Thailand to Become Asia’s Energy Trading Hub

Oct 15, 2019 | BIZ, GOV, Laos, NEWS, Thailand

Culture & Travel 

by MJ Toledo

The Nam Theun 2 is a 1070 MW hydropower plant on Nam Theun river in Laos PDR. 95% of the power produced by the plant is exported to Thailand ©Asian Development Bank

Thailand is prioritizing energy trading in line with ASEAN’s increased volume of renewable energy generation. Soon, the country will have the first-ever Southeast Asian electricity super grid which supplies energy to its neighboring countries.

For the last two decades, Southeast Asia has dreamed of pursuing the connection of power plants and customers across countries. However, this goal was hampered by inefficient government coordination and lack of infrastructure.

Now, Thailand is finally generating an electricity super grid. This will make it the center of power-trading in the region.

Despite being 2,000 km apart, Malaysia gets its electricity from Laos. This is done through cross-border transfer facilitated by Thailand. This transaction is part of the Energy Purchase Wheeling Agreement which dictates that Laos will allot 100 megawatts of its low carbon hydroelectric power to Malaysia. This number is even expected to increase to 300 megawatts. Currently, Thailand already has a grid interconnection with Malaysia and Laos.

According to the Director General of Thailand Energy Policy and Planning Office Wattanapong Kurovat, the country is expected to triple the amount of electricity Laos sends over to Malaysia. 

Additionally, Thailand is also making moves to improve infrastructure from Cambodia to Myanmar to further facilitate cross-country power trading.  

NPTC engineers and staff monitors the operation of the 1070 MW Nam Theun 2 hydropower plant in Laos PDR. 95% of the power produced by the plant is exported to Thailand and the rest are consumed locally.

About the Trade

These actions are in line with the advocacy of Energy Minister Sontirat Sontijirawong to transform the power system of Thailand to become cleaner, more affordable, and competent. 

Wattanapong added that Thailand would get electricity for its national grid from Laos, who generates more electricity than it needs from the Mekong River dam and its tributaries. Currently, Laos demands 1000 megawatts of electricity. However, its natural resources are expected to make 20,000 to 30,000 megawatts soon. This excess power can then be sold to Myanmar, Cambodia, and Malaysia.

“We already have the capacity and the infrastructure to support the vision to become the regional hub,” reported Wattanapong, adding that they are trying to move faster to make their goal come to life.

International Power Grids Around the World

International power grids are not a new concept. In fact, this can usually be found in Europe. This technology is not simple to achieve since it needs to surpass intense technical and legal challenges, not to mention expensive infrastructure. Thailand also needs to complete a series of bilateral deals with its neighboring countries. This is easier to achieve than negotiating a one-time agreement. 

After resolving these hurdles, people can finally take advantage of its benefits which include more opportunities to develop renewable energy sources, and energy security. By becoming the region’s premier energy trading hub, Thailand can increase its energy transmitting revenue. It can also help solve capacity oversupply. In time, the cost of electricity in the country will become cheaper. 

“Thailand’s push for regional energy trading could be a step to increase the security of supply and system resiliency, particularly as falling costs and higher government targets increase the volume of variable renewable energy generation in the ASEAN region,” said BNEF analyst Caroline Chua.

Border towns in Myanmar and Cambodia have also been relying on Thailand to get a small amount of electricity. However, there are still tons of infrastructure upgrades that need to be done to match the scale of connections with Malaysia and Laos.

The interconnection will justify the massive project in developing countries which do not have the demand for huge electricity such as wind power or hydropower. 

Thailand’s Quest to Become Greener

Thailand is hoping to utilize greener energy sources in the future. By 2037, the country plans to get 25% of its electricity from small power producers which generate energy from solar plants and biomass. The region is also decreasing its shares of electricity derived from coal and natural gas, to make way for power from renewable energy sources. 

Thailand’s energy ministry has also announced its plans to improve high-voltage transmission lines in the country to facilitate open regional power trading, and efficient sale of surplus electricity.