In order to strengthen Thailand’s long-term energy security and global economic competitiveness the country has committed itself to develop its alternative energy capabilities. This policy emerged at the national level as the Alternative Energy and Development Plan (AEDP), a 10 year initiative (2012-2021) to better diversify and build a more sustainable energy sector. With this plan, Thailand has set the target of increasing alternative energy consumption from 7,413 ktoe (kilo tonnes of oil equivalent) in 2012 to 24,664 ktoe in 2021.
According to the Energy Policy and Planning Office, Ministry of Energy, Thailand used the equivalent of 2 million barrels of oil per day in 2014. Furthermore, the sector is heavily reliant on foreign inputs considering over half (57%) of that energy is imported.
In general, the major source of power generation in Thailand comes from natural gas, contributing to 66% of the total share in 2014. The other significant sources are coal and lignite which make up 21% of the share. Renewable energy currently only represents 3% of the power produced in Thailand. However, according to the AEDP initiative, this will be increased considerably in the coming years.
Energy Savings and Targets – The Renewable and Alternative Energy Development Plan (AEDP), 2012-2021
The end goal of the AEDP is to achieve 25% reliance on total national energy generation from alternative or renewable sources by the year 2021 and to set the country’s societal development on a path towards a low-carbon usage base, away from fossil fuels. The breakdown of the sources is as follows: solar, wind, hydro-power, bio-energy (biomass, bio-gas, MSW), biofuels (ethanol, bio-diesel, new alternative diesel fuel), and new energy sources (tidal, geothermal).
Nonetheless, the main focus of the plan is on solar and bio-energy because of the suitability and ease of production for these energy sources in Thailand.
Biomass energy production utilizes the combustion or partial-combustion of organic material to be converted into electricity or fuel. The materials readily available in the country are solid waste from rice, sugarcane, cassava, corn, rubber and palm production. In 2014, Thailand consumed 2,452 megawatts of energy from biomass. According to the AEDP, Thailand aims to increase the use of biomass for energy to 4,800 megawatts by 2021. The government also has included biomass energy in the country’s Feed-in Tariff scheme.
The main process behind biogas involves the decomposition of organic matter by bacteria which produces gases that are usable as fuel. The gas that is produced is mainly composed of methane mixed with carbon dioxide and other elements at trace levels. Thailand consumed 312 megawatts of electricity produced from biogas energy in 2014. AEDP aims for 3,600 megawatts of biogas utilization by 2021. The government also has included biogas energy in the country’s Feed-in Tariff scheme.
Municipal Solid Waste (MSW)
MSW is converted to electrical energy mainly through incineration in heat boilers and powering turbines. Currently there are 21 waste power plants in Thailand. In 2014, Thailand consumed 66 megawatts of power through MSW. These numbers are set to grow as the AEDP initiative has set a target of 400 megawatts by 2021. The government has also included MSW energy in the country’s Feed-in Tariff scheme.
Biofuels that are currently commercially produced and utilized in Thailand can be categorized into two general types, biodiesel and ethanol. Biodiesel is a diesel fuel substitute derived from lipid-based biomass, through transesterification. Commercially available products in the market are “B100” and “B5” biodiesel. The other form of biofuel in the country is ethanol. Ethanol is a petrol fuel substitute that is derived from sugar-based biomass and lignocellulose biomass, by fermenting plant materials such as sugar cane molasses, tapioca, paddy straw, cassava and corn. The consumption of ethanol was 3 million liters per day in 2014 and is estimated to reach the target of 9 million liters per day by 2021. Currently, there are 21 factories producing ethanol in Thailand with a total capacity of 5.04 million liters per day. The government also has included biofuel energy in the country’s Feed-in Tariff scheme.
Thailand has a high potential for utilizing solar radiation as an alternative source of energy. The average solar radiation received throughout the country is 18.2 MJ/m2 per day. The areas receiving the highest amount of radiation are in the north-eastern and some parts of the central region. The country is exposed to the highest amount of sunlight between the months of April and May. Solar electrical power generation can be divided into two forms, photovoltaics (PV) and solar thermal heat systems. The photovoltaic process in solar cells converts solar energy directly into electricity. In a solar thermal heat system, solar energy is concentrated via reflections and used to heat fluids to generate steam, which in turn drives a turbine that produces electricity. This is considered one of the cleanest methods of electricity production as no emissions are involved in the energy production process. In 2014, Thailand solar power consumption was 1,299 megawatts. Thailand’s AEDP targets solar energy capacity of 3,000 megawatts by 2021. The government has also included solar energy in the country’s Feed-in Tariff scheme.
Wind power generation in Thailand has high potential in the offshore and gulf regions and is also feasible inland. The largest wind farm in Thailand is in Nakhon Ratchasima province and has a production capacity of 207 megawatts. While local wind energy potential is composed of many different factors including varying topography, the main meteorological factor influencing overall wind potential in Thailand is the seasonal monsoons. In 2014, Thailand consumed 224 megawatts of commercial wind power and is aiming to reach 1,800 megawatts by 2021. The government also has included wind energy in the country’s Feed-in Tariff scheme.
According to the Department of Alternative Energy Development and Efficiency there are 43 small hydropower plants currently in operation, with the highest concentration in the northern mountainous region. Small hydropower plant projects are also a crucial tool in controlling irrigation for agriculture usage and supporting rural communities’ development programs. In 2014, Thailand’s small hydropower energy production totaled 142 megawatts. Thailand’s AEDP has a target to increase power generation from small hydropower plants to 324 megawatts by 2021. The government has also included small hydropower in the country’s Feed-in Tariff scheme.
Clean Development Mechanism (CDM)
Thailand is also part of the global effort to reduce carbon emission to mitigate climate change. A mechanism to expedite that effort is the Clean Development Mechanism (CDM). This is a tool formed under the Kyoto Protocol to reduce carbon dioxide level in the atmosphere through carbon credit trading. It allows foreign investors from designated countries to buy carbon credits to offset their emission levels and helps the host country develop its sustainability goals through investments in green projects by trading Certified Emission reduction (CER) credits. In 2013,Thailand Greenhouse Gas Management Organization (TGO) issued a Letter of Approval (LoA) for 221 CDM projects, with expected average annual CER credits worth 12.71 megaton of carbon dioxide equivalent/year.
Support for Investors
To promote investment in renewable energy development, the Thai government has also initiated a Feed-in Tariff scheme to help new investors mitigate investment risks from the inconsistent nature of renewable energy sources. Feed-in TariffF rate (FiTF) is a fixed buying rate for electricity calculated from initial investment of power plant construction and the full lifetime used of its operation and maintenance cost. Further, price inflation for raw material used in biological energy production (for waste, biomass and biogas) is expected. As such, the scheme will also compensate for this by adding an additional rate (FiTv,2017) on top of the fixed buying rate (resulting in FiT(1)). Additionally, rate add-ons (FiT Premium) are offered for targeted biofuel groups and projects located in the Southern border provinces.
Attractive Investment Incentives
Thailand Board of Investment (BOI) offers a wide range of tax and non-tax incentives for projects that meet national development objectives.
Tax-based incentives include exemption or reduction of import duties on machinery and raw materials, and corporate income tax exemption of up to eight years. Non-tax incentives include permission to bring in expatriates, own land and take or remit foreign currency abroad.
Recognizing the importance of the role alternative energy can play in the socio-economic development of Thailand, the Board of Investments offers attractive incentives to projects in alternative energy.
The production of electricity or steam from waste or refuse-derived fuel has been classified as an activity of special importance and benefit to the country. As such, projects in this activity will be granted 8-year corporate income tax exemptions without being subject to a corporate income tax exemption cap, as well as exemptions of import duty on machinery and import duty on raw or essential materials used in manufacturing export products, and non-tax incentives.
In addition, projects approved for the production of electricity and steam from renewable energy sources, e.g. solar energy, wind energy, biomass or biogas, are granted an 8-year corporate income tax holiday, exemptions of import duty on machinery and import duty on raw or essential materials used in manufacturing export products, as well as non-tax incentives.
Projects that manufacture fuel from agricultural products or agricultural scrap or garbage or waste, e.g. biomass to liquid (BTL) or biogas from wastewater, are also granted an 8-year corporate income tax holiday, exemptions of import duty on machinery and import duty on raw or essential materials used in manufacturing export products, as well as non-tax incentives.
Projects that manufacture biomass briquettes and pellets are granted a 5-year corporate income tax holiday, exemptions of import duty on machinery and import duty on raw or essential materials used in manufacturing export products, as well as non-tax incentives.
Source: Thailand Board of Investment
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