The Effects Of Renewable Electric Price

Published Date: 02 Nov 2017

Chapter 4

Presently, the energy consumption has increased rapidly and generated-energy supply price soaring up (Mulugetta et al., 2007) especially coal and natural gas as main electric generated supply (Nakawiro and Bhattacharyya, 2007). Power production and consumption in Thailand tend to highly increase in as showed in figure 4.1, the commercial primary energy production and consumption in Thailand from 1986 to 2011. Notice that the energy consumption is more than production for all period and Thailand has imported energy from foreign countries.

YEAR

IMPORT

PRODUCTION

CONSUMPTION

UNIT: BBL/DAY (CRUDE OIL EQUIVALENT)

Figure 4.1 Thailand’s production, consumption and import (net) of commercial primary energy

Source: Energy Forecast and Information Technology Center, Energy Policy and Planning Office, 2011

Thailand’s domestic energy production totally has 71,515 ktoe in 2010, mostly are generated from natural gas about 31,407 ktoe as accounted in 43.92% followed with renewable energy about 21,068 ktoe or 29.46%. In addition, Thailand has more imported from other countries, in 2010 DEDE reported that there are total 65,052 ktoe imports which the crude oil is the most as 40,734 ktoe. Therefore, the overall energy supply of Thailand in 2010 is 123,673 ktoe as shown below tables.

Table 4.1 Domestic Production of Primary Energy

Unit: ktoe

Energy Type

2006

2007

2008

2009

2010

Commercial Energy

38,273

39,845

43,208

45,461

50,447

Crude Oil*

6,512

6,911

7,946

8,367

8,475

Condensate

3,522

3,670

4,032

3,950

4,368

Natural Gas

21,131

22,553

24,910

26,783

31,407

Lignite

5,307

4,912

4,743

4,775

4,966

Hydro and Others**

1,801

1,799

1,577

1,586

1,231

Renewable Energy***

17,027

18,227

19,279

19,505

21,068

Total

55,300

58,072

62,487

64,966

71,515

*Including feedstocks, ethanol and biodiesel.

**Others include geothermal, solar cell and wind power.

***Excluding biogas , black liquor & residual gas.

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy. Thailand Energy Statistics, 2011.

Figure 4.2 Share of Domestic Production of Primary Energy in 2010

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy.

Table 4.2 Energy imports and exports in Thailand

Unit: ktoe

Energy Imports*

2006

2007

2008

2009

2010

Crude Oil

41,388

39,858

40,641

41,163

40,734

Petroleum Products

1,383

825

364

429

161

Natural Gas

8,484

8,869

9,434

9,364

11,385

Coal & Its Products

7,032

8,947

10,026

10,270

10,669

Electricity

440

383

237

208

621

Condensate

-

-

-

1,390

1,482

Total Import

58,727

58,882

60,702

62,824

65,052

Energy Exports*

2006

2007

2008

2009

2010

Coal & Its Products

- **

47

1

8

13

Crude Oil***

3,318

2,607

2,437

2,152

1,507

Condensate

-

-

-

-

-

Natural Gasoline

99

102

109

88

103

Petroleum Products

6,834

6,549

9,009

10,140

10,327

Electricity

64

79

101

133

138

Total Export

10,315

9,337

11,703

12,531

12,088

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy. Thailand Energy Statistics, 2011.

Note: *Excluding renewable energy.

**Less than 0.5.

***Including Ethanol.

For fuel type used for the final energy consumption which divided in two categories: commercial and renewable energy in table 5.4 shows that petroleum is mostly used in Thailand as 32,096 ktoe (46.9%) followed with electricity as 12,681 ktoe (18%) and renewable energy is 13,418 ktoe (21.64%) in the year of 2010.

Table 4.3 Primary Energy Supply

Unit: ktoe

Primary Energy Supply

2006

2007

2008

2009

2010

Commercial Energy

87,628

90,261

91,844

93,987

102,553

Crude Oil**

46,413

46,308

46,699

47,344

48,587

Condensate & NGL

2,963

2,991

3,345

4,841

4,937

Natural Gas

29,615

31,422

34,344

36,147

42,792

Coal & Its Products

12,263

13,866

14,947

14,207

14,996

Petroleum Products

(5,803)

(6,429)

(9,204)

(10,213)

(10,473)

Electricity

2,177

2,103

1,713

1,661

1,714

Renewable Energy***

17,054

18,227

19,314

19,505

21,120

Total*

104,682

108,488

111,158

113,492

123,673

*Domestic Production + Import - Export +/- Stock Change

**Including feedstocks, ethanol and biodiesel.

***Excluding biogas , black liquor & residual gas.

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy.

Table 4.4 Final Energy Consumption by Fuel

Unit: ktoe

Final Energy

2006

2007

2008

2009

2010

Commercial Energy

Coal & Its Products

7,489

6,981

7,744

7,493

8,240

Petroleum Products

31,650

32,298

31,207

31,661

32,096

Natural Gas

2,234

2,594

3,153

3,568

3,769

Electricity

10,891

11,348

11,541

11,521

12,724

Renewable Energy

10,993

11,645

12,245

12,455

13,418

Total

63,257

64,866

65,890

66,698

70,247

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy. Thailand Energy Statistics, 2011.

Figure 4.3 Share of final energy consumption by fuel type in Thailand

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy.

Considered on the final energy consumption in 2010 by economic sector, it points that the industry and transportation sector are major sectors to use final energy with more than 25,000 ktoe and total consumption is 70,247 ktoe in 2010. (Table 5.5) Moreover, industry sector uses mostly from coal & its products, renewable energy and electricity, however, transportation sector generally uses from petroleum products. (Table 5.6)

Table 4.5 Final energy consumption by economic sector in Thailand

Unit: ktoe

Sector

2006

2007

2008

2009

2010

Agriculture

3,312

3,448

3,446

3,477

3,499

Industry*

23,711

23,781

24,421

17,366

25,571

Residential

9,034

9,533

9,958

4,328

10,963

Commercial

4,215

4,489

5,041

4,940

5,620

Transportation

22,985

23,615

23,024

24,132

24,594

Total

63,257

64,866

65,890

54,243

70,247

*Industry = Manufacturing + Mining + Construction

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy.

Figure 4.4 share of final energy consumption by economic sector in Thailand in 2010

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy.

Table 5.6 Final Energy Consumption for Economic Sector by Fuel 2010

Unit: ktoe

Agriculture

Industry*

Resident

Company

Transportation

Total

Coal & Its Products

-

8,240

-

-

-

8,240

Petroleum Products

3,470

2,790

1,652

1,193

22,991

32,096

Natural Gas

-

2,171

-

1

1,597

3,769

Electricity

29

5,422

2,841

4,426

6

12,724

Renewable Energy

-

6,948

6,470

-

-

13,418

Total

3,499

25,571

10,963

5,620

24,594

70,247

*Industry = Manufacturing + Mining + Construction

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy.

The electricity situation in Thailand

According to the electric consumption as shown in table 5.7, industrial sector also major sector to consume followed with commercial and residential sector as 5,422, 4,426 and 2,841 ktoe, respectively. The electricity in Thailand sources from domestic generation 159,518 Gwh and imports 5,672 Gwh and total electricity supply is 165,190 Gwh in 2010. (Table 5.8)

The power or electricity generation by fuel in Thailand mostly is generated form natural gas, coal and lignite as the non-renewable energy source. In figure 5.6 showed that the share of power generation in 2010 is consisted of natural gas 73.31%, coal&lignite 19.88%, and renewable energy 4.86%, etc.

Table 4.7 Electricity Consumption by Economic Sector

Electricity Consumption (ktoe)

2006

2007

2008

2009

2010

Agriculture

21

23

24

27

29

Industry*

5,054

5,212

4,893

4,829

5,422

Residential

2,301

2,389

2,453

2,588

2,841

Commercial

3,510

3,719

4,166

4,072

4,426

Transportation

5

5

5

5

6

Total

10,891

11,348

11,541

11,521

12,724

Electricity Consumption (Gwh)

2006

2007

2008

2009

2010

Agriculture

240

268

282

318

336

Industry*

59,315

61,168

57,429

56,670

63,630

Residential

27,005

28,041

28,785

30,371

33,337

Commercial

41,193

43,643

48,893

47,788

51,943

Transportation

58

58

60

62

74

Total

127,811

133,178

135,449

135,209

149,320

*Industry = Manufacturing + Mining + Construction

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy.

Table 4.8 Electricity (National Grid Generation)

Unit: Gwh

Electricity

2006

2007

2008

2009

2010

Total

143,151

146,943

149,032

149,269

165,190

Generation

Net Import

138,742

4,409

143,378

3,565

147,427

1,605

148,390

879

159,518

5,672

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy.

Table 4.9 Fuel Consumption for Electricity Generation

Unit: ktoe

Electricity Generation

2006

2007

2008

2009

2010

Fuel Oil

1,911

888

337

149

227

Diesel

35

21

39

22

34

Coal & Lignite

4,774

6,885

7,203

6,714

6,756

Natural Gas

20,860

21,368

22,097

22,543

24,912

Renewable Energy

916

1,138

1,414

1,626

1,653

Other*

255

292

267

304

566

Biogas

4

6

16

36

62

Total

28,755

30,598

31,373

31,394

34,210

*Including black liquor and residual gas from production processes, etc.

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy.

Figure 4.5 Electricity Consumption by Economic Sector

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy.

Figure 4.6 share of Fuel Consumption for Electricity Generation

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy.

The electricity generation in Thailand

For the electricity generation in Thailand, There are three responsible segments to produce as following,

The Electricity Generating Authority of Thailand (EGAT) is responsible for the production and supply of power to produce electricity sufficiency for domestic use and also responsible for maintenance the power plant and transmission lines. Electricity produced by EGAT will be sold to the Metropolitan Electricity Authority (MEA) and The Provincial Electricity Authority (PEA).

The Metropolitan Electricity Authority (MEA) is responsible for distribution of electricity in the area of ​​three provinces: Bangkok, Nonthaburi and Samut Prakan. Its responsibility is the maintenance of high voltage electrical transmission in transformation station, low voltage distribution lines and high pressure voltage distribution lines. The MEA has electrical power supplied to the public by purchasing from the MEA in high-voltage transmission system: 69 kV, 115 kV and 230 kV.

The Provincial Electricity Authority (PEA) has served as the MEA but in the rest of region. However, the PEA sells electricity to the public which most of them are from the MEA in high-voltage transmission system: 22 kV, 33 kV and 115 kV, and some are purchased from Small Power Producer (SPP) and Very Small Power Producer (VSPP), also have installed diesel generators to supply the far communities that the high voltage distribution systems can not active.

In overall, the power in Thailand is mostly from production and purchase of the Electricity Generating Authority of Thailand (EGAT), some from independent power producers and imports from abroad.

The power purchasing from the private and foreign power plant

All electricity generation in Thailand came from the 3 energy sources which is

The Electricity Generating Authority of Thailand (EGAT), the electricity purchasing from the independent power-generated or private producers and the power purchasing from different countries. In addition, the private sector in Thailand is divided into three major groups as follows:

1. Independent Power Producer (IPP) is a very large capacity manufacturer as the private producers to generate the electricity by using the commercial power such as natural gas and coal under production capacity from 350 MW to 1400 MW. IPP of Thailand, for example, includes Rayong Electricity Generating Co., Ltd., Khanom Electricity Generating Co., Ltd., Ratchaburi Electricity Generating Holding Public Co., Ltd. (Thailand), Independent power producers Co., Ltd (Thailand), Tri Energy Co., Ltd., Glow IPP Co., Ltd., Eastern Power Co., Ltd., PLCP Power Co., Ltd. and Gulf Power Generation Co., Ltd. with total production capacity in 2008 is 10,017.70 MW.

2. The Small Power Producer (SPP) is a power producer by using heat and electricity power combination (Cogeneration or Combined Heat and Power: CHP) or non-conventional energy such as example wind power, solar power and the small hydro power, etc. Each SPP producers will trade the electricity to The Electricity Generating Authority of Thailand (EGAT) less than 90 MW in amount of power. A total power capacity in 2008 is 2,090.60 MW.

3. Very Small Power Producer (VSPP) is a manufacturer of power that as same as small power producers, however, sells electricity to MEA and PEA not more than 10 per megawatt for each. Adder will be estimated for Power Purchasing from SPPs which the generated electricity by renewable energy sources as shown in table 5.10. In terms of purchasing power from other countries, EGAT purchased electricity from Laos and Malaysia in 2008 is 910 MW.

Table 4.10 Adder for the power plant of VSPP

Unit: Baths/KWh

Fuel/Technology

Adder

Biomass

0.3

Biogas

0.3

Small hydro-power generation (50-200KW)

0.4

Small hydro-power generation (less than 50KW)

0.8

Garbage

2.5

Wind

2.5

Solar

8

Source: PEA

Very Small Power Producers (VSPPs) or Small Power Producers (SPPs) are power producers in the government, enterprises, private and public sector with own generator and produce under the requirements of Electricity Generating Authority of Thailand (EGAT) and distribution electricity to Electricity Authority. The power purchasing from SPP and VSPP project aims to encourage the production of electricity from agricultural wastes or residues and biogas in the animal farm. In 2002 the Metropolitan Electricity Authority (MEA) and the Provincial Electricity Authority (PEA) has issued regulation for the electricity purchasing of renewable energy from SPP and VSPP. The objectives of the power purchasing of VSPP is to promote the efficient use of resources or reduced from commercial electricity generation which reduces the cost of fuel imports and reduce the impact on the environment and the government’s investment in terms of production and distribution of electricity. Provided that the policy achieved, it can activate the various crops and has higher efficient management for using as a raw material in power plants, such as rice husk, sugar cane, palm, and wood fuel, corn and cassava, which will be beneficial for farmers to increase crop production.

The alternative energy in Thailand

One of remarkable issues has been concerned, Thai Government has promoted the renewable energy policy and proposed the Renewable and Alternative Energy Development Plan for alternative energy use. Alternative energy consists of electricity (solar, wind, hydro, biomass, garbage and biogas), heat (solar, biomass, garbage and, biogas) and biofuel (ethanol and biodiesel) was 5,418 ktoe or around 7.8% of total energy consumption in 2010. (Table 5.11) Thailand has alternative energy potential especially in photovoltaic, solar radiation and natural gas. However, the energy consumption from those is not much as solid biomass energy which is the significant alternative energy source as 13,813.32 ktoe in 2010. (Table 5.12)

Table 4.11 Alternative Energy Consumption

Unit: ktoe

Alternative Energy

2009

2010

Electricity (Solar Wind Hydro Biomass Garbage and Biogas)

282

269

Heat (Solar Biomass Garbage and Biogas)

3,557

4,329

Biofuel (Ethanol and Biodiese)

798

820

Total

4,637

5,418

Final Energy Consumption

66,698

70,247

Percentage of Alternative Energy Consumption

7.0

7.8

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy.

Electricity generation from renewable energy sources

Renewable energy is any energy sources that can be used as energy from fossil fuels which cannot reproduce in short period from natural such as oil, coal and natural gas. The renewable energy which is electricity generated possibility includes solar energy, wind power, geothermal and biomass.

Solar energy

Thailand is located near the equator caused the solar energy has a high potential.

Average energy of whole country is obtained about 4 to 4.5 kilowatt hours per square meter per day. Thailand has initially pioneered the solar power plant to produce electricity at Mae Hong Son Province.

Wind power

Wind power in Thailand is low to moderate level due to some areas of the country

especially along Andaman Sea and gulf of Thailand, wind from India Ocean in the southwestern during monsoon and from China in the Northeastern during the winter. Wind energy can be used in machine as turbine pump or turbine power plants and electric energy. The wind energy can generate power between 20 to 50 watts per square meter.

Geothermal energy

Geothermal energy from the movement of the Plate tectonics tectonic as some water will flow down below the surface and accumulate the heat then the hot water will steam up on the surface in terms of hot springs, boiling mud, hot stream and gas from under the ground which used to drive a turbine to generate electricity.

Biomass energy

Agricultural waste such as rice husk, bagasse, sawdust, coconut fiber, etc. can be used as fuel for commercial power generation for example; the case of sugar mills or rice mills may be produced in a combined heat and power. In addition, there may be other forms of fuel, such as ethanol from cassava and gas from the fermentation of agricultural wastes or animal manure (Biogas).

Based on Agricultural country, Thailand has a potential to utilize the agricultural wastes or byproducts from sugarcane, rice, cassava, corn, palm tree, and etc. namely biomass for generated power. (Table 5.13) Among all biomass energy sources in Thailand, paddy rice is the potential commodity which an abundant supply especially in 2011, total paddy rice cultivated area had been around 61.85 million rais and total paddy yield was 20.36 million tons. Mostly paddy cultivated areas are in Northeastern, Northern, Central and Southern as 64.35, 20.38, 13.38 and 1.87, respectively (OAE). Focusing on rice husk capacity in 2010, almost 41% or 3.15 million tons of rice husks was produced in Northeastern of Thailand where the highest among all regions is. Moreover, the rice husk potential for the other regions including Northern, Central and Southern Thailand are 2.35 million tons (31%), 2 million tons (26%) and 0.14 million ton (2%), respectively. In addition, rice husk has energy content greater than others such as bagasse, saw dust and agricultural waste, although, the bagasse from sugarcane is hugely. (Table 5.14)

Table 4.12 Alternative energy potential and consumption by energy types

Unit: ktoe

Energy types

2006

2007

2008

2009

2010

energy potential

energy consumption

energy potential

energy consumption

energy potential

energy consumption

energy potential

energy consumption

energy potential

energy consumption

Solid biomass energy

19,786.39

10,993.00

30,953.77

11,645.00

33,824.96

12.475.14

33,004.54

12,981.89

33,055.70

13,813.32

Photovoltaic

554,356.32

0.21

554,356.32

0.22

532,495.13

0.26

532,495.13

0.77

548,097.72

4.50

Solar radiation

332,442.40

0.20

332,442.40

0.20

332,442.40

0.50

332,442.40

0.38

332,442.40

1.12

Wind energy

12.25

0.02

12.25

0.02

12.25

0.02

12.25

0.13

12.25

0.04

Hydro energy

58.69

22.99

42.55

25.52

45.30

18.60

48.14

19.63

84.75

20.02

Garbage

3,503.00

0.43

3,54561

0.33

3,612.59

0.43

3,629.94

1.92

3,657.23

1.63

Liquid biofuel

642.98

96.00

887.88

190.00

982.56

602.00

1,138.52

798.00

986.10

820.00

Biogas

1,136.37

0.82

1,087.03

1.19

806.36

3.24

821.49

8.51

847.46

398.32

Geothermal energy

526.95

0.07

526.95

0.08

526.95

0.09

526.95

0.12

526.95

1.6

Natural gas

775,359.49

2,234.00

749,627.08

2,594.00

322,924.35

3,153.00

300,884.92

3,568.00

298,143.44

3,769.00

Coal&Linite

722,638.00

7,489.00

532,411.96

6,981.00

536935.00

7,744.00

537,130.00

7,493.00

538,089.00

8,240

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy.

Table 4.13 Plantation areas for crop production of solid biomass energy in 2010

Crops

Planted Areas

(rai)

Production

(ton)

Industrial sugarcane

6,309,891

68,807,800

Rice

72,719,955

32,116,063

Maize

7,115,511

4,454,445

Cassava

7,562,792

22,005,740

Oil palm

3,635,513

9,031,804

Coconuts

1,449,807

1,298,147

Groundnuts

194,669

48,791

Cotton

9,302

2,058

Soybeans

686,332

177,222

Sorghum

210,321

55,234

Para Rubber

12,049,102

3,051,781

Pineapple

601,090

1,924,659

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy.

Table 4.14 Energy content of fuel

(Net calorific value)

RENEWABLE ENERGY

kcal/ UNIT

Toe/106 UNIT

MJ/ UNIT

103 Btu/ UNIT

1. FUEL WOOD (kg.)

3820

378.48

15.99

15.16

2. CHARCOAL (kg.)

6900

683.64

28.88

27.38

3. PADDY HUSK (kg.)

3440

340.83

14.40

13.65

4. BAGASSE (kg.)

1800

178.34

7.53

7.14

5. GARBAGE (kg.)

1160

114.93

4.86

4.60

6. SAW DUST (kg.)

2600

257.60

10.88

10.32

7. AGRICULTURAL WASTE (kg.)

3030

300.21

12.68

12.02

8. BIOGAS (m3)

5000

495.39

20.93

19.84

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy.

Table 4.15 Thailand’s agricultural wastes and energy potential of solid biomass in 2010

Crops

Agricultural wastes (Ton/year)

Energy potential (ktoe)

Industrial sugarcane

Top, Trasher

Bagasse

14,036,791

20,848,763

5,365.85

3,715.98

Rice

Paddy husk

Straw

7,258,230

38,218,115

2,474.95

12,486.79

Maize

Stalk, Top, Leaves

Cob maize

3,973,365

841,890

1,505.73

343.38

Cassava

Stalk

Root

2,662,695

2,002,522

982.58

763.61

Oil palm

Frond

Fiber

Shell

Empty bunches

2,456,651

1,345,739

1,165,103

1,941,838

737.80

792.86

852.70

750.18

Coconuts

Shell

Husk

Frond, Empty bunches

320,642

733,453

730,857

148.59

258.91

266.93

Groundnuts

Shell

15,759

4.70

Cotton

Stalk

6,651

2.28

Soybeans

Stalk, Leaves, Shell

208,590

80.15

Sorghum

Leaves, stem

69,153

31.49

Para Rubber

Charcoal

Fuel wood

Frond, leaves

Saw Dust

906,379

756,842

308,230

103,761

619.59

286.45

92.51

26.72

Pineapple

Stalk

1,131,699

422.17

Total

102,043,718

33,014.90

Source: Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy.

Due to the paddy rice processing, rice husk as agricultural residues is biomass derived from rice mill which the paddy rice processing 1 ton will be typically gained about 650-700 kg of rice and about 220 kg of rice husk accounted for power equivalent at 90-125 kWh. (Energy Policy and Planning Office, 2002) Its general characteristics is small and mostly gold or yellow color but some may be white, brown or black with a maximum length of 5 mm and less than 2 mm of thickness. Rice husk is a highly suitable for energy production, because of its supply continuously throughout the whole year, low moisture and small size. Besides, ash of rice husk can be gain high value after generated power with appropriated quality controls. However, its weight is slightly low and will be loss when transported them. The byproduct as rice husk from rice milled processing can be used in several ways, for example; agricultural and industrial proposes as well as remarkable in power generation. (Delivand et al., 2011, Lim et al., 2012; Matsumura et al., 2005; Suramaythangkoor and Gheewala, 2008)

Accordingly, Very Small Power Producers (VSPPs) and Small Power Producers (SPPs) using byproduct of rice that relatively stable among all biomass energy sources in Thailand and abundant supply especially in the Northeast region of Thailand; rice straw and rice husk, are feasible to establish in almost whole country. (Energy for Environment Foundation, 2009) As shown in figure 4.7, SPP&VSPP biomass power plants are located mostly in East-northern and Central plain of Thailand based on rice harvested areas.

Figure 4.7 Rice husk potential in each region in 2010

Figure 4.8 Thailand’s biomass power plant location in 2007

Source: Energy for Environment Foundation

Consequently, to encourage renewable utilization, Thailand’s adder policy has encouraged to setup biomass power plants, especially rice husk power plants. The number of rice husk power plants was increased from only one power plant in 2002 to 19 power plants in 2010. (Figure 4.9) The total power generation capacity of rice husk power plants was about 6 MW in 2002 and then increased to 148 MW in 2010. Rice husk power generation capacity accounted for about 23% of total biomass power generation capacity in 2010. The percentage would be higher if the mixed-fuel biomass power plants, which consumed a significant amount of rice husk, were also included in the estimation.

Figure 4.9 Rice husk generated capacity and power plants (2002-2010)

Figure 4.10 The relation between the paddy rice and renewable electricity

Source: Center for Applied Economics Research (CAER), Faculty of Economics, Kasetsart University

Considering figure 4.10, the electric-generated process from paddy rice to electricity, primarily paddy rice was past though the rice mills by the commission agents farmer organizations, and paddy center markets or directly to rice mills with 50.9%, 6.3%, 23.8% and 19%, respectively. Rice husk comes from milling process and its length and width is about 5 and 2mm. Rice husk moisture is around 10-12%. Moreover, paddy is milled and about one/fourth of it is rice husk. Rice husk is used in many ways which about 25% is used in agricultural and milling, 29.6% is used for biomass power plants to generate electricity, 17.7% is used in industries and 27.7% is not being used or loss in transportation. After rice husk is burn to generate electricity, all of renewable electricity have been sole to the Electricity Generating Authority of Thailand (EGAT) and transferred to consumer at last. From this relationship, we can conclude that paddy rice is a source of raw material that used to generate electricity in Thailand; therefore, paddy production and paddy cultivated area should have relation with the renewable electric price. For the generated electricity from rice husk, it could shift the aggregated demand of rice to new right-side one as showed in figure 4.11 Therefore, the paddy might be affected on renewable electric generation or its price. Thus, this article aims to examine the long and short run relationship between paddy production and paddy cultivated area with renewable electric price by using the Johansson cointegration test, and point out the causality between them. The study on rice husk to support the using on agricultural wastes to improve agricultural resource value included the maximum benefit for resource utilization. Moreover, the power generated from rice husk can substitute the fossil fuel which causes air pollution. Then, the rice husk is one of alternative energy sources to produce the electricity by improving the value added in rice’s supply chain and enhancing the community’s activities or income as well as environmental friendly.

Ppaddy

Drice

D husk+rice

S

Pelectricity

D(Pe)

D(Pe)

S

Qhusk

Qpaddy

Figure 4.11 The aggregated demand of paddy rice and rice husk

Methodology and Empirical Modeling

The time series data, we have to test the unit root or stationary for remove time tend on variables which using The ADF-test. Non-stationary for all variables, then we can estimate the long run relation by Johansen’s cointegration approach which can be used for testing the relationship between two or more variables. Moreover, Johansen cointegration has two methods as Trace Statistic and Maximum Eigenvalue Statistic tests to identify the number of cointegration. This estimation is the Multivariate cointegration with Vector Autoregressive (VAR) model as below,

,

where Xt is a vector n x 1 and εt is vector n x 1 of stochastic variables with zero mean. The above equation can be rewritten in term of Vector Error Correction Model (VECM) as,

,

P is an appropriate lag structure determined by using the Schwarz Information Criterion (SIC).

The Johansen’s LR statistic namely the trace statistic and maximum eigenvalue statistic, is given by

and

LR statistic tests the nested hypotheses as H0(r) : r = r and H1(r) : r > r0 or r = r+1

VECM , causality test

The empirical results

According to The relationship between production and cultivated area of paddy rice and renewable electric price, therefore, we apply Johansen’s cointegration method to determine the relationship between paddy cultivated area, paddy production and renewable electric price especially white paddy rice which mostly abundant in whole country. In Johansen’s cointegration method, We firstly test the stationary of variables by using ADF-test which indicated that all variables has unit root or stationary at the first different I(1) as shown in table 5.22.

Table 5.22 The Unit root rest on variables

Variable

ADF-test

I(0)

k

I(1)

k

Area

-0.907

11

-22.201***

10

Production

-1.186

12

-5.476***

11

Renewable electric price

-0.299

2

-12.832***

1

Note: Lag k selected by Schwarz criterion

Test critical values: 1% level -3.489659

5% level -2.887425

10% level -2.580651

The summary results of the Johansen Cointegration test as table 5.23 find that the Likelihood Ratio is higher than 5% critical value of both Trace and Maximum Eigenvalue test. This means that there is at least one significant statistic in long run relationship between the paddy cultivated area, production and renewable electric price. The appropriate lag 12 is selected because the Akaike Information Criterion (AIC) has given the lowest value.

Table 5.23 The Johansen Cointegration Trace and Maximum Eigenvalue Test

Hypothesized

No. of CE(s)

Trace

Statistic

Critical Value

0.05

Max-Eigen

Statistic

Critical Value

0.05

Eigenvalue

None *

 47.90086*

 42.91525

 25.75250*

 25.82321

 0.207057

At most 1

 22.14836

 25.87211

 13.63074

 19.38704

 0.115559

At most 2

 8.517620

 12.51798

 8.517620

 12.51798

 0.073865

Trace and Maximum Eigenvalue test indicates 1 cointegrating eq(s) at the 0.05 level

* note: rejection of the hypothesis at the 0.05 level

According to the error correlation estimation, a portion of the disequibria in short term from one period is corrected in the next period, the ECM results in table 5.24 reported that the coefficient of error correction terms are statistically significant positive indicated that there are correction to new equilibrium by change in paddy production and renewable electric price with speed adjustment about 43.78% and 2.46%, respectively.

Table 5.24 The results of ECM

Variables

D(LNAREA)

D(LNPROD)

D(LNEP)

Constant

0.023719

-0.008515

0.001788

ECTt-1

-0.014729

0.437766***

0.024627*

D(LNAREA(-1))

-0.605361***

-0.374755***

-0.028236*

D(LNAREA(-2))

-0.677365***

-0.448625***

-0.030501*

D(LNAREA(-3))

-0.714321***

-0.306608**

-0.010526

D(LNAREA(-4))

-0.622262***

-0.127115

-0.009189

D(LNAREA(-5))

-0.758201***

-0.281176**

-0.014653

D(LNAREA(-6))

-0.530070***

-0.116630

-0.008384

D(LNAREA(-7))

-0.637575***

-0.070863

-0.008140

D(LNAREA(-8))

-0.528997***

-0.068953

-0.001418

D(LNAREA(-9))

-0.631148***

-0.024265

-0.008125

D(LNAREA(-10))

-0.556352***

-0.032607

-0.005519

D(LNAREA(-11))

-0.426345***

0.074101

-0.008959

D(LNAREA(-12))

0.048045

-0.025934

0.004654

D(LNPROD(-1))

-0.036272

1.165712***

0.088992*

D(LNPROD(-2))

-0.013023

0.874528**

0.094119**

D(LNPROD(-3))

-0.065757

0.783310**

0.081076*

D(LNPROD(-4))

-0.051985

0.697660**

0.086550**

D(LNPROD(-5))

-0.159422

0.546042*

0.058349*

D(LNPROD(-6))

0.085290

0.429653

0.072646**

D(LNPROD(-7))

-0.022547

0.403945*

0.065062**

D(LNPROD(-8))

0.232283

0.253738

0.049900**

D(LNPROD(-9))

0.189759

0.217425

0.041673**

D(LNPROD(-10))

0.114288

-0.065212

0.042334**

D(LNPROD(-11))

0.183845

-0.074773

0.016703

D(LNPROD(-12))

0.036208

0.466160***

0.012841

D(LNEP(-1))

-1.264887

1.006025

0.007127

D(LNEP(-2))

-1.411470

2.381517**

-0.080551

D(LNEP(-3))

-1.782794

0.688176

0.245268**

D(LNEP(-4))

2.479041

1.395708

-0.171110

D(LNEP(-5))

-0.202357

0.776194

0.447651***

D(LNEP(-6))

0.283216

1.735560

0.161417

D(LNEP(-7))

0.183674

0.179815

0.065706

D(LNEP(-8))

-0.850604

1.334557

-0.039143

D(LNEP(-9))

1.024010

1.309759

0.217833

D(LNEP(-10))

-0.697505

0.352928

-0.117956

D(LNEP(-11))

1.545041

0.259390

-0.041409

D(LNEP(-12))

-2.953528*

0.200730

0.003490

Adjusted R-squared

0.899991

0.955747

0.513108

Note: ECT(-1) = (LNAREA(-1) - 3.68871853459*LNPROD(-1) - 2.89596226198*LNEP(-1) + 0.0151253304357*@TREND(02M06) + 39.4225742213)

In addition, the causality test is applied to find out the direction of relation between variables as the results in table 5.25 showed that the hypothesis of cultivated area does not cause paddy production and paddy production does not cause renewable electric price are significantly rejected. Therefore, this pointed that the cultivated area has affected on paddy production and the paddy production will influence on renewable electric price. It can imply that an increasing in amount of cultivated areas will increase the volume of paddy yield and an increasing in volume of paddy yield will increase the renewable electric price.

Table 5.25 The VEC Granger causality tests between variable

Hypothesis

Chi-square

P-value

Direction

Production does not cause Area

 9.799783

 0.6335

-

EP does not cause Area

 11.58315

 0.4797

-

Area does not cause production

 33.18648

 0.0009

Area=> Production

EP does not cause Production

 10.94439

 0.5337

-

Area does not cause EP

 16.04987

 0.1890

-

Production does not cause EP

 31.11624

 0.0019

Production =>EP

5.3. Conclusion

Paddy rice is a major agricultural production for long a part of Thailand’s history and almost paddy rice quantities are come from poor farmers. After renewable power plants set up in every part of country, rice husk price was increased from a significant increasing demand of rice husk that is a byproduct of paddy rice. Therefore, this study is focusing on the relationship between paddy rice price and wholesale renewable electric price which are benefit to poor farmers in country. The momentum threshold autoregressive (M-TAR) is applied in this study to determine whether the relationship between paddy price and wholesale renewable electric price are symmetric or asymmetric. As a result, wholesale renewable electric price has a highly strong correlation with all paddy prices which are jasmine rice, white rice, and glutinous rice. Moreover, the asymmetric behaviors had been found on renewable electric price and all paddy prices transmission. Therefore, in short run adjustment, all rice prices have significantly in a negative discrepancy; the paddy prices will increase because of the impact from the electric price moved up. Furthermore, there is the unidirectional causality running from paddy prices to electric price for all rice types, it implies that the renewable power plants are price taker from rice mills that purchase the paddy rice from farmers, and rice mills are strong and have highly bargaining power. Besides, the effect of renewable electric price which held from the Renewable Energy Policy achieves the power-generated purpose and enhances the famers’ benefits from byproduct of rice as well.

Considered in relationship between the cultivated area, paddy production and renewable electric price, there are long relationship among them. Moreover, the short run adjustments of production and renewable electric price divert to new equilibrium. Furthermore, causality test indicated that the cultivated area lead paddy production and the paddy production will impact on renewable electric price because the alternative renewable energy policy mandated by government to encourage the using the residues of agricultural waste as well as rice husk to generate electric power, the government will subsidize SPP&VSPP for 7 years by purchasing electricity with adder for 0.30 baht per mWh. Therefore, SPP&VSPP can gain benefits when they generate power more. The purposes of renewable energy can be achieved in terms of reduce the electricity import and reduce power generation from coal or lignite, then be more environment friendly. Moreover, the small biomass power plant established by farmer organization in their community should be recognize from government to enhance the community activities from own power usage for agricultural or non- agricultural purposes as village rice mills, OTOP production and publish uses. Consequently, this will improve not only local farmers’ but also community people’s living standard.