Tag: ASEAN

20
Apr

Thai Energy Companies Expand Across Southeast Asia

Thailand’s increase in Energy Usage

Through the technology practices taking place inside individual homes in Southeast Asia, startups including Solar and Wind companies, are expanding dramatically.

For twenty years, the Thai government have implemented renewable energy policies in support of this green tech, of which the country is now reaping the benefits. Oil and Gas Companies are also now profiting after recovering from a three-year slump, increasing electricity demand due to economic growth, and renewable technologies that have finally become competitive against fossil fuels.

Long-standing reform policies have turned Thailand’s state energy company PTT into a successful international oil and gas producer, they have encouraged the development of power producers such as Electricity Generating, and fostered the emergence of renewable energy start-up companies such as Energy Absolute.

“The power businesses in Thailand have developed expertise in this sector, and are now well placed to support energy development across the region,” said Robert Grant, Asia Pacific head at Canadian-listed SNC-Lavalin, a company focused on energy, infrastructure and mining.

The Association of Southeast Asian Nations (ASEAN) members have a combined population of more than 600 million people, with an approximate collective GDP of $3 trillion.

According to the International Energy Agency (IEA), ASEAN’s energy use rose by 60 % in the last 15 years, which portrays that the region’s demand could grow another 66% by the year 2040.

“You can already see increased activity by Thai investors in the ASEAN region,” Grant said.

The expansion has been reflected in the local stock exchange, with shares of energy companies growing nearly 75% since the start of 2016, against a broader market gain of less than half that.

It’s also sparked a mass broadcast of listings, with Thai power companies having raised more than $2 billion from initial public offerings (IPOs) in 2016 and 2017.

An ‘Ecosystem for Growth’ 

Government policy “created an ecosystem for growth for Thai energy companies,” said Maria Lapiz, head of institutional research at Maybank Kim Eng Securities, with the first reforms coming in the 1990s.

That was the time when the Thai government began allowing small power generators (1-90 megawatts) to sell their power back to the national grid. Thailand was also an earlier adopter of natural gas, which now generates about 60% of the country’s electricity.

‘In 2012, Thailand was one of Asia’s first countries to introduce “feed-in” tariffs to give solar developers additional payments on top of normal prices when selling electricity to utilities, channeling investment into the sector.’

Similar tariffs have been applied to other renewable power sources, including wind, small-scale hydro, biomass and biogas.

The privatization of PTT was another big boost to the energy sector. “PTT was privatized in 2001, which helped drive growth in the energy sector from E&P to refiners and helped in the development of the Thai capital market,” said Lapiz.

According to the International Renewable Energy Agency (IRENA), Thailand is the first Southeast Asian country to be one of the top 15 solar power generators, in the world.

Early Birds in the Renewable Sector

“Thailand started development in renewable power much earlier than regional peers,” said Thidasiri Srisamith, Chief Investment Officer of Kasikorn Asset Management.

Because of the early start and positive relationships with neighbouring countries, Thailand is “a leader in Cambodia, Laos, Myanmar and Vietnam, and will continue to expand into these countries,” she said.

Thailand’s largest solar company Superblock, has plans to grow, with a $1.8 billion  wind farm investment in Vietnam.

Thailand’s biggest wind power generator, Wind Energy Holdings, plans to start investing in solar, hydro and biomass to back up its capacity, not just in Thailand, but also in Vietnam, Cambodia, Laos, Myanmar, Bangladesh and Australia.

“Going forward, Thai power company growth will depend on the ability to secure capacity and have a steady stream of projects … which (are) increasingly coming from overseas,” said Kasikorn’s Thidasiri.