Thailand
Bangkok, Thailand. Image by Mr.Thammarat Pitakchat from Pixabay

The ASEAN power industry is on the cusp of change, but in which direction will it go, and will Thailand be leading the charge?

The best way to spur change and ensure key players’ backing often is to relay what positive results the other parties can expect. This tactic is one Thailand has incorporated when considering increased connectivity between Southeast Asian countries because it increases grid reliability and renewables integration. With power demand still high and expecting to grow, there must be a delineation of a central power hub and innovative plans for trading and growing power capabilities during this pivotal time.

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Through the Thailand government hoping to position Thailand at the centre of ASEAN energy trading, EGAT explores how this can be made a reality with this directive from the government. From a geographic sense, Thailand is ideally located, but what is the best way forward?  

A panel discussion joined by Nitus Voraphonpiput, Director of Generation and Transmission System Planning Division at EGAT, Chollawit Winitchai, Vice President – Head of International Investment at RATCH, Hans-Arild Bredesen, CEO at Nord Pool Consulting, Randi Kristiansen, Economics and Financial Analyst at the International Energy Agency, and Matthew Wittenstein, Section Chief on Energy Connectivity at United Nations ESCAP, tackles the primary challenges and explores the best strategies to accomplish the ASEAN Power Grid vision.

Power outlook forecasts change vital

What can be expected with the realisation of a multilateral power trade in the region with Thailand acting as the primary facilitator? As it happens, ASEAN could see numerous beneficial advantages stemming from the trade, including energy security, energy access, energy resource sharing, investment cost-saving, integration of renewable energy, and long-term decarbonisation, Voraphonpiput shared. In part, due to Thailand’s history with power trade development since 1968, the country seems to be the most informed to help move this process forward. Thailand also has a proven track record with the unidirectional power trade and grid to grid connectivity to multilateral in 2018, with LTM-PIP (Laos, Thailand, Malaysia – Power Integration Project), and now going forward to sub-regional, regional, and even cross-regional trading.

So, where to start? Perhaps at the beginning with the technical aspects that need to be addressed, such as the establishing or merging technical standards for all countries, creating a grid code standard for the interconnection and interoperability for power trade, and strengthening the lack of a resilient network interconnection including the insufficient power system infrastructure as well as increasing the limited number of existing interconnectors.

Still more crucial to such an endeavour’s success are also the non-technical aspects that will need to be contended with. Items such as regulatory and commercial challenges chiefly standardising trading rules and an approach to regional power trading, understanding which policies could potentially restrict international trading, and planning for training to reinforce new procedures and building knowledge of utility staff who are involved in the assessment, negotiation, and operation of regional trading. Lastly, bridging the gap of any potential incompatibility of regional trade with national power market development can be in different stages of progress concerning electricity trading and market reform.

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“In the end, this is a human endeavour, about people coming together to build a bigger network to trade power, to build new machines, to build new generation; if you don’t have the capacity at the human level to do that, the endeavour will surely fail,” Wittenstein emphasises. The panel agrees the human component to this puzzle is the key in addition to all the above steps, which are needed to have a cohesive plan. Likewise, Voraphonpiput acknowledges that officials’ understanding of the overall project and how each country fits into the plan will help narrow down the knowledge gaps between ASEAN member-states.

With this in mind, there must be national and regional policies in place to support an increased power system integration and multilateral trading in ASEAN. On a national level, in Thailand specifically, increasing contractual and institutional flexibility should be one of the most important policies to look at, recommends Kristiansen, so that “you can run your system more dynamically because the real value of most of our power trade comes when you exactly can resource-share.” Aligning renewables development and grid development with multilateral power trade is also crucial because these factors enable one another. Thailand is already proactively taking steps to do just that. It is widely acknowledged the country has a real opportunity to be a frontrunner in the policy development that will enable the ASEAN power trade.

Thailand to make the first move

Market reform is an ongoing process that cannot be completed overnight or without all involved parties’ buy-in. According to Bredesen, successful market reforms are those with a “champion” or someone who takes responsibility and spearheads the new initiatives. Thailand has an ideal location and EGAT’s credibility, which provides an edge to be positioned this way, Winitchai said. Also, ASEAN has the advantage of having strong regional cooperating bodies, which points to the strong possibility for harmonisation of the trade process. Still, of course, every member-state has a different market structure. Bredesen reveals this has always been an issue with market reforms, but “the idea is to start from somewhere.”

To begin the process, Thailand has to identify pilot countries to start developing the trade and uncover some of the low-hanging fruits, says Bredesen. Thailand’s existing bilateral contracts, which open up more flexibility to trade power with other neighbouring countries, can pave the way to learn the process and move the process forward. To build momentum in a market, it’s important to open the market and allow people to start trading slowly. Bredesen echoes this with a piece of advice to “try to base your market reform on evolution, not revolution.”

When considering Bredesen’s principle on evolving and as long as there is support from all countries with Thailand potentially leading the way, it would be wise to start the process and to anticipate challenges while adjusting because there will, of course, be challenges. Managing expectations is important, but it is essential to follow through regardless of setbacks to bring about the ultimate goal: a newer and better-reformed power structure across ASEAN.

Author: Melissa Fitzgerald, Content Manager, Enlit Asia