feed-in tariffs and south-south policy/technology transfer: the evolution and implementation of very...

Feed-in tariffs and south-south policy/technology transfer: The evolution and implementation of Very

Small Power Producer (VSPP/SPP) Regulations in Thailand and Tanzania

Monterey Institute for International StudiesMonterey, California, USA

8 May 2010

Chris Greacenchris@palangthai.org

Palang Thai พลั�งไท

• Thailand NGO• Objective:

– To ensure that the transformations that occur in the region's energy sector: augment, rather than undermine, social and environmental justice and sustainability.

• Key approaches:– We teach hands-on energy technology– We draft / comment on policies– We work to empower citizens to look critically at government

and industry projects and plans– We advocate structural reform

พลั�ง (palang): n 1. Power. 2. Empowerment. ไท (thai): adj. 1. Independence. 2. Self-reliance

Can’t we hook it up and sell power back?

Mae Kam Pong village microhydro

Meeting between National Energy Policy Offic (NEPO) and Mae Kam Pong villgers to discuss grid interconnection of their village micro-hydro

$

Technical regulations:• Allowable voltage,

frequency, THD variations

• Protective relays– 1-line diagrams for all

cases:• Induction• Synchronous• Inverters• Single/multiple• Connecting at different

voltage levels (LV or MV)

• Communication channels

Commercial regulations:• Definitions of renewable

energy, and efficient cogeneration

• Contract parties• Cost allocation• Principle of standardized

tariff determination• Invoicing and payment

arrangements• Arbitration

$

+ Standardized Power Purchase Agreement (PPA)

Import(3%)

EGAT(45%)

IPPs(42%)

Generation(% share)

Transmission

Distribution

EGAT (100%)

PEA(66%)

MEA(32%)

Direct Customers(2%)

Users Users

SPPs(10%)

Thailand’sElectricity Industry Structure

Import(3%)

EGAT(45%)

IPPs(42%)

Generation(% share)

Transmission

Distribution

EGAT (100%)

PEA(66%)

MEA(32%)

Direct Customers(2%)

Users Users

VSPPs(<1%)

SPPs(10%)

Thailand’sElectricity Industry Structure

Import(3%)

EGAT(45%)

IPPs(42%)

Generation(% share)

Transmission

Distribution

EGAT (100%)

PEA(66%)

MEA(32%)

Direct Customers(2%)

Users Users

VSPPs(<1%)

SPPs(10%)

Thailand’sElectricity Industry Structure

Firm / non-firm Peak / off-peak

Evolution of Thai VSPP regulations• 2002

– VSPP regulations drafted, approved by Cabinet– Up to 1 MW export, renewables only– Tariffs set at avoided cost (bulk supply tariff + FT)

Biogas from Pig Farms

Reduces air and water pollution

Produces fertilizer

Produces electricity

8 x 70 kW generator

Ratchaburi

Biogas from Pig Farms

•40 kW•Mae Kam Pong, Chiang Mai, Thailand

Micro hydropower

• Uses waste water from cassava to make methane

• Produces gas for all factory heat (30 MW thermal) + 3 MW of electricity

• 3 x 1 MW gas generators

Korat Waste to Energy – biogas… an early Thai VSPP project

Evolution of Thai VSPP regulations• 2002

– VSPP regulations drafted, approved by Cabinet– Up to 1 MW export, renewables only– Tariffs set at avoided cost (bulk supply tariff + FT)

• 2006– Up to 10 MW export, renewables + cogeneration– Feed-in tariff “adder” – If > 1 MW then utility only pays for 98% of energy

Rice husk-fired power plant• 9.8 MW• Roi Et, Thailand

Bangkok Solar 1 MW PV

• Project size: 1 MW• Uses self-manufactured a-Si

Evolution of Thai VSPP regulations• 2002

– VSPP regulations drafted, approved by Cabinet– Up to 1 MW export, renewables only– Tariffs set at avoided cost (bulk supply tariff + FT)

• 2006– Up to 10 MW export, renewables + cogeneration– Feed-in tariff “adder” – If > 1 MW then utility only pays for 98% of energy

• 2009– Tariff adder increase, more for projects that offset diesel

http://www.eppo.go.th/power/vspp-eng/ for English version of regulations, and model PPA

Thai VSPP feed-in tariffs

Assumes exchange rate 1 Thai baht = 0.029762 U.S. dollars

Fuel Adder Additional for diesel offsetting areas

Additional for 3 southern provinces

Years effective

Biomass Capacity <= 1 MW $ 0.015 $ 0.030 $ 0.030 7 Capacity > 1 MW $ 0.009 $ 0.030 $ 0.030 7

Biogas <= 1 MW $ 0.015 $ 0.030 $ 0.030 7 > 1 MW $ 0.009 $ 0.030 $ 0.030 7

Waste (community waste, non-hazardous industrial and not organic matter)

Fermentation $ 0.074 $ 0.030 $ 0.030 7 Thermal process $ 0.104 $ 0.030 $ 0.030 7

Wind <= 50 kW $ 0.134 $ 0.045 $ 0.045 10 > 50 kW $ 0.104 $ 0.045 $ 0.045 10

Micro-hydro 50 kW - <200 kW $ 0.024 $ 0.030 $ 0.030 7 <50 kW $ 0.045 $ 0.030 $ 0.030 7

Solar $ 0.238 $ 0.045 $ 0.045 10

Tariff = adder(s) + bulk supply tariff + FT chargeBiomass tariff = $0.009 + $0.049 + $0.027 = $0.085/kWh

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การไฟฟ�าส่�วนภู�มิ�ภูาคPROVINCIAL ELECTRICITY AUTHORITY

Generating Capacity supply to Grid from 2006 - August 2009

VSPP project pipeline as recorded in EPPO data

Application under consideration

Permission received, awaiting

PPAPPA signed

Generating & selling electricity

Leakage (Project abandoned)

Jun 2009

Thailand VSPP Status

Dec 2009

Thailand VSPP Status

Mar 2010

Thailand VSPP Status

Mar 2010

Thailand VSPP Status

811 MW online

Mar 2010

Thailand VSPP Status

811 MW online

PPAs signed for additional 4159 MW

Import(3%)

EGAT(45%)

IPPs(42%)

Generation(% share of GWh)

Transmission

Distribution

EGAT (100%)

PEA(66%)

MEA(32%)

Direct Customers(2%)

Users Users

VSPPs(<1%)

SPPs(10%)

… but it’s still a tiny part of Thailand’s electrical energy

Evolution of Tanzania SPP regulations

• Approved by regulator August 2009• Up to 10 MW export, renewables &

cogeneration• SPP Tariffs at average of LRMC and SRMC

– Grid-connected SPP tariff (2009): $0.066/kWh– In rural mini-grid areas offsetting diesel (2009):

$0.26/kWh

• 5 PPAs signed by March 2010

www.ewura.go.tz/sppselectricity.html for English versions of regulations, and model PPAs

Wealthy countries pay Feed-in tariff incremental costs?

GET FiT proposed mechanism

South-south policy/technology transfer:Technical Visit of the Delegation

from the United Republic of Tanzania to Thailand regarding

Thailand’s Very Small Power Producer (VSPP) program 13-20 March 2010

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การไฟฟ�าส่�วนภู�มิ�ภูาคPROVINCIAL ELECTRICITY AUTHORITY

How we have done?

SubmittedProposals

•Line connecting construction•Meter installation

•Meter reading•Billing

AcceptanceLetter

PPA signed First synch. COD Every 1ft

•Meter reading

•license check•All test

•PPA Check

•Document check•Identify circuit connection•System study

•All license check

VSPP will get first settlement within 3 month after COD.

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4141การไฟฟ�าส่�วนภู�มิ�ภูาคการไฟฟ�าส่�วนภู�มิ�ภูาค

การไฟฟ�าส่�วนภู�มิ�ภูาคPROVINCIAL ELECTRICITY AUTHORITY

Who have involved in PEA ?

DG office• Technical & System Analysis

• Document• Coordinator

Research Div.•PQ test

Relay Div.•Switchgear &

Relay test

Meter Div.•Meter installation

System Operation Div.•First synch. test System Operation Area

Office 1-12•Identify circuit connection

•Control & Operation•Communication

Area Office 1-12 & Local Office

•Line connecting construction•Meter reading

Tariff Div.•Billing

Finance Dep.•Settlement

Legal Div.•PPA check

Thailand

VSPP

Tanzania

Vietnam?

Philippines?

Winter 2010-11 … community built, community-owned, profitable VSPP

micro-hydro in Thailand

http://www.soho-properties.com/condobangkok-leraffine31/

Unlimited living?

Office of the National Economic and Social Development Board

O F F I C E O F T H E P R I M E M I N I S T E R

Low Quality

Education Low Quality labour

Insu

fficient in

R&

D

Investm

ent

Slow Technology Development

Lo

w Q

ual

ity

for

Raw

-

mat

eria

l, m

ach

iner

y an

d

equ

ipm

ent

(Low margin/return)

Low

Bas

ic

infr

astr

uctu

re a

nd

Logi

stic

dev

elop

men

t

Enabling factors:MACROECONOMICMANAGEMENT

No

im

mu

nit

y/

Hig

h v

ola

tili

ty

Fin

anci

al

Sys

tem

La

ck o

f S

avin

g

Lack of regulation on

industrial product’s

quality control

Low

Value Creation

High Import Contents & Sheer size

of export to GDP

High Energy Intensity& Low Efficiency& Unsustainable

structure

Macroeconomic Analysis

Electricity productionand consumption(GWh)

1700 families relocated

Loss of livelihood for > 6200 families

Loss of 116

fish species 44( %)

Fishery yield down 80%

65MaeHongSong

Sou

rce: M

EA

, EG

AT, S

earin

, Gra

ph

ic: Gre

en

World

Fou

nd

atio

n

Dams Malls Province

Pak

Mun

Impacts of Pak Mun Dam alone

Bonok-Ban Krud story

Bonok Bankrud

Power Demand: Projections vs. Actual 1992 – 2009If no systemic bias, the chance of over-projecting

demand 15 times in a row = (½)15 = 1/32,768MW

8,000

12,000

16,000

20,000

24,000

28,000

32,000

36,000

40,000

44,000

48,000

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

มิ.ย.-93

ธ.ค.-94

ต.ค.-95

เมิ.ย.-96

ต.ค.-96

มิ.ย.-97

ก.ย.-97

Sep-98(MER)

ก.พ.-01

ส.ค.-02

Jan-04(LEG)

Jan-04(MEG)

Apr-06 (MEG)

มิ�.ค.-07

ACTUAL

ธ.ค.-08

0

5

10

15

20

25

30

35

40

45

J AN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC J AN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC J AN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Res

erve

Mar

gin

(%)

2007 2008 2009

E x c e s s c a p a c i t y

Generation capacity in excess of demand (2007-2009)

Fictional power demand did lead to real investments that become waste & burden

(not to mention disturbed ecology, communities)

Excess gas/ pipeline capacity/

generation capacity

economic waste + excess burden for

consumers

Under centralized monopoly structure

Source of data: EGAT 2010.หมิายเหต� ค�านวณจากก�าลั�งผลัตตดต��งแลัะความิต�องการไฟฟ#าส$งส�ดรายเด%อน

Very little incentives to do energy efficiency/conservation

Linear versus exponential extrapolation

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

Pea

k d

eman

d (

MW

)

2007 Forecast Historic peak demand trend

24 power plants

Fuel mix in power generation - power development plan 2007GWh

Import

NukeRE

Gas

Coal

LigniteHydro

PDPs of the Pacific Northwest, USA

Source: Seattle City Light

Concluding thoughts• VSPP regulations enable small generators together to

profitably make substantial contributions to electricity generation.

• Zero / small carbon footprint• Useful for decreasing diesel expenditures for rural

electrification• VSPP projects help develop local engineering / project

development capacity.• South-South policy/technology exchange• English versions of regulations available online• Still a drop in the bucket in Thailand… IRP needed

Thank you

chris@palangthai.org

This presentation available at:www.palangthai.org/docs

VSPP regulations available at:http://www.eppo.go.th/power/vspp-eng/

And www.ewura.go.tz/sppselectricity.html