Thailand's Energy Minister Pirapan Salirathavibhaga believes managing natural gas use can lower electricity prices. (Photo: Thai Government)
Thailand’s bid to ease high electricity costs hit a snag after regulators rejected a plan to cut renewable energy spending. The Energy Ministry is now targeting natural gas, which powers over 60% of the nation’s grid, though specifics are still vague.
Experts suggest that the government should push for electricity market reforms, allowing supply and demand to determine prices for more effective outcomes.
Energy Ministry focuses on natural gas to cut prices
Thailand conducts quarterly reviews and adjustments of electricity prices, which are currently set at 4.15 Thai Baht per kWh (about $0.12 USD). This price has remained relatively stable for over a year, leading to dissatisfaction among citizens and businesses, with some even concerned about its impact on foreign investment.
In January, the ERC proposed adjusting the power purchase agreements (PPA) with renewable energy producers to lower government spending on renewable energy, hoping to reduce electricity prices. However, the Council of State, the legal advisory body of the Prime Minister's Office, rejected the proposal, citing the difficulty of changing established contracts.
The Ministry of Energy is also seeking solutions, with Minister Pirapan Salirathavibhaga suggesting that the focus should shift to natural gas, which accounts for over 60% of the country's electricity generation. Fluctuating prices of imported liquefied natural gas (LNG) have been a key factor driving electricity price hikes.
He proposed adjusting the average price of cross-border natural gas (Pool Gas), which includes the weighted average wellhead price of gas from the Gulf of Thailand, the Malaysia-Thailand Joint Development Area, Myanmar, and LNG imports. The aim is to bring the price down to below 4 Thai Baht per kWh, though specifics are still unclear.
Thailand's electricity prices remain high, averaging THB 4.15 per kilowatt-hour. (Photo: iStock)
Experts call for electricity market reform
Piyasvasti Amranand, a member of the Energy Reform for Sustainability (ERS) and former Energy Minister, urged the government to push for electricity market reforms.
He recommended that power producers be allowed to sell electricity directly to consumers, hoping to restore a free-market mechanism that could lower prices, especially given Thailand’s high installed power capacity. Opening the market could drive down electricity costs.
Currently, electricity companies can sign PPAs with manufacturers, but these are limited to "gray electricity" produced from fossil fuels. Renewable energy, however, must be sold to the Electricity Generating Authority of Thailand (EGAT) or national distribution agencies before being transmitted to consumers or businesses via the grid.
ERS also recommended reducing national electricity demand and scaling back unnecessary power plant development projects, warning that the government, businesses, and consumers will all face greater financial burdens. Furthermore, this could hinder the growth of the burgeoning rooftop solar energy sector.
Source: Bangkok Post(1), (2)
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