Assumption University of Thailand

COLLEGE OF INTERNET DISTANCE EDUCATION

A HYPOTHETICAL ENHANCED RENEWABLE

ENERGY UTILIZATION (EREU) MODEL FOR

ELECTRICITY GENERATION IN THAILAND

By

DI (FH) Thomas Andexer

A Survey Research Report for

MS 7001 Master Thesis

Submitted in Partial Fulfillment of the Requirements for the Degree

of Master of Science in Management

Bangkok, March 2008

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"IT IS NOT THE STRONGEST OF THE SPECIES WHO SURVIVE,

NOR THE MOST INTELLIGENT,

BUT THE ONES MOST RESPONSIVE TO CHANGE."

- CHARLES DARWIN -

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PREFACE

This thesis presents a research project entitled `A Hypothetical Enhanced Renew-

able Energy Utilization (EREU) Model for Electricity Generation in Thailand′. This

research is motivated by Thailand′s rapidly increasing electricity consumption caused

by the country′s long-standing above-average economic growth. Consequently, the

rising electricity demand can only be satisfied by continuously growing electricity

imports and thus creating a significant burden to Thailand′s national budget. Further-

more, Thailand is heavily dependent on natural gas reserves for electricity generation,

however, these are expected to be depleted within only three decades and global price

levels for conventional fuels are increasingly volatile with an ascending tendency as

well. Therefore, Thailand faces an urgent need to strategically plan for the broad utili-

zation of domestic renewable energy resources, which is essential for a more diversi-

fied and thus sustainable electricity generation, as well as for the nation′s endeavor to

become an energy hub within the South East Asian region.

Under these circumstances this research conducts a comprehensive literature re-

view regarding the past development as well as the current situation of renewable

energy utilization in Thailand, which concludes in the identification of the importance

of renewable energy in the given context and closes with both a distinctive need as-

sessment and a conceptual framework for Thailand′s future renewable energy strate-

gy. Subsequently, the research introduces a unique primary research endeavor in the

form of an explorative expert interview survey, which succeeds in a substantial col-

lection of qualitative and in-depth data. These valuable data is first objectively ana-

lyzed and second subjectively interpreted and summarized to become the major

source for the derivation of a multitude of potential strategic recommendations for an

enhanced future renewable energy utilization development in Thailand. Finally, the

entirety of theses recommended strategic approaches, based on both the secondary

and primary research, are assembled to develop the Enhanced Renewable Energy Uti-

lization (EREU) model for electricity generation in Thailand as the fundamental find-

ing of this thesis and research project respectively. Ultimately, this research aims to

give a strong impetus to the future role of renewable energy and its proper develop-

ment for a truly diversified, independent and thus sustainable electricity supply for the

Kingdom of Thailand on its way to become a regional energy hub.

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Research Project Title: A HYPOTHETICAL ENHANCED RENEWABLE

ENERGY UTILIZATION (EREU) MODEL FOR ELECTRICITY

GENERATION IN THAILAND

Researcher/Author:

DI (FH) Thomas Andexer

Major Advisor:

Prof. Dr. Chaiyong

Brahmawong

Degree:

Master of Science in Management (MSc-Mgt.)

School:

School of

Management, College of Internet Distance Education (CIDE)

Year

: 2008.

ABSTRACT

Objectives:

The objectives of this study are (1) to examine and understand both the

past 15 years and the current situation of RE utilization in Thailand in order to being able

to target questioning several field experts, (2) to create strategic approaches for Thail-

and′s future RE utilization development, (3) to raise the importance of a clear RE strategy

onto the level of public discussion, (4) to stimulate additional research and (5) to give a

strong impulse to the future role of RE in Thailand.

Methodology:

The research is initiated with a secondary research to the RE utiliza-

tion development in Thailand, followed by a primary research in the form of an expert

interview survey, including seven field expert participants from several interest groups.

The gained qualitative data is used to create strategic approaches which are in the last step

assembled to a framework model for enhanced RE utilization in Thailand.

Major

Findings:

The research has found that the importance of RE utilization in

Thailand is underlined by 13 major issues ranging from limited domestic conventional

energy resources until Thailand′s chance to become a regional (renewable) energy hub.

Ultimately, the research has established and verified the Enhanced Renewable Energy

Utilization (EREU) model for electricity generation in Thailand, consisting of five dis-

tinctive modules, namely (i) Regulatory/Administrative Measures, (ii) Incentive Meas-

ures, (iii) Information Measures, (iv) Technology-Specific Measures and (v) International

Goals and Monitoring Measures.

Key

Words:

Electricity Generation, Enhanced Renewable Energy Utilization

(EREU) Model, Kingdom of Thailand, Renewable Energy.

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ACKNOWLEDGEMENTS

I would like to thank all those who have contributed to the development of this

research. I am particularly indebted to all expert interviewees who took their time to

answer my survey questionnaire, namely Mr. Chris Greacen, Ph.D. from Palang Thai,

Mr. Benjagoon Pongpoon from the Energy for Environment Foundation (EFE), Prof.

Dr. Chumnong Sorapipatana from the Joint Graduate School of Energy and Environ-

ment (JGSEE), Mr. Magnus A. Staudte from Envima (Thailand) Co., Ltd., Mr. M.K.

Balaji from Retech Energy Co., Ltd., Prof. Dr. Thierry Lefevre from the Centre for

Energy Environment Resources Development (CEERD) and Mr. Thanawat Yani-

srangkul from Thai Renewable Engineering Co., Ltd. In generously spending their

precious time for my interviews they have provided the necessary input as the funda-

mental basis of this research project.

I give special thanks to Dr. Chaiyong Brahmawong, my tutor at the Assumption

University of Thailand (ABAC) for the ongoing and motivating support, productive

comments and feedback. I also would like to thank the Assumption University of

Thailand as an open-minded, international oriented and inspiring education centre in

Thailand and in specific the staff of the College of Internet Distance Education

(CIDE) for the ongoing administrative support throughout the entire M.Sc. process.

Above all I owe the biggest thanks to my parents and brothers for their support

and encouragement which have always given me the motivation to pursue.

Bangkok, in March 2008

Thomas Andexer, DI (FH)

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TABLE OF CONTENTS

Preface i

Abstract ii

Acknowledgements iii

Table of Contents iv

List of Figures viii

List of Tables x

Chapter

1 Introduction

1

1. Background Information and Statement of the Problem 1

2.

Research

Objectives

3

3. Scope and Boundaries 4

4. The Research Question 5

5. The Significance of this Thesis 6

6. Operationalization of the Terminology 6

7. The Thesis Structure 10

2

Review of Literature 14

1. The Definition of Renewable Energy 15

1.1 Focus: Renewable Energy for Electricity Generation 17

2. Thailand - Country Overview 19

2.1 Digression: Economic Development 1997 - 2007 20

3. The Electricity Industry and Electricity Consumption in Thailand 22

3.1 Thailand′s Electricity Supply Industry (ESI) 22

3.2 Electricity Consumption Development 1990 - 2006 23

4. Renewable Energy for Electricity Generation in Thailand 27

4.1 The Beginning of Energy Conservation and Renewable Energy

Promotion (1992 - 2000) 27

4.2 The Reform of the SPP Program, VSPP Legislation and Enforcement

of Renewable Energy Promotion (2000 - 2004) 30

4.3 The Energy Policy and Development Plan and the Upgrade of the

VSPP Regulation (2005 - 2007) 36

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4.4 Current Data and Statistics 42

4.5 Recent Development: Latest Events in the Year 2007 50

5. Summary, Forecast and Conclusion 56

5.1 The Importance of Renewable Energy for Electricity Generation in the

Kingdom of Thailand 60

6. Pre-Assessment of an Enhanced Renewable Energy Utilization

Model 63

6.1 Need Assessment: Abolition of Barriers to Enhance RE Utilization 63

6.2 Conceptual Framework 70

3 Research

Methodology

75

1. Expert Interview Survey: Research Design 75

1.1 Introduction 75

1.2 Research Type and Participants 76

2.

Research

Instruments

78

2.1 Population and Sampling Methodology 78

2.2 Data Gathering: The Questionnaire and Interview Procedure 78

4

Data Analysis and Synthesis 80

1. The Interviewee Profiles 80

2. Restructuring Thailand′s ESI 83

3. Creation of Enhanced RE Support Mechanisms 93

4. Removal of Major Barriers against RE Development 98

5. Strategic Planning and Thailand′s Future Energy Portfolio 106

6. Compliance to International Goals and Targets 110

5

The Hypothetical Enhanced Renewable Energy Utilization (EREU)

Model and Strategic Implications 112

1.

Introduction

113

2. Restructuring of Thailand′s ESI and Regulatory/Administrative

Measures 114

2.1 Establishment of an Independent Regulation Authority (IRA) 115

2.2 Liberalization and Decentralization 116

2.3 EGAT Restructuring and other Amendment Measures 119

2.4 The Further Development of the SPP and VSPP Program 124

2.5 Conclusion: EREU Module 1 125

3. Enhanced RE Support Mechanisms and Incentive Measures 126

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3.1 Enhanced Quota Mechanism: Update of the RPS 126

3.2 Bidding Mechanism 127

3.3 Enhanced Tariff Mechanism: Establishment of a Comprehensive

Feed-in Support Scheme for RE 128

3.4 Production Tax Credits: Creation of Tax- and Investment Incentives ... 131

3.5 Conclusion: EREU Module 2 133

4. Removal of Major Barriers against RE Development and

Information Measures 134

4.1 Provision of Enhanced Financing Options for RE Projects 134

4.2 Establish Enhanced Local Workforce Training and Expertise 139

4.3 Increase Consumer Awareness Towards RE Utilization 140

4.4 Foster Community and Stakeholder Participation in RE Decisions

and Projects 141

4.5 Conclusion: EREU Module 3 143

5. Strategic Planning for Enhanced RE Utilization and Technology-

Specific Measures 144

5.1 Reform the Power Development Macro Planning Process 144

5.2 Realistically Plan with Renewable Alternatives 146

5.3 Consider Technology-Specific Measures 149

5.4 Conclusion: EREU Module 4 150

6. International Goals and Monitoring Measures 151

6.1 Ratification and Compliance to International Goals 151

6.2 Take the Consequences from the Result of the 2011-Target 153

6.3 Conclusion: EREU Module 5 154

7. The Enhanced Renewable Energy Utilization (EREU) Model 154

7.1 Expert Verification 156

8.

Strategic

Implications

157

6 Discussion

and

Recommendation

159

1. Closing Discussion 159

2.

Final

Recommendation

162

References 163

List of Acronyms 170

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Appendices 173

Appendix A: Secondary Research Documents 174

Appendix A-1: Excerpt: Thailand′s Energy Strategy for

Competitiveness (2003) 175

Appendix A-2: The Energy Development and Policy Plan (2006) 176

Appendix A-3: Selected Newspaper Articles (2007) 179

Appendix A-4: The Bali Action Plan (Decision -/CP.13 ­ Bali roadmap) .. 183

Appendix B: Primary Research Documents 187

Appendix B-1: Expert Interview Survey Questionnaire 188

Appendix B-2: Reference of Organizations 200

Affidavit xi

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LIST OF FIGURES

Figure 1: Thesis structure: The Seven-Step Approach of an R&D project 10

Figure 2: Content structure - Question/Answer Framework (Chapters 1-2) 12

Figure 3: Content structure - Question/Answer Framework (Chapters 3-6) 13

Figure 4: Renewable vs. Non-Renewable Energy 15

Figure 5: Percentage of total energy usage derived from renewable energy sources 16

Figure 6: Relative share of electricity generation capacity in Thailand (as of July 2007) 23

Figure 7: Thailand′s total electricity consumption 1990 - 2006 in GWh 24

Figure 8: Thailand′s electricity imports 1990 - 2006 in GWh 25

Figure 9: Growth Comparison between GDP and Electricity Consumption in Thailand 26

Figure 10: Shares distribution in Thailand′s ESI structure (as of fiscal year 2006) 37

Figure 11: Changing Paradigm: From the centralized ESB model to decentralized utilities ... 40

Figure 12: Cumulative renewable energy SPP contracts signed 1993 ­ 2006 (MW) 45

Figure 13: Biogas storage under a polyethylene cover at a pig farm in Ratchaburi province .. 48

Figure 14: Fuel shares in electricity generation in Thailand (2007) 49

Figure 15: Growth development of types of fuels for electricity generation in Thailand

(1997 ­ 2007) 50

Figure 16: Key barriers to Thailand′s renewable energy utilization development 64

Figure 17: Conceptual Framework of the EREU Model 74

Figure 18: Expert Interview Survey: Participants from multiple interest groups 77

Figure 19: Interest groups distribution of the interview participants 82

Figure 20: Work experience classification distribution of the interview participants 82

Figure 21: Expert opinion tendency towards the establishment of an IRA within 2008 91

Figure 22: Expert opinion tendency towards the general liberalization of Thailand′s ESI 92

Figure 23: Expert opinion tendency towards EGAT′s current strategy 92

Figure 24: Top renewable energy resources with the biggest long term potential in Thailand

(expert′s relative priority ranking) 108

Figure 25: The experts′ opinion towards Thailand′s compliance to the MDG 111

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