Thailand Power Report Q1 2013

BMI View: We expect electricity generation and consumption in Thailand to grow modestly in 2013,underpinned by economic growth and restoration efforts. Our long term forecasts remain relativelyunchanged, though we have revised up our forecasts for coal-fired generation while reducing gas-firedgeneration. This is because we believe that Thailand could suffer from a lack of affordable natural gas inthe long run.

We are forecasting electricity generation in Thailand to grow by 3.9% in 2013. This is significantlyhigher than the historical five-year average of 2.5%, as Thailand's economic performance (a main factoron electricity consumption) was relatively poor during this period. Restoration efforts for the October2011 floods in Thailand are still underway, and could lead to higher levels of electricity consumption andgeneration.

Over the longer term, we forecast electricity generation in Thailand to grow at an average rate of 4.9%per annum between 2013 and 2021. This growth is primarily because we expect Thailand's economy togrow at a respectable rate over the forecast period, with real GDP growth averaging 4.1% per annumbetween 2013 and 2021. Natural gas will continue to play a pivotal role in the country's energy mix, butwe have revised up our long-term forecasts for coal-fired generation due to Thailand's lack of natural gassupplies.

Key trends and regulatory changes in the industry:

The Thai government updated its green energy agenda in March 2012 with the ambitious'Alternative Energy Development Plan' (2012-2021). The plan states that 25% of total energyconsumption would derive from alternative energy sources, and set targets of 2GW of solarcapacity, 1.2 gigawatts (GW) of wind capacity and 3.63GW of biomass, all by 2021.

Construction on the controversial Xayaburi dam has restarted, despite opposition from Vietnamand Cambodia. The Thai government also affirmed a power purchase agreement for 95% of thedam's electricity output in January 2012, going against the regional decision-making process.

The Thai government is set to open bids for six gas-based independent power projects (IPPs)with a capacity of 5400MW. Announced after Thailand's National Energy Policy Councilapproved the third revision of the country's 2010-2030 power development plant. All IPPs usenatural gas.

In April 2011, the Provincial Electricity Authority (PEA) stated that they would investTHB400bn into developing a smart grid over the following 15 years, and followed theannouncement with a roadmap for the project's implementation.