By Fitch Solutions
Key View
- We believe that Thailand will experience a robust growth in non-hydroelectric renewables, following their 2050 carbon neutrality goal announcement at COP26.
- We expect solar and biomass power to be the main drivers for renewables growth, advancing their climate plans and remaining as Southeast Asia’s outperformer in renewables.
- However, Thailand’s power sector’s longstanding dependence on fossil fuel power plants will present challenges to carbon emissions reduction.
We believe that Thailand will experience robust growth in non-hydroelectric renewables, following their 2050 carbon neutrality goal announcement at COP26. On November 1, 2021, Thailand’s Prime Minister, Prayut Chan-o-cha, declared Thailand’s target for carbon neutrality by 2050 and net-zero greenhouse gas emissions by 2065 at COP26. We note that these commitments are a step-up from what we previously noticed, where Thailand had proposals for carbon neutrality by 2065-2070 through their National Energy Plan 2022. The Prime Minister also brought up the Bio-Circular-Green Economic (BCG) Model as the nation’s method to ensure economic development sustainably. Within the BCG Model, includes Thailand’s focus to tap on biomass for renewable power. Apart from what was announced at COP26, Thailand has also made plans to develop renewables in their power sector, with non-hydroelectric renewables target of 18.7GW total capacity by 2037 through their Alternative Energy Development Plan 2018-2037 (AEDP). Supporting the AEDP is their Power Development Plan 2018-2037 (PDP) which aims for 37% of 2037 power mix to be from non-fossil fuel sources. As a result of their renewed commitment to carbon neutrality and a supportive policy landscape for renewables to support their commitment, we expect Thailand to experience robust growth in non-hydroelectric renewables. We forecast Thailand’s non-hydroelectric renewables capacity to surge from 9.7GW by end of 2021 to 17.2GW by the end of 2030, averaging a 6.8% y-o-y growth.
Non-Hydro Renewables Robust Growth
Thailand – Capacity by Type, MW, and Non-hydroelectric Renewables Growth, % y-o-y
We expect solar and biomass power to be the main drivers for renewables growth, advancing their climate plans and remaining as Southeast Asia’s outperformer in renewables. In the short term, we anticipate Thailand to focus non-hydroelectric renewables development on biomass and solar. This view is underpinned by the market’s projects in the pipeline and government plans. On October 31, 2021, Thailand started commercial operation of the world’s largest hydro-floating solar hybrid at the Sirindhorn Dam, adding 45MW of capacity to Thailand’s electricity grid. The Electricity Generating Authority of Thailand (EGAT) also announced that it will be going forward with 15 other similar projects, such as the 24MW floating solar at Ubol Ratana Dam. EGAT expects these projects to contribute a cumulative 2.7GW of capacity for the power market.
Aside from solar power, biomass power will also be a key performer in Thailand’s renewables sector. We expect biomass power plants, which typically generate electricity from biogas, biomass and waste, to be developed in communities outside of Thailand’s metropolitan area, where most of the market’s agricultural activities happen. This is a power plant operators will look to capitalise on the proximity to biomass and agricultural waste that is used as power plant fuel. Furthermore, the government has in place the ‘Energy-For-All’ plan, which will support the development of community biomass power plants. As a result, we foresee solar and biomass to lead the growth of renewables, positioning Thailand as Southeast Asia’s outperformer in renewables.
Solar And Biomass Leads Renewables Growth
Thailand – Non-Hydro Renewables Capacity by Type, MW
However, Thailand’s power sector’s longstanding dependence on fossil fuel power plants will present challenges to carbon emissions reduction. Thailand’s power sector has been heavily reliant on fossil fuels, we estimate that it will contribute to 78.7% of 2021’s power mix by the end of the year. Out of the fossil fuels, gas dominates the market, with a 2021 generation of 115TWh, which more than triples non-hydroelectric power’s 35TWh. We expect this disparity between the two subsectors to remain through to 2030, as Thailand still has gas-fired power plants in its projects pipeline. Prominently, two major gas-fired power plants by Gulf Energy Development Co., one in Chonburi and another in Rayong, will have a combined capacity of 5.3GW. We expect Chonburi’s plant to come online in 2022 and Rayong’s plant to come online in 2025. Furthermore, we point out that in COP26, Thailand did not join the coalition to phase-out coal and stop coal power development. As a result, our forecast shows that conventional thermal generation will remain the largest contributor to Thailand’s power mix through till 2030 with minor abatement.
Conventional Thermal Generation Still Dominates
Thailand – Generation By Type, TWh
This article has been sourced from Fitch Solutions and can be accessed here
