Sunset for wind power? Govt agencies to work it all out

08 กุมภาพันธ์ 2560

Govt agency leased land for wind farms, licenses in 2008, then surprise court ruling & canceled investments last week.

RENEWABLE ENERGY & AGRICULTURAL REFORM

Sunset for wind power: Wind farms wait for land use definition

8/02/2017
Yuthana Praiwan

A government agency known as the Agricultural Land Reform Office (Alro), leased land to investors to build wind farms a long time ago.

Another government agency granted licenses giving permission to these wind farms to operate way back in 2008.

The land that the government leased to the wind farms, however, was agricultural reform land that the government, at least at some point in the past, had intended for use by poor farmers.

This land is also known as Sor Por Kor land, named after the the land title deed, a set of legal rights that users have to the possession and use of the land.

Last week, many years later, an Administrative Court ruling declared that this agricultural reform land cannot be used for wind farms.

The ruling came as a big surprise to all the investors and government agencies involved and has lead to the cancellation of the investments.

What the implications are for electrical power generation from the wind, a form of renewable energy that is subsidized by all the electricity consumers in Thailand through their monthly energy bills, is not clear.

Will wind power ever get off the ground, break even and become economically viable?

Could coordination between the courts and government agencies of Thailand a decade ago have prevented this disastrous outcome of renewable energy policy?

This must be a thought going through the minds of some people, especially supporters of renewable energy.

[It is worth noting that historically such lack of coordination between government agencies is not something new, with several past cases documented in the classic study of Thai political economy Danny Unger's Building social capital in Thailand: fibers, finance, and infrastructure, Cambridge : Cambridge University Press (1998) which is available to the public at the Thailand Information Center (TIC) on the sixth floor of Chulalongkorn University's central library. Another high-profile case is the failed Hopewell mass transit project and the State Railway of Thailand (SRT) documented in the Jungle book: Thailand's politics, moral panic, and plunder, 1996-2008, Silkworm Books, (2009).]

WHAT IS HAPPENING IN THE AFTERMATH OF THE COURT RULING?

The Energy Regulatory Commission (ERC) has suspended approvals for power purchase agreements (PPAs) of 11 wind farm projects located on agricultural reform land meant for poor farmers, also known as Sor Por Kor land, mostly in Nakhon Ratchasima and Chaiyaphum provinces.

ERC commissioner Viraphol Jirapraditkul said the 11 wind farm developers have a combined power-generating capacity of 700 megawatts and are awaiting PPA approval.

They were due to sign PPAs with the Electricity Generating Authority of Thailand (EGAT) before using the PPAs as collateral for the projects' financing and construction.

SURPRISE COURT RULING LEADS TO CANCELED INVESTMENTS

The Supreme Administrative Court made a ruling on a case last week that renting Sor Por Kor land to build a wind farm in Chaiyaphum was deemed a misuse of the land.

The land is designated only for farming use.

The court ruling has forced the investors to cancel the project, raising concerns among developers whose wind farms are located on Sor Por Kor land.

BUT GOVERNMENT LEASED LAND TO INVESTORS TO BUILD WIND FARMS

Another branch of the government, the Agricultural Land Reform Office (Alro), originally leased the Sor Por Kor land to investors to build wind farms on.

The court ruling apparently may not be the last word on the matter. It still may be possible to use the Sor Por Kor land for wind farms it appears.

The Energy Regulatory Commission (ERC) says it is waiting for a clear direction on the definition of Sor Por Kor land usage, which is due to be released to the public after a discussion initiated by the Agricultural Land Reform Office (Alro).

"The Alro will take a few weeks to discuss the issue with economic policymakers," he said.

"PPA approvals are automatically suspended until we get a clear policy direction from the office."

WIND FARM LICENSES GRANTED WAY BACK IN 2008

Energy policymakers first granted wind farm licences to investors many years ago in 2008 to develop and operate wind farms.

Most of these wind farms were due to begin operation this year, after almost a decade of delays, but will now be delayed once again.

1000 OF 1500 MEGAWATTS IS ON AGRICULTURAL REFORM LAND

Total power-generating capacity from these projects is expected to total 1,500MW.

Of the total capacity, some 1,000MW is from projects that leased Sor Por Kor land, while 500MW stands on privately owned land.

Some 354MW of wind farm power is on Sor Por Kor land and already in operation by four firms, while 700MW is still waiting for PPA approvals.

A source at the Energy Ministry said investors fear the court ruling will set a precedent for future projects, and the four firms already in operation are also concerned.

The four firms already in operation are KRU Co, with a capacity of 103.5MW in Nakorn Ratchasima and Chaiyaphum, Chaiyaphum Wind Farm Co at 80MW, Watabak Wind at 60MW and Thepphana Wind Farm at 6.9MW.

http://www.bangkokpost.com/business/news/1194725/erc-suspends-power-purchase-deals