small scale biomass power plants in thailand: policy …

SMALL SCALE BIOMASS POWER PLANTS IN THAILAND: POLICY LESSONS

Disclaimer :The views expressed herein are those of the author(s) and do not necessarily reflect the views of the United Nations. This document has been produced without formal United Nations editing and do not imply the expression of any opinions, designations and material presentations do not imply the expres-sion of any opinion whatsoever on the part of UNIDO concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of frontiers or boundaries. Designations such as “developed”, “industrialized” and “developing” are intended for statistical convenience and do not necessarily express a judgment about the stage reached by a particular country or area

in the development process. Mention of firm names or commercial products do not constitute an endorsement by UNIDO. Although great care has been taken to maintain the accuracy of information herein, UNIDO does not assume any responsibility for consequences which may arise from the use of the material.

Authors:Dr. Chatchawan CHAICHANAUNIDO-STRI, CMU Center for Biomass Gasification Learning CenterThe Science and Technology Research Institute, Chiang Mai University (STRI, CMU)239 Huaykaew Road, Muang District, Chiang Mai 50200, Phone: +66 (0) 53-942-478 ; Fax: +66 (0) 53-942-478 Coordination:This study has been funded by GEF under the Project “Promoting Small-Scale Biomass Power Plants in Rural Thailand for Sustaina-ble Renewable Energy Management and Community Involvement” implemented by UNIDO, in collaboration with The Policy and Strategy Management Office of the Ministry of Energy, Thailand and The Science and Technology Research Institute, Chiang Mai University (STRI, CMU), Thailand The “POLICY LESSONS” was coordinated by: Jossy THOMAS, Project Manager, UNIDOSupalerk KANASOOK, National Project Coordinator, UNIDO

01 05 05 07

10 12 1615

Thailand’s Alternative Energy DevelopmentPlan

Key barriers of developing Smallscale biomass gasifier power plant

Community participation

Electricity tariff and financial feasibility

Limited distributionline capacity

Licenses and permits

Policy Recommendation

Support for community

P a g e P a g e P a g e P a g e

P a g e P a g e P a g e P a g e

CONTENT

Thailand’s Alternative Energy Development PlanThailand has supported the development of Alternative Energy (AE) – all forms of energy that could be substituted for mainstream fossil fuel – since 1992. Renewable Energy (RE) forms part of this development and is mostly considered as Primary Energy (PE) (i.e. the energy used in producing final forms of useful energy). There are three common forms of Final Energy (FE): electricity, biofuel and heat (i.e. thermal). Policy supporting RE facilities in Thailand were first introducedin 1992 through Small Power Producers (SPP), with a genera-tion capacity of 10-100 MW (Figure 1) between 2002 and 2006. The support was extended to Very Small Power Produc-ers (VSPP), whose generation capacity did not exceed 10 MW over that period.

SMALL SCALE BIOMASS POWER PLANTS IN THAILAND: POLICY LESSONS 01

After 2006, a lower levy was introduced to support biofuel production (both bioethanol and biodiesel). The biofuel was blended with fossil-based fuels and sold to the public at cheaper prices when compared to 100% fossil-based fuels. Meanwhile, support for thermal energy was first introduced in 2010 for water heaters and solar dryers, and a Feed-in Tariff (FiT) system was first introduced in 2013; several versions of this were developed in order to influence the renewable energy market in Thailand.

The Alternative Energy Development Plan (AEDP) was developed by the Ministry of Energy in 2012. The 10-year plan aimed to increase the share of RE to 25% of FE consumption. The AEDP was revised in 2015 with a new target of 30% RE over the next 20 years, and included an aim to establish biomass power plants with a total installed capacity of 5,570 MW (Figure 2).

Currently, the share of RE is 15.28%

of the FE consumption, comprising

thermal (61%), electricity (23%) and

biofuel (16%).

SMALL SCALE BIOMASS POWER PLANTS IN THAILAND: POLICY LESSONS02

Note: List of abbreviations in this figureAEDP = Alternative Energy Development Plan

BOI = Board Of Investment

ESCO = Energy Service Company

FiT = Feed in Tariff

M-tCO2 = Million Ton1 of CO2

REDP = Renewable Energy Development Plan

RPS = Renewable Energy Portfolio Standard

SPP = Small Power Producer

VSPP = Very Small Power Producer

VSPP (<1 MW)

SPP• Start 300 MW• Expand 1,720 MW@1995• 3,200 MW (1996-2000)

1992

RPS 5%Policy obligating each retail seller of electricity to includecertain amount of electricity from RE in itstotal electricity supplied to its retail load• Policy start 2003, Framework start 2004• Program and after adder cost

2003

2002

2006

2006

สวนเพิ่มฯ(บาท/

กิโลวัตต-ชั่วโมง)

สวนเพิ่มฯ พิเศษสำหรับ 3 จังหวัดชายแดนภาคใต1/

(บาท/กิโลวัตต-ชั่วโมง)

รวมสวนเพิ่มฯ พิเศษสำหรับ 3 จังหวัดชายแดนภาคใต

(บาท/กิโลวัตต-ชั่วโมง)

ระยะเวลาสนับสนุนนับจากวันCOD (ป)

เชื้อเพลิง

1. ชีวมวล

(1) กำลังการผลิตติดตั้ง ≤ 1 MW 0.50 1.00 1.50 7

(2) กำลังการผลิตติดตั้ง > 1 MW 0.30 1.00 1.30 7

2. กาซชีวภาพ

(1) กำลังการผลิตติดตั้ง ≤ 1 MW 0.50 1.00 1.50 7

(2) กำลังการผลิตติดตั้ง > 1 MW 0.30 1.00 1.30 7

3. ขยะ2/

(1) ระบบหมักหรือหลุมฝงกลบขยะ 2.50 1.00 3.50 7

(2) พลังงานความรอน (Thermal Process) 3.50 1.00 4.50 7

4. พลังงานลม

(1) กำลังการผลิตติดตั้ง ≤ 50 kW 4.50 1.50 6.00 10

(2) กำลังการผลิตติดตั้ง > 50 kW 3.50 1.50 5.00 10

1. พลังงานน้ำขนาดเล็ก

(1) 50 KW≤กำลังการผลิตติดตั้ง < 200 kW 0.80 1.00 1.80 7

(2) กำลังการผลิตติดตั้ง > 50 kW 1.50 1.00 2.50 7

8.00 1.50 9.50 101. พลังงานแสงอาทิตย

หมายเหตุ :1/ หมายถึง จังหวัดชายแดนภาคใต ไดแก จังหวัดยะลา ปตตานี และนราธิวาส2/ หมายถึง ขยะชุมชน และขยะอุตสาหกรรมที่ไมใชขยะอันตราย และไมเปนขยะที่เปนอินทรียวัตถุ

• As premium price FIT or feed in adder into each kWh of power gen from RE• Most effective for all five RE technologies• Fix rate but differ in some specific area & adjusted due to cheaper RE tech

SPP (10-90 MW)VSPP (<10 MW)

AdderCost

Biofuel promotion

Ethanol

Biodiesel

REPolicy

1 Tonne (Metric ton) is equal to 1,000 kilograms

Figure 1 The development of Renewable Energy Supporting policies in Thailand


แผนพัฒนาพลังงานทดแทนและพลังงานทางเลือก 25% ใน 10 ป (พ.ศ. 2555-2564) กพช. 16 กรกฎาคม 2556

การพัฒนาไปสูสังคมคารบอนต่ำ

เปาหมายการใชพลังงานทดแทน 25%ของการใชพลังงานทั้งหมด ภายในป 2564

Alternative Energy Development Plan(AEDP : 2012-2021)

งบประมาณสนับสนุนดานการวิจัยและพัฒนา

สนับสนุนการลงทุนโดยภาคเอกชนและชุมชน

4,800 MW , 100 ktoe

แสงอาทิตย

3,000 MW 1,800MW100 ktoe

ลม

324 MW

โรงไฟฟาพลังน้ำ

เล็ก จิ๋ว ระบบสูบกลับ

324 MW -

3 MW

พลังงานรูปแบบใหม

คลื่น ความรอนใตพิภพ

2 MW 1 MW

8,800 MW , 9,700 ktoe

ชีวมวล กาซชีวภาพ ขยะ

4,800 MW 3,600 MW 400 MW

8,500 ktoe 1,000 ktoe 200 ktoe

กาซชีวภาพอัด

(CBG)

ไบโอดีเซลเอธานอล

9ลล./วัน

3ลล./วัน

7.20ลล./วัน

1,200ตัน/วัน

เชื้อเพลิงใหมทดแทนดีเซล

พลังงานชีวภาพ เชื้อเพลิงชีวภาพ

• Direct subsidy Biogas (20 yr) Solar Biodiesel• ESCO• BOI• Soft loan • Etc.

Otherinstruments

AEDP 25% 2012-2021

Mitigate 76 M-tCO2 by 2021

2010 2013-14

2008 2012 2015

ESCO VentureCapital

R&D

Adder cost

BOI

2008 2011As of February 2009

2016 2022

Biofuels

Thermal

Power

NGV

15.6% 19.1%

4.1%

6.2%

7.6%

2.4%

20.3%EthanolTargetExistingBiodieselTargetExistingHydrogenTarget

Target 690 mmscfd(6,090 ktoe)

Exist 108.1 mmscfd

Target 7,433 ktoeExisting 3,007 ktoe

Target 5,608 MWExisting 1,750 MW

Adder 3,858 MW• Small Hydro/Wind/Solar• Biomass/Biogas/MSw/• Hydrogen

9.0 ML/day1.24 ML/day

4.5 ML/day1.56 ML/day

0.1 ML/kg

6.4%

CDM

Ince

ntive M

easu

res

Total RE output 19,800 ktoe/yrReduce Import 461,800 mil.Baht/yr

Reduce GHG by 42 mil ton/yr

REDP 15 years

1st Long termRE Plan of the

country

Solar heat program(water heater and

solar dryer)

• From adder+electricity price to fixed price FIT• Start with solar PV and rooftop with limited MW bought (July 2013)• Biogas from Napier grass also considered

Feed in tariff

หมายเหตุ : คาใชพลังงานขั้นสุดทายตามเปาหมายป 79 เปนตัวเลขเบื้องตนที่ดำเนินการตามแผน EE แลว

แผนพัฒนาพลังงานทดแทนและพลังงานทางเลือก พ.ศ. 2558 - 2579ประเภทพลังงาน ศักยภาพ ศักยภาพคงเหลือ เปาหมายป 79 เปาหมายป 79ปจจุบัน (ก.ย.57)พลังงานไฟฟา MW MW MW ktoeMW1. กาซชีวภาพ 4,955.97 4,643.02 3,930.00 2,252.31312.952. ชีวมวล 8,712.14 6,330.42 6,000.00 3,189.162,451.723. พลังงานน้ำ 410.00 268.11 410.00 134.66141.894. พลังงานขยะ 697.01 631.29 500.00 261.2565.725. พลังงานลม 14,141.00 13,916.53 3,500.00 470.26224.476. พลังงานแสงอาทิตย 42,356.67 41,608.82 6,500.00 761.371,287.857. พลังงานทดแทนอื่นๆ 175.50 175.20 3.00 0.900.30รวม 71,518.29 67,033.39 20,843.00 7,069.904,484.90พลังงานความรอน ktoe ktoe ktoe ktoektoe1. กาซชีวภาพ 1,000.00 503.87 1,000.00 1,000.00496.132. ชีวมวล 12,384.79 7,231.79 12,300.00 12,300.005,153.003. พลังงานขยะ 200.00 101.91 200.00 200.0098.034. พลังงานแสงอาทิตย 1255.91 1,251.02 300.00 300.004.89รวม 14,840.70 9,088.65 13,800.00 13,800.005,752.05เชื้อเพลิงชีวภาพ ลานลิตร/วัน ลานลิตร/วัน ลานลิตร/วัน ktoeลานลิตร/วัน1. เอธานอล 10.97 7.91 11.00 2,991.183.062. ไบโอดีเซล 14.10 11.17 14.10 4,436.282.933. กาซชีวภาพอัด (CBG) ตัน/วัน 4,100.00 4,100.00 3,900.00 2,419.95-รวม 9,847.41การใชพลังงานทดแทน (ktoe) 30,717.319,004.54

การใชพลังงานขั้นสุดทาย (ktoe) 131,000.0076,560.00สัดสวนการใชพลังงานทดแทน (%) 23.45%11.76%

AEDP 2015-2036


Figure 2 Target of 2015-2036 AEDP

Strategy: Alternative Energy Development Plan 2015-2036

Foundation: Commitment to the development of a low-carbon society

Facilitator:Private-led investment

Goal: Target 30% renewables in Total Energy Consumption by 2036

Bio-FuelEthanol

11.3 ML/Day

4,800 t/Day 10 ktoe

14 ML/Day 0.53 ML/DayAlt.Fuels*CBG

Biodiesel Pyrolysis Oil

Solar WindLarge Hydro

HydroSmall Hydro6,000 MW

3,282.40 MW9,002 MW Power / 1,200 ktoe Heat

3,002 MW1,200 ktoe

Bio-EnergyBiomass Biogas MSW+Industrial Waste

5,570 MW

6,720 MW Power / 23,878 ktoe Heat22,100 ktoe 1,283 ktoe 495 ktoe

1,280 MW 550 MW

Facilitator:Government funded RD&D

New-EnergyGeothermal, Used Tire oil,etc.

10 ktoe2,906.40 MW 376 MW

Note: List of abbreviations in this figureCBG – Compressed Bio-methane Gas

ktoe = kilo tonne of oil equivalent (a unit of energy defined as the amount of energy released by burning one tonne of crude oil.

It is approximately 42 gigajoules or 11.630 megawatt-hours)

ML = Million Liters

RD&D = Research, Development & Demonstration

*Note: Alternative fuels = Bio-oil, Hydrogen

Thailand’s Alternative Energy Development Plant AEDP 2015-2036


Key barriers of developing Small scale biomass gasifier power plantWhile steps were taken to ensure the best possible outcomes during project implementation, there were several uncontrolla-ble external factors that slowed the project and resulted in necessary changes. This section describes those factors.

Community participationThe power plant that supplies electricity to surrounding communities is reliant on resources from these communities, with the resultant waste from the power plant either treated at the power plant or within nearby communities. Engagement between the power plant and these communities is therefore critical in successfully developing a small-scale biomass gasification power plant.

Formal and informal knowledge dissemination sessions are needed in order to keep community members informed of the power plant’s operations, as improved knowledge uptake can result in greater buy-in and support.

Notably, participation does not need to be limited to informa-tion; participation can be extended by affording community members the opportunity to invest in the project, providing a sense of ownership in the power plant. In such cases, both a shareholding structure and a management structure should be developed, as well as the formulation of a legal entity.

As is the case with all community participation, there will be areas of disagreement or conflict. In the current environment, it is not uncommon for power-plant developments in Thailand to receive negative feedback, especially from an environmen-tal standpoint. In many cases, allegations presented by opponents may be based on pseudo-science or fake informa-tion and, in some cases, protests are politically motivated. Conflict can also arise around issues of land rights and the final location of the power plant. Solutions to these problems are varied and not always found. Several power-plant projects

have simply been abandoned as a result of an impasse. As such, it is critical for power-plant developers to engage communities fully before embarking on construction. After gaining support from community members, another challenge facing the development of community biomass gasification power plants is the formulation of a legal entity that considers community-member input in the form of invest-ment and management.

Community members often have low incomes, and invest-ments may need to be shared. Some could share their invest-ment for less than 10% of the requirement needed for the setup of a proposed 300 kW power plant. Local municipalities can also share the investment in kind by providing land, major equipment and housing structures. The contribution from local municipalities is approximately 50% of the total cost, while the budget made available by UNIDO is used for procur-ing the biomass gasifier and electricity generator. However, this fund does not cover grid connectivity fees, nor the equip-ment necessary for connectivity. It is clear that funding exclusively secured from communities will most likely not materialise in a biomass gasification power plant. There are four forms of legal entities that should be taken into consideration: private companies, foundations, cooperatives and municipalities. Each of these legal entities is governed differently and follows a varied set of regulations. The follow-ing table compares these legal entities:


Comparing aspects

Ministry in-charge

Existing Status

Number of initial founders

Duration to get approval

Selling electricity to the grid

Secures special selling rates, such as FiT

Subject to income tax and other taxes

Flexibility in partnership with private funds

Private company

Ministry of commerce

None

3

7 days

Yes

Yes

Yes

High

Foundation

Ministry of Interior

None

5

2-3 months

Not sure

Not sure

Yes/No

Low

Cooperative

Ministry of Agriculture

None

60 (must be farmers only)

3-6 months

Yes/No

No

Yes/No

Low

Municipallty

Ministry of Interior

Existing

N/A

N/A

No

No

N/A

No

In terms of flexibility, the private company entity is the most suitable form for biomass gasification power plants. However, by becoming a private company, the community will be treated as other private companies, but with limited resources in many ways. A community-owned company is unlikely to be able to compete in this market.

The foundation entity is generally recognised as a non-profit organization. Foundations in Thailand must have a specific purpose, and, while this structure could work, there are currently no foundations that have been set up to sell electrici-ty. The related authorities involved in selling electricity to the grid have been unable to confirm this.

Cooperative entities in Thailand fall under the Ministry of Agriculture, as most relate to the agriculture industry, such as working with farmers. They cannot be involved in selling electricity, even though the electricity is produced from agricultural waste. Setting up a new energy cooperative entity is an unprecedented task. All organizations involved in selling electricity to the grid agree that it is possible, but there is great uncertainty if this can be achieved, due to the lack of existing structures and precedent.

Table 1 Comparison of legal entity forms available for community

2 https://www.greennetworkthailand.com/%E0%B9%82%E0%B8%8B%E0%B8%A5%E0%B8%B2%E0%B8%A3%E0%B9%8C%E0%B8%A0%E0%B8% B2%E0%B8%84%E0%B8%9B%E0%B8%A3%E0%B8%B0%E0%B8%8A%E0%B8%B2%E0%B8%8A%E0%B8%99-%E0%B8%9B%E0%B8%B5-63/3 Please note that this simple financial feasibility analysis does not include interest and deflation rates.


Electricity tariff and financial feasibility

The most important question to be answered is the financial feasibility of a project. Since the power plant only sells electrici-ty, the price structures and guidelines set out in the policy will help determine financial feasibility. But as of 2020 there is no policy to buy electricity produced from community biomass power plants.

A recent example of an electricity-buying scheme that was made available to the general public involved the electricity generated by solar solutions. Households are encouraged to install solar systems on their roofs. Electricity generated by the solar system is mainly used in the house, and the government only buys excess electricity produced by each household. The Thai government hopes to get 100 MW of installed capaci-ty from this scheme. The offered rate is 1.86 THB/kWh for 10 years, and this scheme is considered to be unsuccessful due to the very low buying rate. As of the end of 2019, it was report-ed that only 253 kW from 47 houses were successfully purchased2.

In order to justify financial feasibility of community-level biomass gasification power plants that produce less than 1 MW, several assumptions must be made, as outlined below:

1 Efficiency of biomass gasification power plant is 25%,2 15% of generated electricity is used inside the power plant,3 Average heating value of biomass is 10 MJ/kg,4 Life span of the project is 15 years,5 Cost of biomass is 0.5 THB/kg,6 Electricity selling rate to the grid is 4.43 THB/ kWh,7 The power plant operates 24 hours per day, 300 days per year.

Tables 2 and 3 below show a simple financial analysis of a 125 kW and a 1 MW biomass gasification power plant. To reach a financial break even in 10 years, the selling price of electricity for 125 kW power plant is approximately 4.43 THB/kWh. The IRR for these sizes is -12%3, and, as is shown, is not financially attractive at all. On the other hand, for a 1 MW biomass gasification power plant operated with the same assumption, the project payback period is five years and the IRR is 16%. It is clear that a larger project performs better in this regard. One must, however, be aware that operating large scale is not so easy. Hidden technical difficulties, such as fuel security and environmental management, can cause additional operating costs.

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Year

first costs

Operation costs

Fuel costs

Labour costs

Waste disposal

Other costs such as weighting

and loading of biomass

Maintenance

Total

First costsGasifier and generator 5,000,000Housing for gasifier and fuel stock and other equipment 5,000,000Total 10,000,000Subsidy 0%

System own used 18.75 kWeBiomass heating value 10 MJ/kg

Income

Electricity

Total income

Annual profit

Cash flow

Project IRR

3,388,950

3,388,950

1,180,950

- 8,819,050

3,388,950

3,388,950

1,180,950

- 7,638,100

3,388,950

3,388,950

580,950

- 7,057,150

0

10,000,000

-10,000,000

-12%

1

648,000

720,000

120,000

120,000

600,000

2,208,000

2

648,000

720,000

120,000

120,000

600,000

2,208,000

3

648,000

720,000

120,000

120,000

1,200,000

2,808,000

3,388,950

3,388,950

1,180,950

- 5,876,200

4

648,000

720,000

120,000

120,000

600,000

2,208,000

3,388,950

3,388,950

1,180,950

- 4,695,250

5

648,000

720,000

120,000

120,000

600,000

2,208,000

3,388,950

3,388,950

580,950

- 4,114,300

6

648,000

720,000

120,000

120,000

1,200,000

2,808,000

3,388,950

3,388,950

1,180,950

- 2,933,350

3,388,950

3,388,950

1,180,950

- 1,752,400

7

648,000

720,000

120,000

120,000

600,000

2,208,000

8

648,000

720,000

120,000

120,000

600,000

2,208,000

3,388,950

3,388,950

580,950

- 1,171,450

9

648,000

720,000

120,000

120,000

1,200,000

2,808,000

3,388,950

3,388,950

1,180,950

9,500

10

648,000

720,000

120,000

120,000

600,000

2,208,000

3,388,950

3,388,950

1,180,950

1,190,450

11

648,000

720,000

120,000

120,000

600,000

2,208,000

3,388,950

3,388,950

580,950

1,771,400

12

648,000

720,000

120,000

120,000

1,200,000

2,808,000

3,388,950

3,388,950

1,180,950

2,952,350

13

648,000

720,000

120,000

120,000

600,000

2,208,000

3,388,950

3,388,950

1,180,950

4,133,300

14

648,000

720,000

120,000

120,000

600,000

2,208,000

3,388,950

3,388,950

580,950

4,714,250

15

648,000

720,000

120,000

120,000

1,200,000

2,808,000

Installedcapacity

kWe

125

Requiredthermal

energy kWth

500

Biomasscunsumption

kg/hr

180

Cost ofbiomassTHB/kg

0.5

Electricityselling rateTHB/kWh

4.43

Operationhours

day/year

300

Operationalhour

hr/day

24

Simple financial analysis of small biomass gasification power plant (125 kW)

currency: THB

Table 2 Financial feasibility for 125 kW Biomass Gasification power plant

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Simple financial analysis of small biomass gasification power plant (1 MW)

Year

first costs

Operation costs

Fuel costs

Labour costs

Waste disposal



Maintenance

Total

currency: THB

Income

Electricity

Total income

Annual profit

Cash flow

Project IRR

27,111,600

27,111,600

14,073,200

43,926,800

27,111,600

27,111,600

14,073,200

- 29,853,600

27,111,600

27,111,600

8,273,200

- 21,580,400

0

58,000,000

- 58,000,000

16%

1

5,184,000

1,296,000

240,000

518,400

5,800,000

13,038,400

2

5,184,000

1,296,000

240,000

518,400

5,800,000

13,038,400

3

5,184,000

1,296,000

240,000

518,400

11,600,000

18,838,400

27,111,600

27,111,600

14,073,200

7,507,200

4

5,184,000

1,296,000

240,000

518,400

5,800,000

13,038,400

27,111,600

27,111,600

14,073,200

6,566,000

5

5,184,000

1,296,000

240,000

518,400

5,800,000

13,038,400

27,111,600

27,111,600

8,273,200

14,839,200

6

5,184,000

1,296,000

240,000

518,400

11,600,000

18,838,400

27,111,600

27,111,600

14,073,200

28,912,400

27,111,600

27,111,600

14,073,200

42,985,600

7

5,184,000

1,296,000

240,000

518,400

5,800,000

13,038,400

8

5,184,000

1,296,000

240,000

518,400

5,800,000

13,038,400

27,111,600

27,111,600

8,273,200

51,258,800

9

5,184,000

1,296,000

240,000

518,400

11,600,000

18,838,400

27,111,600

27,111,600

14,073,200

65,332,000

10

5,184,000

1,296,000

240,000

518,400

5,800,000

13,038,400

27,111,600

27,111,600

14,073,200

79,405,200

11

5,184,000

1,296,000

240,000

518,400

5,800,000

13,038,400

27,111,600

27,111,600

8,273,200

87,678,400

12

5,184,000

1,296,000

240,000

518,400

11,600,000

18,838,400

27,111,600

27,111,600

14,073,200

101,751,600

13

5,184,000

1,296,000

240,000

518,400

5,800,000

13,038,400

27,111,600

27,111,600

14,073,200

115,824,800

14

5,184,000

1,296,000

240,000

518,400

5,800,000

13,038,400

27,111,600

27,111,600

8,273,200

124,098,000

15

5,184,000

1,296,000

240,000

518,400

11,600,000

18,838,400

Installedcapacity

kWe

1,000

Requiredthermal

energy kWth

4,000

Biomasscunsumption

kg/hr

1,440


0.5


4.43

Operationhours

day/year

300

Operationalhour

hr/day

24

First costsGasifier and generator 40,000,000Housing for gasifier and fuel stock and fuel handling tools 14,000,000Land 4,000,000Total 58,000,000Subsidy 0%

System own used 150 kWeBiomass heating value 10 MJ/kg

It is clear that the 125kW power plant requires a higher selling rate of electricity when compared to that of the 1 MW power plant. If the same rate offered to house-hold solar systems (1.68 THB/kWh) was applied to the 125 kW biomass gasification power plant, the project would not be financially feasible.

Further analysis was made in order to get a better view of the financial feasibility of the projects. In order to receive IRR at 10%, the 125 kW power plants must be able to sell electricity at 5.46 THB/kWh, which results in a payback period of five years.

Table 3 Financial feasibility for 1 MW Biomass Gasification power plant


Limited distribution line capacity

The transmission line systems in Thailand were designed in a way that electricity should be transmitted in one direction: from major producers to consumers. Electricity is generated and transmitted from Electricity Generating Authority of Thailand (EGAT) to Provincial Electricity Authority (PEA) via a transmission system where the voltage levels of electricity are 500 kV, 230 kV, 115 kV, and 69 kV (Figure 3). Electricity is transmitted to locations in each province via lower-voltage power lines, which are operated by Metropolitan Electricity Authority (MEA) and PEA.

There are two sub-classes of voltage: the sub-transmission system (230 kV, 115 kV and 69 kV) and the distribution system (24 kV and 22 kV). Electricity voltage is reduced at substations from 22 kV to low voltage levels (380 V and 220 V) for connecting to general users. Every substation distributes electricity to a designated area through feeders, with each substation housing between five and 15 feeders. At lower voltage level, the size and capacity of delivering electricity decreases because the amount of electricity flow is low. In general, one feeder will safely transfer a maximum of 10 MW of electricity.

4 https://www.egat.co.th/index.php?option=com_content&view=article&id=2107:art-20170830-01&catid=49&Itemid=251


Type of High voltage transimssion post

500 kV

230 kV

115 kV

69 kV

(double-circuit)High 65 m

(double-circuit)High 45 m

(single-circuit)High 32 m

(single-circuit)

Potential sites for developing biomass power plants are generally located at the far end of distribution lines (i.e. connected to one of the feeders). These potential biomass power plants are expected to generate a large quantity of electricity and feed the distribu-tion lines. In most cases, estimated electricity generation is higher than the acceptable capacity of the distribution lines. Therefore, biomass power plants cannot be permitted to be built.

Currently, it is not entirely possible to be certain about the availability of feeder capacity. Formal request letters from communities must be submitted to the PEA (in this project), but information from the PEA is valid only for the specific project development to which it has been applied. Information on the development of other power plants is not made publicly available. In the event that other power plant projects are being developed nearby, the availability of feeder capacity in the area will also be reduced, becom-ing the main factor hindering plans for developing any new power plant projects.

Figure 3 High voltage in transmission system4

5 http://www.erc.or.th/ERCWeb2/Upload/Document/part1-Solar-%20Feb%2024%202015-licensing.pdf


Licenses and permits

In developing biomass power plants, there are a handful of licenses and permits that must be obtained in different stages of project development. According the Energy Regulatory Commission (ERC) office5, There are at least six major reports or permits needed to be obtained from different authorities before applying for Power Purchase Agreement (PPA). These permits are outlined below:

3. Electricity production permit (ใบอนุญาตประกอบกิจการไฟฟ�า)There are issues such as safety and standards regarding the generation and sale of electricity back to the

national grid, as connectivity to the grid is not managed under the Factory Permit. A list of equipment and

the safety standards of connectivity must be presented to the ERC in order to get the permit.

2. Construction permit (ใบอนุญาตก�อสร�างอาคาร)Building construction in Thailand must be permitted by the local authority, which ensures building

safety and hygiene standards are upheld. Drawings of all buildings to be constructed must be prepared

and signed-off by qualified engineers.

1. Factory Permit (ใบอนุญาตประกอบกิจการโรงงานผลิตไฟฟ�า)All of the power plants are considered to be factories under the Factory Act (1992), due to the use

of electrical equipment amounting to more than 5 kW. A list of all equipment and specifications, other

systems, and factory layout must be submitted to the Ministry of Industry in order to get the permit.

The objective of getting this permit is to ensure that all systems meet the required standards –

with a particular focus on safety.


4. Controlled energy production permit (ใบอนุญาตให�ผลิตพลังงานควบคุม)Electricity generation and sale is defined as Controlled Energy, and therefore falls under the Energy

Conservation Promotion Act (1992). All electricity producers with generators exceeding 200 kVA must

obtain permits from the Department of Alternative Energy Development and Efficiency within the

Ministry of Energy.

5. Zoning area law (กฎหมายผังเมือง)Potential project sites must comply with local zoning area laws issued by local municipalities, with these

zones coming under review every five years. Biomass-rich sources are mostly located in farmland or

agriculture areas, usually zoned as green. Thus, high potential biomass power plant sites

could be located in green zones to reduce transportation cost.

6. Environmental Impact Assessment (EIA) reportFor power plant projects smaller than 1 MW, and EIA report is not required. However, the ERC recommends

developers follow the Code of Practice (COP) in order to ensure there is reduced environmental impact.

EIA


It is clear that there are a number of technical and legal documents that must be prepared in order to obtain these reports/permits, and, ultimately, permission for development – this process could be costly. In the case of large-scale power plants such as by an Independent Power Producer (IPP) or a Small Power Producer (SPP), the cost is less inhibiting. With huge investment, normally several million THB, investors can hire consultants to prepare high-quality documents and be connected with the correct authorities to obtain the necessary reports/permits.

At a community level, however, getting these reports/permits is one of the most difficult tasks. In general, the size of community biomass gasification plants is under 1 MW and the total investment is 40-60million THB. Processes and document preparation for getting these reports/permits are mostly the same for small-size and large-size power plants. Thus, the relative share of this cost is high and almost impossible for community-scale biomass power plants to go through all the processes without technical assistance – usually needed from external sources.

License for the Energy Industry operation

Power Purchase Agreement (PPA) by (EGAT, PEA, MEA)

Town Planning Act, B.E. 2518(Zoning industry in zoning area) [Section 48]

Factory license (Environmental

and Safety Assessment: ESA)

Department of industrial work

Permit requirement : Equipment or Machinery > 5 hp

Objective : Safety, Environment, Community According

to Ministerial regulations

[Section 48]Building construction permit

by Department of Local Administration (DLA)

Permit requirement : Building construction depends on low each area

and rules of Department of Public Works and

Tower & Country Planning

Objective : Safety for building construction

[Section 48]Controlled energy production permit by DEDE

Permit requirement : Rated power of a generator > 200 KVA

Objective : Safety of electrical device according

to DEDE ’s regulations

[Section 47]Energy Industry Operation license by ERC.

Permit requirement : Power > or = 1000 KVA

< 1000 KVA (Notified)

Objective : According to policy / Power plant efficiency /

service quality according to ERC.’s regulations

EIA : (Thermal power plant ≥ 10 MW must prepare EIA report and approved by expert committee)

[License according to section 47; by ERC.][License according to section 48; ERC shall have to solicit for comments from the authoritative agencies under those respective laws.]

Factory Act, B.E. 2535

Building Control Act, B.E. 2552

Energy Development

and Promotion Act, B.E. 2535

Energy Industry Act,

B.E. 2550

Figure 4 Related reports/permits for getting PPA


Policy RecommendationIt is quite clear that the most suitable technology for convert-ing biomass to electricity in community scale is gasification. The gasification technology offers simplicity; it is easy to operate compared to other biomass-to-electricity technolo-gies with a major advantage being the ability to stop and start in a short time – generally within one hour. However, within the current policy setting, it is not possible to drive the technology into full utilisation.

There are two major policy changes that could elevate the use of biomass gasification for producing electricity in communities:


Support for community

Different forms of support are required at different stages. By setting up a Biomass Gasification Supporting Unit (BGSU) to deliver support to communi-ties across the country, government would not need to create special tracts or channels for communities. Instead, communities would be able to follow the current procedures facilitated by the units. The role of a BGSU is described as follows:

Knowledge and technical support

Barriers to communities include appropriate technology assessment, resource evaluation, management-scheme design, role and participation management, and project financial-feasibility studies. These issues are essen-tial for communities in order to justify their decision for a biomass gasification power plant, but capacity building takes time and effort. A BGSU would harvest data from communities for analysis and share the results with the community. This is a lengthy process that must be considerate of the time available to community stakeholders, many of whom could be farmers; it could take a year for a community to fully understand all these issues and be able to make an informed decision.

If the community agrees to the biomass gasification power plant, more techni-cally intensive sessions would be required. A dedicated technical team is needed to prepare all documents, conduct discussions with the community, and deal with the related authorities in receiving permits and PPA.

Without a BGSU, it would be impossible for any community to go through these complex processes.

Power plant operation support

Despite the small size of the community biomass gasification power plant, the initial investments and operation costs are high. It is not economically feasible for each small biomass gasification power plant to have its own team of highly paid experienced engineers. It is better that several power plants share resources, including staff, in order to reduce operating costs. In small power plants, the labour overhead alone could be 30% of total operating costs.


New electricity market In order to promote biomass gasification power plants, a new electricity market pricing structure could be promoted. With this new market structure, a power plant can trade both energy (kWh) and capacity (kW). Currently, power plants in Thailand can trade only energy (kWh), meaning the greater the number of operational hours, the higher the income.

In the proposed electricity market, higher income will be achieved on account of the time that the electricity is sold. Different rates are applied to peak and off-peak usage – the price increasing as demand increases. Power plants operating during the peak period are called peaking plants. During the peak period, the cost per unit of electrici-ty is high because several power plants are required for operation. In off-peak periods, these power plants are idle. However, operation costs such as fuel and labour costs are needed for standby purposes, and to ensure grid stability. In Thailand, for large consumers, electricity tariffs are accounted for both demand periods, as seen in Figure 5. For the lower voltage ranges (less than 22 kV), where small power plants are usually connected, the demand charge is as high as 332.71 THB/kW for Time of Day (TOD) users and 210 THB/kW for Time of Use (TOU) users.


Type 4 Large General Service

Applicable to businesses, industrials, government institution, local authorities, state enterprises, embassies,

establishments related to foreign countries or international organization, and so on, including their compound with the

maximum of an average integrated demand of energy in 15 minutes in any period of time from 1,000 kW and over or an

average energy consumption in the last 3 consecutive months are over 250,000 kWh per month through a single demand meter.

4.1 Time of Day Rate (TOD)

4.2 Time of Use Rate (TOU)

4.1.1

4.1.2

4.1.3

4.2.1

4.2.2

4.2.3

At Voltage level 69 kV and over

At Voltage level 22-23 kV

At Voltage level lower than 22 kV

At Voltage level 69 kV and over

At Voltage level 22-23 kV

At Voltage level lower than 22 kV

Demand Charge(Baht/kW)

Partial

29.91

58.88

68.22

Demand Charge(Baht/kW)

Peak

74.14

132.93

210.00

Service charge (Baht/Month)

312.24

312.24

312.24

Peak

4.1025

4.1839

4.3297

Off-Peak

2.5849

2.6037

2.6369

Energy charge (Baht/kWh)

Energy charge(Baht/kWh)

3.1355

3.1729

3.2009

Service charge(Baht/Month)

312.24

312.24

312.24

Peak

224.30

285.05

332.71

Off-Peak

0

0

0

Peak : 06.30 p.m. – 09.30 p.m. everyday

Partial : 08.00 a.m. – 06.30 p.m. everyday (Demand charge is considered only the excess demand over peak period)

Off Peak : 09.30 p.m. – 08.00 a.m. everyday

An advantage of the community-based biomass gasification power plant is that it can be used to assist stabili-ty of the nation grid because it can be up and running within an hour. The community-based biomass gasification power plants are ideally placed to be used as peaking plants. Thus, biomass gasification power plants should be able to trade both energy (kWh) and capacity (kW). In this way, the number of hours and biomass required to operate is reduced.

Table 4 shows an example of the financial feasibility of a 125 kW power plant with capacity trading at 100 THB/kW and 4.00 THB/kWh. The rates that are used in this example are lower than the rate at which PEA sells electricity to their customers. In this analysis, the demand sold from this power plant is one time per day. The power plant is operated only five hours per day. The result indicates that the power plant could be paid back within five years and the IRR is 13%. This concludes that new electricity market could help the biomass gasification power plant becomes financially feasible

Figure 5 Example of electricity tariffs for large consumers.

SMALL SC

ALE BIOM

ASS POW

ER PLANTS IN

THAILAN

D: POLIC

Y LESSON

S19

Year

first costs

Operation costs

Fuel costs

Labour costs

Waste disposal



Maintenance

Total

currency: THB

Income

Electricity

Demand

Total income

Annual profit

Cash flow

Project IRR

637,500

3,187,500

3,825,000

2,130,000

- 7,870,000

637,500

3,187,500

3,825,000

2,130,000

- 5,740,000

637,500

3,187,500

3,825,000

1,530,000

- 4,210,000

0

10,000,000

-10,000,000

-13%

1

135,000

720,000

120,000

120,000

600,000

1,695,000

2

135,000

720,000

120,000

120,000

600,000

1,695,000

3

135,000

720,000

120,000

120,000

1,200,000

2,295,000

637,500

3,187,500

3,825,000

2,130,000

- 2,080,000

4

135,000

720,000

120,000

120,000

600,000

1,695,000

637,500

3,187,500

3,825,000

2,130,000

50,000

5

135,000

720,000

120,000

120,000

600,000

1,695,000

637,500

3,187,500

3,825,000

1,530,000

1,580,000

6

135,000

720,000

120,000

120,000

1,200,000

2,295,000

637,500

3,187,500

3,825,000

2,130,000

3,710,000

637,500

3,187,500

3,825,000

2,130,000

5,840,000

7

135,000

720,000

120,000

120,000

600,000

1,695,000

8

135,000

720,000

120,000

120,000

600,000

1,695,000

637,500

3,187,500

3,825,000

1,530,000

7,370,000

9

135,000

720,000

120,000

120,000

1,200,000

2,295,000

637,500

3,187,500

3,825,000

2,130,000

9,500,000

10

135,000

720,000

120,000

120,000

600,000

1,695,000

637,500

3,187,500

3,825,000

2,130,000

11,630,000

11

135,000

720,000

120,000

120,000

600,000

1,695,000

637,500

3,187,500

3,825,000

1,530,000

13,160,000

12

135,000

720,000

120,000

120,000

1,200,000

2,295,000

637,500

3,187,500

3,825,000

2,130,000

15,290,000

13

135,000

720,000

120,000

120,000

600,000

1,695,000

637,500

3,187,500

3,825,000

2,130,000

17,420,000

14

135,000

720,000

120,000

120,000

600,000

1,695,000

637,500

3,187,500

3,825,000

1,530,000

18,950,000

15

135,000

720,000

120,000

120,000

1,200,000

2,295,000

Installedcapacity

kWe

125

Requiredthermal

energy kWth

500

Biomasscunsumption

kg/hr

180


0.5


4.00

Electricitydemand

selling rateTHB/kWh

100.00

Operationhours

day/year

300

Operationalhour

hr/day

5

Simple Financial Analysis of Small Biomass Gasification Power Plant (125 kW) with Capacity Trading

System own used 18.75 kWeBiomass heating value 10 MJ/kg

First costsGasifier and generator 5,000,000Housing for gasifier and fuel stock and other equipment 5,000,000Total 10,000,000Subsidy 0%

High IRR and short pay-back periods could also help projects find funding sources and presents the possibility of getting loans from commercial banks. It could consequently reduce subsidies required from government.

Table 4 Financial feasibility for 125 kW Biomass Gasification power plant with demand trading


In addition to capacity trading, small power plants can be networked together across regions to form a Virtual Power Plant (VPP), as depicted in Figure 6. A VPP can be a group of small RE power plants that are networked. The VPP can satisfy flexible peak electricity demand via a central control unit.

6,000

5,000

4,000

3,000

2,000

1,000

19.04.2006 20.04.2006 21.04.2006 22.04.2006 23.04.2006 24.04.2006 25 .04.2006

0

Central control unit

Solar

Wind

Biogas Reservoirs

PowerDemand

forecasts

forecasts schedules

forecasts

Virtual Power Plant

In general, demand for electricity can be forecast weekly, daily and hourly. The central control unit satisfies the demand by dispatching a combination of different power plants, depending on the time and magnitude of the demand. In this way, the electricity grid is more secure, owing to the flexibility of electricity sources. In addition, government could benefit from reducing electricity reserve capacity, especially the spinning reserves capacity that is used only for the peak demand period.

Figure 6 Concept of Virtual Power Plant

SMALL SCALE BIOMASS POWER PLANTS IN THAILAND: POLICY LESSONS

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