country case studies: thailand & tanzania feed-in tariffs and small power producer regulations

Country Case Studies: Thailand & Tanzania Feed-in Tariffs and Small Power Producer Regulations

Workshop on grid‐integration of small scale decentralized renewable energy (DRE) systems

Victor Menezes Convention Centre (VMCC), IIT Bombay (Mumbai)

3 April 2012

Chris Greacen

Thailand

Tanzania

Can’t we hook it up and sell power back?

Technical regulations:• Allowable voltage,

frequency, THD variations

• Protective relays– 1-line diagrams for all

cases:• Induction• Synchronous• Inverters• Single/multiple• Connecting at different

voltage levels (LV or MV)

• Communication channels

Commercial regulations:

• Definitions of renewable energy, and efficient cogeneration

• Cost allocation• Principle of

standardized tariff determination

• Invoicing and payment arrangements

• Arbitration

$

+ Standardized Power Purchase Agreement (PPA)

Evolution of Thai VSPP regulations• 2002

– VSPP regulations drafted, approved by Cabinet– Up to 1 MW export, renewables only– Tariffs set at utility’s avoided cost

Biogas from Pig Farms

Reduces air and water pollution

Produces fertilizer

Produces electricity

8 x 70 kW generator

Ratchaburi

Biogas from Pig Farms

•40 kW•Mae Kam Pong, Chiang Mai, Thailand

Micro hydropower

• Uses waste water from cassava to make methane

• Produces gas for all factory heat (30 MW thermal) + 3 MW of electricity

• 3 x 1 MW gas generators

Korat Waste to Energy – biogas… an early Thai VSPP project


– VSPP regulations drafted, approved by Cabinet– Up to 1 MW export, renewables only– Tariffs set at avoided cost (bulk supply tariff + FT)

• 2006– Up to 10 MW export, renewables + cogeneration– Feed-in tariff “adder” (premium payment)

• Paid by ratepayers– If > 1 MW then utility only pays for 98% of energy (utility

incentive to facilitate VSPPs)

Rice husk-fired power plant• 9.8 MW• Roi Et, Thailand

Bangkok Solar 1 MW PV

• Signed PPAs for 767 MW of PV (SPP + VSPP)

Lopburi 73 MW PV (over 1,000 rai = 160 hectares)

• Project size: 1 MW• Uses self-manufactured a-Si• Signed PPAs for 767 MW of PV (SPP + VSPP)

Solar thermal electricity• 5 MW, 135 MW planned• 900 Million baht (180 baht/watt = US$6/watt) but costs

expected to decrease 20 to 30% to 135 baht/watt• Commissioned in Kanchanburi on Nov 2011• Signed PPAs for 1343 MW of solar thermal

VSPP project pipeline as recorded in EPPO data

Application under

consideration

Permission received,

awaiting PPAPPA signed

Generating & selling electricity

Leakage (Project abandoned)

Feb 2007

Thailand VSPP Status

Application pendingReceived permission, awaiting PPA

PPA signedGenerating electricity

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1056 MW online (58-fold increase since 2007)

PPAs signed for additional 4318 MW

Solar trends in Thailand

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MW Solar installed in Thailand Feb 2007 – Dec 2011

PPAs for photovoltaic (PV) solar: 677 MWPPAs for concentrating solar thermal (CST): 1343 MW


– VSPP regulations drafted, approved by Cabinet– Up to 1 MW export, renewables only– Tariffs set at avoided cost (bulk supply tariff + FT)

• 2006– Up to 10 MW export, renewables + cogeneration– Feed-in tariff “adder” – If > 1 MW then utility only pays for 98% of energy

• 2009– Tariff adder increase, more for projects that offset diesel

http://www.eppo.go.th/power/vspp-eng/ for English version of regulations, and model PPA

http://www.eppo.go.th/power/vspp-eng/

Thai VSPP feed-in tariff adders

Assumes exchange rate 1 Thai baht = 0.029762 U.S. dollars

Fuel Adder Additional for diesel offsetting areas

Additional for 3 southern provinces

Years effective

Biomass Capacity <= 1 MW $ 0.015 $ 0.030 $ 0.030 7 Capacity > 1 MW $ 0.009 $ 0.030 $ 0.030 7

Biogas <= 1 MW $ 0.015 $ 0.030 $ 0.030 7 > 1 MW $ 0.009 $ 0.030 $ 0.030 7

Waste (community waste, non-hazardous industrial and not organic matter)

Fermentation $ 0.074 $ 0.030 $ 0.030 7 Thermal process $ 0.104 $ 0.030 $ 0.030 7

Wind <= 50 kW $ 0.134 $ 0.045 $ 0.045 10 > 50 kW $ 0.104 $ 0.045 $ 0.045 10

Micro-hydro 50 kW - <200 kW $ 0.024 $ 0.030 $ 0.030 7 <50 kW $ 0.045 $ 0.030 $ 0.030 7

Solar $ 0.238 $ 0.045 $ 0.045 10

Tariff = adder(s) + bulk supply tariff + FT chargeBiomass tariff = $0.009 + $0.049 + $0.027 = $0.085/kWh

Current VSPP challenges & responsesChallenge Response

1. PPA speculators Bid bond (200 baht/kWh) ($6/kW).No adder if >1 yr past Scheduled Commercial Operations Date.

2. Little diversity (generators online mostly >1 MW biomass owned by sugar, rice mills)

4% interest loans up to 50 million baht ($1.6 million) per project. Government loaned 4 billion baht ($133 million) to 13 banks at 0.5% interest.

Challenge Response3. VSPP not well integrated into

Power Development Planning (PDP) process

Not much yet, but Thai NGOs have developed/advocate “alternative PDP”

GW

h

Fuel mix in power generationPower Development Plan 2007

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Reflections -- Thai VSPP

• Low-key, local approach kept utilities from being threatened

• Thailand’s path to full generation-cost FIT started successfully with tariffs based on avoided cost• Initial trickle of applications gave utility time to build

capacity to implement program• Feed-in adder very successful in attracting projects• Incentivize utility (utility pays for only 98% of energy

from projects >1 MW)• Challenges arising as program grows, largely being

addressed

Tanzania

Evolution of Tanzania SPP regulations

• Approved by regulator August 2009• Up to 10 MW export, renewables & cogeneration• SPP Tariffs at average of long run marginal costs

(LRMC) and short run (SRMC)– Grid-connected SPP tariff (2010): 110.3 TZS ($0.074)/kWh

• 132.36 TZS ($0.088)/kWh dry-season Aug-Nov• 99.27 TZS ($0.0663)/kWh wet-season Jan-Jul, December

– In rural mini-grid areas offsetting diesel (2010): 368.87 TZS ($0.24.6)/kWh

• 4 PPAs signed by November 2010

www.ewura.go.tz/sppselectricity.html for English versions of regulations, and model PPAs

http://www.ewura.go.tz/sppselectricity.html

Lumama 150 kW• Grid Soon to expand

to 300 kW

TPC Sugar Factory• Cogen bagasse• 17.5 MW

SPPs In Operation

Project MW Type of Resource StatusACRA Tanzania 0.3 Hydro In Operation / Community based

TANWAT 2.34 Biomass -wood Selling 1 MW (2010)

TPC Co-Generation 15 Bagasse Selling 10 MWe to TANESCO (2010)

Katani Power Plant 0.3 Biomass - Waste Operation - Pilot

SPPs in Preparation

Project MW Type of Resource

Status

Sao Hill Energy 15 Biomass -wood Applied Licence

Chipole – Own use & sell to the grid

0.4 Hydro In operation – additional 3MW planned

Mwenga 3.36 Hydro PPA Signed with TANESCO

Ngombeni Mafia 1.4 Biomass PPA Signed with TANESCO. Under construction

Kilombero Sugar Co. 10.6 Bagasse Applied Licence

Tanzania Sisal Board 0.5 Biogas Applied License

Kitonga Mini Hydro 10 Hydro Applied License

Andoya Hydro Electric Co.

0.5 Hydro Business plan

Kilocha Hydro 12 Hydro In discussion with REA

Kilombero Mngeta 3 Hydro In discussion with REA

Where we are now…• Completed

– All documents passed public review and are approved for use.

– Several PPAs signed with TANESCO and licenses applied• Ongoing

– TANESCO in process of establishing SPP cell

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Where we are now…• Completed

– All documents passed public review and most are approved for use.

– Several PPAs signed with TANESCO and licenses applied• Ongoing

– TANESCO in process of establishing SPP cell– SPP Working Group composition and function– Discussions between EWURA and REA on how to

coordinate better, done, but may be refined further.– Determine tariff review methodology for projects selling

electricity at retail

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Challenges

Challenge Inadequate financial

resources to support the initiative

Inadequate private sector participation in investment

High interest rates loans from commercial banks

Land ownership and water rights for SPPs projects especially wind farms & mini-hydro plants

Low Tariff and non-cost reflective

Response WB has established a

facility, engage interest of other financial institutions

Conducive Environment, rules and publicize

Promote other sources mix grant and loans

Include land ownership & water rights in RE Policy

Adapt policy in future?

Challenges …..cont. 2Challenge

Lack of experience of key project promoters with skills in project management

Lack of Renewable Energy Policy

Lack of interest on the part of potential Off-takers (TANESCO)

Response Capacity building (REA)

Government needs to set policy targets, etc.

Improving through regular discussions with utility

Thank youFor more information, please contact

[email protected] [email protected]

Thai VSPP regulations available at:http://www.eppo.go.th/power/vspp-eng/

Tanzania SPP regulations available at:www.ewura.go.tz/sppselectricity.html

mailto:[email protected]

mailto:[email protected]

http://www.eppo.go.th/power/vspp-eng/

http://www.ewura.go.tz/sppselectricity.html

Tariffs determined by SPP type

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Connected tomain grid

Connected to isolated mini-grid

Selling wholesale (to DNO*)

Case 1 Case 2

Selling retail (directly to final customers)

Case 3 Case 4

* DNO: Distribution Network Operator (currently TANESCO)

Tariff Case 1: Selling Wholesale to Main grid

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21srmclrmc

caseCCC

Where Clrmc is the long run marginal cost as defined by Tanesco’s long-term power plan; and Csrmc is the budgeted cost of thermal generation in the next year. Note: the actual calculations are somewhat more complicated, taking into account:

• Transmission losses • Seasonality• Price floor & cap

They are available in: Standardized Tariff Methodology Under the Standardized Small Power Purchase Agreements available from EWURA. Order 08-015 on Dec 30.2008

Tariff – case 1: Main GridTariff 2009 (TZS/kWh

Tariff 2010 (TZS/kWh)

Annual Average 85.49 110.30

Dry season (Aug – Nov) 102.58 132.36

Wet season (Jan-Jul and Dec) 75.94 99.27

Note: $1 US = 1497 TZS (November 2010)

Tariff Case 2: selling wholesale to a mini-grid

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22AveMiniLmrcGrid

caseCCC

Mini-grid SPP receives the average of Tanesco’s main grid and mini-grid avoided costs.

CLmrcGrid = long run marginal cost for grid-power (adjusted for losses)CAveMini = average incremental cost of mini-grid power (levelized cost of electricity from a new mini-grid diesel generator).

Tariff – case 2: Mini grid Tariff 2009 (TZS/kWh)

Tariff 2010 (TZS/kWh)

Tariff (no seasonal variations) 334.83 368.87

Note: $1 US = 1497 TZS (November 2010)

Tariff Cases 3 (isolated) and 4 (main grid): selling at retail to end use customers

• Tariff is proposed by SPP generator, subject to EWURA review– Less oversight demanded in cases in which

community is in agreement with proposed tariff– Where possible, EWURA draws on financial

analysis submitted to REA for rural electrification subsidy

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country case studies: thailand & tanzania feed-in tariffs and small power producer regulations

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