GMS Power Grid Who gains, who loses?

Chuenchom Sangarasri Greacen17 July 2005

Piyawan Resort

Leaders from 6 countries met GMS Summit in Kunming, China

4-5 July 2005

MOUImplementation of GMS Power Trade Operation

Agreement- Stage 1

What is ?

• Purpose “To set an implementation framework

for bilateral power trade between countries with transmission links in accordance with the draft GMS Power Trade Operation Agreement – stage I”

• For Thailand, EGAT is the designated entity responsible for plan implementation

MOUImplementation of GMS

Power Trade Ageement – stage I

Asian Development Bank (ADB)

Norconsult June 2002

Indicative Master Plan on Power Interconnection in the GMS

• Benefits :– Exchange energy e.g.

during different peak periods

– Reduce shared reserve margin

– Maximize efficient utilization of resources in the GMS

Reality of GMS Power Grid:expensive, risky investment

• Costs excluded in analysis:– Control center– Water usage– Regulator & reliability

coordination– Transitional costs

• Increased vulnerability: events in Laos/Cambodia determine reliability of Thai Grid

US$billion

Project cost 43.50 - 44.96

Cost savings*

0.45 - 0.91

% benefit of total cost

1.0 – 2.1%

*Cost savings of extended power cooperation scenarios over base case

Source: Comments on Indicative Master Plan on Power Interconnection in GMS Countries by Bretton W. Garrett, P.Eng., Ph.D.

PPA andRegionaldispatch

Regional Institutions

PerformanceStandards

RegionalPlanning

Transmission Tariffs

Regional Power Trade Operating Agreement in the Greater Mekong Sub – Region: GMS RPTOA

Goals for Stage # 1

PTOA: Bilateral Power Transactions;

Tariffs for cross-border transmission facilities;

Regional and Operational transmission planning;

Putting in place regional institutions: Regional Regulatory Board, Planning Working Groups, Management Committee

Recommended:

Agree and apply rules for Long-term PPA

Arrangements for facilitating building of cross-border transmission facilities.

Stage 2-4

Stage 2: power trade among more than 2 countries Stage 3: All GMS countries are connected by HV

transmission links and independent power producers can sell electricity

Stage 4: Complete competitive power trade in Regional Power Pool

Analyses of Dr. Brettron Garrett

Transmission expert from BC, Canada

http://www.palangthai.org/en/policy

1. “The most serious concern is

the wisdom of committing to an expensive, long-term electricity

trade arrangement

without certainty of the economic

benefits”

ADB’s assumptions on benefits of the GMS grid

• Peak sharing can reduce costs, need for reserve margin

• Lots of cheap hydropower will be built in Laos, Burma and Yunnan, and can displace electricity generation from gas and coal.

• Competition among different dam projects in the region will drive cost down so consumers will enjoy low, competitive price

Assumption 1. peak sharing

0

10,000

20,000

30,000

40,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

hour

MW

Thailand

Vietnam

Opportunity for peak reduction

Assumption 2• Hydropower is cheap• Hydropower is

plentiful • Cheap power from

dams will displace power generation from gas and coal plants

Assumption 3. GMS grid+competitive trade will drive the price down

Fact 1. peak sharing can reduce peak by only 25

0

10,000

20,000

30,000

40,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

hour

MW

Thailand

Vietnam

Reduce Peak by only 25. %

Fact 2Cheap hydropower ” is only an assumption, not findings from

studies

• Stage 4 is difficult/impossible to reach and there is no set timeline for it to happen

• With no competition, there is opportunity for price gouging as seen in California

Fact 3.No competition

Conclusion: Extremely risky investment

• Total investment 200,000 million baht (incld. Building dams)

• May result in benefits worth 90,000 million baht but highly uncertain

• What is certain is consumers in the GMS have to pay 48,000 billion Baht

2 . Regulatory body

• Balance interests of investors against consumers

• RPTOA suggests against having a highly independent regulatory

• No public participation• No consideration of

other greener, cheaper alternatives

3. Extremely difficult and expensive to harmonize grid standards across the region

• Split-second decisions by operators in one country can affect the whole region

• The Canadian economy lost 16,000 million Baht in August 2003 when a negligent USA utility caused a massive blackout.

4. Vulnerability of power interconnection to political

situation

Who gains, who loses?

• GMS consumers are sure to foot the bill of 48000, million baht to build the grid

• Economic benefits are highly uncertain and unlikely

• High risks: technical, environmental & social, political

• Benefits from dam construction go to multinational corporations, investors, contractors

Who gains, who loses?

Win-win trade?

Without GMS Grid, Thailand’s energy security would be at

risk?

บั�นทึ�กความเข้ าใจแนวทางการดำ�าเน นงานตามข้�อตกลง

ดำ�านการปฏิ บั�ต การเพื่��อการซื้��อข้ายไฟฟ าระหว#างประเทศในกล&#มอน&ภู(ม ภูาคล&#ม

แม#น��าโข้ง ระยะท+�1

ADB:Peak demand in

2020

Source: Norconsult, Indicative Master Plan on Power Interconnection in GMS Countries, June 2002

Energy security

or business expansio

n ?

Comparison of past demand forecasts vs. actual

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

55000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

MW

Jun-93

Dec-94

Oct-95

Apr-96

Oct-96

Jun-97

Sep-97

Sep-98(RER)

Sep-98(MER)

Sep-98(LER)

Feb-01

Aug-02

Jan-04(LEG)

Jan-04(MEG)

Jan-04(TEG)

ACTUAL

Source: รายงานการปร�บัปร&งค#าพื่ยากรณ์-ความต�องการไ ฟฟ า ฉบั�บัมกราคม พื่.ศ. 2547 คณ์ะอน&กรรมการพื่ยากรณ์-ความต�องการไ ฟฟ า

Thailand’s current demand forecast (Jan04)

Annual increases (MW)Annual Peak Demand Increase (MW)

0

500

1000

1500

2000

2500

3000

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

MW

Jan04 Forecast

Actual

Forecast Avg

Past 15 yr Avg

Past 20 yr Avg

Past 10yr Avg

ท+�มา : กรมพื่�ฒนาพื่ล�งงานทดำแทนและอน&ร�กษ์-พื่ล�งงาน

Biogas from pig farms

Reduces air and water pollution

Produces fertilizer

Produces electricity

Village-scale microhydro

• Mae Kam Pong village, Chiang Mai

• 40 kW• Community cooperative• Expected gross

revenues: 30,000 baht/month

2000 MW = ?

• เข้��อนภู(ม พื่ล 780MW

• เข้��อนปากม(ล 136MW

• แม#เมาะ 2400MW

• จะนะ 700MW