significantly higher than the latest estimates from the Bank of Thailand and other economic agencies.

Overestimating electricity demand could lead to the construction of additional power plants that may not be needed, as has occurred in the past, resulting in an excessive electricity reserve margin and increased electricity costs for consumers.

Furthermore, the overestimation in the draft PDP 2024 could lead to the construction of eight additional natural gas power plants with a total installed capacity of 6,300 megawatts, which would result in Thailand’s continued reliance on natural gas as the primary fuel for electricity generation over the long term.

This reliance would also increase dependence on LNG imports. According to the draft 2024 Gas Management Plan (GAS plan 2024), Thailand is expected to import LNG for 43% of its total gas consumption for electricity generation by 2037, up from 33% in 2024. The increased LNG imports could expose the country to global LNG price volatility, especially during geopolitical crises, impacting energy security and costs.

Apart from additional gas-fired power plants, overestimated electricity demand forecasts have also led to plans for the construction of new hydropower plants with a combined capacity of 3,500 megawatts, which will have three major impacts:

Environmental Impact: The construction of dams will negatively affect ecosystems.

Higher Electricity Purchase Prices: The purchase price for electricity from the new hydropower projects will be higher than that from existing plants. For example, the Pak Beng project has a purchase price of up to 2.92 baht per unit, which is significantly higher than the purchase prices of existing projects such as Nam Ngum, Xeset, Xayaburi, and Nam Theun 1, all of which have purchase prices below 2 baht per unit.

Increased Dependence on Foreign Hydropower: The increased purchase of electricity from hydropower plants located outside of Thailand will affect the country’s energy security due to potential geopolitical factors beyond the control of the Thai government.

Recommendations:

Adjust the electricity demand forecasts in the draft PDP 2024 to reflect more current economic growth estimates and the reduced economic growth potential of the country based on projections from the Bank of Thailand and other economic agencies.

Revise the draft Gas Management Plan 2024 (GAS plan 2024) to reduce LNG imports and instead support the development of domestic clean energy sources to enhance energy security.

Delay investment in the third LNG terminal as the current LNG terminal capacity is not fully utilized.

Consider renewing contracts with existing hydropower plants rather than constructing new ones to reduce ecological impact, lower electricity purchase costs, and mitigate energy security risks.

Reevaluate long-term power purchase agreements for necessary power plants, ensuring that power producers share the plant’s construction cost to alleviate the availability payment debt burden of the Electricity Generating Authority of Thailand (EGAT).