A STUDY OF ELECTRICITY PLANNING IN THAILAND: AN INTEGRATED TOP-DOWN AND BOTTOM-UP COMPUTABLE GENERAL EQUILIBRIUM (CGE) MODELING ANALYSIS A Dissertation Presented to the Faculty of the Graduate School of Cornell University In Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy by Supree Srisamran August 2014 © 2014 A STUDY OF ELECTRICITY PLANNING IN THAILAND: AN INTEGRATED TOP-DOWN AND BOTTOM-UP COMPUTABLE GENERAL EQUILIBRIUM (CGE) MODELING ANALYSIS Supree Srisamran Ph.D. Cornell University 2014 This dissertation examines the potential impacts of three electricity policies on the economy of Thailand in terms of macroeconomic performance, income distribution, and unemployment rate. The three considered policies feature responses to potential disruption of imported natural gas used in electricity generation, alternative combinations (portfolios) of fuel feedstock for electricity generation, and increases in investment and local electricity consumption. The evaluation employs Computable General Equilibrium (CGE) approach with the extension of electricity generation and transmission module to simulate the counterfactual scenario for each policy. The dissertation consists of five chapters. Chapter one begins with a discussion of Thailand’s economic condition and is followed by a discussion of the current state of electricity generation and consumption and current issues in power generation. The security of imported natural gas in power generation is then briefly discussed. The persistence of imported natural gas disruption has always caused trouble to the country, however, the economic consequences of this disruption have not yet been evaluated. The current portfolio of power generation and the concerns it raises are then presented. The current portfolio of power generation is heavily reliant upon natural gas and so needs to be diversified. Lastly, the anticipated increase in investment and electricity consumption as a consequence of regional integration is discussed. Chapter two introduces the CGE model, its background and limitations. Chapter three reviews relevant literature of the CGE method and its application in electricity policies. In addition, the submodule characterizing the network of electricity generation and distribution and the method of its integration with the CGE model are explained. Chapter four presents the findings of the policy simulations. The first simulation illustrates the consequences of responses to disruptions in natural gas imports. The results indicate that the induced response to a complete reduction in natural gas imports would cause RGDP to drop by almost 0.1%. The second set of simulations examines alternative portfolios of power generation. Simulation results indicate that promoting hydro power would be the most economical solution; although the associated mix of power generation would have some adverse effects on RGDP. Consequently, the second best alternative, in which domestic natural gas dominates the portfolio, is recommended. The last simulation suggests that two power plants, South Bangkok and Siam Energy, should be upgraded to cope with an expected 30% spike in power consumption due to an anticipated increase in regional trade and domestic investment. Chapter five concludes the dissertation and suggests possibilities for future research. BIOGRAPHICAL SKETCH Supree Srisamran received his Bachelor degree in Mechanical Engineering from Thammasat University, Bangkok, Thailand in 2001. After he graduated, he was awarded a training scholarship by Swiss-Thai Chamber of Commerce to intern with Sika AG, an adhesive and construction chemical company, in Zurich, Switzerland. After completion of the training program, he returned to Bangkok and worked with SIKA (Thailand) LIMITED for two years. He then continued his Master degree in Engineering Management at Tufts University, Medford, Massachusetts and completed his Master degree in 2007. Subsequently, he joined Blackmore Partners Inc. in Chicago as a business analyst intern for one year prior to pursuit of his Doctoral education in Regional Science in the Department of City and Regional Planning at Cornell University, Ithaca, New York. At Cornell, Supree gained his experience in studying, teaching, and researching aspects. He was a teaching assistant in Introduction for Quantitative Methods for Policy Analysis course as well as an Introduction to Real Estate course. His research interests were energy economics, macroeconomics, and financial management and policies. In addition, with his diverse background in engineering and business, he is also interested in automotive technology, manufacturing process control and improvement, investment and business management. iii To my beloved family iv ACKNOWLEDGMENTS I was born in Udon Thani province which is considered to be far away from Bangkok, the metropolitan center of Thailand. When I was young, studying abroad was quite a farfetched idea, especially pursuing the Doctoral degree in a prestigious University like Cornell. Without the support and encouragement from professors, family, and friends, I would not have had a chance to fulfill my dream. Thus, I would like to take this opportunity to express my deepest gratitude to all of them. I am truly grateful to my dissertation committee: Professor Kieran P. Donaghy, Professor Mark A. Turnquist, and Professor Timothy D. Mount. I learned a good deal from them and truly appreciated their help and contributions. Working with Professor Kieran was an invaluable experience because he was always willing to share his opinions, experience, and knowledge. His guidance contributed throughout the entire process of writing of this dissertation. Aside from the dissertation, I would also like to thank him for giving me a chance to be a teaching assistant and his support for the academic conference participations. I am so greatly indebted to Professor Turnquist as well for his help and supervision to develop the model. His comprehensive advice was always beneficial and reflected the engineering side (Bottom-up) of the model in my dissertation. I am profoundly grateful to Professor Mount who always gave me insightful information about the electricity industry and helped guide my analysis. His constructive comments always enlightened many aspects of the analyses in this dissertation. There are two additional Regional Science professors who always helped and took care of me in academic and life. I also would like to thank Professor Iwan J. Azis, who gave me an exposure to the Regional Science Program and introduced me to Computable General Equilibrium (CGE) modeling in his Public Policies Analysis course. His advice triggered my interest of using the CGE model as a tool in this v dissertation. I also greatly appreciate Professor Yuri S. Mansury who gave me the chance to assist him in his Introduction for Quantitative Methods for Policy Analysis class. Being his teaching assistant made me feel confident and comfortable to teach students. Lastly, I would like to thank Tina M. Nelson, Regional Science Graduate Field Administrator, for facilitating all official activities and documents. To me, Ithaca is one of the coldest places on earth but my heart was always warmed by the kindness of my friends there. I would like to thank Dr. Sutee Anatsuksomsri, one of my best friends since high school, and Dr. Nij Tontisirin, his wife, in bringing me to Ithaca and taking a good care of me in both life and in academics. Dr. Nattapong Puttnapong who has always given me modeling suggestions and encouragement. Many friends who treated me like a brother and shared memorable moments with me while studying at Cornell include the following: Dr. Warong Sukchorat, Dr. Anuk Serechetapongse and her lovely mother-Chularat Niratisayakul, Dr. Thanasin Tanompongphandh, Dr. Sivalai Vararuth, Dr. Paitoon Wongsasutthikul, Dr. Chayanee Chawanote, Dr. Wannasarn Noonsuk, Dr. Surin Maneevitjit, Pannarai Chingchitr, Pimbucha Rusmevichientong, Anuchanat Jareonjitrkam, and Apikanya McCarty. I also had a great chance to meet and study with my supportive Regional Science Program colleagues: Dr. Hee Hwa Min, Dr.Alvin Pratama, Dr. Danny Adiwibowo, Dr. Nur Ain Shahrier, Dr. Scarlett Zuo, Dr. Inka Yusgiantoro, and Dr. Gunawan Wicaksono. Lastly, I would like to thank my beloved family for their unconditional love, endless support, and motivation: my parents who gave me educational inspiration and always stood by and advised me in all matters, my lovely sister, Nuttamon Srisamran M.D., who has always been my best consultant and caretaker since I was born, and my dear grandparents who raised me with their great affection. Without them I would not have achieved my current status. vi TABLE OF CONTENTS BIOGRAPHICAL SKETCH ........................................................................................ iii ACKNOWLEDGEMENTS............................................................................................ v LIST OF FIGURES ....................................................................................................... .x LIST OF TABLES…………………………………………………………………....xii CHAPTER 1: THE STATE OF THAILAND ECONOMY AND ITS ELECTRICITY GENERATION SECTOR 1.1 Introduction……………………………………………………………………1 1.2 Thailand’s Economic Conditions and the Status of Energy Utilization……….2 1.3 The Structure of Electricity Supply Industry in Thailand……………………...9 1.4 The Current State of Electricity Consumption and Generation………………12 1.5 Case Study…………………………………………………………………….16 1.5.1 Case Study I: The Security