Alternative Energy Industry


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Alternative Energy Industry

  1. 1. Alternative Energy in Thailand
  2. 2. Alternative Energy in Thailand To stay competitive in a rapidly globalizing economy, Thailand has emerged as one of the first countries in Asia to encourage alternative energy investment. In 2008, the Government of Thailand introduced an alternative energy development plan (AEDP) which aims to provide 20.3% of total energy consumption from renewable sources by 2022. Thailand’s total energy demand was 66.7 megatons of crude oil equivalent in 2010. The country is highly dependent on imported fuel sources; in 2010, over 84% of fuel was imported. Total fuel expenditures totaled approximately 16% of Thailand’s GDP the same year, equivalent to USD 50 billion. The transportation and manufacturing sectors consumed the most energy in 2010: 35% and 37%, respectively. T d r w g e f p N 7 a c (
  3. 3. Thailand has taken important strides forward in the research and development (R&D) of alternative energy technologies. Thailand recently established the School of Renewable Energy Technology, which trains students and scholars in this field. With solid governmental commitment to develop a low-carbon society, sound economic fundamentals, and solid economic growth expected for the foreseeable future, Thailand’s alternative energy sector is prepared for a promising future. Power Generation by Energy Sources, 2010 Source: Department of Alternative Energy Development and Efficiency Natural gas fuels the majority of Thailand’s power generation, 73% in 2010. In the same year, renewable energy sources accounted for only 6%, though this figure will increase as Thailand continues to implement its Alternative Energy Development Plan (AEDP).
  4. 4. Energy Savings and Targets – The Alternative Energy Development Plan (AEDP), 2008-2022 Energy consumption in Thailand is increasing in step with global oil prices. Commercial energy consumption was 1.2 million barrels of oil equivalent per day in 2010, an increase in demand of approximately 47% over the past ten years. As a net importer of crude oil, Thailand is taking steps to manage the energy sector through an increase in alternative energy fuel sources. In 2008, the Alternative Energy Development Plan (AEDP) was introduced with the goal of boosting Thailand’s renewable energy supply and moving the country towards a lowcarbon society. The AEDP lists specific target periods to satisfy these objectives. Moreover, the plan aims to lower total energy consumption by 1.6% annually. This will reduce energy intensity by 8% by 2015. AEDP policies have led Thailand to become both the leading biofuel producer and user in Southeast Asia. Thailand is also beginning to improve the production of other renewable energy forms such as wind, hydropower and solar energy. In 2010, 6.5% of all energy sources in the Kingdom were renewable. As a leading renewable energy project developer and contractor in Asia, we found very early on that Thailand was a pioneer in renewable energy policy. The incentives for solar, bioenergy, and wind power in Thailand make it a very attractive location for serious renewable energy investors. -Daniel Gaefke, Managing Director, Annex Power Ltd.-
  5. 5. Thailand’s Alternative Energy Develop Plan (AEDP) Thailand’s Alternative Energy Develop Plan (AEDP) is divided into 3 phases: I. Short Term (2008-2011) • Promoting proven technologies and high potential renewable energy such as biofuel, biomass and bioenergy II. Medium Term (2012-2016) • Developing investment in the renewable energy industry and innovative renewable energy technologies so that they are commercially feasible • Investing in new alternative energy R&D • Enhancing the quality of life in Thailand though the introduction of “Green Cities” (low carbon dioxide in cities) III. Long Term (2017-2022) • Enhancing upcoming technologies • Focusing on expanding and maximizing “Green City” Models • Aiming to be a hub for biofuel exports and renewable technology development
  6. 6. Alternative Energy Development Plan (AEDP), 2008 - 2022 Source: Ministry of Energy El So Wi Hy Bi Bi Mu Wa Hy To Th So Bi Bi Mu Wa To Bi Et Bi Hy To To To Re NG To Al
  7. 7. Thailand has been a role model in the region, being first to promote a tariff policy mechanism to promote the adoption of renewable energy. To stimulate investment in power generation plants that make use of alternative technologies, Thailand introduced a comprehensive incentive program including feed-in-tariff subsidies and guaranteed access to the electricity grid. Investors, developers and technology providers such as Conergy responded, making Thailand Southeast Asia’s largest solar power producer. -Alexander Lenz, President, Southeast Asia & Middle East Conergy Renewable Energy Singapore Pte LtdAlternative Energy Potential and Target Potential Existing Electricity Type of Energy MW MW Solar 50,000 32 55 6 95 11 500 56 1,600 1 115 13 375 42 800 89 Wind Energy Hydro Power 2008-2011 MW 2012-2016 ktoe MW 2017-2022 ktoe MW ktoe 700 56 165 43 281 73 324 85 4,400 1,610 2,800 1,463 3,220 1,682 3,700 1,933 Biogas 190 46 60 27 90 40 120 54 Municipal Solid Waste 400 5 78 35 130 58 160 72 0 0 0 0 3.5 1 1,750 3,273 1,587 4,191 1,907 5,608 2,290 Biomass Hydrogen Total Thermal ktoe Solar Thermal ktoe ktoe ktoe 1 5 17.5 38 7,400 2,781 3,660 5,000 6,760 600 224 470 540 600 1 Biomass 15 24 35 Biogas Municipal Solid Waste Total Biofuel ktoe 154 3,007 m lt / d m lt / d 4,150 m lt / d ktoe 5,582 m lt / d ktoe 7,433 m lt / d ktoe Ethanol 3.00 1.24 3.00 805 6.20 1,686 9.00 2,447 Biodiesel 4.20 1.56 3.00 950 3.64 1,145 4.50 1,415 0 0 0 0 01 mill kg 124 6.00 1,755 9.84 2,831 13.50 3,986 Hydrogen Total Total Energy Consumption 66,248 70,300 81,500 97,300 Total Energy from RE (ktoe) 4,237 7,492 10,319 13,709 Renewable Energy Ratio 6.4% 10.6% 12.7% NGV (mmscfd-ktoe) 108.1 393.0 3,469 596 5,260 14.1% 690 6,090 Total Energy from RE+NGV (ktoe) 10,961 15,579 19,799 Alternative Energy Ratio 15.6% 19.1% 20.3% Source: Ministry of Energy
  8. 8. Biomass Biomass is an organic and renewable material made primarily from agricultural byproducts of rice, sugarcane, rubber and palm oil in tropical locations. Thailand — with a developed agricultural sector employing more than half of the population — produces 61 million tons a year of agricultural waste which can be transformed into biomass. Currently just under one-third of this amount is used for this purpose. Thailand thus has great potential to convert this remaining agricultural waste into biomass and exploit its alternative energy potential. In 2010, operating biomass power plants produced 2,000 MW of alternative energy in Thailand. A mix of promotional packages and tax incentives support players operating in this field, as well as R&D initiatives for biomass research. By 2016, Thailand aims to produce 3,220 MW of alternative energy from Biomass to reach the goal of 3,700 MW by 2022.
  9. 9. y m l 1 d s t s r A s s f y Biogas Each year, Thailand creates approximately 14.5 million tons of municipal solid waste (MSW) composed of food waste, paper and plastic. This waste can be used to produce biogas through the breakdown of organic goods contained in MSW that produce methane. In addition to MSW, Thailand has the potential to produce biogas from industrial wastewater and livestock manure. If fully exploited, these renewable resources would produce 7,800 terajoules and 13,000 terajoules of energy per year, respectively. Increasing personal consumption which generates MSW, coupled with ever-present wastewater and livestock effluent sources present opportunities for players seeking to exploit biogas potential. As of 2009, Thailand produced 79 MW of power through biogas. Having already surpassed the short-term target of 60 MW by 2011, Thailand aims to reach production of 90 MW by 2016. Thailand’s AEDP aims for 120 MW of biogas utilization by 2022.
  10. 10. Biodiesel and Ethanol The Government of Thailand strongly promotes the use and production of biodiesel and ethanol. Through major investments in research and development to find non-food alternatives for biodiesel and ethanol production, the Government of Thailand seeks to decrease dependence of imported fuel oil, as well as to promote green technologies. Mass transportation in Bangkok reflects the government’s continued commitment to pursuing alternative energy technologies; all vehicles in the municipal bus network have a hybrid motor which can burn either biodiesel or ethanol. Biofuels are less expensive than pure fossil oil. Additionally, biofuels are available for purchase throughout the country and less harmful to the environment. Palm oil can be used for the production of Biodiesel and is furthermore available in large quantity in Thailand. Since the introduction of Thailand’s Alternative Energy Development Plan (AEDP) in 2008, the demand for Biodiesel has increased significantly from 1.1 million liters per day in 2008, to 1.9 million liters per day in 2010, a growth of 81% over two years. The target — set by the Ministry of Energy — is to reach a demand of 4.5 million liters per day in 2022. Raw materials such as sugar cane or molasses, as well as tapioca, paddy straw and corn are integral to ethanol production and widely available in Thailand. In 2011 Thailand was the world’s largest exporter of cassava, and the second-largest exporter of sugar. Both sugar and cassava can be interchanged in ethanol production. Thailand’s AEDP has forecast sharp increases in the percentage of cassava and molasses that will be used in non-food uses such as ethanol production. The plan forecasts the amount of cassava used for ethanol to triple by 2014; molasses used in ethanol is expected to increase 32% over the same period. Demand for ethanol was 2.11 million liters per day in 2010 and should reach the target of 9.0 million liters per day in 2022. In 2010 the capacity for Ethanol production was 12.5 million liters per day.
  11. 11. Solar Energy Situated in the tropics, Thailand’s clear days and strong sun provide regular energy for the solar industry. Due to high investment costs per unit, Thailand has not yet reached its solar potential. There are two current methods to convert solar energy into electricity. One of the first involves using Photovoltaic (PV) solar cells, which are grouped into panels or arrays of panels and change sunlight directly into electricity. The other concentrates solar energy using lenses or mirrors to heat gasses or to produce steam for power generators. In 2010 Thailand had a solar power production capacity of 60 MW. This clean and safe energy met domestic energy demand as well as producing a surplus for export. Thailand has already surpassed the 2011 target of 55 MW of solar power production. The Alternative Energy Development Plan (AEDP) targets a solar energy capacity of 500 MW in 2022.
  12. 12. Wind power Thailand has an average wind speed which is rather moderate. Recent research has thus focused on locating sites in the country with high potential for generating energy using wind turbines. For wind power generation a wind speed of 4-5 meters per second is needed and an elevation of 50 meters above sea level is ideal. Nevertheless, Thailand has successfully installed wind turbines along coastal areas where the wind speed is high but the elevation is less than 50 meters above sea level. There are commercially potential areas for wind power generation throughout the country. The mountains of north Thailand have an elevation amenable to wind energy generation. Offshore locations in the Gulf of Thailand near Surat Thani or Nakhon Si Thammarat also show potential. The Thai government supports Small Power Producers (SPP) and Very Small Power Producers (VSPP) with special incentives. SPPs receive USD 0.08 per (THB 2.50) kilowatt hour when investing into the wind energy sector and VSPPs receive USD 0.12 per (THB 3.50) kilowatt hour. All private investments can sell electricity to stateowned companies for prices above market rates. A joint venture between Thai engineering firm Wind Energy Holding Co. and a unit of German Siemens AG, Siemens Wind power Co., produce wind turbines with more propeller-like blades and thinner poles that are ideally suited for wind speeds prevalent in Thailand. These turbines are not only more efficient, generating on average 2.5 kilowatts more electricity than existing turbines, but also cost one-sixth of the price of imported turbines: just USD 10,000. This joint venture shows that Thailand still retains untapped potential in renewable energy investments. Thailand’s investor-friendly renewable energy sector also attracted a partnership between Germany’s Pro Ventrum International and US firm GE Energy. The two enterprises announced in 2010 that they will establish a 90 MW plant in Chaiyaphum province, approximately 250 kilometers northeast of Bangkok. By 2010, Thailand had installed a wind power capacity of 5.61 MW and is aiming to reach a midterm target of 375 MW by 2016, with a final goal of 800 MW in 2022.
  13. 13. . y r d . s n n n s t d s o ) - y d s t g , t s d l Hydropower Thailand’s AEDP has targeted hydropower energy production at 165 MW in 2011, with an ultimate goal of 324 MW in 2022. Although Thailand’s topography provides several suitable locations for large hydropower projects throughout the country, small hydropower projects w h i c h a re m o re e n v i ro n m e n t a l ly sound have emerged as a compelling alternative. The relatively low cost of producing hydropower, coupled with Thailand’s abundant seasonal rainfall, makes environmentally- and sociallyconscious hydropower projects a novel way to tap this renewable energy source. Researchers at Thailand’s Suranaree U n i ve rs i t y i n N a k h o n R a tc h a s i m a province have identified multiple sites for microhydropower projects which use reservoirs as well as diversions from rivers through intake pipes to produce power.
  14. 14. Natural Gas Vehicles NGV usage has increased steadily from 1,550 tons per day in 2008 to 6,400 tons per day in 2010; a 413% increase over two years. The increasing number of NGV engines is explained primarily by rising oil prices which have led consumers to substitute to the cheaper and more environmentally sound natural gas alternative. In April 2011, Thailand had 434 NGV stations. These are expected to number 500 by the end of the year
  15. 15. Clean Development Mechanism (CDM) The clean development mechanism is an arrangement under the Kyoto Protocol which aims to give foreign investors the possibility of investing in developing countries to reduce carbon dioxide gas emissions. The CDM allows foreign firms to invest in less expensive emission reductions in foreign markets while collecting Certified Emission Reduction (CER) credits. Developing nations receive investments for the enhancement of their carbon dioxide reduction. Thailand currently has 53 approved CDM projects which mostly consist of biomass and biogas undertakings. Royal Decree No.514 provides an exemption of corporate income tax on net profit derived from the sale of carbon credit, either domestic or overseas, for three accounting periods starting from Jan 1st, 2011. Royal Decree No.514 is covers for the two following types of projects: 1. CDM projects that sell carbon credits of certified emission reduction (CERs) as certified by the Committee for Clean Development of the United Nations and are certified prior to the end of 2013 2. CDM projects that see carbon credits of Voluntary Emission Reduction (VERs) as certified by the Thailand Greenhouse Gas Management Organization and are certified prior to the end of 2013.
  16. 16. Attractive Investment Incentives Thailand Board of Investment offers a wide range of fiscal and non-tax incentives for investments based on location. Taxbased incentives include exemption or reduction of import duties on machinery and raw materials, and corporate income tax exemptions and reductions. Non-tax incentives include permission to bring in foreign workers, own land and take or remit foreign currency abroad. Additionally, foreign businesses are entitled to 100% ownership. Recognizing the importance of alternative energy to Thailand’s future development, the Board of Investment alternative energy has been identified as a priority activity. As such, approved projects in renewable and alternative that are submitted prior to the end of 2012 receive maximum incentives for all locations except Bangkok. They are granted import duty exemption on machinery all zones, 8-year-corporate income tax (CIT) exemption without being subject to a corporate income tax exemption cap; 50% reduction of CIT on the net profit generated from investment for 5 years after the exemption period; Double deductions for transportation, electricity and water costs for 10 years from the date of first income derivation from promoted activity; Deduction of infrastructure installation or construction costs from net profit in addition to normal depreciation of not more than 25% of the project.
  17. 17. Support for Investors The Energy Policy & Planning Office resolution offers additional value to the normal purchasing rate from power plants using renewable energy as below table. Adder for Renewable Energy Fuel Adder (B/kWh) VSPP SPP Special Add^fer * (B/kWh) Supporting period (Year) Biomass - Installed capacity <= 1 MW - Installed capacity > 1 MW 0.50 0.30 Bidding 1.00 1.00 7 7 Biogas (all categories of production sources) - Installed capacity <= 1 MW - Installed capacity > 1 MW 0.50 0.30 Bidding 1.00 1.00 7 7 Waste (community waste, not hazardous industrial waste, and inorganic waste) - AD &b LFG - Thermal Process 2.50 3.50 2.50 3.50 1.00 1.00 7 7 Wind power - Installed capacity <= 50 kW - Installed capacity > 50 kW 4.50 3.50 3.50 1.50 1.50 10 10 Mini and micro hydropower - capacity 50-200 kW - capacity < 50 kW 0.80 1.50 -No- 1.00 1.00 7 7 Solar power 6.50 6.50 1.50 10 * Note: Special Adders for Facilities in 3 Southern Provinces and 4 Districts of Songkhla: Chana, Na Thawi, Thepha, and Saba Yoi Source: Ministry of Energy
  18. 18. Supporting Agencies Encouraging Alternative energy Use • Ministry of Energy (MOE): • The Energy Policy and Planning Office (EPPO) is the main authority in the formulation and administration of energy policies and planning for the national sustainability. • The Department of Alternative Energy Development and Efficiency (DEDE) is the former “National Energy Authority Committee” and was founded to set policies and reflect on several energy projects. • Ministry of Natural Resources and Environment of Thailand (MNRE) is in charge of the protection of Thailand’s mineral, marine, water and coastal resources and administers environmental protection through laws on. • Ministry of Science and Technology (MOST): Formerly the “Ministry of Science, Technology and Energy”. The office exists among others to exploit technology and innovation as well environmental protection.
  19. 19. n y d y n d , s e s l Head Offices OFFICE OF THE BOARD OF INVESTMENT 555 Vibhavadi-Rangsit Rd., Chatuchak, Bangkok 10900 Tel: +66 (0) 2553-8111 Fax: 66 (0) 2553-8222 + Website: Email: ONE START ONE STOP INVESTMENT CENTER (OSOS) 18th Floor, Chamchuri Square Building, 319 Phayathai Rd., Pathumwan, Bangkok 10330 Tel: +66 (0) 2209-1100 Fax: 66 (0) 2209-1199 + Website: Email: Contact Us ONE STOP SERVICE CENTER FOR VISAS AND WORK PERMITS 18th Floor, Chamchuri Square Building, 319 Phayathai Rd., Pathumwan, Bangkok 10330 Tel: +66 (0) 2209-1100 Fax: 66 (0) 2209-1194 + Email: INVESTOR CLUB ASSOCIATION (ICA) 12th and 16th Floor, TP&T Building, 1 Soi Vibhavadi-Rangsit 19, Vibhavadi-Rangsit Rd., Lad Yao, Chatuchak, Bangkok 10900 Tel: +66 (0) 2936-1429 Fax: 66 (0) 2936-1441-2 + Website: Email: Regional Offices CHIANG MAI Regional Investment and Economic Center 1 Airport Business Park 108-110, 90 Mahidol Rd., Muang, Chiang Mai 50100 Tel: +66 (0) 5320-3397-400 Fax: 66 (0) 5320-3404 + Email: SONGKHLA Regional Investment and Economic Center 5 7-15 Chaiyong Building, Juti Uthit 1 Rd., Hadd Yai, Songkhla 90110 Tel: +66 (0) 7434-7161-5 Fax: 66 (0) 7434-7160 + Email: NAKHON RATCHASIMA Regional Investment and Economic Center 2 2112/22 Mitraphap Rd., Muang, Nakhon Ratchasima 30000 Tel: +66 (0) 4421-3184-6 Fax: 66 (0) 4421-3182 + Email: SURAT THANI Regional Investment and Economic Center 6 49/21-22 Sriwichai Rd., Makhamtia, Muang, Surat Thani 84000 Tel: +66 (0) 7728-4637, +66 (0) 7728-4435 Fax: 66 (0) 7728-4638 + Email: KHONKAEN Regional Investment and Economic Center 3 177/54 Moo 17, Mitraphap Rd., Muang, Khonkaen 40000 Tel: +66 (0) 4327-1300-2 Fax: 66 (0) 4327-1303 + Email: PHITSANULOK Regional Investment and Economic Center 7 3rd Floor, Thai Sivarat Building, 59/15 Boromtrilokkanat 2 Rd., Naimuang, Muang, Phitsanulok 65000 Tel: +66 (0) 5524-8111 Fax: 66 (0) 5524-8777 + Email: CHONBURI Regional Investment and Economic Center 4 46 Moo 5, Laem Chabang Industrial Estate, Sukhumvit Rd., Toongsukhla, Sriracha, Chonburi 20230 Tel: +66 (0) 3840-4900 Fax: 66 (0) 3840-4999, +66 (0) 3840-4997 + Email: Overseas Offices BEIJING Thailand Board of Investment, Beijing Office Royal Thai Embassy, No.40 Guang Hua Rd., Beijing 100600 P.R.C. Tel: +86-10-6532-4510 Fax: +86-10-6532-1620 Email: FRANKFURT Thailand Board of Investment, Frankfurt Office Royal Thai Embassy, Bethmann Str. 58, 5.OG 60311 Frankfurt am Main Federal Republic of Germany Tel: +49 (0) 69-9291-230 Fax: 49 (0) 69-9291-2320 + Email: GUANGZHOU Thailand Board of Investment, Guangzhou Office Investment Promotion Section, Royal Thai Consulate-General, Room 1216-1218, Garden Tower, 368 Huanshi Dong Rd., Guangzhou 510064 P.R.C Tel: +86-20-8333-8999 ext. 1216-8, 8387-7770 Fax: +86-20-8387-2700 Email: LOS ANGELES Thailand Board of Investment, Los Angeles Office Royal Thai Consulate-General, 611 North Larchmont Boulevard, 3rd Floor, Los Angeles CA 90004, U.S.A. Tel: +1-323-960-1199 Fax: +1-323-960-1190 Email: SEOUL Thailand Board of Investment, Seoul Office #1804, 18th Floor, Coryo Daeyungak Tower, 25-5, Chungmuro 1-ga, Jung-gu, Seoul, 100-706, Korea Tel: +82-2-319-9998 Fax: +82-2-319-9997 Email: SHANGHAI Thailand Board of Investment, Shanghai Office Royal Thai Consulate-General, 15th Floor, Crystal Century Tower, 567 Weihai Rd., Shanghai 200041, P.R.C Tel: +86-21-6288-9728-9 Fax: +86-21-6288-9730 Email: STOCKHOLM Thailand Board of Investment, Stockholm Office Stureplan 4C 4th Floor, 114 35 Stockholm, Sweden Tel: +46 (0) 8463 1158, +46 (0) 8463 1174-75 Fax: +46 (0) 8463 1160 Email: SYDNEY Thailand Board of Investment, Sydney Office Suite 101, Level 1, 234 George Street, Sydney, New South Wales 2000, Australia Tel: +61-2-9252-4884 Fax: +61-2-9252-2883 Email: NEW YORK Thailand Board of Investment, New York Office 61 Broadway Avenue, Suite 2810, New York, N.Y. 10006, U.S.A. Tel: +1-212-422-9009 Fax: +1-212-422-9119 Email: TAIPEI Thailand Board of Investment, Taipei Office Taipei World Trade Center, 3rd Floor, Room 3E 39-40 No.5 Xin-Yi Rd., Sec. 5 Taipei 110, Taiwan R.O.C. Tel: +886-2-2345-6663 Fax: +886-2-2345-9223 Email: OSAKA Thailand Board of Investment, Osaka Office Royal Thai Consulate-General, Bangkok Bank Building, 5th Floor, 1-9-16 Kyutaro-Machi, Chuo-Ku, Osaka 541-0056 Japan Tel: +81 (0) 6-6271-1395 Fax: +81 (0) 6-6271-1394 Email: TOKYO Thailand Board of Investment, Tokyo Office Royal Thai Embassy, 8th Fl., Fukuda Building West, 2-11-3, Akasaka, Minato-ku, Tokyo 107-0052 Japan Tel: +81 (0) 3-3582-1806 Fax: +81 (0) 3-3589-5176 Email: PARIS Thailand Board of Investment, Paris Office Ambassade Royale de Thailande, 8, Rue Greuze, 75116 Paris, France Tel: +33 (0) 1-5690-2600-1 Fax: +33 (0) 1-5690-2602 Email:
  20. 20. 555 Vibhavadi-Rangsit Rd., Chatuchak, Bangkok 10900, Thailand Tel: +66 2553 8111 Fax: +66 2553 8222 E-mail: BOI 2012