Mekong Utility Watch

PRESS RELEASE World Bank report confirms Nam Theun 2 is not Thailand’s least-cost power option

October 12, 2004
A study commissioned by the World Bank reports Thailand has alternatives to the Nam Theun 2 hydro project in Laos that are cheaper and commercially viable, but that they were excluded from the country’s official power development plans.1

The study obtained by Probe International found that Thailand’s “realistically achievable potential” for renewable energy projects, as well as demand-side management and energy efficiency programs, exceeded the expected output of Nam Theun 2, and could provide Thai customers with power that is 25 percent cheaper.

Thailand could have 1,380 MW of commercially viable renewable energy projects generating power by 2011, mostly using fuels derived from agricultural waste, the study found. But Thailand’s power development plan for 2004 to 2015 includes only 211 MW, which is less than ten percent of the potential.

Notably, the study does not estimate the much larger potential for gas-fired small power producers, which is estimated at 2,700 MW. 2 Thailand already has 73 small power producers generating roughly 10 percent of the country’s power supply.

The study also found Thailand’s achievable demand-side management and energy efficiency potential is at least 75 percent higher than official estimates. Much more could be done to reduce Thailand’s peak demand and boost energy efficiency in large factories and residential buildings, which would reduce the need for additional power plants or costly hydro imports.

In light of this study, World Bank financing for Nam Theun 2 would contravene the Bank’s guidelines on financing new power supply projects. The guidelines stipulate that the “Bank finances only those supply facilities and demand-management measures that help meet economically efficient demand at the least economic cost.” 3

The findings also contradict earlier claims by the World Bank that Nam Theun 2 is needed to keep pace with Thailand’s growing electricity demand, even with demand-side management and new capacity additions by small power producers. 4

EGAT plans to start buying power from the 1070-megawatt Nam Theun 2 dam in 2011, provided the dam’s developers can raise financing from the World Bank and other investors by May 2005. The Nam Theun 2 Power Company is one-quarter owned by EGCO, a private subsidiary of Thailand’s national utility, Electricity Generating Authority of Thailand (EGAT), and buyer of the dam’s output.

For more information, CONTACT:
Gr√°inne Ryder, Policy Director, Probe International
E-mail: grainneryder@nextcity.com

Probe International https://journal.probeinternational.org/ is a division of Energy Probe Research Foundation.

Notes

(1) The 39-page report “Nam Theun 2 Hydropower Project: Impact of Energy Conservation, DSM and Renewable Energy Generation on EGAT’s Power Development Plan,” dated August 28, 2004, was not made publicly available before the Bank’s Nam Theun 2 consultations in Bangkok, Paris, Tokyo, Vientiane, and Washington.

(2) This estimate of gas-fired SPP potential was presented by the Thai energy ministry at the “Energy Strategy for Competitiveness” workshop, chaired by Prime Minister Thaksin Shinawatra, in Bangkok, Thailand, August 28, 2003.

(3) Cited in “Nam Theun 2 Hydro Power Project: Regional Economic Least-Cost Analysis, Draft final report to the World Bank,” Robert Vernstrom, June 24, 2004, p.7. http://www.worldbank.org

(4) See the World Bank’s March 2004 analysis of Thailand’s current Power Development Plan and Probe International’s critique of the analysis in Ten Reasons Why the World Bank Should Not Finance the Nam Theun 2 Power Company in Lao PDR,” Reason #2: “Nam Theun 2 is viable only by monopoly,” Probe International, June 2004, p.5.

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