Bangkok: Thailand is bracing for a significant increase in electricity prices as the ongoing conflict in the Middle East drives up global LNG prices. Thammasat University academics have proposed four measures to tackle this challenge, including the urgent revival of older power plants.
According to Thai News Agency, academics from Thammasat University are warning the public to prepare for high electricity prices as the conflict impacts natural gas production, leading to a surge in global LNG prices and doubling domestic prices. They are particularly monitoring electricity bills for May-August 2026, noting that the crisis in the Strait of Hormuz is limiting Thailand's LNG supply. The proposed measures aim to ensure no power outages and maintain acceptable prices, as it becomes clear that inexpensive electricity prices are a thing of the past.
Associate Professor Dr. Phuree Sirisunthorn from the Faculty of Economics at Thammasat University highlighted that the escalation of conflicts involving the United States, Israel, and Iran has created significant vulnerabilities in the global energy supply chain. The mutual threats of attacks on energy production infrastructure have led to an energy crisis marked by instability, making it difficult to predict outcomes. These disruptions are causing energy prices, including oil and natural gas, especially LNG, to rise, impacting electricity prices in Thailand.
Dr. Phuree explained that Iran's recent retaliation against Israel by targeting Saudi Arabia and Qatar's oil and natural gas production facilities on March 18, 2026, has resulted in a surge in global LNG prices. The destruction of these facilities is expected to reduce global LNG reserves to levels similar to 2021, requiring 1-5 years for repairs and restoration. This situation is concerning for Thailand, which imports more than 72% of its LNG for electricity generation, with over half coming from Qatar.
Currently, the price of LNG has increased by over 120%, reaching US$25 per million BTU, compared to US$11 per million BTU before the conflict. It is feared that prices could rise even further. Under Thailand's electricity pricing formula, this would inevitably lead to an increase in electricity prices. The new electricity price for May-August 2026 is projected to increase by 0.58 baht per unit. Although the government has signaled its intention to freeze the price at 3.88 baht per unit, it remains to be seen if this will be possible.
Price controls on electricity differ from those on oil because Thailand lacks an electricity fund like the fuel fund. The government manages the Ft charge and electricity prices by diversifying fuel sources and negotiating with entities like the Electricity Generating Authority of Thailand (EGAT) and PTT Public Company Limited to absorb some costs temporarily. With the recent rise in LNG prices, existing fuel costs and debt obligations to EGAT and PTT are significant, and any continued absorption of costs will lead to long-term increases in electricity prices.
Dr. Phuree further noted that despite efforts by government agencies like the Energy Regulatory Commission to find more LNG supplies or increase imports from other countries, the crisis in the Strait of Hormuz is likely to cause other nations to reduce or prohibit LNG exports. Thailand may need to prepare for limited LNG availability.
The proposed measures to address the natural gas crisis include increasing the use of domestically produced natural gas, reviving older power plants, encouraging energy conservation across all sectors, and revising the Power Development Plan to focus on renewable or alternative energy sources. It is crucial to prioritize geopolitical risks and reduce reliance on natural gas, especially given the disruption in the supply chain for gas turbine components.
Electricity management differs from oil management as electricity cannot be stockpiled. The goal should be to prevent power outages, which should be manageable given Thailand's high reserve margin. However, electricity prices will no longer be cheap, affecting various sectors including vulnerable groups, low-income earners, the service sector, banks, shopping malls, hospitals, and investments in data centers requiring substantial electricity.