Generating resilience: exploring the contribution of the small power producer and very small power producer programs to the resilience of Thailand's power sector

Abstract

“Resilience thinking” is an increasingly popular approach among scholars and policymakers, with advocates heralding it as the successor to the dominant sustainable development paradigm. Resilience refers to the ability to handle unforeseen changes and the capacity for adaption and self-improvement as a result. This article examines two programs for renewable, distributed power generation in Thailand from a resilience perspective. The research contributes to the existing literature by applying the resilience concept to electricity generation and governance in the Thai power sector. The case is interesting because of the vulnerability of Thailand's current electricity system and the fact that the programs are prototypical among developing nations. A conceptual model is constructed from the literature and used to analyze the programs based on information from expert interviews and other sources. Results suggest that the programs are increasing the resilience of the system, but their contribution is limited by barriers related to governance.

Keywords:

• resilience
• networked governance
• renewable energy
• distributed generation
• Thailand

1. Introduction

In a world characterized by uncertainty and change, governments have two choices: to fight in vain to sustain the status quo or to focus on reducing existing vulnerabilities and adapting to continuous changes. This is a choice between static sustainable development and dynamic resilient development, a distinction gaining recognition by scholars, policymakers, and international organizations. For the last two decades, the sustainability paradigm has dominated in policy and practice, but there is a growing contingent arguing that “resilience is a more useful concept than sustainability” (Baal 2010, p. 2).

Resilience has become more important as researchers and politicians acknowledge what ecologists like Holling (1973) have been arguing for years: that complex systems linking humans and the natural environment are in constant flux and it is essential to plan accordingly. Resilience refers not only to a system's ability to handle unforeseen risks and changes without losing its core functional capabilities, but also to its capacity for adaption and self-improvement as a result of these experiences (resalliance.org). Stated simply, resilience is about not just enduring crises, but flourishing as a result.

Energy systems are a sector in which resilience is particularly critical, because of their fundamental importance to economic functioning and human welfare and the lack of sustainability of current reliance on dwindling fossil fuels (Walker and Salt 2006). Research and experience suggest that dependence on nonrenewable energy sources presents serious environmental, economic, and political risks. Yet in 2005, fossil fuels still accounted for over three-quarters of global energy consumption. Meanwhile, energy demand continues to rise and is projected to increase 49% worldwide between 2007 and 2035 and a staggering 84% in non-OECD (Organisation for Economic Co-operation and Development) countries (US Energy Information Administration 2011).

The necessary transition to renewable energy (RE) and improved resilience is particularly relevant to Thailand's power sector, the focus of this study. Thailand's economy is very fossil fuel intensive compared to other countries, consuming 500% more oil per gross domestic product unit than Germany, making it highly dependent on fluctuating oil prices (Brouns et al. 2007, p. 100). Impressive economic growth in recent decades has only increased energy demand, with nationwide electricity consumption rising on average over 4% per year (Thai Ministry of Energy 2009). Thailand is overwhelmingly reliant on natural gas for electricity generation, yet domestic reserves could be exhausted within 15 years (Sutabutr 2010). Thailand remains a major contributor to greenhouse gas emissions, and the energy sector accounts for the largest share (Office of Natural Resources and Environmental Policy and Planning 2010). Meanwhile, the country ranks sixth in the world in terms of risks of future flooding as a result of climate change (United Nations Environment Programme 2009). Thus, increasing energy consumption, limited domestic conventional fuel reserves, and environmental vulnerability undermine the resilience of the Thai system.

While many developing countries are in a similar position, Thailand stands out, as the government has established policies developing domestic natural resources into distributed, RE. The government policy of increasing distributed energy generation in partnership with the private sector through the small power producer (SPP) and very small power producer (VSPP) programs, with feed-in tariffs for alternative fuels, is quite progressive among developing nations (Amranand 2008a). Moreover, Thailand was the first developing country to institute net-metering legislation, enabling the VSPP program, and one of the first countries in Asia to have a comprehensive policy for RE development (Greacen and Bijoor 2007; Amranand 2008b).

Therefore, the primary question of this article concerns what the main contributions of the SPP and VSPP programs are to the resilience of Thailand's power sector. This question is both theoretically and practically relevant. A number of studies have separately examined resilience and governance (Olsson et al. 2006; Duit and Galaz 2008; Baud and Hordijk 2009), energy system resilience (Walker and Salt 2006; Coaffee 2008), the benefits of distributed energy (Cowart 2001; Zeriffi et al. 2002; Alanne and Saari 2006), and public–private partnerships (PPPs) or governance networks for RE development (Loiter and Norberg-Bohm 1999; Pongsiri 2003; Forsyth 2005; Pettit et al. 2010). However, few studies explicitly connect these different elements, nor empirically test and apply them to a real-world case. Moreover, while some work has been published on the merits of the SPP and VSPP programs in Thailand (Ferrey 2004; Greacen 2007), there appears to be no research evaluating how these policies impact the resilience of the Thai power sector, at least not in English.

This article seeks to fill both these gaps in the existing literature. First, this research contributes to the wider resilience theory by weaving together the relevant elements of the diverse literature on resilience to construct one conceptual framework for assessing both the physical power system and the governance of the power sector. Second, this framework is used to examine how the SPP and VSPP programs improve resilience in both these capacities. Based on the findings, two suggestions are made for revising the framework: first, “reducing economic vulnerability” might be added as a seventh indicator of resilient energy systems, and second, flexibility and redundancy in energy sector governance can undermine effectiveness and should potentially be limited.

The research also has more practical aims. Since their inception, the SPP and VSPP programs have been so frequently modified that, even for the Thai people working in the field, it is difficult to keep abreast of developments. Moreover, much of the information is only made available in Thai. International observers, therefore, may find it difficult to follow the programs' progress. This is problematic because the SPP and VSPP programs are quite progressive, and Thailand's position as a regional frontrunner in RE means that other states can learn from its achievements and challenges. Based on interviews with a broad array of stakeholders in the programs, this study seeks to provide a clear overview of the progress of the programs, including recent developments and likely future trajectories, as well as an analysis of achievements and limitations.

2. Sustainable development and resilience

This section provides a short introduction to the concept and history of resilience theory and then delves more deeply into the aspects of resilience particularly relevant to the energy sector and the SPP and VSPP programs.

In literature and policy, resilience is often closely associated with sustainable development, some scholars even using the terms interchangeably (Berkes et al. 2003). Since the “Brundtland Report” popularized the sustainable development concept in 1987, the focus has been on “development that meets the needs of the present without comprising the ability of future generations to meet their own needs” (Jordan 2008, p. 20). However, as many critics have argued, how can we predict the specific needs of future generations? (Chapin et al. 2009) Moreover, under sustainable development, resource and environmental management has traditionally sought to maintain a certain ecosystem balance or a fixed state of equilibrium. Yet resilience scholars have indicated that in complex ecological systems no such stable state exists (Holling 1973). On the contrary, ecosystems are inherently dynamic and constantly evolving. Efforts to sustain a given situation are futile in such systems, and the focus should be on improving capacities to adapt to unexpected changes in a way that retains similar “functional properties” (Chapin et al. 2009, p. 5). This is the essence of resilience thinking. Therefore, while sustainable development focuses on achieving an abstract future, resilience theory recognizes the impossibility of making such predictions and concentrates instead on improving the processes of adaptive capacity in the face of unexpected change.

3. Resilience theory

Although the concept of resilience has its roots in ecology, it has been applied across a broad array of disciplines. Here we focus on resilience theory as applied to social–ecological systems, referring to complex systems connecting humans to the natural environment (Holling 1973). We use the definition given by the Resilience Alliance (a consortium of academics researching social–ecological resilience) of resilience as “the ability to absorb disturbances, to be changed and then to reorganize and still have the same identity (retain the same basic structure and ways of functioning)” (Resilience Alliance 2002). However, as Dodman (personal communication) suggests, this also includes system changes improving “functioning,” such as reducing inequalities.

While resilience theory is concerned with mitigating and preparing for disasters, there is a fundamental difference between a resilience approach and more traditional risk management practices. Risk management attempts to calculate the likelihood and probable effects of particular disaster scenarios, but some future risks might exist which cannot be imagined or anticipated, the so-called “ontological uncertainties” (Dalziell and McManus 2004, p. 12). Whereas risk management is incapable of planning for such unknowns, a resilience approach takes them as the point of departure and attempts to strengthen fundamental response and adaptation mechanisms. However, resilience is not impervious to criticism. Critics argue that the theory makes too many generalizations (Atwell et al. 2009), ignores power inequalities (Duit and Galaz 2008), and naively assumes the benevolence of elites (Gotts 2007).

Resilient systems have specific attributes that can be translated into real policy guidelines.¹ At least six characteristics of resilient systems can be extracted from literature sources, namely, diversity, redundancy, decentralization, flexibility, innovation, and learning. These characteristics are described in more detail below.

In ecology, where resilience theory originated, it is an established notion that biodiversity improves an ecosystem's chance of survival. This same concept applies to all types of social–ecological systems, where diversity is a key indicator of resilience (Dodman et al. 2009). Often a product of a system's diversity, functional redundancy is another important aspect. Redundancy consists of units with overlapping functions such that if one fails another can take its place. This reduces the risk of total failure in a crisis and encourages innovation (Foster 1993). The notion of encouraging redundancy is in direct opposition to conventional business and management wisdom seeking to maximize efficiency; as cost competition increases in a globalized economy, pressure to eliminate redundancy increases (Marten 2001, p. 170).

The third characteristic is decentralization. Centralized systems are far more vulnerable to disaster than decentralized ones, because if something happens to the central unit the entire system is jeopardized, whereas in a decentralized system a disruption of any one unit affects a small portion of the overall system (Cascio 2009). Moreover, decentralized systems are more “responsive to change” (Chapin et al. 2009, p. 81), which leads to the next characteristic of resilience: flexibility. Resilience theory anticipates unforeseen changes, and resilient systems require inherent flexibility, or the ability to change and adapt when faced with unexpected circumstances (Folke et al. 2002). Both redundancy and decentralization are ways of increasing system flexibility (Baud and Hordijk 2009). (Bio)diversity is also linked to flexibility in the literature, since it means more options to choose from in a crisis (Folke et al. 2002).

According to the definition, resilient social–ecological systems not only weather changes without collapsing, but also adapt and reorganize in new and novel ways as a result (Folke et al. 2002). Innovation, the fifth characteristic of resilient systems, can be defined as “an idea, practice, or object that is perceived as new by an individual or other unit of adoption” (Rogers 1995, p. 11). Innovation can occur as a result of a disaster or crisis or by actively encouraging innovation and experimentation through adaptive management (resalliance.org). Seen in this way, innovation is both a product of, and a contributor toward, resilience (e.g., Pettit et al. 2010).

Adaptive management is a strategy promoted by leading scholars in the Resilience Alliance. It consists of actively experimenting with different resource management techniques to gain additional knowledge about complex systems that can lead to further experiments. Therefore learning, the sixth and final characteristic, is “central to the notion of adaptive management” (Folke et al. 2002, p. 45). Like innovation, learning is both a prerequisite and product of resilient systems. Resilience requires openness to learning and integrating knowledge from different scales and sources (Chapin et al. 2009). This more comprehensive knowledge of the system can then be used to stimulate innovative management or to improve reorganization after a crisis (Folke et al. 2002). Conversely, resilient systems, through adaptive management techniques and flexible, diverse participation should also facilitate social learning (Lebel et al. 2006).

4. Resilient energy systems

The characteristics that denote resilient systems generally can also be applied to processes of power production. Reliance on imported fossil fuels and centralized generation is seen as inherently nonresilient. Studies have also outlined the grave risks nonrenewable fossil fuels pose to economic stability (Coaffee 2008; Newman et al. 2009, p. 10), international security (Zweig and Jianhai 2005, p. 25), and environmental sustainability (Lovell et al. 2009; Waughray 2010). In order to manage these risks and become more resilient, states should actively move toward the use of domestic, renewable sources of energy. Renewability and redundancy are explicitly denoted as key aspects of resilience (Goldschalk 2003, p. 139). Thus, resilient energy systems should have power from a variety of renewable sources in case one becomes unavailable (Newman et al. 2009). Conversely, a lack of resilience can lead to conflicts over energy resources and reduced quality of life (Folke et al. 2002).

The organizational structure of power generation systems also has implications for resilience. Widely distributed and localized power generation is seen as more resilient than a centralized system (Coaffee 2008). The International Energy Agency (IEA) defines distributed generation as “units producing power on a customer's site or within local distribution utilities and supplying power directly to the local distribution network” (IEA 2002 in Pepermans et al. (2003, p. 16)). Distributed generation is said to reduce a system's vulnerability to catastrophic failure or attack (Zeriffi et al. 2002), improve everyday reliability of power transmission (Cowart 2001, p. 10; Chambers et al. 2001), and increase flexibility (Alanne and Saari 2006; Chambers et al. 2001) and, with community participation, has the ability to increase knowledge building (Costello 2009).

5. Resilient governance

The resilience literature presents a compelling argument for states to transition to distributed RE, but also suggests how to govern the transition to improve resilience. One strength of resilience theory is the framework it provides to guide processes as well as outcomes. The characteristics of resilient systems (diversity, redundancy, decentralization, flexibility, innovation, and learning) can be applied not only to a country's physical power infrastructure, but also to its management or governance. Governance refers to the “structures and processes by which people in societies make decisions and share power” (Folke et al. 2005, p. 444). Meanwhile, “adaptive governance” is a management approach that actively incorporates the characteristics of resilient systems into both its institutional structure and operations (Olsson et al. 2006). Essentially, resilient outcomes to crises and change are better ensured under resilient governance. The literature on adaptive governance suggests it is a system consisting of collaborative, flexible networks and multilevel institutions with mutual jurisdiction. It is assumed that adaptive governance systems integrate a wide array of stakeholders and different levels of government (Folke 2006; Coaffee 2008). It is argued that these different actors contribute unique visions and knowledge, which should lead to more innovative solutions better able to withstand crises (Folke et al. 2005, p. 449).

Interestingly, this focus on polycentric control is quite consistent with popular trends in governance outside resilience approaches. The concept of governance includes networks of public, private, and civil society actors (Rhodes 1996). Networked governance refers to government decision-making and actions carried out in collaboration with this wider range of actors. Globalization, neoliberalism, shifts in state power, and the rise of the private sector and nongovernmental organizations (NGOs) have provided an environment in which PPPs proliferate and networked governance has become a dominant model (Reinicke 1997; Brenner 2004).

There is a clear link between networked and adaptive governance (Goldschalk 2003; Baud and Hordijk 2009). Both should encourage learning, flexibility, and diversity (Duit and Galaz 2008, p. 324). From a resilience perspective, the inclusion of a diversity of stakeholders is most beneficial if the roles of these actors are to some extent redundant (Chapin et al. 2009, p. 328). This might run counter to the popular “New Public Management” approach, which seeks to run government like a business, keeping it as economically efficient as possible (Baud and Hordijk 2009, p. 1070). In particular, a decentralized and inclusive governance structure is seen as more conducive to the flexibility, innovation, and learning aspects of resilient systems, particularly in a context of high uncertainty (Folke et al. 2002; Lebel et al. 2006). Given that RE is still in its dynamic development stage and there is considerable ambiguity about what direction the sector will take, this last point is quite relevant.

However, successful governance depends on relatively even power distribution, transparency, and trust (Folke et al. 2002; Cascio 2009) and requires strong, visionary leadership (Folke et al. 2005, p. 451). Finally, open communication, transparency, and trust between stakeholder groups are requisites if networked governance is going to work (Cascio 2009). Yet is this realistic? It could be that an ideal governance system is unattainable because of inherent conflicts between institutional stability needed for effective, efficient management and flexibility for dealing with change, although more empirical studies are needed to test these assumptions (Duit and Galaz 2008, p. 329).

It is always difficult to make models applicable in very different national and local contexts, and one of the chief critiques of resilience theory is that it “oversimplifies complex problems to incorporate complex social phenomena as quantifiable variables in systems models” (Atwell et al. 2009). Resilience also largely ignores the problem of persistent power inequalities. As Galaz (2009) notes, the “asymmetrical distribution of resources and power in social systems” remains one of the approach's “weak points.” Related to notions of power, a final criticism of resilience theory concerns the ostensibly naive assumptions made by its adherents regarding the fundamental integrity of social groups. Resilience theory “has little to say about social elites and the often violent and oppressive ways in which they maintain themselves. Nevertheless elites and violent conflict are fundamental to social dynamics and highly relevant to environmental sustainability” (Gotts 2007). This might be particularly problematic in developing countries, where inequalities, corruption, and governance problems are widespread. Finally, it should be acknowledged that the “theoretical adolescence” of resilience might be a reason for the minimal number of discontents, and as the theory gains in popularity more critiques may follow (Atwell et al. 2009).

To summarize the existing research analyzed in this section, resilience concerns modes of governance as well as concrete policies. The literature suggests that effective networked models of governance, represented by inclusive governance networks, contribute to the resiliency of systems by increasing diversity, decentralization, flexibility, redundancy, learning, and innovation. Specifically, distributed, RE is assumed to improve the resilience of the power sector taking into account these same six characteristics. The SPP and VSPP programs aim to increase distributed and RE production, and the programs are governed by a wide network of actors; therefore, such programs have the potential to increase the resilience of Thailand's power sector.

This hypothesis is visually represented in the conceptual framework (Figure 1). In this framework, power sector resilience stems from its adaptive capacity, subdivided into the physical power system and system governance. The adaptive capacity of these two parts is represented as a product of the six characteristics of resilient systems. Thus, these aspects are used as indicators of resilience. According to the literature, renewable, distributed energy production should improve these indicators in the power system, and networked governance does the same for governance of the power sector. Since the SPP and VSPP programs are a form of PPP aiming to develop renewable, distributed power generation, the assumption is that the SPP and VSPP programs should increase the resilience of the power system.

Figure 1. Conceptual model.

To examine these assumptions, a combination of qualitative methods was employed. Primary data were gathered during 3 months of fieldwork in Bangkok, Thailand, from August to October 2010. Semi-structured interviews were conducted with 29 relevant stakeholders representing different government agencies, the private sector, research institutions, and NGOs. This was complemented with actor analysis and 10 mini-case studies of specific SPP and VSPP projects. Findings were corroborated by available statistics and secondary data sources. Individuals were selected for interviews using a targeted snowball sampling method, whereby each interviewee was asked if they could provide any additional contacts in the field or of a particular affiliation (Nichols 1995). This method of selection ensured a diversity of informants representing all the important stakeholders and took advantage of informants' personal connections to gain access and trust.

6. Current structure and status of the SPP and VSPP programs in Thailand

Thailand's power system functions under the “enhanced single buyer” model. In this system, the Electricity Generating Authority of Thailand (EGAT) retains a monopoly on transmission systems and is guaranteed a majority of generating capacity. Most of the remaining power is generated by the larger conventional fuel independent power producers (IPPs) and SPPs, although they are required to sell much of their power to EGAT for transmission. The Metropolitan Electricity Authority (MEA) and Provincial Electricity Authority (PEA) are the primary power distributors. They purchase power from EGAT's transmission lines, with a minimal amount of power being sold directly to the distributors from the VSPPs.

Thailand passed its first comprehensive 15-Year Renewable Energy Development Plan (REDP) (2008–2022) in 2009.² However, since 1992 the SPP program has allowed private generators to sell power and steam (in the case of cogeneration) from renewable sources to neighboring industries and up to 90 MW of excess power to EGAT through the grid.³ As an illustration of the relative size of these plants, a 1 MW power plant can power 10,000 normal 100 W incandescent light bulbs, thus a 90 MW plant can power 900,000 light bulbs. In 2002 the VSPP program was initiated to facilitate RE development and partnerships at a smaller scale.⁴ The government provides both programs with financial incentives and subsidies for different renewable fuels.⁵

Initially it appeared that the numerous government incentives for RE investment worked well. Large numbers of project proposals, particularly for solar and to a lesser extent wind, were submitted for approval. As stipulated in the regulations, they were reviewed for connection feasibility (in terms of technical specifications and availability of a limited-capacity feeder on the grid at that location) and approved. As of May 2010, nearly 3000 MW of solar projects had been submitted and nearly 2000 MW power-purchasing agreements (PPAs) granted. This rush was precipitated by a dramatic decline in the global price for solar panel technology and materials in 2008 (interview, September 2010). During the same period, investment in wind energy also picked up, with over 1000 projects applying for PPAs.

The capacity of proposed projects far exceeds the targets under the REDP, which aims for 500 and 800 MW capacity in 2022 for solar and wind, respectively (Energy Policy and Planning Office Personal Communication 2010). This concerns the Ministry of Energy (MoE) because the cost of supplying the subsidy to these projects may increase the general electricity tariff, which would be widely unpopular with citizens. This also raises the ethical dilemma of how increased prices would impact livelihoods of poorer population groups, a pertinent question outside the scope of this article. Faced with a risk of unpopular price increases, the government temporarily halted new proposals from solar and wind in March 2010, although wind was later reopened. A further decision followed to lower subsidies for solar projects from 8 to 6.5 Baht and to change the subsidy scheme to a fixed feed-in tariff, which would not be subject to fluctuations in future fuel prices.

A second unforeseen issue that has recently emerged is that many of the proposed projects are not from existing energy companies, but rather developers seeking to reserve a place on one of the limited distribution lines and to resell the PPA later to an energy project developer. This so-called “speculation problem” was caused, according to one Energy Policy and Planning Office analyst, by the “combination of simplified regulations and very strong incentives for investment.” This problem, combined with the concerns about tariff increases and claims by EGAT that large amounts of intermittent renewable power would disrupt their transmission systems, led the ministry to propose creating another committee in late June 2010. This “Committee for the Management of Renewable Electricity Support Measures” is charged with giving final approval for all new renewable SPP and VSPP projects before they can be granted a PPA. Proposals are to be considered particularly in light of their effect on EGAT's transmission system and the tariff. The committee also seems to be tasked with commissioning a study on the grid's overall capacity for renewables and determining how to deal with contracted projects that do not materialize. What the ultimate role of this committee will be, whose interests they will favor, whether they have some “hidden agenda,” and the implications for the SPP and VSPP renewable projects remain to be seen.⁶

7. Contributions of SPP and VSPP programs to power system resilience

This section discusses the improvements resulting from the SPP and VSPP programs compared to the previous situation in terms of the resilience of the Thai power sector. They have improved the diversity of power generators and fuel types. The programs have also broadened the number and distribution of small-scale power plants and appear to be contributing to increased system flexibility, innovation, and knowledge while reducing economic vulnerability.

First, the SPP and VSPP programs have increased the diversity of power producers. Before the SPP program was initiated in 1992, EGAT was the sole power producer. Through the SPP, IPP, and VSPP programs, their generating share has been reduced to 43.3%, with over 100 additional companies joining the power-generating business through the SPP and VSPP programs. Particularly important is the diversity of backgrounds among producers in the new SPP and VSPPs. The IPP program mostly deals with major international power companies and established Thai power players, while through the SPP, and even more so the VSPP programs, many local industries are joining the power-generating business for the first time as a side project. The sugar industry is a good example of this. Of the 47 sugar mills in Thailand, 35 now sell electricity to the grid as a secondary source of income (interview, September 2010). The SPP and VSPP programs have also had a profound effect on the variety of renewable fuel sources used in Thailand. To illustrate, SPP and VSPP projects have utilized everything from biogas extracted from pig manure to municipal solid waste bound for Bangkok's landfills. Before the programs were established, all these resources were considered worthless. Rice husks are the classic example. Prior to the introduction of the SPP program they were simply burned in the fields. Once the subsidy for biomass projects was introduced, it created a market for husks and prices skyrocketed.

Statistics also confirm the contribution of the SPP and VSPPs to fuel diversification, although this will remain relatively minor in comparison to the total power generation through the traditional power plants. At the start of the VSPP program in 2002, there was 560 MW of power from renewable sources, representing a little over 2% of the total installed capacity in that year (Silasuta 2004). As of May 2010, this number had increased to 723.31 MW, just less than 2.5% of the total capacity at that time (Energy Policy and Planning Office Personal Communication 2010). Currently, a large number of additional proposed VSPP and SPP projects, with 7827 MW of renewable power, are in some stage of the approval process. However, even if all these MW do materialize, it will only represent a fraction of the overall generating capacity of the Thai power sector, which is over 29,000 MW at the moment, with an additional 30,000 MW planned by 2021 (Samudrala and Dale Gonzales 2010). Thus, if the installed capacity increases to 60,000 MW by 2021, and the nearly 8000 MW of planned projects are also completed, renewables would still account for less than 15%. The SPP and VSPP programs are also increasing the distribution of power generation across the country and thereby decentralizing the system. Before the introduction of the SPP and VSPP programs, EGAT operated all power plants. Such plants are much larger than those permitted under the VSPP and SPP regulations. Whereas the last four power plants EGAT constructed were 800 MW each, the largest SPP cannot exceed 90 MW (interview, September 2010). Thus, the SPP and VSPP programs decrease the average size of the power plants, an indicator of distributed energy systems (Alanne and Saari 2006). Moreover, since most existing renewable VSPP projects have been biomass and biogas plants located in the rural provinces of the PEA, where power plants were otherwise unlikely to be built, the programs have led to more geographically dispersed power generation. The contribution of the cogeneration SPPs is less clear. Although distributed generation is one of the government's justifications for the SPP cogeneration plants, this objective is undermined by the fact that the majority of contracts are clustered in a few key industrial areas, such as Mataphut.

The SPP and VSPP programs also have the potential to increase system flexibility because the installed capacity of most VSPP and SPP projects exceeds the amount sold to the utilities under the PPA. As most of the contracts are nonfirm, utilities can purchase more power in the future if desired. However, it should be noted that the flexibility provided by this additional capacity is miniscule in comparison to the overall size of the power system. Similarly, although the added diversity and distributed nature of the power system as a result of the SPP and VSPPs should improve functional redundancy, their marginal role in the overall system limits their impact in the case of a major disturbance. Flexibility exists at the project level, which, aggregated across many projects, should translate into increased flexibility across the power system. For example, one sugar mill's new plant uses an innovative boiler that can handle different types of fuels. If there is a drought one year and there is not enough bagasse from the sugar crop, they can still run the plant using other biomass sources.

This case also highlights the way in which VSPP projects can foster innovation. Small-scale projects can serve as experiments, testing new technologies with minimal financial risk. Innovation not only refers to technical developments, but also to new management practices, investment schemes, or incorporating community participation. As an example, the model promoted by the international World Alliance for Decentralized Energy project is particularly novel in its approach to the community. “The power plant by the people for the people,” as one executive cleverly termed it, is conceived as a small-scale, community-based VSPP project (interview, September 2010). The plant will be co-owned by investors and the community itself and fuelled by waste wood collected and delivered by local residents. The community should be supportive because they benefit and have a stake in the plant, and they will also be educated about the benefits of RE. Following a successful prototype the model might be replicated across Thailand. Despite such examples of innovation, many interviewees seemed to feel these were the exception, rather than the rule. Thus, while the potential for innovation within the SPP and VSPP program clearly exists, real experimentation and original development in projects are generally limited.

The SPP and VSPP programs have also extended the chance to take part in and learn about power generation and RE to a new range of actors. When the SPP program was first implemented, few businesses in Thailand had experience with power generation; this has changed, as evidenced by the dramatic growth in applications in recent years. Knowledge has been disseminated through organizations such as the Association of Private Power Producers; such groups are also sometimes involved in educating the public about energy developments. Moreover, some individual projects have made public education a priority, hosting educational tours or acting as demonstration projects. The SPP and VSPP programs have also made the sharing of knowledge about RE technologies profitable, as many companies with potential sources of fuel hire contractors and consultants to assist them in developing their own power plants. Furthermore, consultancy and contractor companies have attracted international knowledge and expertise to Thailand to specifically target the VSPP and SPP RE projects.

Although not one of the six indicators of a resilient power system, the SPP and VSPP programs also appear to decrease the economic vulnerability of the private sector and individual communities and citizens. For the many companies that undertake a SPP or VSPP project as a way to diversify their business, the power plant can improve economic resilience. For example, in the case of biomass from agricultural waste, if the market price for crops falls, there are still guaranteed profits from selling electricity. The economic benefits extend beyond the company itself to local communities. This is especially true in the case of biomass projects in agricultural areas where local residents can sell their agricultural waste or materials to the plant. Plants can also serve as a source of employment and economic growth in rural areas, reducing the necessity of urban migration. Finally, industrial customers buying power from neighboring SPP plants benefit from improved power reliability, increasing their economic performance by reducing power outages. As an illustration, the petrochemical industry, which is particularly vulnerable to electricity interruptions, has benefited from cogeneration SPP plants constructed near their factories in industrial areas such as Mataphut.

8. Limitations and barriers to a resilient power system

Based on analysis of the six characteristics of resilient systems, it can be concluded that the SPP and VSPP programs have the potential to increase the resilience of Thailand's power system; however, they still represent just a fraction of overall generating capacity. This is particularly true for renewable projects, which are usually smaller than the cogeneration plants. A number of barriers limit the growth and success of the programs; these include technical concerns about the grid, PPA speculation, fuel stock security issues, resource location, community resistance, knowledge insufficiencies, and financial limitations. However, informants did not deem these obstacles insurmountable and suggested a number of possible solutions. Table 1 summarizes the main barriers identified and matches them with proposed solutions. Interestingly, the common thread between them was the observation that proactive governance and effective stakeholder collaboration are essential to overcoming these problems and, as will be demonstrated in the next section, this may be problematic for Thailand's energy sector.

Table 1. SPP and VSPP barriers and solutions

Barrier	Proposed solutions
Power transmission and grid limitations: claim that intermittent, renewable power is bad for grid	Independent study of grid constraints, government loans to utilities to increase grid capacity, incentives for projects in areas of high load or low grid efficiency
Speculative buying of power-purchasing agreements for resale to legitimate developers	More stringent requirements and more comprehensive evaluation criteria for PPA purchase, requirement of bank guarantee for all projects
Location of resources (i.e., highest wind potential in conservation areas)	Government can tender out wind contracts
Fuel stock security	More restrictions on contracts, that is, limit number of projects in a region according to local fuel abundance
Community resistance	Better communication and collaboration between community and developers, more corporate social responsibility (CSR) projects by power producers, buy fuel from producers in local community
A lack of knowledge and expertise	Public information campaigns, more practical training programs
Financial constraints	Increase adders, provide different financial incentives depending on the scale of power plant

8.1. Resilient, adaptive power sector governance in Thailand

Resilience theory claims that governance by flexible networks of diverse stakeholders has greater adaptive capacity than other models. Moreover, resilient governance systems allow for some redundancy of jurisdiction, encourage exchange of knowledge between actors, and readily adapt to changes. The current governance model for the Thai power sector with the SPP and VSPP programs exhibits several characteristics consistent with ideas of resilient, adaptive governance, namely, the flexible participation of a diverse array of stakeholders, adaptability, and learning. So far, these factors appear to have enabled the survival, or resilience, of the SPP and VSPP programs.

The committees that make energy policy recommendations, draft financial incentives, and more recently review projects all consist of representatives from different government agencies, the private sector, and the utilities, fulfilling the first criterion of resilience indicated above. There are many examples of collaboration between the different stakeholders, whether looking at partnerships between the Asian Institute of Technology and the utilities for education of PEA employees, the writing of the Power Development Plan, or the government's reliance on the nonprofit EforE (initiated by a grant from United Nations Development Programme) to manage the use of the ESCO fund in assisting private sector VSPP projects (interviews, October 2010).

The SPP and VSPP programs have been particularly instrumental in diversifying power sector governance through greater involvement of the private sector. SPP and VSPP projects can be seen as PPPs between the state-owned utilities and private companies. In fact, the Thai Minister of Finance called these programs one “of the most successful PPP projects in Thailand” (Susangarn 2007). Program outcomes hinge on actors' mutual support. Before the SPP and VSPP programs, the private sector could not participate in electricity generation in Thailand, and therefore had less interest in the governance of the power sector than they do now. Interviewees discussed different ways in which working together allowed them to learn from one another and increase their knowledge. For example, at the PEA they apparently “like to collect and learn about the new technology and the cost of each technology” from their VSPP projects (interview, September 2010).

As RE and private power production are relatively new to Thailand, the history of the SPP and VSPP programs reveals a process of learning and adjusting. The changes in the subsidy scheme are a good illustration. In the original SPP and VSPP legislation, there was no financial incentive for renewable projects; a lack of investment led the government to introduce the first subsidy in 2006. The incentive was still not sufficiently enticing to attract investment in some technologies, so it was increased. Most recently, the price of solar technology plummeted, precipitating an explosion of project applications and leading the government to reduce the solar subsidy. As an international renewable energy (RE) consultant stated, “It is a learning curve, it is the first adder structure, and you have to see how the market reacts and adapt it” (interview, September 2010). The approach has thus far allowed the programs to endure unforeseen challenges, such as fuel stock problems and the economic crisis. This type of adaptive governance is quite consistent with resilience approaches.

9. Barriers to effective governance and the success of the SPP and VSPP programs

While it is important to laud the achievements of the Thai power sector, progress is undermined by a number of failures in the current governance system. While an inclusive, polycentric, and adaptive model may work in theory, the reality of governing in a developing country such as Thailand is considerably more problematic.

First, although there is some level of participation by a variety of public and private actors, not all stakeholders have an equal voice or are always represented. Governance of the power sector remains highly centralized and hierarchical. The MoE, and particularly the National Energy Policy Council, has final authority and does not always accept others' recommendations. Generally, the companies interviewed felt their voice was subjugated to the interests of others. Moreover, businesses complained that they are only invited to selected committees and meetings, obtaining only piecemeal information. Case in point: the private sector was not asked to participate in the new committee reviewing projects, nor was it consulted about solutions to the solar speculation problem before the government made the drastic decision to freeze all new applications (interview, October 2010).

The general lack of public participation in decision-making may also threaten the resilience of power sector governance in Thailand. Although citizens are given some say in project approval since regulations require new power plants to obtain local community approval, generally “there's a lot of room for improvement with the role of the community” in policymaking, as one NGO administrator concluded (interview, September 2010). This is probably due to a combined lack of local interest and lack of government encouragement to provide community inputs.

The perceived knowledge benefit of a networked governance model requires that actors effectively communicate with one another. The interviews indicated clearly that channels of communication are not open in Thailand, particularly between government and the private sector. This is partially due to the private sector's reluctance to collaborate and form strong industry associations, but also due to government not always inviting business inputs. Informants also attributed communication failures to strict observance of hierarchy and seniority in Thai culture. This helps explain why governance of the power system is so top-down, a fact acknowledged by countless interviewees from both public and private sectors. This structure is particularly problematic because many of those making top decisions are appointed politicians or career bureaucrats without technical knowledge or practical experience of energy generation. If they would consult the actors with that knowledge, such as workers at the PEA or the power producers, this would not be such a problem, but social mores prevent this. In addition to cultural barriers, geographical factors limit communication and learning. Policymakers are sequestered in Bangkok, while the majority of RE projects, and the people experienced in working with them, are located in rural provinces. Whether the fault of the private sector, government, cultural customs, or geography, policies adopted have been based on uninformed decisions resulting from missed opportunities to learn from other stakeholders.

This problem of insufficient knowledge sharing could explain the limited innovation occurring in projects, since the potential for innovation is closely related to knowledge-building capabilities and relations between different actors. As innovation systems theory states, “Innovation is the result of a complex interaction between various actors and institutions” and “depends to a large extent on how these actors relate to each other as elements of a collective system of knowledge creation and use” (Organisation for Economic Co-operation and Development 1997).

In such a top-down governance system, individual personalities within elites can profoundly affect policy. The impact can either be positive or negative, depending on their preferences and priorities. This type of system can work, but only if influential individuals make morally responsible decisions for the greater good. Such a leader can push through progressive policies, but just as easily halt advancement. It has already been noted that the top decision makers in the MoE are politicians. This means that not only do they often lack firsthand knowledge of power generation issues, but they also sometimes prioritize politics over the greater public good. In other words, because their first concern is being reelected, they will please the electorate in the short term, even at the cost of long-term policy goals. Beyond basing decisions on political popularity, officials use their position and power for their own profit. Such self-serving behavior has not been restricted to politicians, but can also be observed in the utilities and the private sector.

Greed also underlies corruption, a problem still endemic in Thailand generally. A recent poll found that the majority of Thai citizens are even willing to accept corruption in the government (Siam Daily News 2010). In the SPP and VSPP programs, companies often pay extra to officials to speed up licensing processes for project construction (interview, October 2010). This might be improved if the Energy Regulatory Commission (ERC) would fulfill its role as a one-stop-shop for projects, allowing them to bypass other ministries and officials. The establishment of the Committee for the Management of Renewable Electricity Support Measures to review applications is especially worrying in light of these allegations of corruption in government. A number of other interviewees expressed grave concern that the committee will favor applications for larger projects and influential companies, undermining the VSPPs' contribution to power producer diversity and decentralization.

Uncertainty was a common sentiment concerning local communities, the future of the VSPP and SPP programs, and the industry as a whole, because policies are constantly changing. While the resilience of the SPP and VSPP programs may be due to the ability of the government to adapt and change policies as needed, it creates another set of problems. First, this undermines businesses' faith that incentives will be maintained in future, increasing the risk of investment (interview, September 2010). Since it was introduced, the adder scheme has been adjusted every few years. This is problematic because legitimate companies cannot instantly apply for a PPA after an adder is announced; they must first invest considerable time and money into conducting feasibility studies and securing financing. Yet, by the time they go through the whole process, the government may have changed the policy. If Thailand is serious about promoting private sector RE development, interviewees agreed that the government needs to stop sending “mixed messages” and keep business better informed about possible modifications (interview, September 2010).

In addition to variable policies, the governance structure itself has undergone frequent reform in recent years. The creation of the MoE, the ERC, and most recently the Committee for the Management of Renewable Electricity Support Measures has resulted in widespread confusion about responsibilities and accountability. It was nearly impossible to get a clear answer on the different roles of the various government agencies, even from their own employees. If government employees cannot keep up with changes in the governance system, others will have even more difficulties.

While constant evolution is a key tenant of resilient systems, transitional periods can cause confusion and delays. The changing governance structure of the Thai power sector seems to be a major impediment to the progress of the SPPs and VSPPs. A good example concerns the establishment of the ERC. According to the law establishing the commission, they must approve all new projects. However, it took considerable time after the law was passed until the commission was up and running. The addition of the ERC has also caused some confusion about who should set policies. EGAT officials complained they no longer know whose regulations to follow, the ERC's or the MoE's, as both seem to be issuing policy. The creation of the new alternative energy committee has added even more uncertainty. Although resilience theory would argue that such redundancy is a positive characteristic in governance, interviewees generally perceived such overlap as an obstacle.

A final problem with an adaptive governance approach, whereby regulations are modified “ad hoc” whenever a problem arises, is that the policy becomes unwieldy. Instead of creating one comprehensive law, in Thailand the policymakers keep adding to existing regulations, making the law complex and hard to navigate. Many interviewees criticized the regulatory framework and various laws applicable to the programs. In other cases regulations are incomplete, not yet having been adapted to the current situation. Moreover, existing power sector regulations are not always relevant for RE, causing unnecessary complications or costs.

10. Conclusions: contributions of the SPP and VSPP programs to resilience

The research findings confirmed some aspects of the resilience framework while contradicting others, warranting some reflection on what this means for resilience theory. The literature suggested that renewable, distributed power production would improve resilience. Because the SPP and VSPP programs were meant to increase distributed generation and the use of renewable fuels, it was surmised that they would also increase resilience. The power sector and the SPP and VSPP programs were analyzed in terms of six different indicators of resilient systems, and evidence was found that the programs were increasing diversity, decentralization, flexibility, learning, and innovation, as well as reducing economic vulnerability of the energy system (which might be added as a seventh indicator in future). Generally, the research confirmed the relevance of applying the resilience theory framework to energy sectors. Of course the conclusion remains a hypothetical one, as system resilience could only be directly measured if it experiences a major, unexpected shock, which did not occur during the research period. Although the SPP and VSPP programs are facing more barriers than anticipated, solutions for many of these problems seem to be within reach. However, the greatest obstacle, and probably the most difficult to solve, is the governance concerns. This is especially true, considering that if policymakers continue to withdraw support for the programs, the technical problems become irrelevant.

It was hypothesized that because the SPP and VSPP programs require the collaboration of an array of actors, they would result in more resilient governance in the power sector. The research findings were more ambiguous, highlighting several possible limitations of resilience theory as applied to governance systems. The theory assumes the inherent goodness (altruism) of elites (Gotts 2007), and as the case of the Thai power sector demonstrates, this is not necessarily the case. Multi-stakeholder networked governance also requires fairly equal power relations, which was also demonstrated to be difficult to achieve in reality. Moreover, the theory does not seem to consider the downside to functional redundancy in governance, namely that it makes it difficult to determine the distribution of responsibilities. Such confusion proved to be a liability in the Thai power sector. Finally, flexible adaption of institutions and policies, a key tenant of resilient governance, resulted in inconsistency, which increased uncertainty and obstructed investment in SPP and VSPP projects. This provides empirical support for the conclusion that there is a trade-off between stability and flexibility which needs to be recognized in assessing the “optimal” governance system (Duit and Galaz 2008). At least from the case of Thailand, it seems that the applicability of resilience theory to systems of governance is problematic, and the results call into question the inclusion of flexibility and redundancy in a model of resilient energy systems. Cultural factors and individual interests in particular appear to undermine the perceived benefits of the adaptive governance model. If Thailand is indicative of other developing countries, many of which have even more endemic corruption and high levels of “politics” in governance networks, achieving resilient governance may be more complicated than the theory suggests.

Acknowledgements

We thank Dr. Bart Lambregts for his assistance with the research as well as the many individuals and organizations that contributed information and were interviewed for this project.

Additional information

Notes on contributors

Sara A. Meerow

Sara A. Meerow holds a postgraduate degree in International Development Studies from the University of Amsterdam. Her main interests lie in environmental issues and urban development, with research experience in Thailand.

Isa Baud

Isa Baud is professor of International Development Studies at the University of Amsterdam. Main interests include urban environmental management, urban governance and participation, and the use of spatialized information in urban research. Recent publications include New Forms of Urban Governance in India (edited with J. de Wit, Sage, 2008).

Notes

1.Pettit (2008) has called the attributes of resilient systems “capabilities.” He defines these as attributes of systems that allow them to accomplish specific adaptations.

2.Commonly referred to as the REDP, this plan was significant in that it set concrete targets for the different technologies and an objective of 20.3% renewables in total consumed energy by 2022 (Sutabutr 2010). The plan relies on a number of government incentives and legislation to help achieve this ambitious goal. In addition to the subsidies for the renewable SPP and VSPP projects, the Board of Investors was instructed to provide incentives to lure corporate investors in the RE sector by means of tax holidays of up to 8 years, a reduction in company income taxes of as much as 50%, land ownership and visa facilitation, and lower import duties for foreign companies (Board of Investment Thailand 2006). Also the Department of Alternative Energy Development and Efficiency, using funding from the Energy Conservation Fund, is tasked with providing technical assistance, investment grants, and soft loans through the Revolving Fund, as well as coinvesting in small renewable projects through the Energy Service Company (ESCO) fund. The latter of these helps SPPs through a venture capital fund as well as technical and financial assistance and is comanaged by the Energy for Environment (EforE) Foundation and Energy Conservation Thailand (interview, October 2010).

3.The SPP program functions such that the price EGAT pays to producers depends on the reliability of their energy generation during periods of peak demand, with firm contracts ranging from 20 to 25 years while nonfirm contracts are renewed annually (Amranand 2009). SPPs must use either cogeneration or renewable fuels.

4.The VSPP program functions on net-metering, whereby excess power can be sold back to the MEA or PEA via the grid at the bulk “time-of-use” tariff. By reducing the costs and streamlining the process of connecting to the grid, net-metering increased the incentive for small-scale power production. The original VSPP legislation limited generating capacity to 1 MW, but in 2006 this was increased to 10 MW (Achayuthakan 2010). The legislation for the VSPP program was created through an international partnership between the United States Agency for International Development, a California utilities company, the Thai government, and the Thai NGO Palang Thai (Greacen and Greacen 2004).

5.Since 2007, the Thai government has provided fixed subsidies in the form of “adders” to the normal tariff rate for the first 7–10 years of generation for nonfirm SPP and VSPP projects depending on the fuel source. The financial burden of these subsidies is borne by final consumers in the form of the final power tariff. Projects also have the potential to gain additional income by applying to sell carbon credits under the clean development mechanism (Brouns et al. 2007).

6.Appendix 1 presents a timeline of the major events in the history of the SPP and VSPP programs and RE policies discussed here, including the latest developments as of October 2010.

Appendix

Table

1958		MEA established
1960		PEA established
1968		EGAT established as national energy generator
1990–2000		Privatization proposals to create a “power pool” met with opposition, “enhanced single buyer” model developed
1992		SPP program approved
1994		IPP program approved
1997		Due to Asian Crisis cabinet halted new cogeneration SPP contracts
2002		VSPP program approved
		Ministry of Energy established
		Subsidy for renewable SPPs from ENCON Fund via competitive bidding established
2006		VSPP regulations expanded to 10 MW, include cogeneration, regulations streamlined
	December	Adder mechanism for VSPP renewables established
2007	April	Adder expanded to include renewable SPPs (except biomass)
	August	Bids for cogeneration SPPs reopened, 16 selected
		Additional adder for three southern provinces established
	December	Energy Industry Act establishes ERC
2009	January	15-Year REDP (2008–2022) approved
	March	Adder adjusted, payment time and amount increased to meet REDP
2010	March	New contracts from solar and wind halted, change to feed-in tariff proposed
	June	Committee for the Management of Renewable Electricity Support Measures established to review all renewable SPP and VSPP projects
	September	Bidding for new round of 2000 MW of cogeneration SPPs opened