How e-mobility can power Thailand to net zero

How e-mobility can power Thailand to net zero

An electric ferry operated by Energy Absolute passes the Temple of Dawn on the Chao Phraya River. Electric vehicles herald a new era in how energy is managed. Energy Absolute (EA)
An electric ferry operated by Energy Absolute passes the Temple of Dawn on the Chao Phraya River. Electric vehicles herald a new era in how energy is managed. Energy Absolute (EA)

Thailand’s rich natural resources have long driven its economic growth. Minerals such as tin and gypsum, natural gas and coal, teeming forests and seas, have been exploited and minted many businessmen in the kingdom. Rarely considered is its most abundant natural resource, so abundant it is often taken for granted: sunshine.

While Thailand's sunshine typically attracts millions of cold-weather escapees, sunshine is becoming the focus of the latest energy innovations that will make it commercially useful to millions of Thais, from individual home owners to large real estate operators. Thanks to the incredible progress and business momentum in the electric transportation and battery industries, a movement further accelerated by the urgent need to cut carbon emissions, sunshine will finally have its day. The lowering costs of solar power, batteries and electric vehicles are triggering the convergence of the mobility, power and real estate sectors. Through open collaboration and good management, Thailand is perfectly positioned to capitalise on this megatrend.

What do electric vehicles have to do with the power sector and what does that have to do with the consumer? In short, the use of batteries in electric vehicles can supplant the use of combustion engines and fossil fuels. These same batteries can also be used to store excess solar power, resolving the key barrier to increasing the share of intermittent solar power generation: short-term storage. This stored energy can later be used to power not only vehicles, but also homes, providing significant cost savings to consumers. And unlike many other energy solutions that can only operate in large monopolistic utility networks, this solution works on the smallest scale (i.e. households) as the sun in Thailand shines on everyone equally.

In the next 10 years, battery-powered electric motorbikes, tuk-tuks, cars, buses and ferries will increase demand for electricity and the storage capacity of the power grid as well as the "behind the meter" energy systems they are connected to. This convergence will change the roles and business models of existing energy players and create new opportunities for new market entrants, such as the real estate sector. For example, in Europe and the US, charging stations for electric vehicles are being created within shopping malls, condominiums and residences.

Around the world, this transition is already taking place. There are more than 5 million pure battery electric vehicles on the roads worldwide. While Thailand boasts less than 10,000 as of 2021, the Electric Vehicle Association of Thailand projects 1.2 million battery electric vehicles will be registered by 2036. In addition, 7,000 charging stations are expected to be opened domestically in the coming years.

The first country in Southeast Asia to offer incentives to electric vehicle manufacturers and tax reductions on sales of their cars, Thailand is imagining itself as an electric vehicle hub. Energy Absolute (EA), which recently made headlines for its launch of electric ferries on the Chao Phraya River, is using international climate finance, subsidies and tax breaks to put 5,000 electric vehicles on Thai roads, powered by 700-plus charging stations and using batteries that are made in Thailand.

Ideally, this growing battery storage capacity will be coupled with a stronger move to clean energy, like solar, which will then allow for an almost complete transition to net zero carbon emissions. Linking the increased demand for electricity to increasingly affordable renewable energy production will drastically cut the air, climate, and noise pollution caused by the transport industry, not to mention lowering the costs of transport systems. By some estimations, transport causes 30% of all emissions globally.

In an earlier column, I argued that this transition to “Net Zero” will create winners and losers and therefore needs to be navigated carefully. Among the key driving forces for this transition are innovation, the commercial superiority of new solutions and the capacity of these new solutions to circumvent the sphere of influence of existing players. Indeed, the convergence of e-mobility, the use of renewable energy and energy management is happening “behind the meter,” out of reach of the existing business model of current power system operators. 

For example, there is nothing that could stop the operator of a commercial and industrial (C&I) solar power rooftop from using surplus solar power generation to charge the batteries of the electric motorbikes or e-cars of its workers, staff or customers. In addition, the connected electric vehicle battery capacity can also be used to provide auxiliary power services (currency stabilisation, backup power, peak load support) to the C&I estate it already provides with power at a gain for everyone involved. Electric vehicle users can reduce their transport costs by 20-40%, operators of C&I solar roofs can double their return on investment and the "behind the meter" purchasers of solar power increase their control over power management services. This will eliminate demand for grid power, accelerate the stranding of existing fossil assets and make the construction of new fossil assets, including gas power, obsolete.

Pro-active participation of power sector incumbents in this transition is hampered by the contractual inflexibility of the existing Thai power grid, which obliges state-owned utilities to purchase power from large fossil power generation assets under long-term, “take or pay” purchase agreements, even if there is no demand for this power. This leaves these state-owned utilities with two bad options: they can increase the costs of grid power for their clients as a means to reduce the revenue shortfall, thus driving even more demand behind the meter, further accelerating demand reduction, or they can reduce payments to the owners, thus contributing to an already large state budget deficit. The third and best option is to fully embrace alternative business models. This will require tough decisions that sacrifice short-term profits in return for a commercially bright future for the energy industry. 

A recent study by the IEA in partnership with EGAT addresses the need for increased grid flexibility. While adequately discussing most key issues, it largely ignores the massive impact of the “behind the meter” revolution on business models and markets. 

Utilities need to fully internalize in their decision-making that there are no incremental solutions to their participation in the so-called “Race to Zero” emissions. Transformative change and innovation are required. They need to become substantial players, participants and partners in the energy transformation, and create new teams, ventures and products that can deliver this future. They need to plan and implement mid-term strategies to achieve the soft landing and phase-out of existing fossil assets. On the consumer-facing side, they should shift their investment activities from planned fossil capacity expansion to decentralized, client-centric energy-as-a-service products, covering the whole new vertical of decentralized renewable energy generation, storage, auxiliary energy services, real estate energy management, and e-mobility integration. They need to use their influence over the relevant energy regulatory process to reshape their business models, and find new ways of cooperating with the private sector and their customer base.

The new and additional demand for electricity from scaling up e-mobility will provide a unique window of opportunity to achieve all of this at the lowest cost possible. It also means that existing mobility and power sector incumbents have to act quickly to ensure they can capture a substantial part of the new playing field. The government of Thailand can support this transition and boost the roles of its state-owned enterprises in the relevant sectors, not least because their profits constitute a substantial part of the Thai state budget.

Ingo Puhl is a resident of Bangkok and co-founder of South Pole, a leading climate solutions provider and climate project developer:

Do you like the content of this article?

Malaysia urges Asean states to engage Myanmar junta's rivals

Malaysia wants a clear endgame in Myanmar' faltering peace process and is advocating direct engagement by Asean states with the junta's opponents, and bringing other countries into the fold, its foreign minister said on Wednesday.

10 Aug 2022

Over 1m tonnes of goods transported on China-Laos Railway

KUNMING: The total volume of imported and exported goods transported via the China-Laos Railway has reached 1.02 million tonnes since the railway's opening eight months ago, with total worth of about 9.14 billion yuan (48 billion baht).

10 Aug 2022

Temporary stay

PM Prayut confirms the ousted president of Sri Lanka will stay in Thailand on humanitarian grounds as he looks for asylum in a third country.

10 Aug 2022