Thailand: Fuelling renewables

Thailand: Fuelling renewables

Energy policymakers have revised up their renewable energy target to 40% of
the country's total power generating capacity by 2036, according to the
Alternative Energy Development Plan (2012-21).

That is 15-20% higher than previously targeted, generating up to US$20
billion (680 billion baht) in the renewable power-generating sector over the
next several years.

Private companies are keen to invest more in this promising industry but
have been discouraged by the lack of proper government regulations. The
private sector wants to be involved in the policymaking process, as every
revision will affect them directly.

Officials say the move to boost renewable energy is in line with Prime
Minister Prayut Chan-o-cha's directives, after the government committed at
the Conference of the Parties (COP 21) to cut greenhouse gas 25% by 2030, up
from the previous target of 20%.

Energy experts estimate the new target will take total renewable
power-generating capacity to 40,000 megawatts in 2036, up from 19,600MW
under the previous plan. This would mean the development of new projects by
private firms as well as state utilities in the near future.

But the enthusiasm is being dampened by doubts about future policy for the
fuel segment, with the government promoting the use of electric vehicles
while putting the promotion of biofuel cars on hold.

The private sector is also concerned that current regulations are not clear
or consistent enough for them to compete. There have been several
problematic decisions made by related departments that have tripped up
private players, who have had to suspend projects as a result, says the
industry.

For instance, 16 wind farm projects had to suspend operations earlier this
year when it was found that they were operating on Sor Por Kor land, which
according to the law has to be used for agricultural purposes only. That
forced the Agricultural Land Reform Office, which oversees the issue, to
intervene and allow those wind farms to continue operations.

Existing regulations have also created stumbling blocks for renewable energy
adoption, as many players that have been granted solar farm licences have
not yet started building farms, as they are waiting to make a profit by
selling their licences to others. That has left around 1,000MW of potential
power-generating capacity untapped.

Omsin Siri, vice-president for corporate communications of SET-listed Energy
Advance Plc, says investors want to see clearer policies and regulations to
make it fair for all parties interested in the sector. She points to the
"lucky draw" system as one example of a policy creating a lack of
predictability in the industry.

Policymakers should also let investors know in advance how much total
power-generating capacity will be open for bidding so that they can prepare
their investment strategies, says Mrs Omsin.

With unclear regulations over the past several years, she says Energy
Advance has had to buy licences from investors who were granted permission
to operate wind farms, solar farms and other waste-to-energy projects for
which construction has not yet been completed.

In line with this strategy, Energy Advance acquired the Hanuman Wind Farm in
Chaiyaphum, with power-generating capacity of 260MW, for 20 billion baht.

Cherdsak Wattanavijitkul, managing director of a MAI-listed TPC Power
Holding, says the government should seek other, more secure methods to
govern investment in renewable power.

"Since the capacity is due to double through [the government's] policy, it
should have appropriate regulations to govern the sector, as massive
investment is about to be poured into it. The government should be ready for
it or even set up a special committee to govern the industry," says Mr
Cherdsak.

Since the increase in renewable power-generating capacity will have an
impact on all investors in the industry, Mr Cherdsak says the private sector
should play a part in revising the policy.

Due to the uncertain domestic environment, SET-listed BCPG Plc's president
and chief executive Bundit Sapianchai says the company had opted to invest
in renewable energy abroad.

BCPG has recently sealed a deal to acquire a 33% stake in Indonesia-based
Star Energy Group Holding for $358 million. The company views Indonesia as a
prime location to develop renewable energy, as power demand is expected to
rise substantially.

One of Thailand's leading solar farm operators, Thai Solar Energy Plc (TSE),
has voiced a view similar to that of Mrs Omsin, saying the lucky draw system
should be done away with.

TSE's executive committee chairwoman Cathleen Maleenon says the licences to
be granted to investors should instead be based on the companies'
qualifications. TSE is another renewable company which forwent the lucky
draw system, opting instead to develop solar projects in Japan.

With business expansion in Japan, she says TSE's solar power-generating
capacity is due to double to 12,000MW over the next several years.

The Energy Policy and Planning Office's deputy director-general Prasert
Sinsukprasert says the additional renewable power-generating capacity is
likely to be from solar rooftop installations and biomass projects as other
parts of the renewable power sector are becoming saturated.

Energy policymakers are expected to study what kind of resources to pursue
by year-end.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1275795/fuelling-renewables

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com