Thai Government Awards 19 Power Projects Under Small Power Producers Program for 2010-14

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Researched by Industrial Info Resources (Sugar Land, Texas)--A recent report by the Thailand Board of Investment (Bangkok, Thailand) reveals that for 2010-14, the Thai government has awarded 19 projects under the Small Power Producers (SPP) initiative. The SPP is part of the country's 20-year Power Development Plan (PDP) that proposes to add 54,625 megawatts (MW) to the national electricity generating capacity.

The SPP program is a special initiative that aims to generate and supply high-quality, environmentally friendly energy. The program, announced by the government in 1992, encourages power producers to develop small clean-energy projects by providing several benefits and initiatives to power producers. The initiative covers the following:

• Renewable power sources, including wind, solar and hydroelectricity.
• Thermal power resources like oil, natural gas and coal, which are developed as cogeneration plants.

Companies approved for these projects receive guarantees from the government to sell up to 90 MW of the generated electricity to Electricity Generating Authority of Thailand (EGAT) (Nonthaburi, Thailand) and supply surplus power of up to 20 to 30 MW to other customers in the area. Recently, Gulf JP Company Limited (Bangkok, Thailand) has secured a contract to construct nine gas-based power projects in Thailand. These projects will have a combined power generating capacity of 3,000 MW. The total investment in these projects will be about $2.33 billion. Of this, two power plants will be developed as independent power plants (IPP) and the remainder will be built under the SPP scheme. The total generating capacity of the seven power plants under the SPP program is about 790 MW. Work on the SPP projects is expected to begin in the next two weeks. The projects will be based on combined-cycle power plant (CCPP) technology.

Sources have indicated that three of the seven CCPPs will be at Pathum Thani, Rayong and Chachoengsao, and the rest will be in Saraburi. The projects include:

• The 114-MW industrial cogeneration plant
• The 108-MW Chacheongsao cogeneration project
• The 119-MW plant at Pathum Thani
• The Saraburi A and Saraburi B projects, with capacities of 106.2 MW each
• The 124-MW RIL project

Under the 25-year power purchase agreement (PPA), nearly 80% of the power generated at these plants will be sold to EGAT. Natural gas for the projects will be supplied by PTT. Recently, the projects received $865 million in funding from domestic banks. Construction is expected to be completed in two years. The Gulf JP Company is also planning to apply for a new SPP license to develop projects with a combined capacity of 1,000 MW.

In a related development, Mitsui & Company (TYO:8031) (Tokyo, Japan) and Toyo Engineering Works Limited (TYO:6443) (Tokyo) secured contracts to undertake engineering, procurement and construction (EPC) for the power plants. As part of the agreement, Toyo Engineering and Mitsui will be responsible for procurement of equipment and for construction activities, respectively. Construction is expected to begin shortly.

Mitsui has executed several contracts for power developers in Thailand. In 2006, Mitsui and Toshiba Corporation (TYO:6502) (Tokyo) secured a contract to supply the main plant package for the Nam Ngum 2 hydropower project in Lao PDR. In the 1990s, a consortium of General Electric (NYSE:GE) (Fairfield, Connecticut) and Mitsui delivered the main plant equipment valued at $450 million for the Ratchaburi power project.

Thailand is emerging as one of Southeast Asia's fastest-growing economies. The country generates nearly 70% of its power from natural gas. As part of the PDP, Thailand is aiming to reduce reliance on natural gas to 56% and increase contribution of hydropower from 4.7% to 11.7%. By 2015, Thailand's power demand is forecast to reach 40,978 MW. Currently, the country's power generating capacity is about 28,479 MW.

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