PV Analysis of the Belt and Road Initiative

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PV Demand Analysis of the Belt and Road Initiative: Thailand of Southeast Asia

1. Basic Information of Thailand

Thailand is the second-largest Southeast Asian economy next to Indonesia, with a population of about 69 million. The GDP growth rate reached 4.8% in 1Q18. There have been many coups in Thailand over the past. The most famous one is the Red Shirt Incident in 2014. The Red Shirt Incident caused the nation’s GDP growth rate to fall sharply, reaching less than 1%. 

Thailand has natural resources with abundant sunshine. Thailand’s average solar radiation reached 5-6.5kWh per square meter every day. The nation is also an ASEAN country with the longest development in PV. Up until 2017, the cumulative PV installation reached 2,697MW. Thailand aims to achieve 6,000MW of installed capacity by 2036. 

2. Renewable Energy Development in Thailand

Thailand’s renewable energy policy is based on the Thailand Integrated Energy Blueprint (TIEB). TIEB includes three energy plans such as Thailand Power Development Plan 2015-2036 (PDP), Alternative Energy Development Plan 2015-2036 (AEDP), and Energy Efficiency Development Plan 2015-2036 (EEDP) and two other energy plans that focus on gas and oil. 

AEDP is the major policy for Thailand’s renewable energy development. Comparing the latest version of AEDP2015 and the previous version of AEDP2012, policy has been extended from 10 to 20 years. The prioritized focus has shifted from energy price to waste, biomass, and biogas. PV and wind energy projects will witness the same level of importance as natural gas projects. On the other hand, Thailand pushes up the renewable energy installation target from 13.7GW to 19.6GW. 

In the past, hydro dominated the renewable energy market in Thailand. However, the trend has changed. Biomass has taken up the largest proportion in all renewable energy projects, following was hydro and PV. 

Thailand Cumulative installed capacity of renewable energy

Source:Thailand’s Solar Power Status the 50th Task 1 Meeting, Ministry of Energy& International Energy Agency Photovoltaic Power Systems Programme.

Source:Thailand Alternative Energy Development Plan (AEDP 2015) and Progress, Miss Jariya Budnard, Ministry of Energy

3. PV Policy of Thailand

Thailand has a long PV development history. The earliest policy can be traced back to the off-grid project development plan in 1993. Later in 2007, Thailand implemented Adder and then the FiT. Future policy will focus more on self-consumption.

Feed-in Tariff (FiT)

Thailand’s FiT is specifically for roof-top, ground-mounted, and VSPP projects. FiT for roof-top projects has ended in 2016, meanwhile, FiT still goes on for ground-mounted and VSPP. Argo Solar’s second-phase project is the only one left for ground-mounted types. Its second-phase aims at 100MW of governmental and 119MW of agricultural projects, totalling 219MW. They are subsidized at 4.12THB/kWh (about US$11 cents/kWh). Currently, application is closed for agricultural projects, while only 52MW have been applied for governmental projects. Scheduled Commercial operation date(SCOD) for All projects have to complete grid-connection before December 31st 2018.

Thailand Fit policy

Self-Consumption Scheme - Pilot Project (Ended in 2017)

The plan was launched in August 2016. The core policy is the self-consumption of roof-top projects, aiming at an installation target of 100MW. Contracts can only be renewed every five years with the technology approval from power companies. No subsidies are allowed for surplus electricity.

The result didn’t go well. The actual installation only reached 5.63MW. 

Net-Metering / Net Billing (not approved yet)

The Thai government is planning to come up with Net Metering or Net Billing for roof-top projects. This was originally scheduled to launch in late-2017 – add 300MW of roof-top installation every year till reaching 6,000MW by 2036. But the plan has been postponed. 

Tax Exemption

PV raw materials and cells can enjoy an 8-year income tax exemption. Meanwhile, related PV equipment or component manufacturers can enjoy a 5-year income/import tax exemption.

4. PV Development in Thailand

Thailand has a relatively low cost of labor and electricity and the infrastructure is also relatively complete compare to other ASEAN countries. As a consequence, Thailand is positioned as an OEM role in the global PV industry. In addition, Thailand has an advantage of third-party manufacturing and is exempted from India’s safeguard tariff. Many countries export products to India through Thailand. 

Thailand has a long history in PV development. Tracing back to 1993, Thailand has put effort in PV development for 25 years. By 2017, Thailand’s cumulative installation has reached 2.7GW, and 95% of which come from ground-mounted installation and only 5% come from roof-top projects.

Thailand is one of the first countries in Asia to introduce the concept of FiT. The Thai government promoted PV development mainly through high subsidies. Yet, they focus more on low subsidies and self-consumption nowadays. We can see that from the current subsidy rate of 4.12THB/kWh (about US$11 cents/kWh) and the pilot scheme that was launched previously.

5. Import Analysis in Thailand

The market share of modules reached 84% for multi and 16% for mono in Thailand. 

Thailand Multi Mono proportion

However, the ratio may change in the future. Let’s make a comparison from 2017 to August 2018: In 2017/01-2017/12, Chinese module shipment to Thailand reached 28MW for mono (17MW from January to July) and 263MW for multi, taking up 9.6% and 90.4%, respectively, of the total shipment. Yet, in 2018/01-2018/08, China’s module export to Thailand reached 69MW for mono and 250MW for multi, representing 21% and 79%, respectively, of the total export.

Compare the two period of time, the proportion of mono shipment in 2018/01-2018/08 has increased substantially from the same period of time in 2017 or even the entire 2017. This shows that Thailand will have higher demand for mono modules in the future. 

China Export to Thailand Shipment

6. Conclusion

Thailand hasn’t announced new policies yet. But according to the current policy – 6GW by 2036, this goal can be somewhat conservative based on the installation performance and the abundant natural resources in Thailand. 

Let’s assume if the policy of 6GW by 2036 remains unchanged, from 2018 to 2036, a total of 18 years, the space for newly-installed capacity can only reach 185MW every year. The space is limited. However, if the new target can be higher than the current goal, it can boost installation demand and stimulate market development. 

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