part 1: overview of cogeneration and its status in asia - Fire

42 Part I: Overview of cogeneration and its status in Asia
• revising regulatory frameworks, legal and institutional arrangements, bidding as well as
negotiation procedure periodically on the basis of experience gained, and in consultation
with all the other partners concerned.
4.3.2 Adequate regulatory measures
There should be certain regulations that clearly define the cogeneration system by specifying
the fuel to be used, energy efficiency, minimum or maximum ratio of heat to power, etc.
Regulations should allow the purchase and sale of power between cogenerators and electric
utilities. The obligations and rights of cogenerators and electricity utilities must be clearly
defined as well as the interaction between them. A sound investment climate should be
created in order to attract foreign investment into the field of cogeneration.
Development of a positive regulatory framework regarding the role of the electricity industry
will send the right signal to the potential cogenerator. This should include purchase and sale
of electricity, back-up facilities and wheeling of electricity to third parties. There should be
arrangement for the grid to buy back electricity from a cogenerator. The price of electricity
purchased should be based on avoided cost of electricity generation by the utility.
Experiences in many countries show that capacity allowances fixed are inadequate and the
principle of avoided costs is not fully applied while setting up the pricing structure for
purchasing cogenerated electricity.
Small cogenerators are prone to equipment failure or unscheduled breakdown. Penalties for
importing electricity during these periods can have severe impact on the economics of the
cogeneration project, as has been found in a number of countries. The utility should be
lenient in such cases and provide emergency power at a reasonable rate.
The arrangements for “wheeling” or selling electricity to third parties are not widely adopted or
accepted by energy policy makers in many countries. Wheeling should not only be allowed
but also encouraged at sites where there is a shortage of local supply of electricity or when
power is delivered at a lower level than that of the electricity network.
4.3.3 Examples of regulations in selected Asian countries
Some aspects of regulations for cogeneration facilities in Thailand are presented here. The
benefits that can be enjoyed by cogenerators in some other selected countries are also
mentioned in order to give an idea of how cogeneration can be effectively promoted by
means of good regulations.
In Thailand, regulations for the purchase of power from small power producers were
approved in 1992. The sections that are relevant to the cogeneration systems are mentioned
below. 1
The operating standard of a cogeneration facility is that the process must involve continuous
use of energy by employing a topping cycle or a bottoming cycle thermal process. The
thermal energy to be used in thermal processes other than electricity generation, must be no
less than an average of 10 per cent of the total energy production during each year.
The efficiency standard of cogenerators is set such that if oil and/or natural gas is used either
as a primary or supplementary fuel, the sum of the electricity produced and one half of the
1
Electricity Generating Authority of Thailand, Regulations for the Purchase of Power from Small
Power Producers, Thailand, 1992.