Solar power: could this be Thailand’s economic lifesaver?

Bangkok Condo Finder on November 9th, 2015 with

Solar Power Thailand

Apart from its favourable geographic location at almost the centre of the Southeast Asian region, thereby making it a perfect transit point for goods and services in an arc which encompasses southern China, Vietnam, Cambodia, Laos, Malaysia and Myanmar, Thailand’s climate may well prove to be another major factor in its economic strength.

Given its abundant sunshine, Thailand is now looking at solar power to not only help provide for its ever-increasing electricity needs, but also as a source of regional mega-sola power facilities.

‘Compared with other Southeast Asian countries, Thailand has the highest electricity demand, with plans for increasing imports from neighbouring countries such as Laos, Myanmar, and China. Investments in renewable energy is one of the country’s priorities, given its goal to reduce its energy imports. Thailand benefits from strong year-round solar radiation with the largely rural northeast Isaan region of the country benefitting most,’ noted one locally-based company with links to the solar industry. [1]

This year the government released its new Thailand Power Development Plan 2015 – 2036 and this sets out a clear interest in attracting foreign investment in renewable energy, and in particular solar photovoltaic projects.

In Japan, where solar power and renewable energy are of increasing importance, businesses involved in those industries have noted that Thailand is becoming a centre of mega-solar power facilities. [2]

As Thailand’s local solar power companies grow in strength and size, they are almost certain to leverage their success by expanding into neighbouring countries, especially Myanmar and Laos, both of which have expectations for solar energy as an important power source in their rural areas.

The entire boom in solar power energy production in Thailand is just five years old. Major solar power utility SPCG Public only started developing and operating mega-solar facilities in the country in 2010. Its combined output from its 36 facilities in Thailand is now around 260 megawatts, which is nearly 20 percent of the country’s total solar-generated electricity.

In June 2014, SPCG Public opened two solar farms in Surin province, with a total capacity of 14,920kW. The electricity these farms generate is sold entirely to the Provincial Electricity Authority, bringing revenue of 240 million baht per annum to the power plant operator.

Japanese solar panel maker Kyocera was largely responsible for the success of SPCG Public. The Thai company’s management wanted to be sure to obtain top-quality solar panels for its farms and they negotiated a deal with Kyocera, and also came away with capital investment worth some 1.5 percent from the Japanese company. [3]

In financial terms, SPCG Public’s consolidated revenue reached around 4.4 billion baht at the end of last year, on which net profit was 1.7 billion baht. The company aims to double its power generating capacity to 500MW by the end of 2020.

At the moment, 70 percent of Thailand’s electricity comes from gas power generation. The government has made it clear it wants to raise the supply of renewable energy to 20,000MW by 2036. This would be equivalent to 2.6 times above the level in 2014.

In 2014, solar power in Thailand amounted to 1,300MW, which is a reasonable 17 percent of combined renewable energy supplies. The government has an aim of seeing combined renewable energy supplies standing at 30 percent by 2036.

To encourage new business to enter the sector as well as help existing suppliers to expand, the government introduced a feed-in tariff program, guaranteeing a fixed price for power to renewable energy suppliers.

This government initiative has seen, for example, local electricity company Superblock launch a 16MW solar power plant in northern Thailand in August this year. Oil retailer Bangchak is also busily developing solar power facilities and currently has a combined capacity of 118MW, with aims to increase this to 500MW.

Also in August, the Japanese company Nippon Steel & Sumikin Bussan opened its mega-solar facility in the Rojana Industrial Park in Ayutthaya province. The plant has a power capacity of 24MW.

The Chinese are also targeting Thailand, as well as other Southeast Asian countries, for solar power investment. China has an oversupply of solar panels, which has led to a significant drop in panel prices there. This has caused some serious financial difficulties for a number of companies in the field, and in the hopes of surviving they have started to look overseas for markets as well as sourcing potential manufacturing opportunities.

One such Chinese company which has begun building a photovoltaic production facility for solar cells and panels in Thailand (in Rayong province) is Trina Solar. It has invested around 5.3 billion baht in the factory and expects to begin operations in early 2016 with an annual solar cell capacity of 700MW.

Yingli Green Energy Holdings, another Chinese company, is looking to supply PV panels to power plants across Thailand and elsewhere.

The US-based company First Solar is another foreign business which has tapped into the local PV market, setting up a joint venture with a Thai partner.

All this local and foreign investment in the solar power industry in Thailand has encouraged some of the bigger local manufacturers to look at expanding their operations into neighbouring states, especially Myanmar and the Philippines.

For example, SPCG Public has announced it is currently planning to build a 10-15MW capacity plant in Mandalay in central Myanmar. With the advent of the Asean Economic Community (AEC), these kinds of cross-border investments are likely to continue to grow in numbers and capacity.

Even as far away as Japan, Thai companies are showing interest in building a presence in the solar energy market. The Thai power systems manufacturer Gunkul Engineering Public, alongside its local Japanese partners, is building solar farms in the Chiba prefecture (near Tokyo) and Miyagi prefecture. These two farms will have a combined 30MW capacity and will see an investment of around seven billion baht all told.

Although the price of electricity in Japan is on the decline, the Thai company has noted the ate is still above that of Thailand and management claimed the present business environment is better in J

[1] www.pugnatorious.com/solarpower

[2] http://asia.nikkei.com

[3] ibid.

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