The course of Thailand’s electricity industry development has set forth a goal of greater efficiency - both on the supply side and demand side. The aim is to ensure the optimization of energy resources and minimization of environmental impacts, with an ultimate goal of sustainable energy development. On the other hand, the industry has also had to properly adjust to economic and social changes as well as national energy policies and strategies over the past decades.

For some time, the government has encouraged more private participation in the electricity generation business in order to reduce the public investment burden and enhance greater competition in the industry. In compliance with the national policy, EGAT established and listed the Electricity Generating Public Company Limited (EGCO), the country’s first independent power producer (IPP), in 1992 to mobilize funds from the stock market for its power investment, followed by the privatization of Ratchaburi Electricity Generating Holding Public Company Limited (RATCH), EGAT’s subsidiary founded in 2000.

EGAT has also announced its solicitations for power purchase from IPP projects to enhance competition in the generation business. This has been followed by power purchase from small power producers (SPPs) to particularly promote energy efficiency and the use of renewable energy resources for electricity generation.

In terms of international cooperation, EGAT has collaborated with neighboring countries in pursuing the ASEAN Power Grid Project to integrate the transmission systems within ASEAN countries for energy security and mutual economic benefits. The Electricity Generating Authority of Thailand is also in talks with neighbouring countries, to make joint developments in hydropower projects.

Thailand’s geographical advantage favors transforming Thailand to be the energy hub of the region. Amidst changes and challenges, EGAT has been and will be tirelessly developing the country’s electric power system to ensure that its electricity supply remains the most secure and reliable infrastructure service which contributes significantly to the betterment of the quality of life and the environment and drives the country’s economic and social growth in the future. The expertise and experience gained over 35 years of operation have provided EGAT with the multi-faceted power and strength needed in maintaining its leadership and a competitive edge in the new business environment.

Independent Power Producer Program

In 1995, the independent power producer (IPP) program was launched in an effort to partly privatize state-controlled power utilities. Foreign and local companies have shown great interest in building, owning and operating large power plants that will ease the state's burden of investing in power generation.

The principal operating investments consist of Rayong Electricity Generating Company Limited (REGCO) and Khanom Electricity Generating Company Limited (KEGCO). Both are wholly owned by EGCO and are operated under long-term power purchase agreements (PPAs) with EGAT. The PPAs provide for capacity payments and energy payments, with fuel cost passed through for reimbursement by EGAT. The two power plants have been operating to very high levels of availability and safety standards. EGCO also owns 50% of BLCP Power Limited which was purchased from CLP. BLCP Power Limited is the owner of the 1,434 MW BLCP project of which construction was completed in 2006. Through Gulf Electric Public Company Limited (GEC), EGCO also has a 50% interest in Gulf Power Generation Company Limited, which is building the 1,468 MW Kaeng Khoi 2 (KK2) project, the first unit of which began commercial operation in 2007 and the second in 2008.

Some of the key IPP terms set by the Government are:

*The power prices submitted by IPPs should not exceed EGAT's cost
*The contract for the power purchase agreement be between 20 and 25 years
*The capacity of each project for commissioning in 1996-2002 must not exceed 1,400 MW, but may be expanded during the years 2003-2006
*Investors must have proven technological capability matching the required performance specifications
*Fuel choices must be clear, acceptable to the public, have stable pricing structure, have secured supply and support the Government's policy on fuel diversification for the country.

Priorities for project sites will be given to the following areas in the following order: central region, west coast (e.g. Prachuab Khiri Khan), east coast (e.g. Rayong), other regions and neighboring countries.

Small Power Producer (SPP) Program

The Thai government supports the development of renewable and non-conventional electricity production and cogeneration. SPPs can sell electricity to EGAT for distribution or to consumers located near the plant provided that this energy is generated using hydro, biomass or thermal cogeneration.

The goal of the SPP is to encourage participation in electricity generation, promote the use of indigenous by-product energy sources and renewable energy for electricity generation, promote more efficient use of primary energy and reduce the financial burden of government investment in electricity generation and distribution.

There is a strong emphasis on the environmentally friendliness of the project. The buy-back rate is based on the cost to EGAT.

Electricity Basics:

Electricity in Thailand is 220 Volts, alternating at 50 cycles per second.
Thailand has a stable and dependable electricity generating system that provide power at reasonable price.

Sources: EGAT, MEA, PEA and The Bank of Thailand, OneEnergy

Updated 20 July 2009