Thai solar power agreements a watershed for investment

Thailand’s Energy Regulatory Commission approved connection agreements last week for 67 companies to sell solar power to the national grid, a move the regulator predicts will spur large investment and that an industry magazine hailed as a landmark for renewable energy in Thailand.

The decision by the Commission means that private companies will have the capacity to provide 281 megawatts of solar power to the national electricity grid. Companies that received approval include Global Power Synergy, Bangchak Petroleum, Superblock and Solartron. All were awarded 25-year contracts. All companies are required to start providing their power to the grid by the end of this year.

The connection agreements are an important element in encouraging investment in solar power by private companies. The ability to sell excess power back to the state will increase returns on investment in solar farms and generators, providing an incentive for others to commit resources to solar.

Thailand is the leader in Southeast Asia in solar and wind power. The country has a goal of sourcing 25 percent of its energy from renewable sources by 2036. While the current amount of power provided by solar is still relatively small at 2.76 gigawatts, industry watchers have voiced optimism that capacity is about to rise, and the decision last week will help support that.

“Finalization this week of 67 solar farm connection agreements totaling 281.32 megawatts could be a watershed moment for the nation’s clean energy ambitions,” wrote PV Magazine, a solar industry publication. “The energy regulator believes [this] will unlock more than $512 million in clean energy investment this year.”

Energy Regulatory Commission Viraphol Jirapraditkul said that he hoped the connection agreements would inspire other developers to move ahead with clean energy projects.

“Thailand has strong potential for both solar farms and rooftop solar systems,” Confidante Capital’s Sopon Asawanuchit, and analyst with Confidante Capital told Reuters.

Analysts estimate that around 250,000 new rooftop solar photovoltaic systems could be added over the next five years, helping the country reach its goal of hitting 6 gigawatts of solar capacity by 2036 – which analysts said is a rather modest target given recent progress.

Some Thai solar companies are already looking for opportunities in markets overseas. In early April, Global Power Synergy said it will invest $89 million in a photovoltaic plant in the city of Ichinoseki in Japan. The company said it is looking for more opportunities to invest in solar projects in Japan.

Global Power Synergy is owned by the partially privatized Thai energy conglomerate PTT Group. Its plant in Ichinoseki will provide 20.8 megawatts of power and will be operational by the end of 2017.