Grid-tied decentralized power generation: experience from Thailand and Tanzania

1. Grid-tied decentralized power generation: experience from Thailand and Tanzania Chris Greacen Palang Thai AEPF 9 17 October 2012 Vientienne, Lao

2. Outline • What is decentralized electricity? • Practical policies for decentralized electricity • Thailand • Tanzania

3. What is decentralized electricity? • Decentralized electricity: generating electricity from many small, local energy sources • High efficiency cogeneration (CHP) • On-site renewable energy • On-site power • Centralized electricity: large power plants generally located far from loads • Coal • Nuclear • Large hydropower • Natural gas (CCGT)

4. Decentralized Technologies

5. The Move to Decentralized Technology vs. vs.

6. Old way New way Power plant Power plant Biomass Wind power Biomass Solar Customers Energy efficient end-use, or dispatchable loads

7. Cost and size of thermal power plants from 1930 to 1990 • Initial cost declines through increasing scale. • 1990s through mass production of smaller turbines Source: Hunt, Sally and Shuttleworth, Graham. Competition and Choice in Electricity. (England, John Wiley & Sons, 1996).

8. Decentralized generation brings down costsIreland – retail costs for new capacity to 2021

9. Worldwide energy waste Electricity Generation Worldwide (TWh) (Source: International Energy Agency 2002)

10. Cogeneration (Combined Heat and Power – CHP)

11. 14 MW cogeneration at University of Massachusetts, Amherst, USA75% efficient. Provides heating for 200 buildings

12. Denmark – a transition to decentralized energy Source: Danish Energy Center

13. CHP cools Bangkok’s airport Suvarnabhumi International Airport in Bangkok cooled by district cooling system powered by a CHP that also generates 52.5MW of electricity.

14. Decentralized electricity policies and outcomes -- Thailand

15. Practical policies to support distributed electricity • Access to grid • Feed-in tariffs • Low cost financing • Tax incentives Thailand’s SPP+VSPP

16. Access to grid $

17. Technical regulations: Allowable voltage, frequency, THD variations Protective relays Communication channels Commercial regulations: Definitions of renewable energy, and efficient cogeneration Cost allocation Standardized tariff determination Invoicing and payment arrangements Arbitration • Access to grid $ + Standardized Power Purchase Agreement (PPA)

18. Access to grid Small Power Producer (SPP) regulations: • Started 1992 • Fossil-fuel cogeneration and renewable energy up to 90 MW (export to grid) • Low tariff offered for “non-firm” generators made it difficult for most renewables.

19. Bangkok Cogen, Rayong, 115 MW LaemChabang, Chonburi 100 MW 4494 MW online + 4152 MW with signed PPAs... 75% fossil fuel PluakDaeng, Rayong 70 MW Map Ta Phut Olefins, Rayong, 70 MW

20. Evolution of Thai VSPP regulations • Access to grid • Feed-in tariffs • 2002 • VSPP regulations drafted, approved by Cabinet • Up to 1 MW export, renewables only • Tariffs set at utility’s avoided cost • 2006 • Up to 10 MW export, renewables + cogeneration • Feed-in tariff “adder” • 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

21. Feed-in tariffs EPPO 21

22. Feed-in tariff policies worldwide • Feed-in tariffs

23. Revolving Fund • Thai Government loans funds at 0% interest to commercial banks for investment in: • Energy efficiency improvement projects • Renewable energy development and utilization projects • Low cost financing 11 local financial institutions have participated. • Max loan amount: 50 MB • Max. interest rate: 4% • Max. loan period: 7 years January 2003 – present 7000 M Baht

24. Investor Investor Investor Investor ESCO Fund A source of venture capital for ESCOs to jointly invest with private operators in energy efficiency & renewable energy projects. The program targets SMEs & small projects. • Low cost financing Energy Conservation Promotion Fund ESCO Fund Investment Committee Fund Manager ESCO Venture Capital Equity Investment Equipment Leasing Carbon Market Technical Assistance Credit Guarantee Facility 24

25. Tax Incentives • Tax incentives 25

27. Bangkok Solar 1 MW PV • Signed PPAs for 767 MW of PV (SPP + VSPP)

28. Lopburi 73 MW PV (over 1,000 rai = 160 hectares) • Project size: 1 MW • Uses self-manufactured a-Si • Signed PPAs for 767 MW of PV (SPP + VSPP)

29. Solar thermal electricity • 5 MW, 135 MW planned • 900 Million baht (180 baht/watt) but costs expected to decrease 20 to 30% to 135 baht/watt • Commissioned in Kanchanburi on Nov 2011 • Signed PPAs for 1343 MW of solar thermal

30. Biogas from Pig Farms Reduces air and water pollution Produces fertilizer Produces electricity 8 x 70 kW generator Ratchaburi

31. 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

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

33. Feb 2007 18 MW online Thailand VSPP Status

34. June 2008 Thailand VSPP Status

35. June 2009 Thailand VSPP Status

36. Mar 2010 Thailand VSPP Status

37. Sep 2011 1056 MW online (58-fold increase since 2007) PPAs signed for additional 4318 MW Thailand VSPP Status

38. Solar trends in Thailand

39. 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 (2012): $0.096/kWh • In rural mini-grid areas offsetting diesel (2012): $0.243/kWh • 3SPPs in operation, 12+ in pipeline by October 2012 www.ewura.go.tz/sppselectricity.htmlfor English versions of regulations, and model PPAs

40. Policies to encourage decentralized mini-grid electricity in rural areas • Allow off-grid generators to pick their own retail tariff (subject to transparent regulatory approval) • Simple 1-page spreadsheet for regulators to do this: http://tinyurl.com/SPPevaluator(developed by World Bank for use in Africa)

41. Policies to encourage decentralized electricity in off-grid areas • Lower investment risk to mini-grid generator operators in event that “big grid reaches mini-grid” by: • Allowing formerly off-grid generators to sell back to the grid; and/or • Allowing mini-grid operators to purchase wholesale electricity for resale to retail customers.

42. Micro- hydropower • 300 kW – remote mini-grid • LUMAMA hydropower project • Mawengi village, Njombe, Tanzania

43. TPC, Moshi17.5 MW – selling 4 MW to main gridCogenerationSugarcane bagasse

44. Mwenga 4 MW hydroexpected to serve 1000 customers by Feb 2013

45. Summary • Access to grid • Feed-in tariffs • Low cost financing • Tax incentives • Remote mini-grids: • Flexibility in retail tariff setting • Reduce investment risk by working out details of what happens when “big grid” reaches mini-grid

46. Thank you For more information, please contact chris@palangthai.org This presentation available at: www.palangthai.org/docs