This week the Solar Energy Southeast Asia conference was held in Bangkok. In one sense the timing was unfortunate, with protests in the city preventing some of the attendees from making it to the Impact Arena venue. But in another sense, the summit was perfectly timed, as the latest installation figures show that the market is booming.
IHS Solar Research’s latest data from Thailand reveal that the kingdom is the clear solar leader of the Southeast Asian region, with almost 700 MW expected to be installed in 2013. The boom is expected to extend at least through 2014.
PV and Southeast Asia seem like a natural fit. Comprised of archipelago nations with fast-growing economies that often rely on large amounts of oil-based electricity generation, the geographies and economics play into the strengths of distributed generation from solar PV. However, the region has largely failed to deliver on this potential, as regulatory uncertainty and what appear to be muddled policies hamper the growth of the solar market.
The exception to this has been Thailand, which has demonstrated strong support programs, albeit with some policy hiccups along the way.
The Thai government recently set construction deadlines for solar arrays – largely utility-scale – approved under the previous “adder” subsidy program and it has jump started developers and project integrators. There had been rumours, in the Thai press and picked up by industry observers, that up to 700MW of installations that had been approved under the “adder” incentive scheme was to be cancelled, if construction failed to take place in 2013. “This has triggered huge development this year,” says Josefin Berg, a senior analyst with IHS Solar. “We’ve seen projects popping up to get the very attractive (adder) premium on PV projects.”
IHS reports that 691MW of PV will have been installed in 2013 by the year’s end. The boom is expected to continue through 2014, with a further 754MW of new capacity added. When Thailand introduced its “adder” program for renewable energy development there were high hopes for the market, and an “avalanche of applications” followed, explains Berg.
The registration system under the incentive program was then closed in 2010 and projects allocated capacity, but many not built out. This year the Thai government put a deadline on projects, if they are to qualify for the generous adder off-take rate, and hence the flurry of activity.
Thailand has had ambitious targets for solar for some time. Under its Alternative Energy Development Plan, the government first targeted 2GW of installed capacity by 2021, before increasing that to 3GW this year.
A rooftop solar scheme, in the form of a feed-in tariff (FiT) was added to its solar initiatives when the new solar goal was set. Regulators appear to have learnt from previous mistakes and set a short timeframe for rooftop projects to be completed, if they were to qualify for the initial generous FiTs. Developers were given until the end of this year to complete their rooftop installations – smaller than 1MW. Community utility-scale projects also qualify for the FiTs – installations larger than 1MW.
Under the FiT, rooftop installations up to 10kW receive THB6.9/kWh ($A0.24), for 10 kW to 450 kW THB6.555/kWh ($A0.26) and for 450 kW to 1 MW THB6.16/kWh ($A0.21). The FiT will be paid for 25 years. Up to 100,000 residential and 1,000 commercial systems will be supported under FiT program, worth a total of 800 MW. There have been reports that the rooftop scheme could be expanded and that utility-scale projects that do not go ahead will have their allocated capacity directed towards rooftop installations.
Thai company SPCG has emerged as the country’s leading solar developer. SPCG has been quick to move into the rooftop market, under its Solar Power Company Limited subsidiary. It claims that payback periods in Thailand range between six to nine years and it provides a 25-year performance guarantee.
SPCG developed its solar business as a project developer in Thailand, having developed 36 utility-scale PV projects, amounting to some 260MW. IHS Solar reports that SPCG is building out a pipeline worth 290MW. “SPCG is an entrepreneurial company which took advantage of the licensing system for the ‘adder’ system in 2010,” says IHS senior analyst Berg. “It was then was able to put together financing with multilateral funding, and really bring the projects to life.”
In terms of module suppliers, with many module manufacturers located in Southeast Asia, IHS reports that competition is fierce. SPCG has a module supply deal for both its utility-scale and rooftop business with manufacturer Kyocera, meaning that the Japanese firm supplies a big chunk of the Thai market.
German firm Conergy had an early presence in Thailand, and is continuing to develop utility-scale projects in a joint venture with local company Annex Power. Norway’s REC is also supplying Thailand with over 80MW of modules, from its manufacturing base in Singapore, and is also acting as system integrator on some projects. First Solar opened a local subsidiary in Bangkok in 2012 and is presumably supplying projects from its Malaysian manufacturing operations. Canadian Solar announced a 91MW supply deal with local developer Soleq Solar, in July. “There are a couple of Chinese manufacturers (supplying Thailand),” says IHS’ Berg, “but they don’t get as big a share of the market as they do in other markets like Europe.”
With the rush to complete projects, and receive the generous “adder” rates, Thai companies that had qualified for projects are increasingly working with foreign system integrators. Soleq Solar is working with German firm juwi on 61 MW of its projects. IHS reports that Phoenix Solar and SunEdison are the other most prominent foreign system integrators in Thailand.
Looking forward, it looks likely that the solar boom in Thailand will be the norm through 2014, but new policy measures will be required for it to continue beyond that. While the economics of PV in archipelago nations are compelling, the example of Thailand demonstrates that government policy also needs to align for PV to take off.
“There are regulatory barriers to simply complementing all the diesel generation with PV systems,” says IHS Solar’s Berg, speaking about Southeast Asia in general, “and development has to come with collaboration with the government.”