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Economy

Facing a natural gas shortage, Thailand looks to coal and hydropower

Greenpeace Thailand digs in to stop a coal-powered plant planned in Krabi province, best known for its pristine beaches and limestone cliffs.   © Photo courtesy of Greenpeace Southeast Asia

BANGKOK -- After nearly three decades as Thailand's primary source of energy, natural gas reserves in the Gulf of Thailand are running low. Dwindling supply is prompting the country's military-led government to propose a controversial shift to greater reliance on coal and imported hydroelectricity. A power development plan for 2015 to 2036, expected to be approved within three months, has also been criticized for suggesting that renewable sources should make up only a fifth of the future power mix.

     Thailand's Mineral Fuels Department announced in June that proven natural gas reserves in the Gulf stood at 8.4 trillion cubic feet -- equal to about seven years of power production at the current rate. Shortly afterwards, Energy Minister Narongchai Akrasanee announced plans to build three new coal powered plants. The plants are the first step toward reducing the current 70% reliance on gas for electricity generation to 40%. Coal fired generation would rise from 15% to 20-25% by 2036, with power from renewable sources rising from 6% to 22% and imports of hydropower from neighboring countries growing from 7% to 15-20%. Narongchai also announced the opening of new bids on offshore and onshore oil and gas concessions, to be finalized in February. The decision follows a seven year hiatus in granting concessions, although a debate over technical issues could cause further delays.

     The first scheduled coal project is an 800 megawatt plant to be built by the state owned Electricity Generating Authority of Thailand in Krabi province, a popular tourist destination on the Andaman Sea coast. The area is renowned for its pristine beaches and limestone islands. Greenpeace Thailand has been campaigning to rally local opposition to the project for the past three years, but the government seems determined to go ahead. "Construction will start by the end of 2015 despite strong protests," Narongchai told the Bangkok Post in December. Altogether, the Krabi plant and two more in Songkhla, southern Thailand, and Rayong, on the eastern seaboard, would add about 3,000MW to Thailand's existing generating capacity of 32,400MW.

Hard sell

Coal fired power is a hard sell in Thailand. This is especially the case since sulfur dioxide emissions from a plant at Mae Moh, in Lampang province, caused a health crisis for the surrounding community in 1992. Although EGAT, the plant's owner, had largely cleaned up the sulfur problem by 2000. New coal powered plants have been included in previous power development plans, but none have materialized, because of community resistance. "Thailand has failed in pushing coal, so you see the coal plants now moving across the border to neighboring countries," said Tara Buakamsri, director of Greenpeace Thailand. For example, a 1,800MW coal-fired plant in Hongsa, Laos, is scheduled to begin exporting power to Thailand's electricity grid this year.

Piyasvasti Amranand, chairman of the PTT board, is preparing for a lot more LNG imports.   © Photo courtesy of PTT

     Even PTT, Thailand's national oil and gas company, has doubts about the government's coal targets. "If the government sets the target too high, then in the end they will have to scramble for more gas [because the target will not be met] and that will mean more energy imports," said Piyasvasti Amranand, chairman of PTT and a former energy minister. "Anyway, PTT is prepared for that," he added. The PTT board last month approved investments in floating liquid natural gas storage facilities off Map Ta Phut, in Rayong province, where Thailand's largest petrochemical complex is located. Further investments are being considered off Songkhla and Phuket provinces, in southern Thailand, and in the Gulf of Martaban, where an offshore pipeline that delivers natural gas to Thailand from Myanmar comes ashore. The Myanmar deal expires in 15 years, and is unlikely to be extended because of Myanmar's own gas needs.

     There is other evidence that Thailand is gearing up for a lot more liquefied natural gas imports, with or without new coal plants. On Jan. 8, Qatar Liquefied Gas Company (Qatargas) delivered its first shipment of 90,000 tons of LNG to PTT's receiving station in Map Ta Phut. The shipment was part of a 20-year agreement under which PTT will import 2 million metric tons of LNG a year from Qatargas, the world's largest LNG producer. PTT is expanding the Map Ta Phut terminal to accommodate 10 million metric tons per annum by 2017, and Piyasvasti said capacity would eventually reach 20 million. "Narongchai said after the first Qatargas delivery that the Energy Ministry was "rethinking" its plan to reduce the country's dependence on natural gas because of the "revolution" in energy supplies caused by the increasing availability of imported LNG. "It is a very clean energy and an alternative energy that is highly efficient," Narongchai told Thai media.

     However, energy activists believe Narongchai's "rethink" will not necessarily translate into shelving plans to generate more electricity from coal, which would eventually require the construction of a dozen new coal-powered plants over the next two decades. "It is clear that Minister Narongchai, the Energy Ministry and EGAT want more coal power plants and large hydropower plants in neighboring countries, " said Suphakij Nuntavorakorn, a leader of the non-governmental Healthy Public Policy Foundation and a member of Thai Energy Reform Watch. Suphakij is expecting a heated debate over the power development plan at a public hearing next month -- and possible protests in Krabi and Songkhla -- despite a state of martial law imposed by the military-led government. "It's a bit harder for movements in provincial areas, such as Krabi and Songkhla, but they will not keep quiet, that is for sure," he said.

Mekong concerns

There is also concern about energy imports from controversial projects such as the $3.5 billion 1,285MW Xayaburi dam in northern Laos, which will be the first hydropower dam on the lower Mekong River. The river is a major source of fresh water, fisheries and soil sediment for Cambodia and Vietnam, which lie downstream, as well as Thailand, which borders the river. EGAT will purchase about 95% of the electricity generated by Xayaburi Power Company, the Lao company contracted to build and operate the dam, whose largest shareholder is CH. Karnchang, a Thai construction and infrastructure group. "If this causes the destruction of food production in Vietnam's Mekong Delta a regional conflict is in the making," said Kraisak Choonhavan, a former Thai senator who once chaired the Senate's foreign relations committee.

     However, Narongchai's first moves in reducing Thailand's dependency on gas have been less controversial. Over the past two months he has cut subsidies for liquefied petroleum gas and natural gas for vehicles. Because of the low price structure, consumption of natural gas for vehicles surged from 84.95 thousand cubic meters a day in 2004 to 8.7 million cu. meters a day in 2013, according to the Kasikorn Research Center, an independent think tank. Transport now accounts for about 7% of Thailand's natural gas consumption, and has helped transform the country from a net exporter of gas to a net importer. According to Pimonwan Mahujchariyawong, deputy manager of Kasikorn Research, rising demand for natural gas for vehicles caused Thailand to start importing LNG in 2011, with import volume rising to over 5.6 million cu. meters a day in 2014.

     The Energy Ministry insists that falling world energy prices will make no difference to its commitment to renewable power. The message is clear; Thailand is committed to renewable energy," Twarath Sutabutr, Deputy Permanent Secretary of the Ministry of Energy, told the Nikkei Asian Review. Under the 2015 to 2036 plan, which envisages a rise in power generation capacity from renewables to 17,000MW, the ministry will promote power generation from alternative sources such as solar, biomass, wind, and waste. The plan also aims to cut Thailand's carbon emissions from power generation and consumption by nearly 20%, from 0.5 grams of CO2 equivalent per kilowatt-hour of power generated to 0.405.

     "Another highlight of the new power development plan will be integrated energy efficiency measures which will enable us to reduce the power demand by 10,000MW over the 20 year time frame," Twarath said. "This is the equivalent of getting rid of one big power plant of 500MW every year for the next 20 years. "The efficiency drive will include improving transmission lines, programs to promote energy saving light bulbs, light emitted diode technology, environmental building codes, and energy efficiency home appliances."

     However, energy activists argue that the Energy Ministry's targets fall short, both in terms of improving efficiency and boosting renewable energy alternatives. For example, the ministry's efficiency strategy does not include peak demand response measures and the use of combined heat and power technologies, which are commonly applied elsewhere, Suphakij said. He also urged the government to raise the target for power generation from renewables to 21,000MW. "Actually 22% of renewable energy is not too ambitious for Thailand, because it is quite clear from past experience that if we set the right measures in place, renewable energy could take off very fast," he said.

     Thailand, touted as Southeast Asia's leader in renewable energy, has had a mixed performance in terms of policy implementation. The solar program, for example, has been dogged by accusations that politicians favored certain groups in granting concessions, and that licensees made quick fortunes by reselling licenses to other investors with fewer political connections. "Clean energy can help a lot, but unfortunately the politicians messed it up," said Piyasvasti. Of the hundreds of solar farm concessions granted since 2010, only about 1,200MW of generating capacity has been installed, with another 3,000MW delayed. Narongchai has given licensees until the end of 2015 to implement their licenses or risk losing them.

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