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NEWS UPDATES 26 June 2010

Thai 'realistic' incentives for green energy

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Thailand’s Energy Minister Wannarat Channukul said tariffs to support renewable energy projects will be changed to reflect more realistic costs as the previous programme to encourage investment in the sector has already achieved its targets,

The new feed-in tariff scheme will be applied to all new renewable energy operators who have yet to sign purchasing contracts with power buyers, except for the solar power sector which will still receive an adder tariff but at a lower rate of 6.5 baht per kilowatt hour down from 8 baht.

The new feed-in tariff will be implemented once the National Energy Policy Council approves it at Monday's meeting.

The new tariff will be calculated based on real investment costs and an appropriate return on investment for operators.

With the feed-in tariff, every supplier of renewable energy to the Electricity Generating Authority of Thailand, the country's sole power buyer, will need to propose and negotiate their tariff or power price with Egat.

The ministry will set up a special panel to consider the feed-in power price on a case-by-case basis. The criteria for paying a high or low rate will depend on the size of each project and the quality of its energy. The ministry said the new scheme will offer better rates across the board, even to very small projects.

Thailand previously encouraged investment in renewable energy by using an adder-tariff as an incentive. The tariff was a special rate, fixed by the Energy Policy and Planning Office, that renewable operators could charge Egat in addition to the normal power rate.

Adder rates varied according to the type of renewable energy, eg solar or biomass.

Thailand's Renewable Energy Development Plan from 2008-22 said total renewable energy supply would rise to 5,600 megawatts by 2022 but its had only reached 1,750 MW as of the first quarter of the year.

"Thailand received overwhelming support from private investors [with the adder tariff] and the capacity of renewable energy that will be built over the next 10 years is already much higher than expected. So it is time for us to drop the subsidy," said Mr. Wannarat.

The new feed-in tariff is already widely used in developed countries and regions, such as Europe.

"New tariff rates will not impact on potential foreign investors coming to Thailand since the new system is calculated on an international basis," he said. "With the feed-in tariff, we remain an attractive place for renewable energy investment given the various supportive programmes."

Twarath Sutabutr, deputy director-general of the Department of Alternative Energy Development, said the department planned to allocate about 200 million baht for financing the research and development of low-speed wind turbines. The scheme will take place from 2013-20.

"With nearly 200 million baht we should be able to draw low-speed wind-power investment to match with our potential sites (for wind farms)," said Dr. Twarath.


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