Northeastern Thai Sugar Mills Construct Biomass Power Plants in Bid to Nab Hybrid SPP Firm Licenses

Sugar mills in Northeastern Thailand are in the race to win SPP hybrid firm licenses, with Khonburi Sugar joining the fray with its 40MW power plant. Thai Sugar Millers Corporation expects the auction to be highly competitive, drawing in as many as 400 private investors, which will dump the FiT to a level much lower than the announced rate. In a bid to prevent license resale, ERC is also implementing harsher measures, requiring 8 million baht for each MW as collateral.

Mr. Issara Twiltermsup, Director of Khonburi Sugar PLC (KBS), has revealed that the company is joining the auction for a renewable power project under a SPP hybrid firm agreement, which makes use of more than one type of fuel soon to be purchased by the Ministry of Energy the Energy Regulatory Commission (ERC). Khonburi Sugar is also set to invest in the construction of a new sugar mill in Sikhew District in Nakhon Ratchasima as well as a biomass power plant with a total capacity of 40 MW, 20 MW of which will be sold to power grids while the remaining will be used in the company’s sugar production. The environmental impact assessment (EIA) of the project is being reviewed by the Office of Natural Resources and Environmental Policy and Planning (ONEP) and is expected to receive approval this time after the recommendations of the first two submissions have been implemented.

In the Northeast, however, nearly all sugar mills are equipped to join the bidding, including Buriram Sugar and Mitr Phol, putting the estimated total capacity of the entire region at 200-300 MW. In addition, some have already constructed their own power plants but have not begun their operation because ERC had earlier put a hold on power purchasing. The private sector has expressed concerned over when the auction winner will be required to generate electricity for commercial purposes because many companies are still in the EIA process.  The commercial operation date (COD) for SPP Hybrid Firm licenses was originally 2019 and pushed back to 2021, and there is unlikely to be any further extension.

Mr. Santi Rattanasuwan, Chairman of the Biomass Power Plant Working Group of Thai Sugar Millers Corporation, says that 52 sugar mills have the readiness to participate in the auction for a SPP Hybrid Firm agreement, and ERC is expected to announce relevant conditions and kick off the bidding within September. The auction is speculated to be highly competitive, with 300-400 sugar mills and investors vying for the license, while the feed-in tariff rate is expected to be low as it was previously announced at 3.66 baht/unit. In addition, ERC has included additional conditions to prevent license resale without actual power plant construction by requiring higher collaterals to be paid at the auction at 8,000 baht per KW, or 800,000 baht for 1 MW.

ERC is also reported to be in preparation to purchase more power from four project types with a total capacity of 600 MW: 1) feed-in tariff renewable biogas projects (wastewater) for Jana, Sabayou, and Nathawee Sub-districts in four southern provinces, 2) renewable energy project for SPP Hybrid Firms, 3) FiT renewable energy projects for VSPP Semi-Firms, and 4) Pracharat biomass power plants for the three provinces along the southern borders.

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