Power Shortage Warning for Thailand by Phairath Khampha 26 June 2002 Consultants say more plants needed Thailand risks an electricity shortage unless more power plants are constructed within the next few years, according to a British-based legal and consulting firm. Electricity Generating Authority of Thailand said that an additional 1,500 to 2,000 MW would be required by 2007. Power supply requirements for local consumption at the end of 2016 would total 48,271 MW. Output from the renovated plants in North and South Bangkok and Bang Pakong could replace electricity supply that was supposed to come from the two delayed plants in Prachuap Khiri Khan, but the Lao-based Nam Theun 2 hydropower project would be needed to come on-line by no later than 2008. However, the Electricity Generating Authority of Thailand countered this claim by stating that its electricity reserves would hit almost 50 per cent in November 2002, which would affect its earnings and investment in future power plants, as well as its existing power operations. EGAT suggested that it was reviewing to put new power projects, including new projects to buy power from Laos, on hold. "If the Thai government persists in ceasing the construction of the Bo Nok and Hin Krut coal-fired power projects in Prachuap Khiri Khan, the country could face an imminent power shortage of at least 1,200 megawatts by 2006," said James Douglass, a partner at Linklaters & Alliance in Hong Kong. Mr Douglass said demand for power had begun to grow as a result of the consumer-led recovery. Peak demand as of June 2002 stood at 16,5000 MW, excluding the reserve of 30% of total demand. In 2002, power consumption was expected to grow by approximately 3.5%, with rates of between 4% and 5% forecast in subsequent years. In another forecast, the Electricity Generating Authority of Thailand (EGAT), said that an additional 1,500 to 2,000 MW would be required by 2007, necessitating that the Nam Theun 2 hydropower project in Laos be completed by that time. Power supply requirements for local consumption at the end of 2016 would total 48,271 MW. Total power generation capacity was forecast at only 29,971 MW at the end of 2009, based on EGAT's original electricity generation plan. However, research by Chulalongkorn University said that the current power reserve of 30.95% was sufficient to last until 2005. "I believe that construction of the two coal-fired power plants is vital so as to generate more and cheaper energy to encourage foreign investor confidence in Thailand," Mr Douglass said. As well, he said, the plants plus the Lao-based hydropower project would reduce the country's risk in relying so heavily on natural gas. He said Thailand depended on natural gas for 70% of all domestic electricity production, and risked supply disruptions and price volatility because gas prices were linked with petroleum prices. Wilailuk Okanurak, a partner with the Bangkok office of Linklaters and Alliance, said the government had to provide a clearer statement of its national energy policy and find a "win-win" solution for the two controversial coal-fired plants. First, she said, the government must set clear environmental policy goals for all parties and make them transparent and accountable. As well, community groups and non-governmental organisations must demonstrate a preparedness to negotiate with government and corporations within a reasonable, commercially viable and sustainable context. Finally, she said, corporations must accept that the framework for undertaking projects in Thailand had shifted and the adoption of socially responsible investment strategies was now fundamental to the success of projects in Thailand. "Thailand is facing the dilemma of rebuilding its economy while also protecting the environment," she said. Ms Wilailuk said that if the economy continued to grow and the government had no plans to build additional power plants, the country would risk power shortages. The last time Thailand experienced a threat to its power reserves was in the late 1980s. In 1986 the reserve was 60%, but with annual economic growth roaring ahead by more than 10% at the time, the reserve dropped to 5% within three years. The situation was precarious as every power plant had to run at full capacity and could not stop for maintenance. Ms Wilailuk also said that EGAT's "repowering" programme would not be sufficient to accommodate increasing demand in the future. EGAT would begin "repowering" or upgrading three outmoded plants in 2004, two years ahead of schedule because of the delay in the coal-fired plants. The three plants would have a combined capacity of 1,300 megawatts. Output from the renovated plants in North and South Bangkok and Bang Pakong could replace electricity supply that was supposed to come from the two delayed plants in Prachuap Khiri Khan. The Nam Theun 2 project plus other electricity sold to Thailand by Laos would provide an additional 3,000 megawatts. Reserves to hit 50% in Nov: EGAT EGAT's reserves would hit almost 50 per cent in November 2002, which wiouldaffect its earnings and investment in future power plants, as well as its existing power operations. Kamphuy Jirararuensak, deputy governor in charge of transmission systems at EGAT, said that as of the middle of 2002 the country's power reserves stood at 39 per cent of the total generating capacity. But the reserves, he added, would increase to 50 per cent by November when EGAT would take delivery of three new power plants, two of which would be operated by the private sector and one by the government. The natural gas turbine power plant operated by the Tractebel group has a capacity of 715 megawatts, compared to the 300 MW generated by Eastern Power's natural gas turbine plant. Eastern Power is affiliated with the MDX Group. The third Ratchaburi power plant coming on stream would have a capacity of 700 MW, which would take EGAT's total power supply to 1,700 MW by November. Kamphuy said that between the middle of 2002 and 2006, there would not be any new power plants generating electricity into the system. But he said the unusually high power reserves, which normally stood at 15 to 20 per cent, would not affect electricity prices but would affect EGAT's earnings, as the authority had already committed investment to its power projects. The delivery of three new power plants means that EGAT would have to stop operating two of its diesel-run plants in Bangpakong and Rongphai, in North Bangkok, which together produce 1,700 MW. The power supply from the private sector would rise to 55 per cent., or 4,000 million units of the total 9,000 million units. Kamphuy said the higher power reserves would make it necessary to delay the commission of the Bo Nok and Hin Krut power plants, which were beset by political problems. Initially, these two power plants were scheduled to come on-stream between 2004 and 2006. Furthermore, the Thai government was seeking to renegotiate the purchase of new power from Laos and to delay new projects there until there was a sufficient growth in the demand of electricity in Thailand.