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Rice Husk Power Project in Thailand Invested by Japanese Company
http://www.atbiopower.co.th/project/index.html
http://www.atbiopower.co.th/project/biomass.html
Shotaro Sasaki (Dual Master's Candidate, Tufts University, Fletcher School of Law and Diplomacy, Department
of Urban and Environmental Policy and Planning)
Mailing Address: 30 Cambridge Park Drive #3146, Cambridge MA. 02140
(Parmanaent; 27-16 Umegaoka Aobaku Yokohama, Japan 235-0022)
E-mail address: shotaro_sasaki@jpower.co.jp or shotaro@cello.ocn.ne.jp
DHP P 259 Sustainable Development : A View from the South
Professor Atiq Rahman/Jonathan Harris
Tuesday, December 16, 2003
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OUTLINE
A. Introduction
B. Backgrounds of Rice Husk Power Promotion that Coincident with Thailand and Japan
I. Difference of Social Aspects between Two Countries
a. Population
b. Purchasing Power Parity (PPP)
c. Total Electricity Production and Consumption
II. Background: Thailand
a.
What is the Potential of Rice Husk Power in Thailand?
b. Advantage of Social System in Thailand for Rice Husk Power Project Promotion
c.
Policy Inducement Small Power Producer Programme
III. Background: Japan
a.
Liberalization in the Power Industry
b. Saturation of Power Development in Japan
c.
Can it Contribute to CO2 Reduction ?
C. Concerns from Southern Perspective
I. Gap between Thailand and Japan
a. How Does Japanese Companies Regard Investments in Rice Husk Power Project in Thailand?
b. Thailand’s View of Japanese Investment in Rice Husk Power Projects
c. How can We Bridge the Gap between Thailand and Japan?
II. How Serious is Air Pollution ?
III. Can Economical Benefits for Thailand be Expected?
IV. How can Rice Husk Power Project Contribute to Thailand’s Benefit?
a. Can it Contribute to Improvement of Infrastructure?
b. Can it Contribute to Technology Transfer?
D. Policy Recommendations
I. Recent Trend Review
II. Recognition of the Problems
III. Appropriate Policy Needed
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Executive Summary
Both Japanese and Thai companies are motivated to develop rice husk power projects in Thailand.
In Japan, there is no strong need for new power plant construction. Plant companies in Japan need to use
their conventional technology. Trading companies need to find business opportunities outside of Japan, where
the economy is still in recession. Electric power companies also need to find business opportunities outside of
Japan.
Thailand needs more electricity. The potential of rice husks as a fuel is enough for renewable energy
source and not too much to give pressure to present energy plan. Although it is uncertain about the benefit to be
involved in Clean Development Mechanism (CDM) scheme, effective use of domestic resources contribute to a
favorable energy-source-mixture that serves for national energy security. However, as far as Thailand has
enough electricity reserve, rice husk project is a preferable, but not essential choice. Thus Thailand has only
weak centripetal force for rice husk power projects.
These motivations from both sides need to translate into real projects. For Japanese companies, the
largest benefit to be involved in such projects is showing to the public the company’s positive stance on
mitigating environmental problems. In this way, the motivation cannot have strong centripetal force. If the
project can contribute to the Clean Development Mechanism (CDM) scheme, it can be a strong driving force to
promote investment in rice husk power projects in Thailand. However, this is uncertain given the
Thai-government’s ambiguous attitude. Those two weak driving forces from both sides must be strengthened.
The Thai-government commented that “the government will select only deals that use appropriate technology,
emphasizing public participation”.
To satisfy those needs, more money will be needed. Domestic subsidies are not preferable and cannot be
expected to be increased greatly because there is little motivation in Thailand. For the “common good” of the
world, funds from international organizations are preferable. Increasing this amount can be considered once
Thailand is involved in the CDM plan.
This fund will be used for “appropriate technology” and “emphasizing public participation.” As rice
husk power projects need only conventional technology, technology transfer should be concentrated to
appropriate operations and maintenance and safety management. To achieve increasing public participation,
tripartite committees will organize to fill in the gap between developers and local people, and also be used to
evaluate environmental issues appropriately. In this policy, rice husk power project promotion can become more
attractive for both Japanese companies and Thailand, so the motivations from both sides can become much
stronger than they are now.
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A. Introduction
Why is biomass power considered a favorable power source for sustainable development? Since biomass
energy can be categorized as a kind of waste incineration, biomass fuel supply is limited. Although biomass
combustion contributes to CO2 emissions, energy proponents favor biomass over fossil fuel because plants can
be grown to sequester CO2. When plants are continuously grown in same place, CO2 circulates between the
atmosphere and the plants. Thus biomass energy will not increase CO2 in the atmosphere.
Biomass generally means food and forestry waste, feces of livestock, wood tips and construction waste
derived from wood. As the situation surrounding each source will be different, this paper particularly
concentrates on a rice husk incineration power project.
I was working for a Japanese power company for 11 years as an engineer. During those years, I had
managed the building a biomass power station that incinerated rice husk in Roi-et located in Northeastern region
of Thailand (see Exhibit 1). For many years, a lot of projects done in developing countries managed by Japan had
been based on ODA (Official Development Assistance) funded by the Japanese government. But recently the
situation is changing, especially for power station building. The Thai government is now welcoming direct
investment to biomass power projects from foreign companies establishing a policy of “small power producer
programme (SPP programme)”. The Electric Power Development Co.,Ltd.(EPDC),1 which I had been working
for, also privately invested in the Roi-et power project. Exhibit 2 shows the project scheme. During the period
when I had been involved in this project, I wondered whether this project could contribute to sustainable
development. Alternatively, I was concerned it would become a project that would exploit natural resources and
detrimentally impact the environment. Is there any gap on how rice husk power project is perceived between
Thailand and Japan? Can the investment be considered as sustainable development? In this paper these questions
will be examined. As shown in Exhibit 3, one needs to see this issue from three aspects for evaluating policy: the
social, economic, environmental aspects.
1
Electric power producing company with fifth total amount of generating power in Japan;
Special public corporation of the Ministry of Economy, Trade And Industry Of Japan.
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Roi-et
Exhibit 1. Location of Roi-et in Thailand
Source: Yahoo Education, Map of Thailand. November 2, 2003.
<http://education.yahoo.com/reference/factbook/th/map.html>.
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Investment
Exhibit 2. Roi-et Biomass Power Project Scheme
Financing
EPDC
Contract
Largest Private
Power Producer
Investment
Local Special Company
Sommai
Rice Mill Company
Fuel Supply
Investment
Investment:30%
Financing:70%
5% of Investment
Industrial Finance
Corporation
of Thailand(IFCT)
Financing
95% of Investment
Project Company
ESCO’s
Subsidiary
Fuel Supply
Agreement
Technical Advisory
EPC
Agreement
Power
Purchase
Agreement
EPDC
(Electricity
Generating
Public Co.
Ltd).
EPC Contractor
Power Purchase Agreement:
Conclusion of Small Power Programme (SPP)
with EGAT
Operation and Maintenance Agreement:
Conclusion with ESCO
Construction:
Selected by bidding-competition
EPC: Engineering, Procurement, Construction
Source: The Electric Power Development Co.,Ltd.(EPDC), News Release, The Start of the Construction of Rice
Husk Power Station in Roi-et, Thailand (Taikoku Roietto Momigara Karyoku Hatsudensho no Kensetsu Chakko
ni Tsuite). October 29, 2001. November 2, 2003.
<http://www.jpower.co.jp/news_release/news/news160.htm>.
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Exhibit 3. Each Category of Economic, Social and Environmental Aspect
Economic Aspect Can it contribute economically to Thailand and Japan?
Can Thailand get benefit from Japanese investment?
How Should We
Evaluate Rice Waste
Husk management (Ash treatment)
Power Project?
What Policy Should We
Have?
Environmental Aspect
Social Aspect
(Thailand)
CO2 reduction (CDM credit for Kyoto Protocol)
How does Thailand prefer those projects?
Gas emissions
Rapid increase of electricity demand.
Potential of biomass energy.
Need to satisfy demand of infrastructure.
Threshing method of rice husk in Thailand.
(Japan)
Electric industry liberalization
Saturation of domestic power development
B. Backgrounds of Rice Husk Power Promotion that Coincident with Thailand and Japan
I.
Difference of Social Aspects between Two Countries2
a. Population
Population is one of the main factors of the country’s social aspects. Moreover it has a great impact on
energy and electricity consumption. During 1975-2000, the Japanese population increased from 112 million to
127 million people as shown in Exhibit 4. The increasing rate of population in Japan is decreasing, and in
particularly it is as low as 0.27% per year when the average rate of the recent 10 years is calculated (see Exhibit
2
The data except electricity consumption is obtained by World Bank,World Development Indicators. November
2, 2003. <http://80-devdata.worldbank.org.ezproxy.library.tufts.edu/dataonline/>.
Electricity consumption data is obtained by Energy Information Administration (EIA), International Electricity
Information, Table 6.2 World Total Net Electricity Consumption, 1980-2001. November 2, 2003.
<http://www.eia.doe.gov/pub/international/iealf/table62.xls>.
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5). On the other hand, population in Thailand has increased from 41 million to 61 million people from 1975 to
2000, and population increase rate is still as high as 0.88% per year when the average rate of the recent 10 years
is calculated. However, it has been gradually declining from 1975 to 2000 (see Exhibit 6). From this data, one
can find that the potential of increasing energy and electricity consumption is high in Thailand because the
doubling time of the increasing rate 0.88% will be around 80 years, as opposed to the 260 years doubling time
with the increasing rate of 0.28%.
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Exhibit 4.
Popul
ati
on Trends of the Two Countri
es
1.
40E+08
1.
20E+08
Japan'
s Total
Popul
ati
on
Thai
l
and'
s Total
Popul
ati
on
Popul
at
i
on
1.
00E+08
8.
00E+07
6.
00E+07
4.
00E+07
2.
00E+07
19
99
19
97
19
95
19
93
19
91
19
89
19
87
19
85
19
83
19
81
19
79
19
77
19
75
0.
00E+00
Year
Exhibit 5.
Increasing Rate Trends ofPopulation of the Two Countries
3.00%
Increasing Rate ofJapan's Total
Population
Increasing Rate ofThailand's Total
Population
2.50%
1.50%
1.00%
0.50%
0.00%
19
75
19
76
19
77
19
78
19
79
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
Percentage
2.00%
Year
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Exhibit 6.
PPP Trends of the Two Countri
es
30000
Japan'
s PPP (current
i
nternati
onal$)
Thai
l
and'
s PPP (current
i
nternati
onal$)
CurrentI
nternati
onal$
25000
20000
15000
10000
5000
19
99
19
97
19
95
19
93
19
91
19
89
19
87
19
85
19
83
19
81
19
79
19
77
19
75
0
Year
b. Purchasing Power Parity (PPP)
PPP is the index that shows level of people’s practical level of wealth of the country. The level of wealth
has an intimate relationship with energy and electricity consumption. Japan’s PPP has increased from $5,695
(current international dollar) to $25,735 per person while Thailand’s PPP has increased from $776 to $6,315 per
person from 1975 to 2000. This means the wealth difference between the two countries has shrunk from 7.3 to
4.1 during this period (see Exhibit 7). After 1975, almost every year the increasing rate of PPP in Thailand has
been larger than the rate in Japan (see Exhibit 6). From this data, one can find again that potential of increasing
energy and electricity consumption is high in Thailand.
c. Total Electricity Production and Consumption
Some of countries have a gap between electricity production and consumption because of the difference
between electricity imports and exports. Thus Exhibit 8 examines the two countries’ electricity production and
consumption and Exhibit 9 shows the two countries’ increasing rate trends of electricity production and
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consumption. According to these two exhibits, one can find that both Thailand and Japan have high rates of
self-sufficient electricity production 3 (see Exhibit 8). They are producing by themselves almost all of the
electricity consumed. Both the increasing rates of electricity consumption and production in Thailand are much
higher than those data in Japan (see Exhibit 9). The reasons for this phenomenon must be the increase of
population and the increase of wealth.
Exhibit 7.
Increasing Rate Trends ofPPP ofTwo Countries
20.00%
15.00%
5.00%
-5.00%
-10.00%
-15.00%
3
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
0.00%
1975
Percentage
10.00%
Increasing Rate ofJapan's PPP
(current international$)
Increasing Rate ofThailand's
PPP (current international$)
Year
The gap between Japan’s electricity consumption and production can be assumed to be caused by difference of
data sources because, as Japan is an isolated islands’ country, there is no import and export of electricity.
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Exhibit 8.
Electricity Production and Consum ption Trends of the Two Countries
1.20E+12
1.00E+12
8.00E+11
kW h
Electricity production in Japan (kwh)
Electricity production in Thailand (kwh)
Electricity Consum ption in Japan (kwh)
Electricity Consum ption in Thailand (kwh)
6.00E+11
4.00E+11
2.00E+11
19
75
19
76
19
77
19
78
19
79
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
0.00E+00
Year
Exhibit 9.
Increasing Rate Trends ofElectricity Production and Consum ption ofthe Two Countries
20.00%
15.00%
Percentage
10.00%
5.00%
19
75
19
76
19
77
19
78
19
79
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
0.00%
-5.00%
Year
Increasing Rate ofElectricity production in Japan (kwh)
Increasing Rate ofElectricity production in Thailand (kwh)
-10.00%
Increasing Rate ofElectricity Consum ption in Japan (kwh)
Increasing Rate ofElectricity Consum ption in Thailand (kwh)
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II.
Background: Thailand
a. What is the Potential of Rice Husk Power in Thailand?
Exhibit 10 shows the worlds’ rice production. According to this data, in the year 2000, Thailand’s rice
production was ranked 6th in the world. It was 25.6 million tons, increased from 20.3 million tons in 1985. On the
other hand, Japan’s production in year 2000 was ranked 9th. Its production was 11.9 million tons, decreased from
14.6 million tons in 1985. From the data, it is assumed that the weight of rice husk will be around one third of the
total rice weight because the weight of polished rice is about two thirds that of total rice weight. This means
approximately 8 million tons of rice husk are produced from 25 million tons of rice in Thailand every year. The
rice husk power plant where I had managed construction, used orthodox technology was designed to generate 10
MW (Mega Watts) by incinerating about 306 tons per day of rice husk4. When the availability rate of the plant is
assumed to be 100%, the plant needs 111,690 tons/ year of rice husks.
306 tons
365 days = 111,690 tons/ year of rice husks
Thus eight million tons of rice husks have an equivalent potential of about 70 units of this plant.
8,000,000 tons / 111,690 tons per unit = 71.6 unit
Thus the total rice husks in Thailand has a potential of 700 MW (70 units
10MW) or 6,132,000 MWh per year
(700MW 465 days 24hours) of electricity. When one considers that the total electricity consumption in
Thailand in 2000 is about 85 billion kWh, the potential of 6.1billion kWh is equivalent to about 7% of total
electric consumption.
Exhibit 10. World’s Rice Production
(Unit: million tons)
Country/Year
1985 1990 1995 1996 1997 1998 1999 2000
2001 2002
Estimated
4
The Electric Power Development Co.,Ltd.(EPDC), News Release, The Start of the Construction of Rice Husk
Power Station in Roi-et, Thailand (Taikoku Roietto Momigara Karyoku Hatsudensho no Kensetsu Chakko ni
Tsuite). October 29, 2001. November 2, 2003. <http://www.jpower.co.jp/news_release/news/news160.htm>.
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China
171.3 192.0 187.3 197.0 202.8 200.6 200.4 189.8 178.7 178.3
India
95.8 111.5 119.6 122.1 123.6 129.1 134.4 127.3 136.1 133.0
Indonesia
39.0 45.2 49.7 51.1 49.4 49.2 50.9 51.9 49.6 48.7
Bangladesh
Thailand
22.6 27.5 26.5 28.3 28.3 29.9 34.2 37.6 38.1 39.0
20.3 26.8 22.0 22.4 22.6 23.6 24.2 25.6 25.3 24.6
Vietnam
16.0 18.8 26.8 27.3 28.7 30.9 32.7 32.5 31.9 32.3
Myanmar
14.3 14.0 18.0 17.7 16.7 17.1 20.1 20.1 20.6 20.5
Japan
14.6 13.1 13.4 12.9 12.5 11.2 11.5 11.9 11.3 11.0
Brazil
Philippines
9.0
8.8
8.0 11.2 10.0
9.5
8.5 11.6 11.4 10.4 11.5
9.9 11.2 11.2 10.0 10.3 12.0 12.5 13.1 13.0
South Korea
7.9
7.7
6.4
7.3
7.5
7.0
7.2
7.2
7.5
7.3
USA
6.1
7.1
7.9
7.8
8.3
8.4
9.3
8.7
9.7
9.6
Pakistan
World Total
World Total
(
Rice)
4.4
4.9
5.9
6.5
6.5
7.0
7.7
7.2
5.7
5.2
469.4 521.3 554.0 571.2 577.2 583.8 611.4 598.7 593.1 587.2
(Polished
) 314.0 349.0 369.0 383.0 387.0 390.0 409.0 400.0 397.0 393.0
Source: JA, Rice Production and Processing World Situation of Rice (Okome no Seisan to Kakou Sekai no
Kome Jijyou). November 2, 2003.
<http://www.gohan.ne.jp/okome-data/01/121.html>.
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b. Advantage of Social System in Thailand for Rice Husk Power Project Promotion
Even though the rice production in Japan is less than the production in Thailand, still Japan seems to have
a certain potential for a risk husk power project when one considers the amount of 11.9 million tons per year.
Moreover, there is a strong need for renewable energy in Japan. Wind power and photovoltaics are increasing
steadily in Japan. Contrary to the potential and the need, there is no rice husk power project in Japan included the
future plans. This is because the way of polishing rice in Japan is not appropriate for a rice husk power project.
As a rice husk power station only uses simple conventional incineration technology, the key issue for the
successful project is cheap and stable fuel supply. As mentioned above, 10MW rice husk power station needs
more than 300 tons or more than 2,000 cubic meters of rice husk.5 If the project cannot get the huge amount of
rice husk at one place and thus needs to transport small portions of fuel from many places, it makes
transportation costs increase and the cost will exceed the income earned by electricity sales. In Japan, polishing
rice has been practiced with small amounts processed at many places. On the other hand, in Thailand, rice is
polished in bulk quantity at huge factories. This difference in social systems makes advantageous for the
promotion of a rice husk power project. Actually, the power station of the Roi-et Power Project was constructed
just next to a rice mill factory that can supply all fuel to the power station.
c.
Policy Inducement: Small Power Producer Programme
The Thai government has established a policy called “Small Power Producer Programme (SPP
Programme).” This programme promotes the use of rice husk for power generation. From the first announcement
about SPP programme in 1992, the compendium of the programme has been gradually improved until 1999 as
shown in Exhibit 11. The objects of the program are6:
•
To encourage participation by SPPs in electricity generation.
•
To promote the use of indigenous by-product energy sources and renewable energy for electricity
generation.
5
According to inside document of EPDC.
Electricity Generating Public Co. Ltd (EGAT), SPP Project, Objectives in Purchasing Electricity in SPP.
November 2, 2003. <http://www.egat.or.th/dppd/eng_spp_obj.html>.
6
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•
To promote more efficient use of primary energy.
•
To reduce the financial burden of government investment in electricity generation and distribution.
Qualifying facilities need to have any of characteristic below7:
Electricity generation using non-conventional energy such as wind, solar and minihydro energy (but excluding
generation using petroleum, natural gas, coal and nuclear energy).
Electricity generation using the following fuels:
Waste or residues from agricultural activities or from industrial production processes.
Production derived from waste and residues from agricultural and industrial production processes.
Garbage (e.g. municipal waste).
Dendrothermal sources (e.g. tree plantations).
Electricity generation by co-generation using any types of fuels that meet the following requirements for power
generation.
The process involves the continuous use of energy by using a Topping Cycle or a Bottoming Cycle thermal process.
The thermal energy to be used in thermal processes other than electricity generation, must be no less than an average of
10% of the total energy production during each particular year.
If petroleum and/or natural gas is used either as a primary or supplementary fuel, on an annual average, the sum of the
electricity produced and one half of the thermal energy used in the thermal process, must be at least 45% on average, of the
total energy from the petroleum and/or natural gas used (based on Lower Heating Value.)
The programme has two types of contracts; one is the Non-Firm Contract where the contracted capacity
is unspecified. The other is the Firm Contract, which has the restrictions as below.
•
The term of contract does exceed 5 years.
•
The contracted capacity is specified.
•
The total hours of electricity production supplied must be no less than 7,008 hours per year.
•
For the electricity generating using renewable energy, the annual hours must be no less than 4,672
hours per year.
The list of non-firm contract projects and firm contract projects can be seen in Exhibit 12. The qualified
7
Electricity Generating Public Co. Ltd (EGAT), SPP Project, Characteristic of Qualifying Facilities. November
2, 2003. <http://www.egat.or.th/dppd/eng_spp_char.html>.
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capacity has a cap of 60 MW for normal cases and 90 MW for special cases if required by the system.8
When one considers rice husk power project in SPP programme from Thailand’s view, it is assumed that
there will be several difficulties to move onto realization as follows:
•
As the project is not big, it is not favorable to spend a huge amount money by only one company during
the feasibility exploration period,
•
Power plants with small capacities have a disadvantage to make a profit. Thus accurate project finance
forecast is demanded.
•
Even though the plant needs no advanced technologies, it is difficult to find appropriate plant makers
because there are not many biomass power plant producers.
•
If the project has a deficit, it is difficult for only one company to do project.
To promote biomass power projects including the rice husk power plant, appropriate policy inducement
is needed (preferable policy will be discussed later).
8
Electricity Generating Public Co. Ltd (EGAT), SPP Project, Capacity to Be Purchased from Each SPP.
November 2, 2003. <http://www.egat.or.th/dppd/eng_spp_capacity.html>.
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Exhibit 11. Background of SPP Programme
According to the government policy to encourage private sector participation in power development in form of both Small Power Producer (SPP) and
Independent Power Producer (IPP) , it is obviously seen by the National Energy Policy Council (NEPC) that the electricity generated by non-conventional
energy , waste or residues from agricultural activities or production processes , and co-generation would lead to more efficient use of renewable energy and
primary energy as well as reducing the financial burden of government investment in electricity generation and distribution.
17 March 1992 : the cabinet had approved the NEPC’s resolution in the meeting No. 2/2535 (No.36) held on 12 March 1992 for The Regulations For
The Purchase of Power From Small Power Producers.
30 March 1992 : The Electricity Generating Authority of Thailand (EGAT) has made the first announcement to purchase power from SPP up to 300
megawatts. The maximum capacity to purchase from each SPP shall not exceed 50 megawatts.
27 October 1993 : NEPC’s resolution according to the meeting No. 4/2536 (No.43) was to revise the Regulations For The Purchase of Power From
Small Power Producers in a manner that the power purchase from each SPP can be increased from 50 megawatts to 60 megawatts. It can be upto 90
megawatts if the capability and reliability of the system is acceptable.
28 November 1995 : The cabinet had approved The NEPC’s resolution in the meeting No. 6/2538 (No.53) held on 8 November 1995 for increasing the
power purchase from SPP from 300 megawatts to 1,444 megawatts.
1 December 1995 : EGAT had made the second announcement to purchase power from SPP with total capacity increasing from 300 magawatts to
1,444 megawatts. Due date for application was on 29 December 1995
9 July 1996 : The cabinet had approved the NEPC’s resolution in the meeting No. 3/2539 (No.57) held on 14 June 1996 for
1.
2.
increasing the capacity to be purchased from SPP from 1,444 megawatts to 3,200 megawatts at the connection point. Awarded SPPs were
screened form those SPPs who applied before 29 December 1995 but failed to be accepted at that time , and
Contunuing to purchase power from non-conventional energy , residual fuels , waste , garbage or wood chips for unlimited capacity and
unlimited time.
3 September 1996 : EGAT had made two announcements according to the cabinet’s resolution in 9 July 1996. Those are
1.
2.
The announcement about increase of power purchase from SPP and evaluation criteria. Due date for application was on 20 September 1996 ,
and
The announcement about purchasing power from those SPPs who generate electricity from non-conventional energy , residual fuels , waste ,
garbage or wood chips. Proposal can be submitted form 1 November 1996 onwards.
2 July 1997 : The government had announced the new currency system to be the managed float system. As a result , this affected the SPP projects both
in financial problem and import contents. SPPs had request to inprove the triff and terms and conditins in the Power Purchase Agreement (PPA).
4 November 1997 : The cabinet had approved the NEPC’s resolution in the meeting No. 5/2540 (No.66) held in 24 October 1997 for the measures on
problem solving for SPP. These include :
1.
2.
3.
4.
5.
Amendment of the PPA in a manner that terms and conditions are clearer so that SPP is capable of finding the loan securing.
Providing the tariff adjustment mechanism to relieve the effect of managed float exchange rate system by indexing a portion of the Capacity
Payment. The currency indexation is pegged at 27 Baht per 1 $US as same as IPP projects.
Postponement of the Scheduled Commercial Operation Date (SCOD) for not greater than 12 months. In case th SPPs have no intention to
continue the projects , EGAT shall them the performance securities.
Purchase the exceeding capacity. EGAT and the National Energy Policy Office (NEPO) shall consider to purchase the exceeding capacity if
appropriated. And EGAT shall make only the Energy Payment.
Deviation of some SPP’s qualifications are allowed.
July 1998 : due to the economic crisis. EGAT in co-operation with NEPO had invited the SPPs to discuss about their problem facing in development of
the projects. SPPs were allowed to either delay or cancel their projects.
16 February 1999 : The cabinet had approved the NEPC’s resolution in the meeting No. 1/2542 (No.67) held on 10 February 1999 for postponement of
SPP’s SCOD as indicated in The Power Development Plan (PDP 99-01 : Revised). NEPO and EGAT shall keep following the progress SPP’s project
closely. For furture delay other than those indicated in PDP 99-01 (Revised) shall be subject to NEPO and EGAT approval.
Source: Electricity Generating Public Co. Ltd (EGAT), SPP Project, Background. November 2, 2003.
<http://www.egat.or.th/dppd/eng_spp_bg.html>.
Sasaki 19
Exhibit 12. List of SPP Projects
FIRM CONTRACT
1 GLOW SPP PUBLIC CO.,LTD.(1)
2 GLOW SPP PUBLIC CO.,LTD.(2)
3 TPT UTILITIES CO.,LTD.
4 NATIONAL PETROCHEMICAL PUBLIC CO.,LTD.
5 GLOW SPP 1 CO.,LTD. (1)
6 THAI OIL POWER CO.,LTD.
7 DEFENCE ENERGY
8 GULF COGENERATION CO.,LTD.
9 AMATA-EGCO POWER CO.,LTD.
10 GLOW SPP 1 CO.,LTD. (2)
11 BANGKOK COGENERATION CO.,LTD.
12 NATIONAL POWER SUPPLY CO.,LTD. (1)
13 GLOW SPP 2 CO.,LTD.(1)
14 SAHA COGEN (CHONBURI) CO.,LTD.
15 THAI POWER SUPPLY CO.,LTD. (1)
16 GLOW SPP 2 CO.,LTD.(2)
17 THAI POWER SUPPLY CO.,LTD. (2)
18 ROJANA POWER CO.,LTD.
19 NATIONAL POWER SUPPLY CO.,LTD. (2)
20 SAMUTPRAKARN COGENERATION CO.,LTD.
21 GLOW SPP 3 CO.,LTD.(1)
22 GLOW SPP 3 CO.,LTD.(2)
23 THAI NATIONAL POWER CO.,LTD.
24 NONG KHAE COGENERATION CO.,LTD.
25 LAEM CHABANG POWER CO.,LTD.
26 BIO-MASS POWER CO.,LTD.
27 AMATA POWER (BANGPAKONG) CO.,LTD.
28 T.L.P. COGENERATION CO.,LTD.
29 ROI-ET GREEN CO.,LTD
30 SIAM POWER GENERATION CO.,LTD.
31 GULF YALA GREEN CO., LTD.
32 COUNTRY ELECTRICITY CO., LTD.
33 DAN CHANG BIO-ENERGY CO., LTD.
34 GULF ELECTRIC PUBLIC CO., LTD.
35 AA PULP MILL 2 CO.,LTD
36 ADVANCE AGRO PUBLIC CO.,LTD.
37 KORACH INDUSTRY CO.,LTD.(1)
38 UNITED FARMER & INDUSTRY CO.,LTD.
39 A.T. BIO POWER CO., LTD.
40 MTR KALASIN SUGAR CO., LTD.
41 THAI POWER SUPPLY CO.,LTD.
NON - FIRM CONTRACT
1 KASET THAI SUGAR CO., LTD.
2 UNITED FARMER & INDUSTRY CO.,LTD.
Sasaki 20
3 MITR PHOL SUGAR CO.,LTD.
4 RATCHABURI SUGAR CO.,LTD.
5 THAI PETROCHEMICAL INDUSTRY PUBLIC CO.,LTD.
6 KORACH INSUSTRY CO.,LTD.
7 THAI IDENTITY SUGAR FACTORY CO.,LTD.
8 THAI ACYLIC FIBRE CO.,LTD.
9 PANJAPOL PULP INDUSTRAY PUBLIC CO.,LTD.
10 RUAMPOL ENTERPRISE CO.,LTD
11 BAN PONG SUGAR CO., LTD
12 MITR PHU VIENG SUGAR CO.,LTD
13 N.Y. SUGAR CO.,LTD
14 T.N.SUGAR INDUSTRY CO.,LTD.
15 RATCHASIMA SUGAR CO.,LTD.
16 THAI POWER SUPPLY CO.,LTD. (3)
17 REFINE CHAIMONGKHOL SUGAR MILL CO.,LTD
18 MITR KALASIN SUGAR CO.,LTD
19 ADVANCE AGRO PUBLIC CO.,LTD.
20 EASTERN SUGAR CO.,LTD
21 KARNCHANABURI SUGAR INDUSTRY CO.,LTD
22 SARABURI SUGAR CO.,LTD
23 PRG. GRANARY CO.,LTD
24 THAI ROONG RUANG INDUSTRY CO., LTD
25 MITR KASETR INDUSTRY CO., LTD
26 BURIRUM SUGAR CO.,LTD
27 PHITSANULOK SUGAR CO.,LTD
28 PRANBURI SUGAR INDUSTRY CO.,LTD
29 KORACH INSUSTRY CO.,LTD.(2)
30 PHUKET MINICIPALITY
31 RATCHASIMA SUGAR CO.,LTD.(2)
32 T.R.T.PARAWOOD CO.,LTD.
33 AA PULP MILL 2 CO.,LTD
34 THAI CARBON BLACK CO.,LTD
35 SATEUK BIO MASS CO.,LTD
36 U-THONG BIOMASS CO.,LTD
37 NEW KRUNG THAI SUGAR FACTORY CO., LTD.
38 NEW KRUNG SOON LEE SUGAR FACTORY CO., LTD.
39 TAMAKA SUGAR INDUSTRY CO., LTD.
40 THE KUMPHAWAPI SUGAR CO., LTD.
41 SIAM MODERN PALM CO., LTD
Source: Electricity Generating Public Co. Ltd (EGAT), List of SPP Project. November 2, 2003.
<http://www.egat.or.th/dppd/eng_spp_name.html>.
III.
Background: Japan
a. Liberalization in the Power Industry
From March 2000, partial liberalization in the electric industry started because of the expectation of
Sasaki 21
electricity cost reduction caused by competition (see Exhibit 13). It started from retail liberalization for large
customers (contracted power is 2,000kW or higher and the voltage is 20,000 voltage or higher). These large
factories and buildings occupy 30% of total electricity sales in Japan.9 Moreover, Japan has been divided into 10
regions, each monopolized by one utility company. Exhibit 14 shows each regional power company’s power
generation capacity and the amount of sales and Exhibit 15 shows the geographical territory of each regional
power company.
Because of the long lasting recession over 10 years in Japan, regional power companies cannot expect to
increase their sales but worry about being dispossessed of their sales by liberalization. On the other hand, many
of heavy industry companies have the potential to have their own power stations and actually possess power
stations for their own facilities. Because of the long lasting recession again, those companies wish to find
opportunities to use their technical abilities and experiences of generating electricity at another location. It is not
preferable for them yet to look for business opportunities in Japan’s still insufficiently liberalized power market.
Although some large companies have potential to become power producers, only other large companies (who
might be competitors in power production) could be customers. This is due to the recent situation of ongoing
liberalization. These situations are making potential incentive for Japanese power companies and heavy industry
companies to look for IPP (Independent Power Producer) projects outside of Japan.
Until Now
Partial Liberalization
Regional Power Company
Regional Power Company
Shikoku Denryoku (Shikoku Electric Power Company), Partial Liberalization of Power Retail (Denryoku
Kouri no Bubun Jiyuka ni Tsuite). November 3, 2003. <http://www.yonden.co.jp/info/free/>.
9
Sasaki 22
Exhibit 13. Partial Liberalization of Electric Power Retail
Partial
Liberalization
Source: Shikoku Denryoku (Shikoku Electric Power Company), Partial Liberalization of Power Retail
(Denryoku Kouri no Bubun Jiyuka ni Tsuite). November 3, 2003.
<http://www.yonden.co.jp/info/free/>.
Sasaki 23
Exhibit 14.
Source: Japan Electric Power Information Center (JEPIC), Electric Power Industry in Japan
2001/2002: 42.
Exhibit 15. Territory of Each Regional Power Company
Source: Japan Electric Power Information Center (JEPIC), Electric Power Industry in Japan 2000/2001:
26.
Sasaki 24
b. Saturation of Power Development in Japan
As already shown in Exhibit 9., recently electricity consumption in Japan is stagnant. There is no need to
have new power stations in Japan. Power plant makers cannot expect to find many domestic business
opportunities in this situation. It is preferable for them to seek business opportunities in foreign countries with
the help of trading firms who have experience and information on business in foreign countries.
c.
Can it Contribute to CO2 Reduction ?
EPDC is planning to invest in another biomass project other than the Roi-et project, even though it does
not use rice husk this time. The 32-megawatt biomass plant in Yala uses the remains of rubber plants from which
the gum has been extracted. In May, 2003, the Ministry of Economy, Trade and Industry in Japan (METI) has
designated the EPDC’s Yala project as eligible for emission credits under the 1997 Kyoto Protocol. It is admitted
that the technology used by the Japanese company will allow the project to cut emissions of carbon dioxide
(CO2) by 60,000 tons a year, compared with a case where the same volume of electricity is generated using
conventional power generation technologies available in Thailand.10 Another developer is planning to build
four units of the 22 megawatts biomass power plants and expecting to have a total emission mitigation potential
of approximately 448,000 tons of CO2 annually.11 Recently the price of carbon emission is at an average of $5
per ton. Even though total cost is unknown, a large amount of money is expected to be spent under Clean
Development Mechanism (CDM).12
However this CDM project may not be effective because Thailand lacks the legal framework to support
Kyoto Protocol. In addition, the project must prove they have added value from superior technology that a Thai
farm could not obtain.13 Prime Minister Takshin decided that Thailand would not play a role in this plan, likely
stemming from concerns about the future emissions from the country. As Thailand develops economically, it will
need to rely on sectors producing its carbon emissions, mainly methane from agricultural production. This would
10
Kyodo News Service Japan Economic Newswire, METI marks Thai biomass plan for benefits under Kyoto
protocol. May 23, 2003.
11
Penn Well Publishing Co. Power Engineering International, On the rice track. June 2002.
12
Bangkok Post, Why not Help Make Our World Cleaner? September 13, 2002.
13
Bangkok Post, Japanese Firm Can’t Claim Carbon Credits. June 14, 2003.
Sasaki 25
be affected by emission targets that might start soon for developing countries.14
The Bangkok Post states that Thailand will accept carbon credit trading offers from industrialized
countries, but in a selective manner. The government will select only deals that use appropriate technology,
emphasizing public participation and sustainable development.15
C. Concerns from Southern Perspective
I.
Gap between Thailand and Japan
a.
How Does Japanese Companies Regard Investments in Rice Husk Power Project in
Thailand?
For Japanese companies, playing a part in biomass power projects is attractive because they can
demonstrate to the public their positive attitude for environmental problem. Meidensha, a contractor of Roi-et
power project, states the following:
Rice husk had been treated as agricultural waste until now. However, using it as a energy generating fuel,
it can be transferred to renewable energy that does not increase carbon dioxide in the atmosphere. Building the
plant next to the rice mill factory enables the project to be profitable and the fuel transportations to be stable. As
a local distributed small scale power source, this system is expected to be an effective measure to avoid climate
change that has only little impact to the environment such as carbon dioxide emission.16
Sumitomo Corporation (Sumitomo Syoji), which is the organizing contractor of the Roi-et project, also
views the project as a good opportunity to show the public its possible approach to environmental problems.17
Biomass power projects cannot become as large-scale as coal thermal power stations, which can have
50-100 times the capacity of biomass power plants. Biomass power projects can only be local small-scale power
producers which need little investment because of the fuel availability limitations. In addition, Thailand is a
14
Bangkok Post, Why not Help Make Our World Cleaner? September 13, 2002.
Bangkok Post, Govt Gives Carbon Credit Assurance. July 19, 2003.
16
Meidensya Press Release, Getting an order of Biomass Power Plant that Uses Rice Husk as a Fuel in
Thailand (Tai de Momigarawo Nenryotosuru Baiomasu Hatsuden Puranto wo Jyuchu). August 22, 2001.
December 9, 2003.
<http://www.meidensha.co.jp/press/press-0998445181.html>.
17
Sumitomo Corporation, Environmental Topics. Climate Change Mitigation Projects (Kankyo Topikkusu
Chikyuondanka Boushi Jigyo). March, 2003. December 9, 2003.
<http://www.sumitomocorp.co.jp/environmental/topics/topi01.shtml>.
15
Sasaki 26
rather stable country in the economical, political, and safety as compared to some other Asian countries near
Japan. Those three aspects make the investing in biomass projects in Thailand favorable for Japanese companies.
b.
Thailand’s View of Japanese Investments in Rice Husk Power Projects.
Currently 45 SPPs produce 1862.9 megawatts for sale to EGAT. Only 26 of them with a combined
capacity of 280 megawatts use renewable energy source in 2001.18 However, Thailand still has a vast potential
to use biomass for power generation due to the availability of raw materials such as rice husks, tree bark, and
woodchips.19 It is believed that, with the proper political will, Thailand will have 30% of its energy from
renewable sources, such as solar and wind power and biomass in 2020. The SPP programme itself is expected to
promote energy saving programme, 20 although the government attitude is still said to be only lukewarm
regarding renewable energy use.
21
However, a long-term perspective requires knowing how the
Thai-government and people feel about biomass, especially the recent rice husk power project.
Conceptually, renewable energy is advocated as a favorable power solution to mitigating environmental
problems, especially in industrialized countries. However, one should consider the new conflict on the
construction of wind turbines, because of the environmental destruction that can occur. The Cape Wind Project
in Massachusetts now has huge difficulties in getting public support.22 Although the Thai government believes
biomass energy is most suitable for Thailand,23 as a developing country, this tendency is unusual because people
there are not so familiar with climate change issues. Thus the critical question for local people is the project’s
contribution to their society. Although the Philippines succeeded as it focused on small-scale projects and
18
Nation(Thailand), Power Producers Line Up to Join NEPO’s Biomass Project. October 19, 2001.
Financial Times Information Global News Wire, Seminar Organized to Discuss Biomass as Alternative
Energy. December 20, 2002.
20
Nation (Thailand), Power Producers Line up Join NEPOS biomass project. October 19, 2001.
21
Bangkok Post, Greenpeace Warns: Renewable Energy Cheaper, Better for Thailand in Long Run. August 13,
2003.
22
There are huge debate in several website as below:
Cape & Islands Offshore Wind-An MTC Public Outreach Initiative.
<http://wind.raabassociates.org/>.
Cape Wind. <http://www.capewind.org/index.htm>.
Cape Cod Times, Latest News and Sources for Proposed Nantucket Sound Wind Farm.
<http://www.capecodonline.com/special/windfarm/>.
Save Our Sounds. <http://www.saveoursound.org/index.html>.
23
Bangkok Post, Biomass Policy needs Rethink, Says Industry. August 18, 2003.
19
Sasaki 27
required local villagers to be part-owners, thirty-one biomass projects had been proposed for state subsidies and
about half had been rejected in Thailand until August, 2003 because they failed to win local villagers’ approval.
Communities where the projects had been proposed were worried about the possibility of air pollution and the
demand on local farm produce for fuel. The developers were required to show that over 70% of villagers
accepted their projects in order to gain the subsidy. Most of those who oppose such a project do so because they
did not gain personally from it, or the company did not buy their land24.
One project had offered to set up a five million baht community fund during the construction. It also
offered to give one million baht to the district per year during its operation and 1,200 baht per family per year.
At some biomass project site, people worried the project would take too much water from the river25 or
that discharged water from the plant would cause flooding in low-lying areas.26 However, some locals supported
the project because it would create job for the community.27
Energy Minister Pongthep Thepkanchana plans to form provincial tripartite committees composed of
local people, plant owners and provincial governors in provinces where the projects are planned, in order to ease
opposition. The committees are also expected to have environmental protection experts hired by the Energy
Planning and Policy office (EPPO).28
One NGO points out that the reason of the conflict is not a technical issue but the bidding process.
Building plants near rice mill factories is a prerequisite condition for rice husk power projects. Companies
seeking to develop energy projects usually buy the preferred site first as an indication of their commitment, then
obtain a bank guarantee. Speculators often manipulate protesters in an attempt to push up land price, so the
project cost will increase and reduce the chances of winning a contract.
There are also positive side-effects of using biomass power. Steam for paddy drying services will
contribute to higher incomes of the local communities, the reduction of dependence on increasingly expensive
imported fossil fuels, and the implementation of further biomass power generation in Thailand. 29 As in
24
25
26
27
28
29
Bangkok Post, Biomass Policy needs Rethink, Says Industry. August 18, 2003.
Bangkok Post, Trang Power Plant Proposal Fires Up Residents to Protest. October 7, 2002.
Bangkok Post, Locals Pull the Plug on Biomass. April 29, 2003.
The Nation (Thailand), Biomass Power: Face-off Over Rice Husk Plant. June 10, 2003.
Bangkok Post, Bid to Win Backing for Plants. November 18, 2003.
Penn Well Publishing Co. Power Engineering International, On the rice track. June 2002.
Sasaki 28
Massachusetts, 30 renewable energy is also expected to create new job opportunities. Solar power alone is
expected to create 16,000 new jobs in Thailand.31 These examples show that unreasonable resistance could
result in a huge loss of benefits offered by the abundant biomass source.32
c.
How can We Bridge the Gap Between Thailand and Japan?
According to the above discussion, one could realize the total different perceptions about the project
between Thailand and Japan. As biomass power projects, including rice husk power projects, cannot be huge in
scale, Japanese companies do not expect to make a large profit from the projects. Their interests are favorable
appeals to the public. Although Japanese companies have confidence that the projects can contribute to
“common good” for the future from the aspect of CO2 reduction, local people around the site do not care much
about this benefit. Social responsibility for company, especially in industrialized countries, is gradually getting
significant. Without a sense of social responsibility, many projects cannot go beyond the barrier that is produced
by conflict with local people.
Exhibit 16 shows circumstance around corporations, including key issues. Corporations are influenced
by law, shareholders and ethics. Making enough profit for shareholders is a very important issue for companies.
Corporations need to collaborate with governments, because corporate money cannot substitute government
funds, and to overcome the weakness. According to Corporate Purpose and Responsibility, corporations have four
responsibilities of community, employees, suppliers and customer and they construct society. They need to
satisfy obligations for the responsibilities to have a “license to operate.”33 In this exhibit, contribution to society
by reducing CO2 emission will be categorized as an obligation to the customer. However, it is not enough for a
Japanese company to obtain the “license to operate.” When a company prepares to get into the biomass power
business in Thailand, it needs to take care of obligations to the community around the site.
On the other hand, as mentioned, unreasonable resistance from the community could result in a loss of
benefits for society itself and also for Thailand. The plan to form provincial tripartite committees by local people,
30
31
32
33
Massachusetts Technology Collaborative: http://www.mtpc.org/.
Thai Press Reports, Use the Sun and Cut Energy Bills, Greenpeace Urges Prommin. March 5, 2003.
Bangkok Post, Local Pull the Plug on Biomass. April 29, 2003.
Paine, Lynn Sharp. Corporate Purpose and Responsibility. Harvard Business School case 9-396-201
Sasaki 29
plant owners and provincial governors and involving environmental protection experts has been presented by
Energy Minister, as recently mentioned. Surplus government intervention often creates undesirable results.
However, when one considers that the electric power industry is public and a basic industry for country, this plan
should be highly appreciated. Negotiations between developers and local people should be done under fair
circumstances with the presence of a third party and environmental experts dispatched from authorities. This
would be a process similar with the Cape Wind Project that is under the negotiation now in Massachusetts.
II.
How Serious Is Air Pollution?
Open burning of grass and weeds has been a problem because it creates especially smoke fires and can
lead to hazy conditions. Agricultural burning during the dry season in rural areas sometimes makes the air worse
than city areas: Most of the rice husk is currently disposed of through burning, either in rice mills using old
incinerators or boilers, or out in the open space, resulting in high emissions, especially particulates. This is
much greater than burning rice husk in the power plants, where electrostatic precipitators/bag houses and
carefully designed combustion will result in a minimum of particulate and other emissions. 34 A properly
equipped incinerator may be a good alternative.35
As rice is an agricultural product for food, projects do not have to worry about emission of toxic material
such as heavy metal and dioxins, even though it contains a small portion of iron and copper. It is assumed that
one does not have to worry about sulfur because it is rice that is incinerated. Thus the main concern is NOx and
small particulates from smokestacks, because even if nitrogen is not contained in the fuel, the incinerator creates
NOx with nitrogen in the air when it burns material at high temperatures. As far as the fuel contains ash, one
cannot avoid having small particulates. However, NOx is controllable by incineration adjustment by
conventional technology, which can be done economically without difficulty. Small particulates are also
completely controllable by conventional technology. Thus it is considered that installing environmental facilities
would not have serious economic impact on the project profitability. Actually, the Roi-et project’s emissions are
much lower than the regulation values. Even though it installs only an electronic precipitator and multi-cyclones
34
35
Penn Well Publishing Co. Power Engineering International, On the rice track. June 2002.
Bangkok Post, Air Pollution: Stop Open Burning. April 13, 2003.
Sasaki 30
that do not need advanced technology.
Sasaki 31
Exhibit 16. Situation around Corporation
Religious Vacation
Influence
Influence
Profit
Influence
Influence
CORPORATE
Needs:
Profit (=necessary for contribution to responsibilities),
Sense of balance (repression, suspension, compromise, trade off),
Rapid Improvement (=learning fast and changing fast)
Government
Tax policy and other public
policy should be reformed
Collaborate:
To overcome the desire for maximizing
profit.
Corporate money cannot substitute the
government fund.
Internal Conflict:
Long term perspective and short term perspective
License to operate
Local needs such as
schools,
traffic,
pollution,
health,
recreation
Community
Moral and Ethics
Free competition without
deception or fraud
Shareholders
Law
Obligation to responsibilities:
Public welfare, Humanitarian,
philosophical purpose
Fair pay, equal opportunity, healthy
and safety workplaces, financial
security, personal privacy, freedom
of expression
Employees and workers
=Human Resource
Educational
Fair purchasing practices and
prompt payment
Suppliers
Society:
Concerns and issues of national and significance
Maintaining economic viability
Standard of living and Quality of Life
Development and global solidarity
and
Reliable products and
services, fair value,
good service and
accurate
advertising
Customers
Sasaki 32
III.
Can Economical Benefits for Thailand be Expected?
As revenue, rice husk power projects can expect capacity payments that depend on their power capacity
for sales, and energy payments that depend on the actual amount of power sales. When the fuel is rice husk,
capacity payment is 374 baht/kW/month and energy payment is 0.71 baht/kWh. 36 The cost of rice husk,
including transportation, can be estimated at 300-500 baht per ton.37 However, construction cost differs by each
project. For example, the Roi-et project (generating power output: 10 megawatt, power output for sales: 8.8
megawatt) requires 0.6 billion baht,38 but other rice husk projects planned at Phichit, Nakhon Pathom, Sing Buri
and Saraburi are assumed to need 1.5 billion baht (power output: 22 megawatts). The Phichit projects are
expected to have a revenue of 270 million baht and a profit of 100 million baht per year. Other operation costs,
such as maintenance and personnel, are not accessible to people outside of the project. Profitability and
cash-flow of the project in general is not available at this point because there are still few projects with accessible
information (see Exhibit 17).
In any case, biomass power projects still cannot compete with fossil fuel power plants without subsidies.
This is because of the difference in size of biomass and fossil fuel power plants. As fossil fuel power plants can
be larger than biomass power plant by 50-100 times, they can have a “scale merit” to generate cheap electricity
per unit: The project will be eligible for a tariff subsidy (tax incentive) of 14 satang39 per unit (kilowatt hour)
form the Energy Policy and Planning Office (EPPO).40 The EPPO allocated three billion baht to subsidies 31
projects that would generate 511 megawatts of electricity from plant and animal sources.41 Only fourteen
36
Electricity Generating Authority of Thailand (EGAT), Metropolotan Electricity Authority (MEA), Provincial
Electricity Authority (PEA), Regulations for the Purchase of Power from Small Power Producers (For
Electricity Generated From Non-Conventional Energy, Waste or Residual Fuel and Cogeneration). January
1998 (Revision August 2001).
37
Penn Well Publishing Co. Power Engineering International, On the rice track. June 2002.
38
The Electric Power Development Co.,Ltd.(EPDC), News Release, The Start of the Construction of Rice Husk
Power Station in Roi-et, Thailand (Taikoku Roietto Momigara Karyoku Hatsudensho no Kensetsu Chakko ni
Tsuite). October 29, 2001. December 2, 2003.
<http://www.jpower.co.jp/news_release/news/news160.htm>.
39
1 baht = 100 satang 3 yen = 2.5 cent
40
Bangkok Post, Firm to Build Plant in Phichit. September 24, 2003. However Bangkok Post, EGAT Delays
Buying SPP power, April 22, 2003 tells subsidy is 17 or 36 satang per unit.
41
Bangkok Post, Biomass Policy needs Rethink, Says Industry. August 18, 2003.
Sasaki 33
projects, capable of producing 194 megawatts, had won approval to receive a subsidy.42 Other projects could not
show sufficient biomass supply and acceptance from nearby residents or the ability to secure enough funds.43
The World Bank is planning to have a prototype fund which provides financial support for biomass
power projects. Industrialized countries behind fund would be able to earn carbon credits that would allow them
to show good performance in meeting their targets in addressing climate change.44
However, there is not only the trend that is favorable for biomass project. As mentioned, it is assumed
Thailand will have a rapid electricity consumption increase because of development and population increase.
Thus the country has been prepared for the increase and started a 15-year power development plan (PDP). Now
Thailand has high electricity reserves. For this reason, the Electric Generating Authority of Thailand (EGAT)
states that it will delay subsequent plant constructions and the EGAT shelved the electricity purchases from SPP
projects that do not yet have signed agreement using biomass or renewable energy sources as fuel.45
When one compares the Thai-government subsidy with the World Bank fund, the fund is more
reasonable because biomass power projects are desired to be promoted, as they can contribute to CO2 reduction.
Even though Thailand would have some other benefits, using biomass as a fuel is not mainly profitable for
Thailand, but this is primarily for the mitigation of global climate change. In this meaning, subsidies should be
coming from international organizations, not national governments.
Even though the total potential of biomass as a fuel is rather large in Thailand, its prevalence will
proceeded gradually because of each of its unit’s small size. Thus the promotion will not push power projects that
use other fuels in the national energy plan, if the projects could be eligible to have subsidies from international
organizations.
As one positive side effect of using rice husks as a fuel, one could expect to sell the ash after the
incineration. The most common way to use it is as fertilizer. Approximately 10% of rice husks are ash, and it can
be assumed to be sold around 300-700 baht per ton. There are also other possibilities to use it. It is known that
rice husk contains high silica. Recently Thailand meets all its requirements through imports. It is said to be
42
43
44
45
Bangkok Post, EGAT Delays Biying SPP Power. April 22, 2003
Bangkok Post, 17 SPP Projects Gain Subsidies. March 28, 2002.
Inter Press Service, Eco-Activists Wary of World Bank Offer. August 20, 2002.
Bangkok Post, EGAT Delays Buying SPP power, April 22, 2003.
Sasaki 34
possible to reduce solar cell production cost by about 45% by producing silica from rice husks. Silica is also used
for the production of semiconductors. If the ashes contain very high percentages of silica, they can be sold at
high prices to those industries. Rice husk power plants will integrate features to produce saleable rice husk ash
for the cement and steel industries.46
46
Penn Well Publishing Co. Power Engineering International, On the rice track. June 2002.
Sasaki 35
Exhibit 17. Power Purchase from Small Power Producers (As of August 2003)
1. Proposals Submitted
1.1 Number of Projects
1.2 Generating Capacity (MW)
1.3 Sale to EGAT (MW)
2. Received Notification of Acceptance*
2.1 Number of Projects
2.2 Generating Capacity (MW)
2.3 Sale to EGAT (MW)
2.4 Type of Fuels
- Natural Gas
- Coal
- Oil
- Bagasse
- Paddy Husk, Wood Chips
- Municiple Waste
- Bagasse, Wood bark, Paddy Husk
- Rubber Wood Chips, Palm Residue
- Paddy Husk, Bagasse, Eucalyptus
- Black Liquor
- Waste gas from production process
- Wood bark, Wood Chips, Black Liquor
3. Contract Signed
3.1 Number of Projects
3.2 Generating Capacity (MW)
3.3 Sale to EGAT (MW)
4. Supplying Power to The Grid
4.1 Number of Projects
4.2 Generating Capacity (MW)
4.3 Sale to EGAT (MW)
Firm
Non-Firm
Total
78
7,824.31
4,621.30
48
937.31
337.48
126
8,761.62
4,958.78
41
3,634.41
2,119.80
41
864.30
326.30
82
4,498.71
2,446.10
20
5
1
2
2
1
1
1
1
2
27
1
1
1
1
2
1
20
7
1
29
3
1
2
1
3
2
2
2
31
3,329.41
1,917.40
34
792.80
281.90
65
4,122.21
2,199.30
29
3,006.41
1,837.20
31
761.50
261.70
60
3,767.91
2,098.90
Source: Energy Policy and Planning Office in Thailand (EPPO), Power Purchase from Small Power
Producers (As of August 2003). <http://www.eppo.go.th/power/pw-spp-purch-E.html>. August 2003.
December 12, 2003.
Sasaki 36
IV.
How can Rice Husk Power Project Contribute to Thailand’s Benefit?
a.
Can it Contribute to the Improvement of Infrastructure?
As mentioned, rice husks in Thailand have potential to cover 7% of electricity when all of them are
assumed to be used for it. Even if only one fiftieth of the 7% could be used for rice husk power projects, it will be
0.14%.
7%/50 = 0.14 %
The renewable energy’s target for electricity production in Japan at 2010 is only 0.3% in the basic case and 1.0%
in the strenuous case as a total including photovoltaics and wind turbine.47 Considering this target, this potential
of 0.14% which is achievable only by rice husks can be judged as a significant contribution for Thailand’s
infrastructure.
b.
Can it Contribute to Technology Transfer?
As mentioned, the rice husk power projects have much smaller scales compared to fossil fuel power
projects. Thus developers do not use so much investment for environmental equipment. Moreover, there is no
need to install complicated environmental equipment for rice husk incineration. Thus, current conditions are not
favorable for technology transfer from industrialized countries to Thailand. However, the participation of
Japanese companies will contribute to precise operation, maintenance and safety management. These kinds of
indirect technology transfers should be also appreciated when one recalls Exhibit 16. This exhibit shows that
well-organized operations and maintenance will contribute to customers by improving the reliability of energy
supply. The safety conscious improvements will contribute to the employees. Both of these benefits can be
expected as the company’s obligation to society. They are important issues to be considered when companies in
industrialized countries do business in developing countries.
D. Policy Recommendations
I.
47
Recent Trend Review
The General Resource and Energy Investigation Meeting (Sogo Shigen Enerugi Chosakai), National Energy
Policy Report for the Future (Kongo no Enerugi Seisaku Nitsuite).
<http://www.meti.go.jp/report/downloadfiles/g10713bj.pdf>. July, 2001. December 12, 2003.
Sasaki 37
It is confirmed that the motivation toward rice husk power projects is sufficient from both the side of
Japanese companies and Thailand, as reviewed below:
Even though Japan’s PPP is increasing still during its long-lasting recession, because of stagnant
situation of population and energy saving, electricity consumption is not increasing. Thus there is no strong
requirement for new power plant construction. Plant companies in Japan need to use their conventional
technology cultivated by waste-to-power projects. Trading companies need to find business opportunities
outside of Japan because of the recession. Electric power companies also need to find business opportunities
outside of Japan because their expansion opportunities are hindered by going liberalization.
On the other hand, Thailand needs more electricity because of its rapid increasing population and
economic development. The potential of rice husks as a fuel is enough for renewable energy source and does not
apply too much pressure to the present energy plan. Although the benefits of being involved in CDM scheme are
uncertain, effective use of domestic resources contributes to a favorable energy-source-mixture that serves for
national energy supply security.
II.
Recognition of the Problems
However, as far as Thailand has enough electricity reserve, rice husk projects can be a preferable choice,
but not essential choice. Moreover several problems are confirmed from Thailand’s side, as mentioned in Section
B. .c. Thus Thailand has only a weak centripetal force for rice husk power project.
Motivations from both sides are needed to become real projects. For Japanese companies, the main
purpose of using this business opportunities is not making profit, although the project should not lose money.
The largest benefit for their involvement is to show their positive stance on environmental problem mitigation to
the public. In this meaning, the motivation has only weak centripetal force for realizing the project because
companies have many other options for showing the public their positive attitude on environmental problem
mitigation. If the project can contribute to the CDM plan, it can be a strong driving force to promote investment
in rice husk power projects in Thailand because it they can give companies an economic benefit. However, it is
not certain, given the Thai-government’s ambiguous attitude on the CDM.
Sasaki 38
III.
Appropriate Policy Needed
These two weak centripetal forces from both sides must be strengthened to become tenacious motivation
for realizing the project. As mentioned in Section A. .b, the Thai-government commented that “the government
will select only deals that use appropriate technology, emphasizing public participation”. This shows the
appropriate direction for Thailand’s preferable sustainable development through rice husk power projects. Here
one needs to clarify “appropriate technology” and “emphasizing public participation” to reflect them into actual
policy.
To satisfy those needs, more money will be needed. As mentioned, domestic subsidies are not preferable
and cannot be expected to be increased greatly because of little motivation in Thailand. For the “common good”
of the world, funds from international organizations are preferable, in particular, ones similar to the World Bank
proposed pilot plan. Incrementing the funds can be considered once Thailand is involved in the CDM scheme. In
this way, international organizations such as the World Bank can contribute and affect to promotion of renewable
energy and the CDM scheme’s realization.
This fund will be used for “appropriate technology” and “emphasizing public participation.” As rice
husk power projects need only conventional technology, technology transfer should be concentrated to
appropriate operations, maintenance and safety management, as mentioned in Section C. .b. technology
improvement for effective uses of ashes might be achieved by the investments.
To achieve the emphasis on public participation, tripartite committees will organized to fill the gap
between developers and local people, and also to evaluate environmental issues appropriately as mentioned in
Section C. .c. For the government, it is impossible to prepare enough human resources at the appropriate time,
who would be involved in the committees. Thus, approved third parties such as quasi-public companies should
take care of the committees. This is a plan very similar to that of the Cape Wind Project, where Massachusetts
Technology Collaborative (MTC) is involved. Basically, it should stay as an observer to avoid too much
intervention. However, to avoid lengthy negotiation and money required for this, the negotiation period should
have a limit and a final decision should be done by the government in case of breaking off.
In this policy and plan, rice husk power project promotion can become more attractive for both Japanese
companies and Thailand, so that the motivations from both sides can become much stronger than now. Moreover,
Sasaki 39
depending on the strategy and the amount of the money that international organizations bring, the CDM plan will
be encouraged now more than ever.
Sasaki 40
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