Thai solar slated to rejuvenate from mid-2017 but long dry spells expected

Thai solar slated to rejuvenate from mid-2017 but long dry spells expected

Political changes over the last four years and the recent death of King
Bhumibol has brought some inertia to the Thailand market, but industry
members expect the market will return to strong growth in the second half of
2017.

Speaking at Solar & Off-Grid Renewables Southeast Asia in Bangkok, Franck
Constant, co-founder Sonnedix Group, said it has not been easy to develop
policy in the current climate following a constitutional referendum in
August, which has made foreign investors hesitate. Far less capacity has
come online compared to the 2010/11 period.

Constant added: "The country is mourning the late King and there will be a
natural slow down situation for a few months. I think that will extend into
early next year."

Despite a level of "inertia", Constant noted that Thailand is still leading
the pack in Southeast Asia with more than 3GW of operating solar PV
installations; far more than Malaysia, Indonesia, Laos and Myanmar, although
the Philippines is catching up quickly. Regulations in the Philippines and
Thailand have been more stable than other countries and they have a more
level playing field in their regulatory frameworks.

Referring to Thailand, Constant added: "I believe the new ministry of
finance, the new leadership in the government, is going to very aggressively
push for infrastructure implementation from the second half of next year.
They want to do green bonds and other interesting things so watch this space
on Thailand."

Florian Bennhold, managing director, Symbior Energy, said that the last year
has actually seen an easing of inertia with 1GW installed, although this has
been mainly from postponed PPAs that were applied for in 2010/11. He said
the really dry spot for the country was between 2011 and 2015.

Bennhold said there has a been a steady supply of quotas being allocated
although often with breaks of six months to one year at a time, and
therefore it is "quite likely there will be long dry spells again".

Nevertheless given the number of Thai and foreign companies in joint
ventures invested in the supply chain and the market reaching maturity,
Bennhold was confident that the market will continue to progress.

Athough the Energy Regulatory Commission (ERC) has been successful in
streamlining the development process, Bennhold pointed to complications in
Thailand's policy making. This includes the only capacity being worked on at
present, which is a total of 800MW specifically to be developed jointly by
agricultural co-operatives and government agencies. Bennhold said this
specification had "little value" and is likely to add to costs.

The next allocation out of these 800MW, which is widely expected to come in
the first quarter 2017, is also slated for around 500MW. However, the
Electricity Generating Authority of Thailand (EGAT) has not said in what
locations that capacity can be added, which will make it difficult to find
suitable sites and conduct the required grid studies in the short time
periods available. EGAT has also historically excluded large parts of the
country, such as the entire northeast in the previous round.

Bennhold added: "This is very un-transparent and unpredictable process. [.]
That remains one of the key challenges."

Quotas and tariffs are also being adjusted on a "relatively arbitrary" basis
and frequency, making it difficult to invest in the long-term, he said.

End of subsidy

On a positive note, Bennhold said: "In the end, what I think is really
changing the game right now is moving away from the subsidy. The feed-in
tariff (FiT) of THB4.12/kWh (US$0.1157) that has been announced is basically
the same as the peak, and solar generates roughly 70% of the time during the
peak.

"We are very close at least to the wholesale rate and moving closer to the
generation rate, especially if you have some view that fossil-based power is
probably at a low right now and likely to increase in the coming years."

In support of both Constant and Bennhold's expectations for next year, a
recent report from Bangkok-based law firm Pugnatorius, forecast that 2017
will be Thailand's "second solar gold rush" after a successful year in 2015
was dampened by several delays and uncertainties in 2016.

Yesterday in Bangkok, Wandee Khunchornyakong Juljarern, chairwoman and chief
executive, SPCG, the largest solar installer in Thailand, called for a focus
on quality to keep solar sustainable across Southeast Asia at an early
stage.

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Link to Original Article:
http://www.pv-tech.org/news/thai-solar-slated-to-rejuvenate-from-mid-2017-bu
t-long-dry-spells-expected

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com