Thailand set for record plunge in annual power output, LNG imports

By Sudarshan Varadhan

SINGAPORE, Sept 23 (Reuters) - Thailand is set for a record decline in electricity output this year as mild weather and a slowing economy are reducing demand, government data shows, putting Southeast Asia's top LNG importer on track for its steepest decline in purchases of the fuel.

Power generated and imported to supply the country of over 70 million people fell 5.4% annually in the seven months through July, official data showed, nearly twice as steep as the 2.8% slump in January-July 2020 due to coronavirus-linked lockdowns.

An annual decline in output would be only the fourth in the nearly four decades for which official data is available, as fewer days of extreme heat due to frequent rainfall slashed air conditioning use.

Raksit Pattanapitoon, analyst at Rystad Energy, said weather is "by far the most significant driver" of power demand in Thailand this year, with all other factors including politics and economic growth lagging "significantly".

RESIDENTIAL, INDUSTRIAL DEMAND FALL

Residential power demand - which accounts for 31% of annual consumption - fell over 7% in the seven months through July, the steepest decline on record and far outpacing a 2.8% decline in industrial and commercial demand, which make up over two-thirds of Thailand's annual electricity use, government data showed.

Electricity demand has grown due to higher air-conditioning use in recent years.

The World Bank expects Thailand's economic growth to slow to 1.8% this year and 1.7% next year due to weaker exports, a slowdown in tourism and political uncertainties that could hold back public investments.

"This year will be the first since 2020 when Thailand will not record a new peak demand after averaging 6.2% growth from 2021-2024," Pattanapitoon said.

LOWER GAS-FIRED POWER

Electricity generated from natural gas, which accounts for 56% of Thailand's power output, fell 12% through July, putting it on track for its steepest decline ever and the first drop in annual LNG imports since 2014, government data showed.

LNG shipments, about two-thirds of which supply utilities, plunged 15.3% annually to 7.2 million metric tons in the eight months through August, data from analytics firm Kpler showed.

Thailand increased output from coal-fired power plants, while hydropower generation and imports from neighboring Laos rose due to bountiful rains, official data showed.

Coal use also rose as Western sanctions choked exports of piped gas from neighbouring Myanmar, said Ying-Chin Chou, LNG analyst at consultancy Energy Aspects.

A decline in pipeline gas supply, driven by falling imports from Myanmar and reduced domestic production next year, is expected to help fuel a recovery in LNG demand, she said.

"We expect Thailand LNG demand to rise in 2026, supported by increasing volumes under term contracts with Oman and the U.S. These contracts will enhance the stickiness of LNG imports," Chou said.

ELECTRICITY DEMAND TO RISE

Non weather-related power demand is expected to grow next year, analysts said.

"Given the pace of transport electrification and upcoming data center projects, we expect electricity use continuing to rise regardless of economic growth," Rystad's Pattanapitoon said.