6 minute read
Solar energy and its role in combating climate change in Thailand and the ASEAN region
Markus Ganterer
As our planet's age increases, so does its temperature.
Our planet's climate system is undergoing unprecedented changes, which are mostly caused by human activity. Natural catastrophes are becoming more frequent and severe, while rising global temperatures, melting ice caps, and altering weather patterns all serve as vivid reminders of the urgent need to confront this global issue. The Intergovernmental Panel on Climate Change (IPCC) has repeatedly warned that if greenhouse gas emissions are not significantly reduced, we will face catastrophic consequences that will affect all aspects of human life on Earth.
Renewable energy is at the forefront of the fight against climate change. Unlike fossil fuels, which emit massive volumes of carbon dioxide and other greenhouse gases into the atmosphere, renewable energy sources such as solar, wind, and hydropower produce electricity that does not contribute to global warming. Among these, solar energy has emerged as a particularly viable alternative due to its availability, accessibility, and quickly evolving technology.
MARKET ANALYSIS OF RENEWABLE ENERGY IN THAILAND AND ASEAN
Thailand and the ASEAN region's renewable energy markets are expanding rapidly, thanks to increased investment and favourable legislation.
Rising energy consumption, lower renewable technology prices, and more environmental consciousness are all key factors contributing to this expansion. Furthermore, worries about energy security and the need for sustainable development are driving governments and industry to adopt renewable energy.
Thailand serves as a notable example of encouraging investment in renewable energy through various incentives. Since 2003, the country has offered capital grants for renewable energy equipment, including solar thermal systems, biogas installations, and municipal solid waste (MSW) energy projects. In 2007, Thailand introduced a feed-in tariff to further stimulate renewable energy development. Additionally, since 2004, the government has provided tax exemptions for the importation of renewable energy equipment, bolstering the sector's growth and sustainability.
These policies are intended to enhance the percentage of renewables in the energy mix, encourage investment, and support technical innovation in the field.
SOLAR AND WIND ENERGY ADOPTION IN THAILAND
Solar PV is the cheapest power source in Thailand and is becoming more affordable every day, with last year's auction setting prices at 2.2 BHT/KWh flat for 20 years. By contrast, gas, which still constitutes 60% of
Thailand's power generation, is becoming increasingly expensive, costing over 4-5 BHT/ KWh as seen in recent PEA/MEA bills. This trend is exacerbated as Thailand depletes its domestic reserves and shifts to more expensive gas imports and LNG.
In addition to this, the use of solar energy has advanced significantly in Thailand. For example, Constant Energy signed corporate PPAs totaling 6MW for a Fortune 500 client, developing rooftop-based solar power plants that will be owned and operated for 20 years. This project will help reduce both CO2 emissions (by over 67,000 tons) and electricity bills.
Another notable example is Constant Energy's 1.7 MW project for Nestlé, a Fortune 500 company. By installing floating and rooftop solar panels, Constant Energy created one of Thailand's first combined rooftop and floating solar plants, energized in December 2022. This project yields high energy output and reduces CO2 emissions by 975 tons annually, making a tangible impact on environmental sustainability. Constant Energy's innovative project sets a benchmark for future advancements, resulting in substantial decreases in carbon emissions and improved energy security.
Constant Energy is also introducing Battery Energy Storage Systems (BESS) to increase the renewable energy ratio from 30% to nearly 50%, supporting their client's path to net-zero emissions. This initiative will enable the use of solar energy reserves even during nighttime, solidifying their leadership in sustainable practices. This reflects the potential for impactful environmental changes through innovative renewable energy solutions.
Increasing the use of solar and wind energy will significantly mitigate climate change by reducing greenhouse gas emissions. These renewable sources are essential for decreasing reliance on fossil fuels, which are the primary contributors to global warming. Transitioning to more solar and wind energy will also enhance Thailand's energy independence and attract investment from data centers that require a 100% green power supply. This shift is crucial for combating climate change and ensuring a sustainable and secure energy future for Thailand.
CHALLENGES AND OPPORTUNITIES
Financially, the high initial investment costs for solar installations can be a barrier. Permits and policy-related challenges also exist, including lengthy approval processes, which can deter investment and slow down project implementation. The main limitation will increasingly be the capacity of the grid to receive power, especially as power plants become more decentralized. Grid system capacity is becoming a bottleneck, as seen in developed markets like Europe. Large investments in grid systems will be required to maintain high reliability.
Despite these challenges, there are significant opportunities for growth and innovation in Thailand's solar energy sector. One effective strategy to address these challenges involves developing partnerships where initial investments are not required from clients. This approach removes the financial barriers that often impede the adoption of solar energy. Additionally, having a team of skilled professionals knowledgeable about permits can expedite the approval processes, making project implementation more efficient.
Independent Power Producers (IPPs) play an important role in overcoming these challenges and driving the adoption of solar energy in Thailand. They alleviate financial barriers by financing initial installation costs and offering flexible financing options like Power Purchase Agreements (PPAs). Technologically, IPPs enhance efficiency by adopting the latest solar technologies and improving energy storage solutions. They navigate regulatory challenges by expediting permit processes and advocating for favourable policies. Furthermore, IPPs pool resources and share risks, making large-scale solar projects more feasible and accessible. Once regulators open third-party access, this will significantly increase the renewable energy portion. Through these coordinated efforts, IPPs significantly contribute to the growth and sustainability of solar energy in Thailand.
CONCLUSION
Addressing climate change is an essential concern, with renewable energy, particularly solar, playing a critical role. Thailand's renewable energy business is quickly expanding, thanks to favourable regulations and technology breakthroughs.
Challenges persist but possibilities for expansion and innovation abound. Partnerships are critical for conquering problems. To preserve Thailand's and the world's long-term sustainability, stakeholders must invest in renewable energy. By committing to renewable energy investments, stakeholders can contribute to a greener, more resilient future for Thailand and beyond. The time to act is now, ensuring a sustainable energy future for generations to come.
References: https://news.un.org/en/story/2022/02/1112852 https://www.iisd.org/system/files/publications/ investment_incentives_thailand.pdf https://iea.blob.core.windows.net/assets/dd5b10 b2-b655-4c7d-8c09-d3d7efe6bd50/ThailandsClean ElectricityTransition.pdf
Markus Ganterer
Chief Financial Officer, Constant Energy
Contact details:
Constant Energy
+66 2 714 2400 (Head Office)
