Thailand sets record for annual drop in power output and LNG imports

Thailand's electricity production is expected to drop by a record amount this year due to a mild winter and a slowed economy, according government data. This will result in Southeast Asia’s largest LNG importer experiencing its steepest fall in fuel purchases.

Official data revealed that the power generated and imported by the 70 million-plus people in the country fell by 5.4% in the seven-month period ending in July. This is nearly twice as much as the 2.8% drop in January-July of 2020, due to the coronavirus lockdowns.

The official data for the last four decades show that the annual drop in production is only the fourth since the early 1970s. This was due to the fact that the number of days with extreme heat dropped as frequent rain reduced the use of air conditioning.

Raksit Pattanapitoon is an analyst at Rystad. He said that weather has been "by far" the "most significant driver" for power demand this year in Thailand, and all other factors, including economic growth and politics, have lagged "significantly".

Demand for Residential and Industrial Products Fall

The government reported that the residential power demand accounted for over 31% of Thailand's electricity consumption. This is the steepest drop on record. It also outpaced a 2.8% decrease in industrial and commercial use which makes up more than two thirds of Thailand’s annual electricity usage.

The demand for electricity has increased due to the use of air conditioning in recent years.

The World Bank predicts that Thailand's economy will grow at a slower pace of 1.8% in this year, and 1.7% the following year. This is due to a weakening export sector, slowed tourism and political uncertainty which could slow down public investments.

Pattanapitoon stated that "this year will be first in Thailand since 2020 where we will not record any new peak demand, after an average 6.2% growth between 2021-2024."

Gas-fired Power at Lower Prices

Government data revealed that the electricity generated by natural gas, which makes up 56% of Thailand’s power production, dropped 12% in July. This is on course to be its steepest drop ever, and also marks the first annual LNG imports decline since 2014.

Kpler data showed that LNG shipments, of which two thirds supply utilities, fell 15.3% per year to 7.2 millions metric tons during the eight-month period ending in August.

Official data revealed that Thailand's coal-fired plants increased their output, while hydropower production and imports of Laos from the neighboring country rose because of abundant rains.

Ying Chin Chou, LNG Analyst at Energy Aspects, noted that coal use increased as Western sanctions slowed down the exports of piped natural gas from Myanmar.

She said that a decline in pipeline gas supplies, due to falling imports from Myanmar, and reduced domestic production in the coming year, will help fuel a recovery of LNG demand.

We expect Thailand LNG demand will rise in 2026, supported largely by the increasing volume under term contracts with Oman & the U.S. Chou stated that these contracts would increase the stickyness of LNG imports.

ELECTRICITY DEMAND WILL RISE

Analysts expect the demand for electricity to increase next year despite weather conditions.

Pattanapitoon, of Rystad, said that he expects electricity consumption to continue rising regardless of economic growth.

(source: Reuters)