Thailand Solar Sector Is Growing, But Still Without Direction

According to its Alternative Energy Development Plan (2008-2022), Thailand aims to produce up to 20% of its total electricity from renewables by 2022 and install 1GW of solar capacity by 2020

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Solar cell and module manufacturer China Sunergy (NASDAQ: CSUN) has introduced its high efficiency QSAR modules in a specially organized event in Bangkok, Thailand. The Company's CTO, Dr. Jianhua Zhao, was also present at the occasion and gave a presentation to the audience, which comprised solar energy investors, distributors and government officials. The company’s CEO, Mr. Stephen Cai, believes that “Thailand is a market with great potential.”

According to its Alternative Energy Development Plan (2008-2022), Thailand aims to produce up to 20% of its total electricity from renewables by 2022 and install 1GW of solar capacity by 2020. The Ministry of Energy has already received applications from solar power companies for on-grid connections exceeding 2GW, and the country plans to allocate 700MW to PV and 1300MW to solar thermal. In 2011, electricity generation from renewables in the country grew between 12 and 14 percent.

The Chief Executive of China Sunergy believes that the current initiative is in line with China Sunergy’s diversification strategy, saying, “Considering macroeconomic and industry uncertainties, especially in the developed solar markets, we continue to further diversify our sales into emerging markets, including Thailand, Japan and China, where we believe there are great growth opportunities for China Sunergy."

The QSAR modules are China Sunergy’s most efficient product, with an average cell conversion efficiency rate of 19.1% - a significant increase in efficiency. The world’s leading module manufacturer, China-based Suntech Power (NYSE: STP), produced the multi-crystalline solar PV modules, considered as the most efficient solar panels produced commercially, with a conversion efficiency rate of 15.7%. Sunergy launched large-scale production of QSAR modules in October 2011.

It was a good time for Sunergy to launch its new modules in Thailand. The country was recently host to the International Exhibition of Environmental Protection and Pollution Control Technology held on 6^th – 9^th June, which attracted leading firms from the global solar sector such as Canadian Solar, China Sunergy, LDK Solar, Yingli Green Energy, Trina Solar, Suntech Power Holdings and Conergy. 

Several foreign solar firms have been looking to invest in the country’s solar sector, including Suntech Power Holdings, which is planning to invest $20 million in the Thai solar sector. The company wishes to build a solar panel manufacturing plant in the country, but a final decision has not been made. The company is waiting for a clear long-term solar policy from the Thai government. Suntech’s CEO Shi Zhengrong has said that his company is “looking at opportunities for getting closer to the market, and we need to hear support from the government before planning our investment. Our plan could be feasible if the Thai market grows to a big enough level.”

Analysts are expecting Suntech to work in the country in collaboration with Bangchak Petroleum PCL, which is owned by the Thai government. The company’s President, Anusorn Sangnimnuan, who visited Suntech’s manufacturing plant in China, thinks that the government will unveil a major solar policy and framework in the current year. Analysts are therefore expecting Suntech to formally announce its Thailand manufacturing plant in 2013. The two companies have also collaborated before; the 38MW Bangchak facility in Ayutthaya's Bang Pa-in district built last year had installed Suntech’s solar panels.

Thailand was one of the first countries in Asia to introduce a feed-in-tariff (also called ‘adder’) program for renewables, but implementation of projects has been slow. According to a local NGO Palang Thai, the country produces 31,447 MW of electricity and has a growing annual demand of 3.2%, but it produces just 5% from non-hydro renewables.

Thailand currently has no single long-term renewable energy plan. Instead, it has five separate energy strategies, prepared by different government departments and with different energy goals. Three of such plans: The Power Development Plan (PDP) 2010-2030, the 15-year Renewable Energy Development Plan (REDP) and the Alternate Energy Development Plan (AEDP) 2012-21 have specific renewable energy targets, but both of these plans focus on contradictory forms of energy to achieve their targets. The government attempted to clear some confusion by replacing REDP with AEDP, but other plans existed as before. Furthermore, there hasn’t been any renewable energy legislation in the country. This lack of clarity in renewable policy and framework is probably one of the reasons why the country wasn’t included in Ernst and Young’s market attractiveness indices.

Despite these obstacles, there are many local and foreign firms that are operating in Thailand’s solar sector. The Solar Power Company Ltd (SPC), the dominant player in Thailand’s solar industry, is currently building 34 solar plants across the country with combined capacity of 204MW. Meanwhile, the Natural Energy Development (NED), a joint venture of local, Chinese and Japanese corporations, is constructing the country’s largest solar plant with gross capacity of 84MW in Lopburi province.

Currently there is no import tariff on solar panels; therefore the country’s solar sector focuses more on imported components, rather than manufacturing them locally. Most of these components are imported from China, but other manufacturers such as Conergy and First Solar (NASDAQ: FSLR) are also entering this market. In 2011 Conergy constructed a 3MW solar power plant in Sena, Ayutthaya region, which used 40,000 of First Solar’s PV modules. Conergy has so far built three solar parks in the country within one year. Two of these solar parks have been built using only Conergy’s components.

Some of Thailand’s solar sector stakeholders, such as Dr. Suponthana of Solar Club, comprising six local solar companies, are apprehensive of the rising import costs to the country due to developments in the solar sector. Therefore the news of Suntech’s manufacturing facility, when officially announced, is expected to be received positively. Before that can happen, the country needs a clear and unified solar policy that defines a long-term strategy and sets a measurable target for the future. It has a feed-in-tariff policy but in the absence of renewable energy law, it is difficult to implement it properly.