Assessment of Feed-in Tariff Policy in Thailand: Impacts on National Electricity Prices

Abstract

In Thailand, 67% (119,434 GWh) of primary energy resource for electricity generation relies on natural gas. Therefore, it may not be sustainable for the future, due to instability of energy resources. Thai government has launched the policy measure to motivate private sector for investment in electricity generation from renewable energy since 2007. It was called “Adder”. In 2012, the feed-in tariffs (FIT) measure has been announced by the National Energy Board in 2013 to replace adder because adder is paid on top of the retail electricity price but FIT is a fixed price. However, both adder and FIT subsidize so higher cost resulting in higher retail electricity price to customers. This study assesses impact on retail electricity price thru fuel adjustment charge (Ft) from Adder and FIT policy during 2010 to 2030 by using the alternative energy development plan (AEDP), optimization, and power development plan (PDP2010 rev.3). As a result, in 2030 in optimization case, subsidy on FIT will be about 48,873 million Baht while subsidy on adders will be about 53,416 million Baht. The FIT will increase average national electricity production cost in Ft mechanism by 0.013 Baht/kWh in 2030 while Adders will increase average national electricity production cost of 0.154 Baht/kWh in 2030. It is found that FIT scheme lowers burden of subsidy than adder scheme in both short and long terms. Therefore, if government encourages renewable power generation, the proper policy should be analyzed to balance the benefits of green electricity, investors and consumers.