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In order to increase the prevalence of renewable energy resources in its national generation portfolio, Thailand has passed numerous energy plans and roadmaps in recent years in concurrence with Thailand’s Industry Energy Act of 2017, which established a multitude of objectives to promote a competitive, efficient, and transparent electricity system. These policies include a gas plan, an oil plan, an energy efficiency plan, and the Power Development Plan, which integrates smart grid plan objectives intended to modernize the national electricity grid. An updated Alternative Energy Development plan (AEDP) also passed in 2018, which established a national target of 30% of total electricity consumption from renewable energy sources by 2036.
Additionally, Thailand has maintained a decades-long plan to create an electricity super-grid for Southeast Asia and serve as a regional power-trading hub. With the majority of infrastructure and capacity already established to serve in this role, as well as grid interconnection with Laos, Malaysia, and Cambodia, Thailand’s intention to foster power trade reflects greater regional interconnection interests. As such, Thailand is taking steps to ultimately increase regional power security and system resiliency, particularly as falling costs and ambitious government targets increase the volume of variable renewable energy generation in the region.
To support this effort, Thailand’s Energy Regulatory Commission (ERC) is working on the design and implementation of regulatory frameworks governing open/third party access (TPA) to electric grid infrastructure, tariff review, and licensing for entities supporting reliable cross-border power trade. Additionally, by instituting regulations requiring use of the Uniform System of Accounts (USoA),[1] the ERC aims to support progress toward cost-reflective electricity tariffs that will contribute to the long-term financial stability of the sector.
In 2020, NARUC initiated the ENR-NARUC-Thailand Electricity Regulatory Partnership with support from the Bureau of Energy Resources’ (ENR) Power Sector Program at the U.S. Department of State. It was established as a bilateral energy regulatory partnership between the ERC and NARUC to discuss country-specific regulatory issues with regional implications. In doing so, the partnership supports ongoing efforts under the Mekong-U.S. Partnership (MUSP) to enhance regional energy coordination by helping countries in the Mekong region modernize their power sectors, integrate renewable energy, attract investment in generation and transmission projects, and develop regional frameworks to encourage interconnection and cross-border power trading. NARUC’s work with the ERC also supports the Japan-U.S. Mekong Power Partnership (JUMPP), which promotes regional economic growth in the Mekong region through free, open, stable, rules-based regional electricity markets.
Thailand is also a part of NARUC's regional work under the USAID Regional Development Mission for Asia (RDMA).
Regulatory accounting and USoA implementation
After decades of expansive economic growth, Thailand aims to increase the commercial competitiveness of its power sector as it has the potential to draw interest from both local and foreign investors. As such, the Government of Thailand has ordered the transition away from a single-buyer electricity sector toward a competitive market structure. In following with power sector reforms, the ERC has prioritized strengthening the power sector’s international competitiveness through the implementation of uniform financial and accounting systems, which will foster cost-reflective, financially solvent power and gas utilities. Utilizing a USoA will assist Thailand in reaching utility sector goals by enhancing transparency for development of cost reflective tariffs and ensuring that systems are internationally compatible with others to ease cross-border trade.
In 2021, NARUC conducted a two-part remote webinar series during which U.S. regulatory experts shared perspectives and expertise on the diverse uses and benefits of a USoA, as well as its role in financial data collection and tariff setting processes. They also discussed implementation processes and strategies, and how to monitor and evaluate utility data. Following a NARUC expert recommendation made during the series, the ERC organized USoA implementation teams comprised of key stakeholders in both the electric and gas sectors, signaling progress made toward USoA implementation.
TPA frameworks
Private companies’ participation in Thailand’s power sector has grown significantly in recent decades, accompanied by the need for power wheeling services from the transmission and distribution networks owned and operated by the three public utilities, which currently utilize an Enhanced Single Buyer Model (ESBM). Under the ESBM, the tariff structure is comprised of a national uniform tariff with rate of return regulation. However, as Thailand’s power sector continues to grow both on a national and regional level, it is looking to establish more sophisticated and liberalized power markets. To accomplish this, Thailand has drafted a TPA framework, which will allow private companies to attain non-discriminatory access to its transmission and distribution networks. The country seeks to develop an accompanying pricing mechanism for wheeling[2] charges under the ESBM, with the goals of ensuring rates are fair for third parties, promoting fair competition in the power sector, reducing economic burden on consumers, and increasing utilization of the grid.
NARUC is providing technical assistance to the ERC on both the development of a TPA framework for the electricity grid and a proposed pricing mechanism for wheeling charges. Through this work, NARUC is assisting the ERC in identifying crucial considerations governing non-discriminatory third-party access to electricity transmission and distribution networks, thus creating robust, open, and effective competition in electricity sector markets. Competition can lead to lower prices, increase innovation, improve the quality of electricity service, foster investment in energy infrastructure, and promote the integration of renewable energy sources. Moreover, this initiative is an important step toward enacting competitive power market development and liberalization in Thailand, ultimately promoting cross-border power trade.
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[1] A USoA is a regulatory accounting tool that provides uniformity and consistency when utilities report financial information by clearly separating costs between generation, transmission, and distribution.
[2] Wheeling refers to the transportation of electricity over transmission lines.
Project Dates: 2020-Present
Primary Partner: Energy Regulatory Commission (ERC) of Thailand