* Listed Thai firms investing $2 bln in solar capacity over
* Solar's contribution to Bangchak Petroleum qtrly core
profit up 150 pct
* Solar panel maker Solartron's shares jump; global panel
makers want in
By Khettiya Jittapong
BANGKOK, Nov 8 Riding on generous government
incentives, Thailand's energy firms are deepening a push into
solar power to bolster their profits over the next few years and
perk up lacklustre shares.
Utility Electricity Generating Pcl (EGCO) and
refiner Bangchak Petroleum Pcl are among a dozen listed
Thai companies investing as much as $2 billion combined in solar
projects over the next five years to provide power to Southeast
Asia's second-largest economy.
The government, spooked by spikes in fossil fuel prices, is
buying electricity from solar power producers at prices up to
two times those charged by conventional power suppliers.
Still, the longevity of those premium prices remains to be
seen, as energy policies can change in Thailand's often volatile
political climate, some analysts say.
SPCG, Thailand's largest solar farm, will make a
net profit of 10 million Thai baht ($319,400) per megawatt this
year, at least four times that of traditional power producers
who will make 1.2-2.5 million baht per megawatt, industry
"Solar is hot," SPCG CEO Wandee Khunchornyakong said. "It's
undeniable that everyone wants to enter this business."
Bangchak Petroleum reported results on Thursday that showed
the solar business was its fastest-growing segment in terms of
profitability, accounting for 15 percent of its core quarterly
profit of 2.6 billion baht. Earnings of the business jumped 150
Bangchak, part of state-controlled PTT Pcl, is
raising its solar capacity to 169 megawatts by next year from 94
MW in 2013. It has plans to boost that to 500 MW by 2020.
EGCO, whose affiliate won licences in October to put up
solar-powered rooftops, is looking to buy solar farm licences as
part of plans to expand into the renewables business.
"The government has made it very attractive to enter the
sector now," said Itphong Saengtubtim, analyst at KGI
"But for solar farms, there are some risks as we don't know
when the government will issue more new licences. And going
forward, return on investment for the future projects could be
lower because the government may not offer high rates to buy
solar power as it is offering now."
With oil imports hitting a record $38 billion last year, or
9.3 percent of GDP, Thailand unveiled a plan this year to triple
its solar power capacity to 3,000 MW by 2021.
Renewable energy is expected to account for a quarter of
Thailand's energy mix by 2021 from 8 percent now, of which about
a fifth will come from solar power.
It launched a project in September encouraging households
and factories to install solar photovoltaic panels on their
roofs and sell power to the state.
They are being offered nearly 7 baht per kilowatt-hour for
their power, against the 4 baht per kWh that has been contracted
this year for electricity generated by gas-fired power stations.
Bangchak, EGCO and other solar power producers are already
being paid up to 8 baht per kWh for the 1,445 MW they have
contracted to sell to the state grid, of which the companies
have supplied a third so far.
The government says the extra paid for solar power would
still be less than what new power from conventional sources
could cost with the increases in oil and gas prices.
Company executives are confident new projects coming online
will lift near-term profits.
"The third phase solar farm will start its commercial run in
the second quarter next year, which should boost revenue by 1.2
billion baht a year," Bangchak President Vichien Usanachote said
about a $144 million solar farm that is under construction in
Thailand's east and northeast provinces.
SPCG and EGCO will report quarterly financial results on
Nov. 11 and Nov. 12, respectively.
By providing a source of new and stable profits, the solar
push could offer a lift to Thai energy sector shares. Utility
shares in the Thomson Reuters Thailand Index are down nearly 5
percent this year on average compared to the 1 percent gain on
the main stock market index.
There have, however, been related winners. Rising demand for
solar energy has boosted sales for domestic panel makers such as
Solartron Pcl, whose shares have almost doubled in
Global solar panel suppliers such as Kyocera Corp
and China's Suntec Power Holdings Co Ltd want in on the
action in Thailand as they seek to lift sales volumes to make up
for weak prices owing to global oversupply.
"People are not just getting into the business out of love
for the environment," said Syed Azmin Al Bukhary, chairman of
Malaysia's Sun + Lite & Power, which bought a German solar panel
maker and wants to sell the products in Thailand.
"There is good money to be made here across the industry and
Thailand is the sweet spot, for now," he added.
($1 = 31.3100 Thai baht)
(Additional reporting by Pisit Changplayngam; Editing by
Niluksi Koswanage and Muralikumar Anantharaman)