While the oil and natural gas sectors have been deregulated, the former energy minister said that the Thai power sector was “the most monopolised”.

“It should be opened up for competition to allow consumers to have choices of who to buy from, and for [other power] producers to have choices of who to sell to,” he said.

“This will enhance efficiency and also solve the problem of transmission constraints faced by renewable-energy producers,” he added.

Speaking at a seminar held to launch a book by Sal Forest, Piyasvasti recommended that the government undertake a sweeping reform of the structure of the power industry by establishing an “independent system operator”, which could either be combined with or run separately from the power-transmission grid, which should be spun off from Egat.

A power market or other mechanism should also be created to open up a venue for power producers to sell their electricity to consumers, thus abandoning the single-buyer role of Egat, he said.

The government should also set electricity tariffs to reflect their true costs, and remove regulations and other obstacles, as both moves would help more renewable-power projects to be developed, he suggested.

Piyasvasti also commented that in recent years the government had become more rigid with its goals and plans, instead of letting the market mechanism work.

The Energy Regulatory Commission, for instance, should have organised competitive bidding for solar-farm project developers to submit their lowest electricity price offers, instead of setting a high power-purchase price and selecting them through a lucky draw, he said.

Chom Sangarasri Greacen, an independent energy specialist, said that while renewable-energy costs had fallen significantly and become competitive with those for fossil fuels, Thailand had ceased to add new solar-power capacities to the system so far this year.

One reason for this is the obligations that Egat has already committed to in terms of buying from large power projects in Thailand and from neighbouring countries, which means its reserve margin will soar to 30-40 per cent of installed capacity over the next 10 years, she said.

Moreover, the current setting of national electricity tariffs based on Egat’s return on invested capital, which in effect provides a guaranteed profit to the state power monopoly, has also helped create an overcapacity problem, since the more it invests, the more profits it will get, she explained.

Chom also claimed there was a “conflict of interest” issue in the Thai power sector, because government officials sit on a board to consider power-purchase deals from neighbouring countries, while at the same time many of them are also on the boards of Egat’s privatised subsidiaries – Ratchaburi Electricity Generating Holding, and Electricity Generating – which have won many of these deals.

In his first media conference since become Egat governor last month (June), Kornrasit Pakchotanon also revealed that the agency’s wholly owned subsidiary Egat International was negotiating to acquire stakes in a power plant abroad in a deal valued at about Bt10 billion.

Unlike other Egat subsidiaries such as Electricity Generating and Ratchaburi Electricity Generating Holding, which were set up with power-plant assets transferred from the parent company, EgatInternational does not have sufficient equity or asset backup, making it difficult to borrow or pursue project financing. Hence the planned acquisition, expected to be concluded in September, will helpEgat International obtain a revenue-generating asset and thus gain more flexibility to pursue other overseas projects in the future, he said.

Kornrasit said Egat would hold discussions with the Energy Regulatory Commission on amending the national Power Development Plan to allow the state-owned power utility to increase its renewable-power projects from 560 megawatts to 1,000-2,000MW by 2036, and to increase its share of the country’s total generating capacity to 50 per cent by that time, up from 39 per cent stipulated in the current PDP.

“At present, Egat’s share is 37 per cent. This should be [increased to] 50 per cent to preserve security” of the electricity supply, he said.

Egat’s share of Thailand’s electricity generation has decreased over the years, as private power producers increased their role in the sector.

On renewable power, Kornrasit said Egat was looking to develop power plants running on biomass, as well as solar and wind-power projects.

Under its current investment plans, Egat will have to spend Bt670 billion over the next five years and Bt1.2 trillion over the next 10 years. The investment sum will be increased if the regulators give their approval for it to take a larger share in the country’s power generation.

Kornrasit said Egat was also preparing to enter the liquefied-natural-gas (LNG) sector after the National Energy Policy Council (NEPC) resolved last month to assign Egat to build a floating storage and regasification unit (FSRU) to supply gas to its power plants and other users.

He stressed that the government’s objectives were not for Egat to maximise profit from the fuel business but to help lower cost of the national gas supply, since the agency’s projects are usually capped at a 5-per-cent return on invested capital.

The FSRU will have the capacity to receive and supply 5 million tonnes of LNG per year, of which 2.8 million tonnes will be sent to Egat’s South Bangkok Power Plant, the first of whose two new combined-cycle gas-turbine units is slated for commissioning in 2019.

The agency is studying how to make use of the remaining 2.2 million tonnes of LNG capacity, most of which could go to its North Bangkok Power Plants and the rest to other users.

Egat had originally proposed to build an FSRU with only 3 million tonnes’ capacity, but the NEPC ordered it to build the larger facility to help create competition in the gas-supply market, currently monopolised by PTT.

The supreme energy body has assigned Egat to present its revised feasibility study on the FSRU project back to the council within three and a half months.