SE Asia chases solar-power investment
by Kieu Van
Southeast Asian nations are looking to attract foreign investment in solar power to exploit the region's huge renewable energy potential.
Alexander Lenz, president of Conergy South East Asia&the Middle East, said a number of countries in the region had begun to pursue large-scale investment in solar power.
Among the countries taking the lead are Thailand, Malaysia, the Philippines and Indonesia, which have adopted practical policies to attract domestic and international investment in renewable energies.
According analysts, these government-led initiatives include feed-in tariffs (a policy mechanism designed to accelerate investment in renewable energy technologies by offering long-term contracts to renewable energy producers, typically based on the cost of generation of each different technology), customs and duty exemptions and guaranteed access to the electricity grid. Feed-in tariffs (FiTs) are considered crucial to raising investment in renewable energies.
Thailand now pays solar power generators an additional 6.5 baht/kWh (US$0.2) on top of the wholesale electricity tariff.
Malaysia meanwhile is looking at an all-in tariff rate of between RM0.85 ($0.27) or RM0.95 per kWh for megawatt-scale systems and up to RM1.23 kWh for very small solar systems.
Similarly, a rate of 17.95 pesos ($0.4) per kWh is under discussion in the Philippines. Both nations are expected to implement their FiT programmes by this year.
Encouraged by progressive government incentives to invest in solar energy, Thailand has become one of the leading nations in the region to invest in large-scale solar power parks.
One of Thailand's most forward-thinking investments in solar power generation is the recently completed Solarta 3MW Sai Sena Solar Park in Ayutthaya, 70km north of Bangkok.
Implemented by Conergy, it produces enough energy to power 1,530 Thai homes with its production potential of 4,471 megawatt-hours of clean energy each year, while also saving a phenomenal 1,971 tonnes of carbon emissions annually.
In response to these incentives, Thailand's Energy Ministry has received applications for over 3 gigawatts of solar plants, which represent six times the existing national target for solar power.
Indonesia, although it has not implemented plans to introduce FiT, announced this year it would set up communal grid-connect solar power plants on 100 small islands across the country and 1,000 more on other islands in the following years.
Indonesia expects to invest Rp9 billion ($997,000) in each island.
Viet Nam has enormous renewable energy resources. However, it has yet to take advantage of its potential for solar power on a large scale, with most projects being located on islands and in remote rural areas. The Government blames the huge investment required in constructing infrastructure for its lack of large-scale investment in solar energy.
Most solar power projects in Viet Nam depend on foreign investment, and typically only State agencies and social institutions have installed solar panels. Bucking the trend however is the city of Nha Trang where many hotels and households have installed solar panels to take advantage of the south central coastal city's year-round sunshine.
Vietnamese Deputy Minister of Industry and Trade Le Duong Quang said the country was keen to exploit renewable energy sources, despite the costs involved.
However, Lenz cautioned that the financial risks could not be ignored. "We have to consider risk factors when investing in long-term solar power projects. It is essential to manage the risks to protect the investment."
Furthermore, expanding into photovoltaics (the method of converting solar radiation directly into electricity using semiconductors, as opposed to solar panels which generate hot water and steam) and other forms of renewable energy would require infrastructure changes as most power grids in Southeast Asia were designed primarily for centralised power systems.
Limited awareness by both governments and the public in developing countries has also hindered solar energy application, Lenz said.
"Investors and consumers alike are more and more aware of the need to protect the environment and gradually move way from dependence on fossil fuels for power generation," he said.
Nguyen Duc Cuong, from Electricity of Viet Nam's renewable energy centre, said because the Government was subsidising the electricity price, households were reluctant to invest the necessary capital in renewable energy.
He said the Government should make financial inducements available to encourage private enterprises and households to invest in solar energy.
Phuong Hoang Kim, a senior official at the Ministry of Industry and Trade's Energy Department, said rapid industrial growth and a growing population had led to a steep rise in electricity consumption, which is expected to climb 14 per cent from 2010 to 2020.
He said investment in renewable energy could meet some of this extra demand for power.
The Asian Development Bank (ADB) plans to invest $3.7 trillion in renewable energy infrastructure in Asia.
Kim -Gil-hong, director of the ADB's Sustainable Infrastructure Division, said developing countries like Viet Nam needed to invest more in renewable or clean energy infrastructure.
At Clean Energy Expo Asia, jointly organised by the Sustainable Energy Association of Singapore and Koelnmesse – one of the world's largest trade fair organisers – this month, Kim affirmed ADB's long-term commitment to investing in solar projects in the region.
Meanwhile, at an APEC forum in Hawaii, leaders of the 21-member organisation reaffirmed their commitment to developing clean energy. — VNS