Thailand in need of 'Energy 4.0'
Thailand’s next phase of growth requires a transition to a low-carbon economy while ensuring energy security, affordability, and sustainability.
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 transition Thailand into a high-income country through an economy centered around 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 1,000 GW 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 (or digitalization) that provides the transformative potential.
The internet is now ubiquitous: about 55% of households worldwide have internet access. Digitalization, 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, allowing them to charge and discharge based on power system conditions. 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.
The digital power system provides better visibility and control over the electricity grid, which helps the industry better manage demand-supply balance, reduce power 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, buyers, and sellers, 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 realize the benefits of low-cost renewable energy, accelerate energy efficiency, enhance electricity trading across the Association of Southeast Asian Nations (ASEAN)'s power grid, lower the costs of reliable energy, and secure the nation’s transition to clean, sustainable energy use that benefits all sections of society.
A strong foundation for Thailand’s “Energy 4.0” is already in place: approximately 10 GW of renewable energy capacity, a mature framework on energy efficiency, a supportive environment for distributed power generation, pilot programs 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 enabling policies, structural changes, international best practices, and modern financing solutions and instruments.
ADB has been supporting Thailand’s effort to introduce innovations into the power sector, with US$2 billion in 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, including distributed generation. ADB’s recent investment of 5 billion Thai Baht (about $155 million) in Thailand’s first certified climate bonds highlights the potential for attracting new sources of financing, including pension funds and climate finance, to support power sector 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 than now for “Energy 4.0” to strengthen Thailand’s economy and serve as an example for other emerging ASEAN economies.
This blog was first published as an op-ed by the Bangkok Post.