The future for solar power has never looked brighter. Aided by recent commitments from world leaders to reduce the effects of climate change and decrease the globe’s dependence on fossil fuels, solar photovoltaic (solar PV) solutions are now at the forefront of viable alternatives to conventional energy.
Governments in Southeast Asia have also begun to embrace the change, leading to significant growth in renewable energy deployment in the region in recent years.
Reaching solar grid parity
Governments across the region have encouraged solar PV solutions primarily through subsidies such as feed-in tariff schemes. The tariffs have often been set significantly above wholesale prices, so as to encourage investment in historically higher-cost renewable technologies. While this has led to increased installation of renewables, these subsidies can be expensive to society, and are not expected to continue in the long term.
However, according to a detailed analysis by Poyry’s electricity market model, solar PV grid parity – the point at which the cost of solar PV drops to match the cost of electricity from the grid (even without any subsidies), potentially leading to a drastic increase in solar deployment – is expected to occur in Thailand in 2023-2024 from a wholesale perspective. It is estimated that retail grid parity for solar PV will also occur within the next few years, with residential and commercial grid parity in the mid-2020s, and industrial as soon as 2019 – just a couple of years from now.
Thailand’s shift to sun-power
In Southeast Asia, Thailand has so far been the leader in promoting solar power in large utility-scale applications with government subsidies. With a further shift to solar now expected, Thailand can be in an advantageous position to ride this renewable energy trend and become a centre for solar PV technology in this region.
The power sector remains an attractive investment segment in Thailand and the government plans to almost double the power generation capacity in the next 20 years under its Power Development Plan (PDP 2015).
Right now, gas-fired power generation accounts for around 70 per cent of the electricity mix. However, energy security and the environmental impacts of using fossil fuels are of increasing concern, so Thailand is currently seeking to reduce gas-fired power generation to 40 per cent by 2036, according to its PDP 2015. Solar PV is a logical alternative to help with this shift, not only for its environmental and energy security benefits, but also as a tool to decentralise electricity generation and attract new investors in this sector.
Matthew G Heling is head of Asia Pacific Energy Consulting for the international engineering consultancy Poyry.