Industry gears up to respond to U-turn on renewable energy policy
THE Federation of the Thai Industries (FTI) will tomorrow announce its response to a controversial government decision to halt purchases of electricity from renewable sources for five years.
The federation's renewable energy group met with Energy Minister Siri Jirapongphan to seek clarification on the government’s policy move, which left investors in the sector confused and resulted in a suspension of new investment in alternative energy.
FTI chairman Suphan Mongkolsuthree said: “The cessation of electricity purchases has affected operators that made investors in line with a government policy for it to make purchases of electricity from renewable sources in the order of 16,778 megawatts. The postponement will lead to problems."
Business operators need to be confident that the government has a plan to cope with an expected increase in future demand for electricity as a result of electric vehicle use, the construction of several routes of the mass rapid transit system and urban expansion driven by the growing economy, he said.
Recently, Siri told the FTI that the government would not prohibit the purchase of electricity produced by renewable energy if that supply came at lower costs than the wholesale price of electricity of Bt2.44 per unit. The minister cited the government’s need to shield ordinary people from higher power costs.
The FTI believes that the electricity purchase should be classified by fuel cost and business size.
Siri has invited the FTI to join with the Ministry of Energy to promote electricity generated by solar cells from the upstream to downstream processes. About 80-90 per cent of solar modules in the country are imported from China.
A source from the FTI's renewable energy group said that the five-year postponement will deal a short-term blow to those renewable energy enterprises that raised capital through the stock exchange. The stock prices of such operators have plunged, with declines in some of more than 50 per cent.
In the medium term, the source said, these renewable energy enterprises may find it difficult to apply for loans from financial institutions, given their suspended investments.
If there is still policy uncertainty over the long term, these enterprises may withdraw their investment from Thailand, the source said.
“Previously, the government had projects to buy electricity generated by renewable energy at 500 megawatts per year on average, with investment worth about Bt50-Bt60 million per megawatt. Therefore, the (temporary) cessation of electricity purchases will see the government lose the opportunity to invest at about Bt25 billion per year,” the source said.
The source said that the stocks of renewable energy companies dropped immediately in the wake of the government’s surprise announcement.
For those companies that had been planned to raise capital, their plans will have to be revised. This includes hundreds of small and medium-sized enterprises in the biomass sector, the source said.
Currently, the government has projects for which it was supposed to buy electricity produced by renewable energy of about 9,000 megawatts, for about Bt450 billion. About 250 FTI members are involved in this business and about 300 companies are in related businesses.
According to Suphan, Siri said the government would go ahead with the bidding plan for the Erawan and Bongkot gas fields, whose concessions expire in 2022 and 2023. The FTI had expressed concerns over the plan. The signing of contracts with the bid winners is expected by February next year.