Thailand is moving towards Thailand 4.0 – a new economic model focusing on innovation and technology. The initiative aims to pull the country from the “middle-income trap” and accelerate its development to a more advanced level. Under this, the country plans to focus aggressively on industry, infrastructure and investment. A key project under the initiative is the Eastern Economic Corridor (EEC) that aims to develop the three provinces of Rayong, Chonburi and Chachoengsao near Bangkok as a showcase for Thailand 4.0. The EEC covers an area of about 13,000 square km and is being regarded as the “Metropolis of the Future” and the “Gateway to Asia” with various government and private entities setting up advanced infrastructure projects in the corridor. For over three decades, Thailand’s eastern coastal area or the eastern seaboard has been the centrepiece of the Thai economy linking trade and investment with the rest of the world. The region is home to over 3,780 industries, especially petrochemicals, automobiles and electronics. With the EEC, the Thai government plans to build up upon its successful Eastern Seaboard Development Programme, which was launched in 1982 and led significant industrial growth in the country. The Thai government is providing incentives to attract investors to set up next-generation industries in the EEC in the aviation, automobiles, intelligent electronics, advanced agriculture and biotechnology, food processing, tourism, digital, robotics, logistics, biofuels and bio-chemicals, and medical fields. Naturally, adequate electricity is key to the development of the EEC and several power projects are planned in the region. One of the key generation projects under way in Chonburi is the 2,500 MW Gulf SRC combined cycle power plant (CCPP) (also called as Chonburi project), which will be one of the largest projects in Thailand once it is commissioned in 2022.

Southeast Asia Infrastructure provides an update on the project…

Background

The Chonburi project is being developed under Thailand’s IPP programme, launched in 1994, under which private companies bid to set up generation projects on a build-own-operate basis. Since its inception, over 16,000 MW of capacity has been awarded to private players through competitive bidding. The Chonburi project was awarded to Gulf SRC under the IPP bidding round that was concluded in 2013.

Gulf SRC is 100 per cent owned by Independent Power Development, a joint venture between Gulf Energy Development Public Company Limited (GED) with a 70 per cent stake and Mitsui & Company Limited with a 30 per cent stake. Notably, GED is one of the largest private power generation companies in Thailand with an operating portfolio of 5,544 MW of power projects and Mitsui is one of the largest trading companies in Japan.

Project details

The Chonburi project, comprising four units of 625 MW each, will be located at WHA Eastern Seaboard Industrial Estate 1 in Chonburi in the east of Thailand. The project location is about 130 km away from the Thai capital Bangkok. The electricity produced by the project will be supplied to the state-owned utility Electricity Generating Authority of Thailand (EGAT) for a period of 25 years. Based on natural gas, the Chonburi project will deploy high efficiency CCPP technology to reduce emissions and lower the carbon footprint. CCPP technology reduces carbon dioxide emissions by about 70 per cent compared to conventional coal-fired power plants.

The Chonburi project entails a total investment of $1.55 billion (Baht 51 billion) and achieved financial closure in November 2018 by securing financing from a host of domestic and international financiers. The Asian Development Bank (ADB) has signed a $227.7 million loan agreement with Gulf SRC to fund the project. In an official release by ADB, Christopher Thieme, Deputy Director General for Private Sector Operations, ADB, stated, ADB’s financing of Gulf SRC will support the creation of a cleaner and more affordable source of energy generation in Thailand.” Sarath Ratanavadi, chief executive officer, GED, remarked, “This project

is important as it will help produce the growth and industrial transformation that is expected under the Government of Thailand’s EEC programme. We appreciate ADB’s leadership in mobilising the finance to make the project possible.”

Apart from ADB, the Japan Bank for International Cooperation (JBIC) and ten other international and local commercial banks, including the Export-Import Bank of Thailand, Mizuho Bank Limited and Sumitomo Mitsui Trust Bank Limited are providing funds to the project. The JBIC will provide financing up to $227.7 million with an overall co-financing amount of about $1,299 million. ADB’s loan will have a tenor of 23 years and include a four-year grace period during construction and commissioning. A consortium of financial institutions, including JBIC and the Export-Import Bank of Thailand, has the same loan tenor.

In February 2019, the engineering, procurement and construction contract for the project was awarded to Mitsubishi Hitachi Power Systems (MHPS). The plant will have four power trains with four gas turbines, steam turbines, heat recovery steam generators and generators, etc. The project will be equipped with MHPS’s M701JAC gas turbines and it marks the first order for this model received by MHPS from Southeast Asia. MHPS will be in charge of manufacturing and supplying the gas and steam turbines and ancillary equipment, and the Mitsubishi Electric Corporation will provide the generators.

Regarding gas requirement, the project would need about 386 million cubic feet of natural gas per day and a gas supply agreement for supply has been signed with Thailand’s state-owned oil and gas company PTT Public Company Limited. The gas will be supplied through a new gas pipeline, about 2.67 km long, which will connect the plant with PTT’s existing pipeline at Moo 3, Pluak Dang district, Rayong province. The electricity generated by the project will be evacuated by EGAT through a 500 kV transmission line connecting the Pluak Daeng substation.

Conclusion

The Chonburi project is scheduled to be commissioned by 2022. While the first two units are planned to be commissioned in March 2021 and October 2021 respectively, the other two units will be commissioned in March 2022 and October 2022 respectively. The civil works have already started at the project site and, as of January 2019, the project’s completion progress stands at 22 per cent. The project is critical to supply the energy necessary for the EEC programme, which is a key component of the Thai government’s economic policy.

Going forward, capacity addition of over 56 GW is expected between 2019 and 2037 as per Thailand’s latest Power Development Plan, 2018. Of the total planned capacity addition, about 20.76 GW will come from renewables, 13.16 GW from CCPPs, about 2.1 GW from cogeneration power plants, 1.74 GW from lignite/coal-fired power plants and 500 MW from pumped storage hydropower plants. In addition, about 8.3 GW will be from replacement power plants, 5.86 GW from imports, and 4 GW will be realised through the energy conservation plan. In 2037, 53 per cent of the country’s power generation is expected to be based on natural gas, 35 per cent on non-fossil fuels and 12 per cent on coal. Overall, the Thai government is increasing focus on cleaner fuels such as renewables and gas to meet its power demand in the coming years.