Paul Gipe  @  ChelseaGreen

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Thailand Feed-in Tariff Program Harvests Large Crop of Projects

Posted on Wednesday, December 8th, 2010 at 7:35 pm by Paul Gipe

Since the introduction of its small-power program in 2006, Thailand has signed contracts to develop 4,300 megawatts of renewable generation. Nearly half of the contracts – 1,800 megawatts – are for solar energy alone.

Currently 850 megawatts of generation are online as a result of the program, says Chris Greacen, a former consultant to the Thai government. The large majority of that, 700 megawatts, is from biomass. Only 16 megawatts’ worth of solar is in operation, but the number of projects is growing rapidly, according to Mr. Greacen.

Thailand’s Very Small Power Producer program uses the “bonus model” of feed-in tariff design where the final tariff paid is composed of several “adders” on top of the avoided wholesale cost of generation.

As in successful programs elsewhere, the Thai feed-in tariffs are differentiated by technology. However, the Thai feed-in tariff program contains several unique features. There is a specific “adder” or bonus for offsetting diesel-fired generation. There is also a location adder or risk premium for projects in three southern provinces and an adder to compensate for fossil-fuel price volatility.

Thailand joins several other Asian countries, such as China, Malaysia and the Philippines, that have moved to feed-in tariffs or are in the process of doing so.

The Thai program includes anti-gaming provisions to discourage “briefcase” project developers from clogging the program with applications that are unlikely to be built. The program requires a 200 baht ($6) per kilowatt-hour deposit to prove the developer’s good faith. Further, no adder will be paid if project completion is more than one year past its due date.

Contracts to date are dominated by proposed biomass and solar thermal electric projects. There are 1,400 megawatts of solar thermal electric projects under contract, and 2,100 megawatts of biomass projects under contract.

To increase project diversity, Thailand is providing government-backed loans at 4 percent interest up to 50 million baht ($1.6 million) per project. Similar to Germany’s KfW (the German Bank for Reconstruction and Finance), the government has loaned 4 billion baht to 13 banks at 0.5 percent interest for use in the program.

The Thai program followed the introduction of a net-metering policy in 2002. The current feed-in tariff program went into effect in 2006. Projects are limited to 10 megawatts. Contracts vary from seven to 10 years.

Most solar photovoltaic projects under contract are large, ground-mounted arrays. Interestingly, nearly all will use inverters made by a domestic Thai manufacturer.

Payment for a typical solar project not located in the southern provinces would include 8 baht/kwh solar bonus, 2.6 baht/kwh for the wholesale avoided cost, plus 0.93 baht/kwh for the fuel volatility bonus. The total payment, 11.5 baht/kwh, comes to about $0.38/kwh. However, solar contracts are good for only 10 years.

More information may be obtained from the organization Palang Thai.

Read the original post on The Solar Home and Business Journal.

windenergybasics Paul Gipe is the author of Wind Energy Basics.
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