A wave of organized and well-attended protests against new coal-fired power generation projects could become a major hindrance to the diversification of fuel usage in Thailand's gas-dominated electricity generation sector.

The potential setback for coal use came as delays also occurred in signing up one anticipated source of new gas supplies.

Rallies were held in September against coal-fired power projects planned by IRPC and the Babcock & Brown Co-Loxley partnership in Rayong and Samut Songkhram, respectively.

The opposition could prompt other bidders in the forthcoming round of independent power producer (IPP) projects to abandon coal-based schemes.

They would be forced to turn to other types of power plants, notably those run on natural gas, which have attracted less opposition. But the kingdom is already heavily reliant on gas-fired projects.

The local and environmentalist opposition to new coal-fired power plants as well as to nuclear energy could mean that Thailand's reliance on natural gas for power generation could balloon from the current 70% to as much as 90% by 2020 or before.

IRPC and Babcock & Brown Co-Loxley are among the sixty or so local and international companies pursuing the concessions to install 3,200 megawatts (MW) of generating capacity from 2012 under the country's second IPP tender.

The 3,200 MW of capacity represents the first in a series of IPP bids planned in connection with Thailand's revised power supply development plan, which calls for the installation of at least 32,000 MW of capacity over the next 15 years.

Thai power demand is projected to grow by 5% to 6% a year, or an average of 1,400 MW a year. Thailand's most recent peak power demand, registered on March 28, 2007, was 21,896.4 MW.

Within the 32,000 MW of total new capacity, IPP developers are being called on to build 12,600 MW of plant from 2007 to 2021. This represents 31.75% of the additional generating plant the kingdom is projected to require over the next 15 years.

Bids for the country's first IPP tender in more than a decade are due for submission in October 2007. The Energy Ministry plans to complete the bid evaluation process by December with a view to clinching the power purchase agreements by June 2008.

The negative perception of coal held by much of the Thai public dates back to problems that occurred more than a decade ago, and in particular the controversy over the high sulfur dioxide emissions produced by the 2,400-MW Mae Moh lignite-fired complex in Lampang in the 1980s and 1990s. The plant is owned by the state-run Electricity Generating Authority of Thailand (Egat).

The perceptions remain in spite of the fact that comprehensive air pollution control and mitigation measures have been implemented since then.

This includes the Baht 7.1 billion ($207.2 million) installation of flue gas desulphurization units on the ten generators, which absorb more than 90% of the sulfur dioxide emissions.

These measures mean that the air around Mae Moh is now much better than in Bangkok in terms of its SO2 content. The annual average is about two micrograms per cubic meter at Mae Moh compared to five micrograms per cu m in Bangkok.

Following the Mae Moh controversy there were prolonged and high-profile protests in Prachuab Khiri Khan province at the time of the first IPP tender in the mid-1990s. These led to the eventual demise of the Union Power Development Company's 1,400-MW coal-fired project and Gulf Power Generation's 734-MW facility.

The two Prachuab Khiri Khan schemes have since been relocated to the Central Plains and switched from coal use to gas-fired combined-cycle systems.

Egat's Mae Moh plant and the BLCP Power Company's 1,400-MW IPP facility are the country's only large coal-fired power plants, although there are a substantial number of smaller coal-fired generating plants developed on a captive basis or through the small power producer program.

The BLCP Power project was awarded in the first IPP bidding round and, operating in the highly-industrialized eastern coastal province of Rayong, contributes about 20% of national power supplies.

IRPC

In the latest development IRPC, which is a subsidiary of the state-controlled energy company PTT, has already bowed to pressure from local communities and environmental activists. The opponents had set up a road blockade to protest against the IPRC's proposed 1,600-MW coal-fired project.

IRPC president Piti Yimprasert said the company will now not bid in the second IPP bidding round on the basis of the coal-fired project, due to a lack of understanding about the firm's policy and the project. But IRPC is keeping its options open for the third and successive IPP rounds and says that, ahead of any future tenders, it will involve local residents in all the processes of project planning and execution, especially relating to the environmental impact assessment.

IRPC executives also hinted that the company is pondering switching the fuel source of the proposed second-round project from coal to natural gas. And Energy Minister Piyasvasti Amranand has weighed in, saying that IRPC should not build a coal-fired power plant in Rayong as the project site is located near communities.

He noted that new IPP plants must abide by environmental requirements and the new constitution, which requires people's participation in projects that will affect their lives. Power plant builders should review their projects if there is opposition from residents, the minister added.

Egat is meanwhile pressing ahead with plans to build its own coal-fired plants, although the utility has been seeking with limited success to advance the option for many years. Egat governor Kraisri Karnasuta has said that the company is conducting feasibility studies to find suitable locations for a number of coal-fired plants, each with 800 MW of capacity, to come on line between 2014 and 2015 (see PiA 486/12).

Meanwhile in a separate development Thailand's negotiations over a planned liquefied natural gas (LNG) supply contract with Iran have become bogged down by inflated gas prices. These have resulted in large part from the higher development costs now expected at the project on the Pars gas field.

The difficult price negotiations between PTT and a consortium comprising the National Iranian Oil Company, France's TotalFinaElf and Malaysia's Petronas, are expected to delay the conclusion of the contract by six months to mid-2008.

The uncertainty over the contract has also prompted PTT to look in more detail at other possible LNG deals with countries including Algeria, Australia, Qatar, and Egypt in case the talks with Iran are delayed further or collapse.

In July 2006 PTT had signed an in-principle agreement with the Iranian Oil Ministry for three million metric tons a year of Iranian LNG from 2012, with a further 2 million mt a year to be supplied from 2014. At that time, both sides hoped to conclude a contract in June 2007, with contracts to be signed before the end of 2007.

But PTT executive vice-president Chitrapongse Kwangsukstith said the Pars group wants to include higher development costs in the selling price, which has repeatedly prolonged the negotiations. He added, however, that PTT wanted to see a successful conclusion to the negotiations with Iran.

While a deal has yet to be struck, he noted that PTT will continue to build an LNG receiving terminal and related facilities in Rayong province at a cost of $700 million. The facility is scheduled to be completed by the end of 2010.

Iran has denied that a disagreement on prices has delayed the LNG contract with PTT. Mohsen Pakaein, the Iranian ambassador to Thailand, said in a statement that the negotiations have proceeded smoothly. He stressed that he had not received reliable reports that the talks were facing obstacles.

But he did note that "the process of reaching an agreement in energy talks was very delicate, complex and requires patience." The ambassador also emphasized that the project would serve the interests of both countries in the long term and negotiations would continue without any hindrance due to mutual goodwill. And in a sign of the increasing concerns over securing new gas supplies, Chitrapongse indicated in late September that PTT plans to ask the Vietnamese and Malaysian governments and state energy companies to join it in seeking to develop the Natuna gas resources in the Indonesian sector of the South China Sea. He noted that all three countries had expressed interest in buying gas from the offshore D-Alpha field, which has enormous estimated gas resources, at more than 50 trillion cubic feet, but has very high carbon dioxide content at about 70%. Chitrapongse said that PTT had expressed interest in participating in the project for more than a decade, but that the prospect had earlier been less attractive because of its high production costs compared with alternative sources.

He added that a 2,000-kilometer (1,240-mile) pipeline costing more than Baht 100 billion ($3 billion) could link Natuna with PTT's existing and developing pipeline system in the Gulf of Thailand to allow the delivery of about 3 billion cu ft of gas a day to the project partners.

Created: October 1, 2007


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