THE Federation of Thai Industries (FTI) is digging on its position that the current wholesale price for electricity is too low for small operators in renewable energy.
The industry lobby sees room for an increase – from Bt2.44 per unit - to a level below that which starts to affect ordinary consumers.
If the purchase price is not increased, the amount of electricity produced from renewable energy will not reach the official target of 19,000 megawatts by 2036, as set out in the Power Development Plan (PDP), FTI chairman Suphan Mongkolsuthree said yesterday.
Suphan made the comments after talks between Energy Minister Siri Jirapongphan and the FTI on the government’s policy to postpone its planned purchases of electricity produced from renewable energy. The policy excludes the output from plants producing electricity from waste.
Siri said that the Ministry of Energy has focused on electricity produced from renewable sources but had shifted its position to now buy electricity produced from such sources at a price below or equal to the grid parity. The government needed to be firm on this view in order to avoid increasing the price burden on ordinary people, the minister said.
Suphan said that only big producers of power from renewable energy or processing plants with sufficient material left to generate electricity would be able to accept an electricity wholesale price of Bt2.44 per unit.
Small power producers that buy fuel from other operators would not be able produce electricity at that price, given the higher production costs. Suphan cited the production costs of more than Bt3 per unit at a typical biogas power plant.
“Currently, the electricity price that people pay averages out at Bt4 per unit,” he said. “The purchase price of Bt2.44 per unit is still far from the selling price. Therefore, the government may raise the purchase price for electricity produced by renewable energy so that renewable energy power producers will survive and ordinary people will still not be affected.”
Suphan urged the government to determine the reference price, or the upper-limit price, for power producers to make their decision.
“The declining support measures for electricity production by renewable energy have encouraged more large renewable energy power producers to gradually turn to overseas markets for their investments,” he said.
“SMEs will face difficulties as they cannot flee the local market to make overseas investments. The private sector has agreed on a gradual decline in support measures to ensure no impact on people's electricity cost, but only at a rate at which Thai producers can survive.”
Siri said the ministry would look into the problems faced by the affected small biogas power producers. This would be done on an individual basis in order to find relief measures for them, while supporting the use of floating solar installations in reservoirs for highly efficient electricity generation.
Suphan asked that the ministry proceed with gradual policy implementation, with an adequate adjustment period for operators. He also called on officials to carry out their supervision of the sector with fairness and transparency.
Somphop Prompanapitak, chief operating officer of Thai Solar Energy Plc (TSE), and Cherdsak Wattanavijitkul, president at TPC Power Holding Plc (TPCH), agree with the FTI's position.
They fear the government’s new policy on purchase of electricity from renewable energy could lead to a suspension in some companies’ operations, with widespread impact on related businesses across the supply chain.
If the government does not make purchases of electricity produced from renewable energy in the next five years, the industry would be hit hard, Somphop said. The executive shared the view that some operations would be suspended and operators burdened with slower growth.
Somphop also agreed that some bigger operators would turn to investments in overseas markets in order to survive. This could exacerbate capital outflows in the future, he said.
Somphop said that TSE has made more overseas investment to mitigate the risks over the past two to three years. Previously, the company had relied mainly on the government's electricity purchases. The company runs renewable energy power plants of almost 200 megawatts in Japan.
Locally, the company has expanded its business through mergers and acquisitions relating to power plants in operation, while focusing more on roof-top solar energy productions.
Cherdsak urged the government to review its long-term policy in several dimensions, including assistance to farmers and to ensure energy stability.
Cherdsak said the company plans to grow in the next two years, given its power purchase agreement for over 120 megawatts. It is preparing to bid for special projects with total power production of 300 megawatts in the three southernmost provinces.
Amorn Sapthaweekul, deputy chief executive officer of Energy Absolute Plc (EA), said that power producers wanted certainty in policy from the government. Uncertainties could affect business plans in the future, Amorn said.