Decentralized Electricity Generation from Solar PV
Decentralized Electricity Generation from Solar PV
Business Model Description
Through B2B and B2C models, companies can offer solar PV installation services to households, communities and other businesses to make revenue from selling the equipment involved, service fees, or from selling the electricity to the grid. This IOA will help customers reduce energy cost by substituting fossil fuel energy with solar energy, help remote communities and low income households gain access to clean and affordable energy, and help the planet by reducing greenhouse gas emissions. Investors can invest money in equipment and other capital that companies will utilize to offer solar PV installation services to customers. Companies active in this space are:
Leonics is a microgrid technology company in Thailand, renewable energy technical expertise since 1991. Leonics offers services in ASEAN to set up both on-grid and off-grid solar energy systems at various scales, including household, village, big business, and community. Leonics can also provide an energy trading platform for community micro-grids using blockchain. Many of the projects include an energy storage system and back-up generator using diesel (1).
SCG Solar Roof Solutions (Siam Ceent Group) and GRoof (Gunkul Engineering) are two examples of Thai companies that offer solar panel installation services for households. SCG Solar Roof Solutions is a service under the SCG that has expertise in construction for over 80 years and focuses on innovative solutions and digital tools (7).
SENA is a real estate developer that partnered with a solar rooftop retailer and installer to sell houses that already have solar rooftops installed. SENA launch the SENA Solar ENergy company in 2015. The solar rooftop innovations are installed on most projects of SENA’s real estate USD 213.6 million (THB 7.1 billion) sale value in 2021 (15).
Expected Impact
This IOA helps replace fossil fuels with renewable sources in energy production, decrease greenhouse gas emissions, and help individuals reduce energy costs.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
Disclaimer
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Country & Regions
- Thailand: Countrywide
- Thailand: Countrywide
- Thailand: Countrywide
Sector Classification
Renewable Resources and Alternative Energy
Development need
In 2021, total electricity generation consists of 58.69% from natural gas, 23.92% from coal, 15.65% from renewable sources, 0.30% from fuel oil, 0.10% from diesel oil, and 1.35% from other energy sources. Most energy sources are non-renewable, which resulted in 250 million tons of GHG emissions or 70% of the total emissions in 2019 (1).
Policy priority
Major energy policies include the Power Development Plan (PDP) 2018-2037, which aims to improve energy security to meet the rise in demand, lower energy costs for consumers and industries based on a feed-in-tariff pricing mechanism, and incentivize the energy ecosystem through micro-grid, smart grid, and decentralized generation (2).
Gender inequalities and marginalization issues
According to research by Apaitan and Wibulpolprasert (2018), there are inequalities in the ownership of electrical appliances, and energy consumption and expenditure based on income and urbanization. Low-income households, rural areas, and non-tourist areas use less energy than high-income households, and urban and tourist areas (3).
Investment opportunities introduction
To promote investment in renewable energy production, Thailand has announced the feed-in-tariff scheme so that investors can get income from selling electricity back to the grid (4).
In 2021, FiT for residential solar rooftops at USD 0.23/kW (THB 6.85/kWh) with a capacity of 0-10 kWp, and for industrial solar rooftops at USD 0.21/kWH (THB 6.40/kWh) with a capacity of 10-250 kWp and USD 0.20/kWh (THB 6.01/kWh) with a capacity of 250-1,000 kWp (5).
Key bottlenecks introduction
Thailand is ranked 51 out of 115 countries in the Energy Transition Index in 2019 by the World Economic Forum (6). Despite the government effort in investing in smart microgrids, the current infrastructure and power grid in certain areas are not flexible enough to support the increase in renewable energy and decentralized production (7).
Alternative Energy
Development need
In 2021, total electricity generation consists of 58.69% from natural gas, 23.92% from coal, 15.65% from renewable sources, 0.30% from fuel oil, 0.10% from diesel oil, and 1.35% from other energy sources. Most energy sources are non-renewable, which resulted in 250 million tons of GHG emissions or 70% of total emissions in 2019 (1).
Policy priority
Alternative Energy Development Plan (AEDP) 2018-2037 set targets for energy production from various renewable sources (8). The National Smart Grid Master Plan 2015-2036 aims to increase energy efficiency and service reliability of the grid system and to support a better metering system, microgrid and renewable energy production (9).
Gender inequalities and marginalization issues
There is gender inequality in employment in the energy sector with 3:1 male to female employment (10). In 2016, the Department of Alternative Energy Development and Efficiency (DEDE) has only 2 out of 17 executives that are females, and the Electricity Generating Authority of Thailand (EGAT) employed only 23% women employees (11).
Investment opportunities introduction
Incentives include 8-10 years or more of corporate income tax exemptions, import duty exemptions on machinery, as well as non-tax incentives for energy service companies (ESCO) and electricity generation from solar energy (12).
Key bottlenecks introduction
Although the costs for solar energy have decreased by 66% from USD 8,233 (THB 247,000) in 2013 to USD 3,303 (THB 99,095) in 2019 (13). But this upfront installation cost for solar panelsl is still relatively high for Thai households that have an average household income of USD 879 per month (THB 26,371) (14).
Solar Technology and Project Developers
Pipeline Opportunity
Decentralized Electricity Generation from Solar PV
Through B2B and B2C models, companies can offer solar PV installation services to households, communities and other businesses to make revenue from selling the equipment involved, service fees, or from selling the electricity to the grid. This IOA will help customers reduce energy cost by substituting fossil fuel energy with solar energy, help remote communities and low income households gain access to clean and affordable energy, and help the planet by reducing greenhouse gas emissions. Investors can invest money in equipment and other capital that companies will utilize to offer solar PV installation services to customers. Companies active in this space are:
Leonics is a microgrid technology company in Thailand, renewable energy technical expertise since 1991. Leonics offers services in ASEAN to set up both on-grid and off-grid solar energy systems at various scales, including household, village, big business, and community. Leonics can also provide an energy trading platform for community micro-grids using blockchain. Many of the projects include an energy storage system and back-up generator using diesel (1).
SCG Solar Roof Solutions (Siam Ceent Group) and GRoof (Gunkul Engineering) are two examples of Thai companies that offer solar panel installation services for households. SCG Solar Roof Solutions is a service under the SCG that has expertise in construction for over 80 years and focuses on innovative solutions and digital tools (7).
SENA is a real estate developer that partnered with a solar rooftop retailer and installer to sell houses that already have solar rooftops installed. SENA launch the SENA Solar ENergy company in 2015. The solar rooftop innovations are installed on most projects of SENA’s real estate USD 213.6 million (THB 7.1 billion) sale value in 2021 (15).
Business Case
Market Size and Environment
> USD 1 billion
It is expected that there will be 220,000 households that have residential PV to sell energy to the government by 2028, amounting to a market size of USD 1.4 billion (THB 42 billion) (2). In addition, it was expected that there will be 2.36 million households that will install residential PV for self-consumption and will not sell electricity to the government (2).
The penetration rate of residential PV in 10 years or by 2031 will be around 10-20%, amounting to a market size of USD 1.58 - 3.17 billion (THB 47.5 - 95 billion). Total market size by 2031 will equal USD 2.98 - 4.57 billion (THB 89.5 - 137 billion) (2).
Indicative Return
5% - 10%
According to Krungthai Bank, solar rooftop companies have a gross profit margin of 5.7% from 2017 -2019. The market cap in the next 10 years is estimated to be 4.5 billion USD (2).
Investment Timeframe
Medium Term (5–10 years)
Most reports study the timeframe for households rather than solar rooftop companies. According to Krungthai Bank, in 2021, 2 kWh residential solar PV with feed-in-tariffs (FiT) of USD 0.073/kWH (THB 2.2 /kWh) will have an investment timeframe of 6.1 - 13.9 years (2).
Electricity that are produced by the solar PVs are either used by the households or sold back to the grid. By analyzing the different combinations of electricity used by households or sold back to the grid, the report published by Krungthai Bank was able to calculate different investment timeframes (2).
It was shown that higher portion of electricity being used by households resulted in shorter investment timeframe, while higher portion of electricity being sold back to the grid resulted in longer investment timeframe.
In addition to insights on investment timeframes, the results also show that financial benefits of using the electricity (cost saving) still outweigh the financial benefits of selling the electricity back to the grid (revenue generation) under the current FiT scheme.
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Market - Highly Regulated
Capital - CapEx Intensive
Impact Case
Sustainable Development Need
Power generation in Thailand is mostly from non-renewable sources and contributes 250 million tons of GHG emissions or 70% of Thailand's total emissions in 2019 (4).
Gender & Marginalisation
Households in remote regions have difficulties acessing electricity, and low income households face high energy costs as a proportion to their income when compared to higher income households.
There are gender inequality in employment in the energy sector with 3:1 male to female employment (8). In 2016, Department of Alternative Energy Development and Efficincy (DEDE) has only 2 out of 17 executives that are females, and Electricity Generating Authority of Thailand (EGAT) employed only 23% women employees (9).
Expected Development Outcome
Increase access to solar as a clean source of energy and provide energy cost savings for households, communities and businesses.
Reduce greenhouse gas emissions by increasing energy production from renewable sources while reducing energy production from non-renewable sources.
Improve Thailand's energy security by having a decentralized energy production and reducing the import of energy sources.
Gender & Marginalisation
Low income households, including those in rural areas, can have energy cost savings from using solar PV, making clean electricity more affordable.
Investment decision in the IOA with policies to prohibit discrimination in all forms including discrimination based on gender could help promote gender equality in the energy sector, especially in hiring process.
Primary SDGs addressed
7.2.1 Renewable energy share in the total final energy consumption
In 2021, the renewable energy share out of total energy consumption is 15.99% (4).
Thailand has set a target of improving the percentage of renewable energy out of total energy use to 24.08% by 2030 (4).
7.b.1 Installed renewable energy-generating capacity in developing countries (in watts per capita)
In 2020, the renewable energy share of electricity capacity is 22.4% or 11,991 CAP (MW) (10). Total population in 2020 is 69,799,978 (11), hence, 170.64 watts per capita.
Data not available.
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Outcome Risks
Sluggish economic conditions due to COVID-19 and high upfront cost may affect an individual's ability to invest in solar rooftops.
Gender inequality and/or marginalization risk: This IOA may not address the problems of low female employment in the energy sector.
Impact Risks
External risk: Changes in policies, regulations, and electricity price can affect the feasibility of the solar panels.
Unexpected impact risk: Increase in hazardous materials used in solar panel manufacturing (12).
Unexpected impact risk: Increase in electronic waste from energy storage systems and solar panels (16).
Execution risk: Solar energy cannot be produced during nighttime, leading to consumers using energy generated from non-renewable sources. To create the full impact of greenhouse gas reduction, investments in efficient energy storage system should also be promoted to enable consumers to store the solar energy produced during daytime for use during nighttime.
Gender inequality and/or marginalization risk: Large number of low income households may not be able to afford solar PV due to high installation and maintenance costs.
Men tend to decide on the purchase of more durable items (e.g. cars) while women tend to be responsible for buying short-term use products (household products, food, etc) despite women having more sustainable consumption patterns than men. Raising awareness of men on benefits of solar PV will be important. (19)
Impact Classification
What
Significant and positive outcomes as an increase in solar energy production helps clean energy become more accessible and reduces greenhouse gas emissions..
Risk
Policies and economic conditions can limit the affordability, especially for low income individuals. Manufacturing and end-life disposal of solar panels can have negative environmental impacts.
Contribution
Additional contribution is likely better than base case as the there is existing momentum from the cost reduction of Solar PV.
Impact Thesis
This IOA helps replace fossil fuels with renewable sources in energy production, decrease greenhouse gas emissions, and help individuals reduce energy costs.
Enabling Environment
Policy Environment
Power Development Plan (PDP) 2018-2037: Aims to meet the increasing energy demand, strengthen energy security, and support consumers and businesses with lower energy costs through feed-in-tariffs. The PDP also aims to develop a decentralized energy ecosystem driven by smart and micro-grids (3). This policy supports the IOA by promoting solar energy.
Alternative Energy Development Plan (AEDP) 2018-2037: Aims to promote community-based production and private sector investments in renewable energy and R&D. AEDP also aims to upgrade infrastructure (e.g., smart grid and transmission lines) to support the increase in renewable energy (13). This policy supports the IOA by promoting solar energy and providing infrastructure necessary to support solar PV.
Energy Efficiency Development Plan (EEP) 2015-2036: Aims to revise regulations to promote energy efficiency measures and investments, raise public awareness, and enhance human resources and institutional capacities to support energy efficient technology (17). This policy supports the IOA by raising awareness of the benefits of solar energy and promote installation of solar PV in large buildings.
Financial Environment
Financial incentives: In 2021, FiT for residential solar rooftops at USD 0.23/kW (THB 6.85/kWh) with capacity of 0-10 kWp, and for industrial solar rooftops at USD 0.21/kWH (THB 6.40/kWh) with capacity of 10-250 kWp and USD 0.20/kWh (THB 6.01/kWh) with capacity of 250-1,000 kWp (6).
Fiscal incentives: Board of Investment (BOI) Promotion provides 8-10 years or more of Corporate Income Tax exemption, import duty exemptions on machinery and raw materials, and other non-tax incentives for energy service companies (ESCO) and electricity generation from solar energy (14).
Other incentives: Energy Conservation Fund (ENCON Fund) provides financial support to renewable projects through direct subsidies, Energy Efficiency Revolving Fund, and ESCO Revolving Fund. ENCON Fund is financed by taxes from the sale of petroleum products (18).
Regulatory Environment
Energy Industry Act (2007) established the Energy Regulatory Commission (ERC) to regulate power generation, distribution, transmission, and system operator licenses. It also oversees fairness between stakeholders, tariff review, and approval of power purchases (5). This regulation is relevant to the IOA as selling solar energy produced by the solar PV back into the grid is regulated by this policy.
Electricity Generating Authority of Thailand Act (1968) enables EGAT to reinforce regulations with regards to power purchases from independent producers and to transmission system operations (5). This regulation is relevant to the IOA as EGAT will be the main actor in buying the solar energy produced from solar PV.
Foreign Business Act (FBA) 1999 stipulates eligibility criteria for foreign businesses in Thailand. Renewable energy production is not restricted by FBA, but foreign businesses must obtain a BOI investment promotion certificate to own land used in energy production (5). This policy is relevant to the IOA as foreign investment will have to follow the legal requirements.
Marketplace Participants
Private Sector
Retail and installation services i.e. SCG, Gungkul Engineering, and Leonics. Real estate developers that installl solar rooftops i.e. SENA, corporate venture capitalists (i.e. AddVentures, ExpresSo)
Government
Energy Planning and Policy Office (EPPO), Department of Alternative Energy Development and Efficiency (DEDE), Energy Regulatory Commission (ERC), Energy Generating Authority of Thailand (EGAT), Metropolitan Energy Authority (MEA), Provincial Energy Authority (PEA)
Multilaterals
Asian Development Bank (ADB), International Finance Corporation (IFC)
Non-Profit
Thailand Renewable Energy for Community Association
Public-Private Partnership
NIA Deep Tech Incubation Program
Target Locations
Thailand: Countrywide
Thailand: Countrywide
Thailand: Countrywide
References
- (1) https://sustainabledevelopment.un.org/content/documents/279482021_VNR_Report_Thailand.pdf
- (2) http://www.eppo.go.th/images/POLICY/PDF/PDP2018.pdf
- (3) https://www.pier.or.th/abridged/2018/16/
- (4) https://www.boi.go.th/upload/content/alt_energy_5a4faa2f9dc0b.pdf
- (5) https://www.krungsri.com/en/research/industry/industry-outlook/Energy-Utilities/Power-Generation/IO/io-power-generation-21
- (6) https://www.trade.gov/energy-resource-guide-thailand-renewable-energy
- (7) https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2017/Nov/IRENA_Outlook_Thailand_2017.pdf
- (8) https://policy.asiapacificenergy.org/sites/default/files/Alternative%20Energy%20Development%20Plan%202018-2037%20%28AEDP%202018%29%28TH%29.pdf
- (9) http://www.eppo.go.th/images/Infromation_service/EppoAnnualReport/EPPOAnnualReport2014.pdf
- (10) https://www.sei.org/perspectives/thailands-energy-transition
- (11) https://mediamanager.sei.org/documents/Publications/Bangkok/SEI_2017_Report_USAID-CleanPowerAsia-GenderEquality-WhitePaper.pdf
- (12) https://www.boi.go.th/upload/content/alt_energy_5a4faa2f9dc0b.pdf
- (13) https://krungthai.com/Download/economyresources/EconomyResourcesDownload_457Solar_Rooftop_ภาคครัวเรือน_แหล่งรายได้เสริมของผู้พัฒนาอสังหาฯ_31_03_64.pdf
- (14) http://www.nso.go.th/sites/2014en/Survey/social/household/household/2019/Summary_2019.pdf
- (1) https://www.leonics.com/index.php
- (2) https://krungthai.com/Download/economyresources/EconomyResourcesDownload_457Solar_Rooftop_ภาคครัวเรือน_แหล่งรายได้เสริมของผู้พัฒนาอสังหาฯ_31_03_64.pdf
- (3) http://www.eppo.go.th/images/POLICY/PDF/PDP2018.pdf
- (4) https://sustainabledevelopment.un.org/content/documents/279482021_VNR_Report_Thailand.pdf
- (5) https://uk.practicallaw.thomsonreuters.com/1-628-5906?transitionType=Default&contextData=(sc.Default)&firstPage=true
- (6) https://www.krungsri.com/en/research/industry/industry-outlook/Energy-Utilities/Power-Generation/IO/io-power-generation-21
- (7) https://www.gunkul.com/th/our-business/groof/groof
- (8) https://www.sei.org/perspectives/thailands-energy-transition/"
- (9) https://mediamanager.sei.org/documents/Publications/Bangkok/SEI_2017_Report_USAID-CleanPowerAsia-GenderEquality-WhitePaper.pdf
- (10) https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2021/Apr/IRENA_RE_Capacity_Statistics_2021.pdf
- (11) https://data.worldbank.org/indicator/SP.POP.TOTL?locations=TH
- (12) https://www.ucsusa.org/resources/environmental-impacts-solar-power
- (13) https://www.boi.go.th/upload/content/alt_energy_5a4faa2f9dc0b.pdf
- (14) https://www.boi.go.th/upload/content/BOI-A%20Guide_EN.pdf
- (15) https://www.prachachat.net/property/news-782922
- (16) https://www.irena.org/publications/2016/Jun/End-of-life-management-Solar-Photovoltaic-Panels
- (17) http://www.eppo.go.th/images/POLICY/PDF/EEP2015.pdf
- (18) https://www.iea.org/policies/1233-energy-conservation-promotion-fund-encon-fund
- (19) https://www.oecd.org/env/GFE-Gender-Issues-Note-Session-5.pdf
- (20) https://asianinsiders.com/renewable-energy-in-thailand-to-double-by-2030/