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Business >> Tuesday June 12, 2007
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McKinsey Quarterly
Global Insights
Egat to build $6bn nuclear plant

Facility needed to cut dependence on gas


The Electricity Generating Authority of Thailand (Egat) plans to spend US$6 billion, or 204 billion baht, to build the country's first nuclear power plant. In a speech yesterday, Energy Minister Piyasvasti Amranand stressed the need for developing nuclear energy as an alternative power option. Building a nuclear power plant is necessary, he said, given the rising demand for electricity and limited fuel options for generating affordable electricity in the future.

''For every 1% the economy grows, electricity demand will increase 1.14%,'' he said.

In addition, existing fuel sources for electricity production also emit greeenhouse gases, which contribute to global warming.

For the first time ever, officials included nuclear energy on the 15-year power development plan that runs through 2021. By the next decade, a nuclear plant will be the most affordable way to meet the country's rapidly growing energy needs, Dr Piyasvasti said.

''The action plan for the nuclear energy programme is expected to be completed by the end of this year and then it will take about seven years for project preparation and another six years for construction work,'' said Dr Piyasvasti.

Thailand first flirted with nuclear power 31 years ago, but the idea was dropped after environmentalists strongly opposed the idea and companies discovered indigenous natural gas. If the first nuclear power plant was built in Thailand at that time, electricity would be much cheaper than it is now.

It is clear that Thailand needs to diversify its energy sources to lessen its dependence on natural gas, which supplies about 70% of Thailand's electricity production. The rest comes from oil, coal and hydropower.

Indigenous natural gas reserves are running low, and plans to import about 10 million tonnes per year of liquefied natural gas remains uncertain. Officials initially touted the benefits of coal, which is cheap and abundant, but soon cowed to protests from environmentalists.

Essentially, this leaves nuclear power as the only choice left.

Many neighbours, including China, Vietnam, Indonesia and the Philippines, have begun developing nuclear energy.

Egat governor Kraisi Kanasuta said Egat would be the sole investor in the first nuclear power plant since it is something new for Thailand. The state-run firm needs to make all the preparations for the project, including public relations.

The government wants to generate 4,000 megawatts of electricity from nuclear energy within the next 15 years. Egat is looking for about 1,000 to 2,000 rai close to the sea to build the plant.

According to Mr Kraisi, Egat will spend about US$6 billion, or 204 billion baht, to build the nuclear power plant. This amounts to US$1.5 million for every megawatt of electricity produced.

Although coal-fired power plants are cheaper at US$1.2 million for every megawatt, the cost of electricity production from nuclear energy is cheaper at 2.01 baht per unit compared to 2.05 baht per unit from coal.

''Consumers will pay less on their electricity bill if nuclear power can operate,'' said Mr Kraisi.

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