Market To Watch: Thailand
In 2019, new wind energy installations in Thailand reached 322 MW, bringing the total wind power capacity to 1,532 MW in the country – half of the 3 GW target set by the government for 2037. Moving forward, wind development is entering a hibernation phase with the expiry of previous subsidy schemes and no new incentives in sight. Nevertheless, the outlook for Thailand’s wind market still is undoubtedly one of the strongest in the region, and it is sure to come back stronger from 2022 onwards.
Current market status
In 2019, we saw one of the most significant wind projects in Thailand begin commercial operations, with 260 MW across five wind farms from Energy Absolute’s Hanuman wind projects. Steady increases of wind power capacity over the last few years has confirmed a very important lesson for the Kingdom: with strong Feed-in-Tariffs (FiTs) comes a mature investment environment and supply chain to drive healthy growth of wind power deployment.
However, wind developers interested in Thailand have now adopted a ‘wait and see’ approach due to poor policy support from the government. The rising price competitiveness of onshore wind has resulted in the government removing FiTs for wind in 2018, forcing any new wind projects to compete on the same playing field as traditional energy sources if they want to secure a Power Purchase Agreement (PPA) from the government. Meanwhile, LNG and diesel are still enjoying some long-standing subsidies from the government. With an average price of 2.44thb/kWh for traditional energy sources, it is challenging for wind energy to compete, especially for sites situated in low wind speed regions. Additionally, removing the FiT for onshore wind has dampened investor confidence in this emerging market as there are uncertainties on the long-term pipeline for the wind market without the proper regulatory frameworks in place to support its growth.
Consequently, the market responded with a sharp decrease in upcoming wind projects after the significant drop in the FiTs, and this shall persist until satisfactory clarifications on new tariffs are announced. This policy is contrary to its intention of increasing renewables in its total energy mix of 2037, as highlighted in Thailand’s Alternative Energy Development Plan.
Optimism for the Thai Wind Industry
While wind power development is expected to slow over the next five years in the country, Thailand is on track to fulfil its conservative target of 3 GW by 2037 as they are already half way there with 1.5GW installed as of 31 December 2019.
For a country with the technical potential of 13-17 GW wind energy capacity, a continued decline of wind’s levelized cost of electricity (LCOE), and depleting domestic reserves of natural gas and oil within the next five years, wind energy should be playing a much bigger role in Thailand’s energy mix. GWEC has called for a significant increase in wind energy ambition, calling for at least an additional 7 GW for the country’s 2037 target, as well as putting in place the necessary supportive schemes to successfully achieve this target in the upcoming revision of Thailand’s Power Development Plan (PDP). The revised PDP will be critical to retain confidence in investors and developers at this uncertain stage for Thailand’s wind development.
With a number of wind power projects commissioned in 2019 and an investment of approximately THB 120,000 million (~3.9 billion USD), GWEC maintains a positive outlook on this pioneer who brought renewables into South East Asia. It is anticipated that Thailand can maintain its momentum in the renewable energy transition with the onshore wind playing a significant role. Continuing to drive forward this transition will be crucial to realise Thailand 4.0 and move towards a low-carbon society in the future.
The full list of industry requests and recommendations to reach an additional 7 GW by 2037 can be found in the “White Paper: An Industry Perspective on Strengthening Onshore Wind Development in Thailand” here.