Thailand in need of 'Energy 4.0'

Thailand in need of 'Energy 4.0'

The transformative potential enabled by the intersection of clean energy technologies and the interconnected digital economy offers an ideal platform for powering "Thailand 4.0".

Adopted by the Thai government in 2016, Thailand 4.0 is a model for growth that aims to transform Thailand into a high-income country, through an economy centred on knowledge, innovation and value addition.

Thailand's next phase of growth requires a new paradigm for the power sector -- one that leads to a low-carbon economy while ensuring energy security, affordability and sustainability.

This new paradigm must be based on the combination of clean energy technologies, distributed generation, energy efficiency, storage, electric vehicles and digital technologies that is already being deployed on a large scale around the world.

Cost reductions, technical innovations and supportive government policies have integrated renewable energy firmly within the mainstream. In 2017, global renewable energy capacity additions of 178 gigawatts (GW) accounted for over two-thirds of the growth in total generation capacity. A further 1,000GW of renewable energy capacity additions are expected through 2023.

More than capacity additions alone, it is the interplay between energy technologies and the digital economy that provides the transformative potential.

The internet is now ubiquitous: about 55% of households worldwide have internet access. Digitalisation, big data and the Internet of Things are transforming the way we interact with appliances, equipment and devices. Increasingly, smart appliances are communicating digitally with power networks.

Digital communications allow connected appliances to respond automatically to specific incentives. For example, they can automatically charge from the grid when power prices are low and disconnect when prices are high. Half a billion smart meters, which enable such real time demand responses, were in operation or contracted for installation in 2016.

Electric vehicles are similarly programmable. The resulting opportunities will be huge: The global fleet of electric vehicles, which grew by 54% in 2017 to 3 million, is projected to reach 125 million by 2030.

Digital power systems can be advantageous because they provide better control over the electricity grid, which helps the industry better manage supply and demand, reduce costs, and better integrate intermittent resources.

New enterprises have emerged to take advantage of these opportunities. Innovative business models that leverage data, analytics and digital technologies are enabling improvements in energy efficiency, reliability and customer service. They are challenging traditional capital-intensive approaches of electricity utilities and offering energy services in innovative ways.

The digital power sector affords customers greater control over their electricity production and use, including choosing from a diversity of energy sources -- thus creating opportunities for distributed generation and efficiency markets.

Thailand's "Energy 4.0" platform will need to harness the possibilities enabled by innovations in the power sector. It can help Thailand to benefit from low-cost renewable energy, increased efficiency, enhance trading across the Association of Southeast Asian Nations (Asean) power grid, lower costs, and secure the nation's transition to clean, sustainable energy use that benefits everyone.

A strong foundation for Energy 4.0 is already in place: the country has an approximate capacity of 10GW from renewable sources, a mature framework on efficiency, a supportive environment for distributed power generation, pilot programmes on smart grids and digital platforms, and funding for research and development in energy storage.

For Energy 4.0, Thailand will draw from its Integrated Energy Blueprint, which combines ambitious long-term goals on renewable energy, energy efficiency, smart grids and the broader power, natural gas and oil sectors. Achieving these goals will require structural changes based on international best practices, modern financing solutions and investment instruments.

The Asian Development Bank (ADB) has been supporting Thailand's efforts to encourage innovations in the power sector, with US$2 billion investment across 14 power projects since 2010.

ADB's financing of Thailand's first solar and wind generation plants has led to increased deployment of renewable energy capacity. ADB's recent investment of 5 billion baht in Thailand's first certified climate bonds highlights the potential for attracting new sources of financing -- including pension funds and climate finance -- to support infrastructure needs.

ADB is also supporting Thailand's utility innovation by helping identify new business models that move away from merely selling energy to a broader set of customer-focused utility and energy services.

There could be no better time for Energy 4.0 to strengthen Thailand's economy.

Pradeep Tharakan is Principal Energy Specialist, Asian Development Bank (ADB). His article coincides with a two-day international conference beginning Thursday at the Queen Sirikit National Convention Center on 'Energy 4.0: Designing the Future of Thailand's Power Sector', sponsored by the ADB.

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