Faced with a lack of energy options, Thailand looks to coal

As the Thai economy continues its steady growth, policymakers are drafting energy strategies with a view toward keeping the lights on for the next 15 years.

To do that, planners say, Thailand must nearly double its electricity production to about 55,000 megawatts each year.

But as Thailand is learning and Malaysia has already discovered, coal could be the key to energy security in the coming decades. To secure supply in a cost-effective way that won't hold the country hostage to gas imports from regimes like neighboring Myanmar or Iran, analysts say the most viable option is coal – a fuel source hated by environmentalists who see it as the main driver of global warming.

"As much as I don't like coal, due to the carbon emissions, I'm equally worried about the need for Thailand to diversify fuel sources," says Mark Hutchinson, an independent regional energy analyst. "And there's really nothing other than coal."

A power plant fueled by natural gas has the added benefit of, on average, producing about half as much carbon dioxide, a third as much nitrogen oxides, and 1 percent as much sulfur oxides as a coal-fired plant.

Of the 22,684 megawatts Thailand uses each year, nearly 70 percent comes from gas and about 15 percent from coal.

While the reliance on gas is already considered high, Thai Energy Minister Piyasvasti Amranand has warned that 90 percent of Thailand's power could come from gas if the country does not embrace either coal or nuclear energy.

That trend is particularly worrisome because Thailand already relies on Burma (Myanmar), an oppressive military-run state, for about a third of its gas.

In future years, as domestic natural-gas production in the Gulf of Thailand peaks, Bangkok may have to import increasingly expensive liquefied natural gas from Middle Eastern countries like Iran.

"Certainly it's a concern to be so reliant on natural gas," says Norkhun Sitthiphong, the Ministry of Energy's deputy permanent secretary who is overseeing the electricity plan. "Natural gas is subject to volatile world market oil prices, and we know exactly what can happen when they rise quickly."

Learning lessons from Malaysia

Five years ago in Malaysia, policymakers faced the same problem. At that time, nearly three-quarters of the Muslim state's electricity came from natural gas.

Kuala Lumpur then shifted towards coal-fired power plants, and now coal is slated to generate half of the country's power by 2030 – a remarkable increase from just 6 percent in 2002.

The move shows the increasing strategic importance of coal, which is plentiful and relatively cheap compared to gas.

Two-thirds of future global coal demand will come from energy-hungry China and India, and the US plans to boost power generation from coal to 57 percent by 2030 from 50 percent now.

Energy officials in Bangkok have drawn up no less than nine 15-year plans to add between 27,000 and 36,790 megawatts to the grid by 2021. All of the plans call for the use of coal and nuclear energy, with coal set to generate between 2,100 and 21,000 megawatts, while nuclear power would account for about 4,000 megawatts in every plan.

But any decision to build more coal-fired power plants – or even a nuclear plant – will likely take some political muscle, which the military-installed government is sorely lacking after months of missteps.

The first public hearing for the 15-year plan was canceled after 600 protestors from rural areas blocked the entrance to the meeting place. The second hearing, held this week at a military conference center, went off without a hitch.

Thailand's prior experience with coal has put the fossil fuel on the environmental hit list.

In the northern province of Lampang, the dirty lignite-fuelled Mae Moh power plant has been linked to hundreds of deaths and respiratory problems among local villagers.

Those troubles led villagers four years ago in the coastal province of Prachuap Khiri Khan to successfully kill plans by two companies to build coal-fired power plants – forcing them to switch to gas-fired plants and move to another province.

"It's extremely difficult to find a place to build a coal-fired plant because it's subject to much opposition," Mr. Norkhun says. "But I think we can do it if we provide the right incentives."

Thai planners consider incentives

A draft law now making its way through the legislature would call for an energy tax that will send millions of baht directly to communities in which power plants are located. The government is also considering incentives to give away electricity for free to villages surrounding a power plant.

Still, many are skeptical that even those moves will placate rural communities.

Environmental groups like Greenpeace and human rights activists say the government should decentralize its power operations and focus on small power plants that generate enough power for each community instead of importing gas or hydropower from neighboring countries.

But that will likely lead to increased power bills.

"You can say 'Let's build one megawatt and five megawatt projects all over the country,' but if you push up the cost of power to the consumer, they'll be outraged," says Duncan Ritchie, executive director of Aequero, an Asia-based energy and infrastructure consultancy.

"The way to deliver the cheapest energy is gas-fired or coal-fired power plants. If you supplement that with renewable energy, the price will go up because renewable energy is more expensive," he says. Even so, that price may be worth paying to mitigate the inevitable protests that a coal or nuclear power plant would invite.

One solution, says Mr. Ritchie, is a "co-firing" plant that would burn coal and biomass, which is plentiful in Thailand.

Either way, experts warn that Thailand should take steps to diversify fuel sources now so its electricity supply five to 10 years from now will be secure. If policymakers leave the tough choices for the future, the costs could be extremely high.

"Coal is not a panacea, but diversity of supply is," says a long-time Bangkok-based power plant consultant. "To rely on a country like Iran and Myanmar for gas supply … if anything, I'd be shaking in my boots."