State-run Electricity Generating Authority of Thailand (Egat) plans to discuss the possibility of delaying the commercial operation dates (COD) of small power producer (SPP) plants.
The SPPs currently under development by private firms in Thailand have a total capacity of 8,765 megawatts and the firms have already signed power purchase agreements with the state grid.
SPP licence holders can sell up to 90MW to the state grid, while selling the rest to companies operating in industrial estates.
Patana Sangsriroujana, deputy governor for strategy at Egat, said tentative discussions have already happened and a final proposal will be submitted to the Energy Regulatory Commission.
The government wants to delay the SPPs as the plants generally have a greater production cost, especially those fuelled by biomass.
Energy demand is expected to be lower this year, and power with the highest costs must be cut first.
He said policymakers are concerned about the impact the delays could have on licence holders and will likely include remedies for the latter.
Mr Patana said the proposal will not affect large power plants or independent power producers because the generation costs of SPPs average 2.5-3 baht per kilowatt-hour (unit), while independent power producers average 2 baht per unit.
Under the merit order or electricity generation cost arrangement, when demand for electricity declines, power plants with the highest costs will be first to drop out of the state grid because they are the most expensive energy producers.
Another reason Egat wants to delay these SPP projects is the higher power generation capacity reserved during the work from home and lockdown period made power demand in Thailand drop by 7-8% and reserve power rise over 35%.
The more energy is stored in the grid, the more expensive power becomes for users.
Preeyanart Soontornwata, president of B.Grimm Power, said the company would not be affected by the government action because its five gas-fired SPP plants are scheduled to operate in 2022, after the proposed delay.
The company holds the most SPP licences in Thailand.
The five plants under development have a combined capacity of 700MW, 150MW of which the company must sell to the state grid.