Thailand to rely on coal for power longer amid record gas prices

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Thailand expects to burn coal for power for longer after it extended the lifespans of some plants to cope with record high natural gas prices, the assistant secretary general of its Energy Regulatory Commission (ERC) said on Wednesday.

The country has intensified its search for alternative energy sources, ranging from coal to renewables, to cut liquefied natural gas (LNG) imports amid a surge in prices of the super-chilled fuel, Prasit Siritiprussamee told Reuters on the sidelines of the Singapore International Energy Week.

“The price of LNG is increasing rapidly and we are trying to cope with this by finding (other) options,” he said.

Global gas prices rose to records this year as a result of Russia’s gas supply cuts to Europe amid the Ukraine conflict. The region has imported record volumes of LNG which has eased some of their supply concerns but Asian buyers come under enormous strain as regional spot prices surged to a record while shipments were pulled to Europe, where prices were even higher.

The price volatility coincided with a rebound in Thailand’s electricity demand which hit a new peak in April as industries ramped up post-covid, hitting consumers hard.

Thailand, a net oil and gas importer and Southeast Asia’s No. 2 economy, last year relied on imports for nearly 75% of its electricity, crude oil, coal and natural gas needs. Natural gas generates 55% of Thailand’s electricity and of the gas consumed, about 30% is LNG, Prasit said.

Among the measures to reduce its gas usage, Thailand is extending the lifespan of some of its coal-fired power plants for one or two years, shelving earlier plans to retire the units, Prasit said. The government is also purchasing excess electricity for the grid from local renewable power plants, he added.

Thailand, which already imports hydropower from neighboring Laos, could seek more supplies, he added.

The country’s ERC Secretary-General Komkrit Tantravanich told Reuters in March that some of Thailand’s power plants will switch to using oil to generate electricity to lower gas demand, while the government was extending the closure of a coal power plant and biomass contracts.

Energy security and keeping electricity prices at affordable levels are Thailand’s priorities, Prasit said.

“We try to optimize prices to be as low as possible. Even if we have to use fuel oil or diesel oil, if it’s cheaper than the LNG, then we must do it,” he said.

To reduce spot LNG purchases, Thailand has been looking to secure supplies in medium- to long-term contracts, but that they were “quite difficult” to find and negotiate, Prasit said.

“At this moment, people can’t forecast what will happen and how long the high-price situation (will last),” he added.

“The priority is to find alternative options and reduce the use of gas.”

(By Emily Chow, Isabel Kua and Chayut Setboonsarng; Editing by Florence Tan and Christian Schmollinger)


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