Energy authorities are planning to study the possibility of adopting an "early retirement" for ageing power plants that cannot efficiently supply power to the state grid in a bid to resolve the oversupply of national power reserves, says Kawin Thangsupanich, secretary to the energy minister.
These plants, operated by both state-run Electricity Generating Authority of Thailand (Egat) and private power producers, will be bought by the government before their retirement, according to a proposal.
The idea is among proposals raised to revise the national power development plan (PDP) for 2018-37.
The revision is necessary to make the long-term master plan better suited to rapidly changing energy needs.
The power generation capacity reserve in Thailand has reached 50% of total capacity, but according to an energy expert who requested anonymity, the amount is much higher than the international standard of 15-20%.
The higher a power reserve's capacity, the more tariff is charged on power bills, creating a heftier burden for households.
Egat, which also serves as an electricity buyer, is required to pay private power producers under a 25-year power purchase agreement (PPA).
The electricity rate is calculated for the whole period, which is known as availability payment (AP), although the actual usage may not span the agreed time frame.
AP is part of the base tariff for monthly power bills.
A source who is familiar with the early retirement issue said Egat may be allowed to forgo paying for electricity for the full period of 25 years at some ageing power plants that are closed for retirement.
For example, the AP can be settled if plants have been operating for only 21 years.
The government needs to buy the plants in return, but this is less expensive than purchases of used and unused electricity over 25 years.
Opportunities for new power plants with better technologies will also be available to policymakers.
Mr Kawin said many power plant operators welcome the early retirement idea because they also have to bear expenses during standby mode when they do not supply electricity to the grid.
"Buying some ageing plants would be fair for operators," he said.
Oversupply of the national power reserve is a big headache for authorities because several domestic gas-fired power plant projects and hydropower plant development projects in Laos are in the pipeline, with operation dates scheduled until 2025, said Mr Kawin.
The facilities will add 5,000 megawatts of electricity to the grid.