Govt reviews power deals as costs fall

The Thai government is undertaking a review of long-term power purchase agreements (PPAs) with private electricity producers as part of a broader strategy to reduce electricity costs for consumers. Deputy Prime Minister Pakorn Nilprapunt announced that the National Energy Policy Council (NEPC) approved negotiations on these agreements on July 17, allowing state electricity authorities to begin discussions with private operators immediately.

“

In practice, no contract should remain unchanged throughout a 50-year term. Reviews should be made periodically for long-term contracts, for example every 10 years, to reflect inflation, production costs and changing conditions.

Pakorn emphasized the necessity of periodic reviews for contracts spanning several decades. "In practice, no contract should remain unchanged throughout a 50-year term," he stated, advocating for reviews every 10 years to account for inflation, production costs, and evolving market conditions. The current average purchase price is approximately 2.16 baht per unit, while the cost of generating electricity through some technologies has decreased, prompting the review to ensure prices reflect actual production costs and fairness to consumers.

The committee is also examining the "availability payment," a fee ensuring power plants are ready to operate even when not generating electricity. Pakorn clarified that the negotiations are not intended to terminate existing contracts or deter investors but rather to align them with international practices. He stressed that lowering electricity prices requires a comprehensive approach, not just focusing on purchase contracts.

“

The negotiations are not intended to terminate existing contracts or undermine investor confidence, but rather to bring them into line with international practice.

Furthermore, the government is reassessing the power development plan (PDP) to ensure it is based on realistic scientific data, avoiding overestimations of future power shortages. This includes a clearer assessment of energy sources like natural gas, wind, and solar power. The government also needs to prepare for rising electricity demand from data centers, reduce transmission costs, and monitor the development of small modular reactors (SMRs). Pakorn warned that Thailand's long-term competitiveness could be jeopardized if it relies heavily on imported energy and faces high electricity prices while neighboring countries benefit from lower costs and new energy resources.

“

The government must ensure we have sufficient power and at reasonable prices. People in remote ar