Industry Research Photovoltaic Solar Power Generators
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Industry Research
Photovoltaic Solar Power Generators
Industry Outlook: Stable
Main Risk of Solar Power Generation
Remains on Government Policies
Executive Summary
18 October 2013 As of June 2013, there are total of 157 solar power plants and solar rooftop
projects currently in operation in Thailand. Most of the projects use
photovoltaic (PV) technology. The first commercial-scale photovoltaic solar
Thiranart Napapruekchart
thiranart@trisrating.com power project started up in 2010, in Nakorn Ratchasima province. At
present, the total electricity generating capacity of solar PV power projects
approved by the Ministry of Energy amounts to about 1,355 MW. Of this
Nopalak Rakthum
nopalak@trisrating.com
total, only 500 MW is currently operating. The balance, or more than 800
MW, has yet to start up. The solar PV technology currently in use is neither
as cost competitive nor as cost-effective as other means of generating
power, such as natural gas, coal, or large-scale hydropower plants.
Globally, the rapidly increased use of solar power is due primarily to
government incentives. However, the Thai government recently announced
that it will not sign any new power purchase contracts with utility-scale solar
farms. The solar projects that have already been approved must start
operation within the deadlines written into the terms of their agreements. If
a solar project fails to start up by the contractual deadline, the license will
expire.
Electricity consumption in Thailand is projected to grow by 3%-5% in 2013,
compared to 8.7% growth in 2012. The peak demand reached in the first
half of 2013 was 9.2% higher than the peak demand in 2012. Electricity
consumption in Thailand in the second half of 2013 could be affected by the
lackluster domestic and global economies. The growth potential of the Thai
economy over the medium to long term depends largely on the economic
activity derived from the government’s plans and budget to improve
infrastructure nationwide.Industry Research
Increasing role of solar power
The lion’s share of power generated in Thailand is derived from fossil fuels, i.e. coal and
petroleum products. DEDE did not include the installed capacity of conventional large-scale
hydropower plants in Thailand and hydropower imported from neighboring countries as part of
alternative sources of energy. Those big scale hydropower plants shared 15.3% of total installed
capacity in Thailand in 2012. Solar power has been only a small portion, about 13.5% of
alternative source of power generation in Thailand in 2012.
According to the Department of Alternative Energy Development and Efficiency (DEDE),
alternative sources of energy accounted for about 8% of total installed power generating
capacity (including off-grid capacity) in 2012. The proportion of alternative source of energy
increased to 9% in the first quarter of 2013. Solar power has been used primarily in power
generation. It accounted for 16% of alternative energy used to generate electricity in Thailand
during the first quarter of 2013. Out of total power generation capacity, installed capacity of
solar power accounted for 1.42%. The proportion of power generation capacity of biomass
continued to be the largest alternative source of fuel, accounting for 65.6%, of power generated
from renewable source of energy.
Chart 1: Proportion of Alternative Source of Power Generation in Thailand
(Jan-Jul 2013)
Biogas MSW Solar Wind
7% 1% 16% 7%
Small
Hydro
Biomass 3%
66%
Source: The Department of Alternative Energy Development and Efficiency (DEDE)
Photovoltaic solar power generation in Thailand
Thailand’s first solar power project started in 1983. Thailand has had more than 1 MW of
installed capacity of grid-connected solar power since 2003. The first commercial-scale solar PV
project was a 6 MW solar farm project, named Korat 1, built by SPCG. The project is located in
Nakorn Ratchasima and has been operating since 2010.
TRIS Rating 2 18 October 2013Industry Research
According to the Department of Alternative Energy Development and Efficiency (DEDE), there
are a total of 157 solar power plants and solar rooftop projects currently in operation in
Thailand, as of June 2013. The on-grid installed capacity of the solar power plants and solar
rooftop projects amounted to 532 MW in June 2013.
Solar photovoltaic technology is the most widely used technology
There are three types of solar power generating technology: concentrating solar thermal (CST
or concentrating solar power ,CSP), solar PV, and concentrating photovoltaic power (CPV). AT
present, the most common solar power technology that producers use is solar PV technology.
PV solar projects are considerably more flexible than other technologies because a PV solar cell
can generate electricity from both direct and indirect (diffused) sunlight. According to the
Energy Policy and Planning Office (EPPO), as of the end of 2012, the grid-connected solar power
capacity in Thailand that has passed commercial operation date (COD) totaled 378.6 MW. The
vast majority, or 368.8 MW, uses PV technology.
The major risk factors facing power generators using PV technology include the reliability and
availability of radiation data, the efficiency of the solar modules, the credit risk of the solar
module and inverter suppliers, and government policies. There are also other unpredictable
event risks which could affect the performance of solar power generators, such as natural
disasters and climate change.
The technology to produce electricity from solar energy has been around for a long time.
However, the technology of producing efficient and effective solar cells is still in its early stages.
The technology has not yet made solar power a cost-effective alternative source of energy. The
unit cost of solar power is still unable to compete with other means of generating power, e.g.,
from coal, natural gas, or hydropower. Solar power would not be feasible without government
subsidies and incentives. According to the Electricity Generating Authority of Thailand (EGAT),
the unit cost of solar power was Bht12.50/ kilowatt hour (kwh). This cost is the highest
compared with the cost of nuclear power (Bht2.74/kwh), coal (Bht2.94/kwh) and co-generated
(Bht3.96/kwh). The growing of demand for solar power around the world is driven mainly by
government incentives to support environmental friendly sources of energy in each country.
Electricity consumption in 2013 is expected to grow by 3% - 5%
In 2012, electricity consumption increased notably, rising by 8.7% year-on-year (y-o-y). Peak
demand rose by 9.2%, after a slight drop during 2011. The high growth rates were due to a
recovery in economic activity after the heavy floods in 2011. Electricity consumption in 2013 is
expected to continue growing, albeit at a slower rate, even though the country’s economy is
expected to slow down. The National Economic and Social Development Board (NESDB)
TRIS Rating 3 18 October 2013Industry Research
forecasted that real GDP will grow by 3.8-4.3% in 2013. In the first five months of 2013,
electricity consumption grew by 3.4% y-o-y, a normal level of growth. Peak demand was 27,285
MW in May 2013, up by 1.9% from the 2012 peak. TRIS Rating estimates that electricity demand
in 2013 will rise by 3 – 5%.
Chart 2: Electricity Consumption and Real GDP Growth
200,000 12%
10%
150,000 8%
%Growth(y-o-y)
6%
GWh
100,000 4%
2%
50,000 0%
-2%
0 -4%
2002
2000
2001
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
5M/2012
5M/2013
Consumption
Consumption Growth (RHS)
Real GDP Growth (RHS)
Sources: 1) The Office of National Economic and Social Development Board (NESDB)
2) Energy Policy and Planning Office (EPPO)
Chart 3: Peak Electricity Demand
28
26
Thousand MW
24
22
20
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2010 2011 2012 2013
Source: EPPO
The industrial sector has been historically the largest power consumer, utilizing 45% of all total
power consumed in 2012. The other main power consuming sectors are the residential sector,
the business sector, the small general services companies sector, and the government and non-
profit sector. The amount of electricity sold to the industrial sector in 2012 grew by 6.7%, after a
TRIS Rating 4 18 October 2013Industry Research
0.3% drop in 2011. The 2013 economic forecast made by the NESDB predicts continued growth
in industrial activity, but growth will come at a slower rate. For 2013, the NESDB forecasts 4.0%
growth in real private investment, compared to 14.4% growth rate in 2012.
Chart 4: Consumption of Electricity by Sector in 2012
Governme Others
nt and 3% Residential
Non-Profit 23%
2%
Small
General
Service
10%
Industrial
45% Business
17%
Source: EPPO
Power Development Plan 2013 is being drafted
Since 2012, the government has used Power Development Plan (PDP) 2010 Revision 3 as the
guideline for its power development plans. According to the PDP, which covers 20 years of
power development efforts between 2010 and 2030, the proportion of imported electricity will
rise to 12% of total electricity generating capacity by 2030. In 2012, imported electricity
comprised about 7% of electricity generating capacity in Thailand.
Chart 5: Targeted Proportions of Electricity Generating Capacity, by Source, in 2030
Nuclear
3% Others
Coal and Renewable
1%
Lignite 19%
11%
Imported
Natural Gas
12%
54%
Sources: 1) Power Development Plan (PDP) 2010 Revision 3
2) EPPO
TRIS Rating 5 18 October 2013Industry Research
However, the current PDP is under review and a new PDP is expected to be released in the near
future. In the new PDP, the proportions of electricity generated by each source will change. TRIS
Rating expects that the new PDP will lower the proportion of imported electricity and increase
the proportion generated from renewable fuels, especially electricity generated from biomass
and biogas. The Ministry of Energy plans to add 10,000 MW of power-generating capacity,
fueled by biomass and biogas, in the next revision of PDP.
Government policies support solar energy
The alternative Energy Development Plan (AEDP) 2012-2021 contains a target value for the
installed capacity of grid-connected solar power. The target is 2,000 MW (PV and thermal)
within 2021. As of December 2012, the capacity of approved solar PV projects, including projects
with signed power purchase contracts, totaled 1,355 MW. For the total signed contracts, the
installed capacity of solar PV projects is much higher than the installed capacity of the solar
projects which use CSP technology. Installed capacity of CSP technology, which already signed
contracts, equaled to only 947 MW. Nevertheless, only about 500 MW of total capacity of
approved PV projects started operation by the end of June 2013. The government announced
that if a project fails to meet the commercial operation date (COD) within the period stated in
the PPA, the PPA contract will be terminated. In addition, according to the DEDE, the
government doesn’t intend to re-issue PPA contracts to new solar farming operators. The Thai
government has shifted its focus to other types of renewable sources of energy, i.e., biomass
fuels. There is also a government policy that encourages the installation of solar cells on
rooftops. However, the amount of electricity generated from rooftop solar projects is expected
to be insignificant.
On 13 July 2013, the National Energy Policy Council (NEPC) agreed to adjust its 10-year
Alternative Energy Development Plan (AEDP). The plan was adjusted to increase the usage of
renewable and alternative energy. The new plan calls for 25% of the total amount of electricity
generated in Thailand to come from renewable and alternative energy sources. This will amount
to 13,927 MW during 2012-2021. The plan was amended in order to reduce the dependence on
imported electricity, especially imported hydropower. The planned increase in renewable
energy will come from biomass and biogas (3,000 MW), wind power (600 MW), and solar power
(1,000 MW).
TRIS Rating 6 18 October 2013Industry Research
Big solar power producers face uncertainty from government
policy changes
Current operators of solar farms are subsidized when they sell their power. The operator
receives a higher electricity tariff rate called the adder. The adder is paid to the solar farm
operators for the unit of electricity they sell to any of the three government-owned enterprises,
namely; the EGAT, Metropolitan Electricity Authority (MEA), or Provincial Electricity Authority
(PEA). The adder rate has been reduced from Bt8 per unit in 2008 to Bt6.5 per unit in 2011. The
approved solar power projects benefit from the adder, according to the power purchase
agreements (PPAs) signed with EGAT, MEA, or PEA. The solar power producers receive the
benefits for ten years after the COD. The government publicly stated that EGAT, MEA, and PEA
will not sign any additional PPAs with solar power producers because the adder causes a higher
burden for the government and for electricity users. The government instead has launched solar
roof projects whereby small operators, or even households, are eligible. Under the terms of the
solar roof project, solar power producers who install rooftop solar cells and have power
purchase agreement contracts with EGAT, MEA, and PEA will receive fixed feed-in tariff rates
between Bt6.16 per unit to Bt6.96 per unit. The rate received depends on the type of operator.
A project operator can receive benefits for 25 years after the scheduled commercial operation
date (SCOD). The Ministry of Energy has put on hold the study of subsidies for solar PV farms
with feed-in tariff (FIT) schemes after conducting public hearings at the end of 2012.
Table 1: Solar Farm Operators by Technology and Adder Scheme, as of Dec 2012
Operators Installed Capacity PPA Capacity
Type of (Numbers) (MW) (MW)
Solar Adder Rate Adder Rate Adder Rate
Power by (Bt/unit) (Bt/unit) (Bt/unit)
Adder Rate
0 6.5 8 0 6.5 8 0 6.5 8
Photovoltaic 27 216 227 0.4 1,399 912 0.4 1,347 886
Thermal 0 0 182 0 0 947 0 0 919
Source: DEDE
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