Funding energy when higher oil prices return

Khun Piyaswasdi gave us a good background about SPP (Small power plant of 10-90 megawatt) and VSPP (Very small power plant of less than 10 megawatt), some of which use natural gas and coal as sources of energy while the others use unconventional sources of energy such as rice husks, bagasse, and wood residues, or waste water and residual heat from industrial plants, or solar energy, wind energy and garbage etc. Investment in these businesses started after 1992 when the regulation of SPPs was announced and had been gradually implemented up to the end of 2006, when there was a major improvement in government policies on this issue such as the allowance for cogeneration SPPs to sell the electricity produced into the national grid on a long term contract.

 Most important is the approval of adders [a digital circuit that performs additions of numbers] for the purchase of electricity produced from various sources of renewal energy such as wind energy, solar energy, waste water from plants, garbage, biogas, etc. These adders are needed to attract investments for producing electricity from these energy sources as their costs of production are still higher than electricity from power, natural gas, and bunker oil.

A CHALLENGE FOR THE ENERGY CONSCIOUS INVESTOR

Electricity produced from renewable energy sources, even at higher cost of production, does benefit the economy in serving the hard earned foreign currency used for importing oil. Such a major change of policy on this matter at the end of 2006 attracted a large number of investors in SPP and VSPP in a short period of time. Some of them are now under construction while a lot more are in the pipeline with the pending investments totalling at least Bt. 100,000 million. These are attractive investments with a ready market for their product and at the same time help reduce oil imports.

Khun Piyaswasdi is a modest and humble man who has never publicised himself. I was a part of government during the time of the above mentioned policy changes. I dare to conclude that without Khun Piyaswasdi as an Energy Minister, such policy changes would not be as swift, with the affirmatively correct direction, and really effective in attracting a lot of investments in a short period of time as it has occurred. It is fortunate that these intended investments are still ongoing, which would contribute to our economic growth. I hope that the current government would further promote this issue.

This issue of investment to reduce the use of imported oil reminds me of the investments in the production of ethanol and biodiesel. Gasohol, produced from ethanol and bio-diesel, has been in demand of motorists since it is cheaper than normal gasoline and diesel. More investments were then prepared for ethanol and bio-diesel. However, recently, as the price of oil has reduced markedly, such investments seemed to disappear. I do not really know what is going on. As I believe that, once the world economy recovers, the oil price could bounce back to the level of US$60(Bt2,160) or US$80 per barrel again, is it desirable to provide incentive for investments to further expand production capacity of ethanol and bio-diesel? The adequate capacity for ethanol and bio-diesel could help lessen the impact of oil price surge and increase economic stability.

I believe that Khun Piyaswasdi would have a better understanding of the issue and, therefore, would request for his opinion on the matter including the issue of providing cost handicap for the production of gasohol and biodiesel, such as the application of lower excise tax, which may be needed currently when the price of oil is very low. If we can do anything to stimulate additional investments on ethanol and bio-diesel now, it would help increase domestic demand for the economy in addition to the investments in SPP and VSPP. Khun Piyaswasdi, I would much appreciate if you could spare your valuable time writing about this issue.

Until next Monday.