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          09/2005 - issue 11 ..... (New)
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ASEAN Grid Access Programmes

Renewable energy polices in Europe were introduced almost in parallel with the liberalization of the electricity markets. Hence, the right conditions for market deployment policies were already established. Market regulations that create the right conditions for renewable energy deployment include the following: i) the independent power production laws which require utilities to interconnect and sign power purchase contracts with qualifying renewable energy facilities; ii) market liberalization schemes that allow generators and independent marketers to wheel power to retail customers though the cost of this access are sometimes very high; and iii) access of small-scale renewable energy systems suppliers to consumer retail outlets as well as end-users access to the distribution grid.

In ASEAN, parallel to the introduction of renewable energy investment incentives, and fiscal and non-fiscal measures, some member countries have introduced various levels of reforms and partially liberalized their electricity markets. Reform measures undertaken include the opening up of the electricity generation market to private investors and introduction of regulatory frameworks for independent power production. To further support grid-based renewable energy investments, Indonesia, Malaysia and Thailand have even developed renewable energy specific access frameworks and programmes (Table 1). On the other hand, the electric power industry reforms in the Philippines, which introduced competitive electricity markets, have promoted access of renewable energies to national grids.

In Thailand, the Small Power Producers (SPPs) program was introduced in the early 1990s and is designed to promote grid-connected electricity generation from renewable energy and cogeneration. A flexible power purchase agreement has been introduced (firm and non-firm) to respond to the technical limitations of renewable energy technologies. Power purchase price is based on the utility�s avoided costs.

In 2002, Thailand introduced a new framework that promotes small-scale renewable electricity generation known as Very Small Renewable Energy Power Producers (VSREPP). A VSREPP is defined as a generator with his own generating unit, whose power generating process utilizes renewable energy sources, agricultural and industrial wastes and residues, or by-product steam, and who sells no more than 1 MW of electrical power directly to a distribution utility. The VSREPP regulations allow for net metering arrangements and streamlined interconnection process and requirements so as to minimize the costs of connecting a VSREPP to the distribution systems. Generators with net generation can generate income by selling electricity to the distribution utilities at the latter�s avoided costs (the wholesale price that the distribution utilities pay to EGAT for bulk electricity). The main targets of the VSREPP Program are pig farms and food processing industries.

Malaysia recently introduced the Small Renewable Energy Power Programme (SREP) which aims to facilitate implementation of grid-connected renewable energy resource-based small power plants. Grid-connection of SREP is governed by the Renewable Energy Power Purchase Agreement (REPPA). REPPA�s power purchase price is capped by the government at 4.5 cent US$/kWh.

Table 1. ASEAN RE strategies and targets


Small Scale Distributed Power Generation Using Renewable Energy, PSK Tersebar (2002)

  • Obliges PLN � the national electric utility � to purchase up to 1 MW capacity generation using renewable energy sources by small enterprises.
  • Tariff rate is 80% of PLN�s production cost if the electricity purchased is interconnected to medium voltage network, or 60% of production cost if it is interconnected to low voltage network.


Renewable Energy Power Purchase Agreement (REPPA)(2001)

  • Selling price is capped at a ceiling of RM 0.17 sen/kWh (USD 0.045 cent/kWh).


Electric Power Industry Reform Act (2001)

  • Priority dispatch for renewable energy generation.
  • Distribution utilities and contestable markets can negotiate directly with electricity generators including renewable energy producers.


Small Power Producers (SPP) Program (1992)

  • Encourage participation by SPPs in electricity generation; promote the use of indigenous by-product energy sources and renewable energy for electricity generation; promote more efficient use of primary energy; reduce the financial burden of government investment in electricity generation and distribution.
  • Buy-back rate were based on the avoided costs of the Electricity Generating Authority of Thailand (EGAT). A firm contract pays both capacity and energy generation while a non-firm contract considers energy payment only. In the 1990s, the avoided fuel was fuel oil. The oil price increase in 2000 shifted EGAT�s marginal plant to natural gas-fired power plant. Consequently, the reference technology was changed from fuel-oil fired to natural gas-fired power plant.

Very Small Renewable Energy Power Producers Programme (2002)

  • To promote participation of small generators (less than 1 MW) in electricity generation and efficient use of domestic natural resources that are environmentally friendly.

Sources: Indonesia � DGEEU (2005); Malaysia � Pusat Tenaga Malaysia (2004);
Philippines � Department of Energy (2005); Thailand � NEPO (2002).


In the late 1990s, Indonesia issued the legislation on Small Power Generation from renewable energy covering procedures for small private power generation from renewable energy interconnected to the grid of the state-owned utility PLN. The power purchase tariff is, however, to be negotiated between PLN and the developer. The renewable energy policy was recently strengthened with the passage of the legislation in 2002, allowing renewable energy power plants up to 1 MW capacity to be interconnected to the grid. The purchase tariff is calculated at 80% and 60% of the utility�s (PLN) announced electricity base price for interconnection at medium and low voltages, respectively. 

With the operation of competitive electricity markets in the Philippines, electricity generators will have direct access to national and distribution grids. The wholesale electricity spot market (WESM) rule also specifies priority dispatch for renewable energy generation. Electricity wholesalers, retailers and contestable customers on the other hand can directly negotiate with generators (including renewable energy) for the bilateral trade of electricity. This however does not guarantee that the wholesale market-clearing price will provide sufficient returns to renewable energy generators. The government at present is studying various options to stimulate private investments on renewable electricity generation under the competitive electricity market setting.

Last modified 10/09/05    Top