Milan, 8 May 2014

INTELLIGENCE OF FAST-GROWING PV MARKETS: THAILAND Josefin Berg – Senior Analyst Solar Power, IHS Technology

INTELLIGENCE OF THREE FAST GROWING PV MARKETS THAILAND, TURKEY, BRAZIL

Three markets in turbulent times • Intensified protests likely as opposition attempts to unseat Thai government before

fresh election in July • Risks of protests in Bangkok and political instability in Thailand remain heightened

despite end of emergency rule • Planned opposition protests in Thailand likely to turn violent and increase risk of

military coup • Protests set to intensify in Turkey over teen's death, raising injury and property

damage risks • Intensified protests, widening current-account deficit overshadow Turkey's Q1

economic gains • Anti-authoritarian protests proliferate across Turkey • Civil unrest risk remains high for FIFA World Cup • Social protests hit first weekend of Confederations Cup in Brazil • Several hundred arrested during Independence Day protest in Brazil 25

© 2014 IHS

GDP evolution 3000 Thailand

Turkey

Brazil

Nominal GDP USD

2500

2000

1500

1000

500

0

Source: IHS © 2014 IHS

26

Interest rates 25 Thailand

Turkey

Brazil

Long-term interest rate %

20

15

10

5

0

Source: IHS

27

© 2014 IHS

Power demand outlook Graph title Demand outlook

Electricity demand outlook 2017 600 500

TWh

400 300 200 100 0

2012 Source: IHS

© 2014 IHS

2017 © 2013 IHS

28

Installed PV capacity Graph title Demand outlook

Installed PV capacity YE 2013 1200 1000

MWdc

800 600 400 200 0

Source: IHS

© 2013 IHS

29

© 2014 IHS

Thailand Maturing or boom/bust market?

Thailand power situation • A net-importer of energy, with energy security being a key objective in all

policy decisions • Regulated electricity tariffs, with price increases due to fuel adjustment and

renewables surcharges • Plan to more than double installed power capacity by 2013 (32 GW to 71

GW) Power generation mix (2012) Power generation mix,

Electricity tariffs and PV price ranges

TWh (2012)

$/MWh

350 300 250 200 150 0%

20%

40%

Coal Natural Gas Hydropower Geothermal Biomass and other

Source: IHS

60%

80%

100%

100 50

Oil Nuclear Wind Solar

0 Wholesale © 2013 IHS

Retail

PV

Note: Wholesale is weighted average of generation costs. PV prices are IHS estimates of required price of PV electricity Source: IHS

© 2013 IHS

31

© 2014 IHS

Electricity market structure • Electricity Generating Agency of Thailand (EGAT) is the single • • • • •

© 2014 IHS

buyer of electricity The Energy Policy and Planning Office (EPPO) oversees the deployment of renewable power Metropolitan Electricity Authority (MEA) oversees electricity supply in Bangkok and two provinces Provincial Electricity Authority (PEA) oversees electricity supply in 73 provinces Rural electrification is the responsibility of PEA Thailand has a growing market for carbon finance. Many PV projects are also CDM projects

32

Thailand adder support scheme has spurred PV installations Thailand PV Demand 800

2013: Deadline for adder projects

MWdc

700 600

2021 target raised to 3 GW

500

1 GW rooftop scheme

400 300

2010: Adder scheme introduced, registration closed

200 100 0 2008

2009

2010

2011

2012

2013

2014

Source: IHS

© 2013 IHS

33

© 2014 IHS

Thailand adder scheme • The premium – “adder” – is B6.5/kWh or B8/kWh depending on date of

approval ($0.19/kWh and $0.25/kWh) – on top of market power prices. For 10 years • The window for new projects closed in 2010 when more to 2 GW of

projects had registered • PV projects registered in 2010 and constructed before year-end 2013.

Deadline is not as strict as first thought – many finishing in 2014 • Sharp and ITD are now building a 52 MW plant in 2014, under the adder

regime. Financed by Kasikorn Bank • Many planned projects were cancelled by the regulators after not

showing progress

© 2014 IHS

34

Rooftop PV FIT • On July 16, the National Policy Energy Commission approved a FIT

scheme for PV, with rates lasting for 25 years (Resolution 2/2556 no.145) • 1,000 MW of which 800 MW for ground-based community projects

• Applications for the rooftop FIT were officially open until 11 October 2013 • Rooftop systems were supposed to be installed by year-end 2013, and

community projects by year-end 2014 Thailand rooftop PV FIT scheme

System size (kW) FIT rate (Baht/kWh - $) 0-10

6.96 – 0.22

10-250

6.55 – 0.21

250-1,000

6.16 – 0.20

Thailand community ground-based PV FIT scheme

Quota (MW)

Year

FIT rate (Baht/kWh - $)

100

1-3

9.75 – 0.31

4-10

6.50 – 0.21

1125

4.50 – 0.14

100

Source: IHS, ERI

Quota (MW)

800

Notes Projects are 1 MW in size. The FIT will be managed by Thailand’s Village Fund and the MOE

Source: IHS, ERI 35 © 2014 IHS

Barriers have slowed down FIT projects • Rooftop FIT awarded through lottery instead of through criteria • Only projects that registered early on 22 September 2013 were actually

successful to participate in the lottery • Uncertain how serious the awarded projects were

• None connected to grid by deadline 31 January 2014. New deadline for

projects is pending • Factory operation license and building permit requirements blocked

installations • Factory operation license requirement has now been removed for small PV

systems

© 2014 IHS

36

Certified installers under rooftop scheme • Solar Power Roof Company

• Annex Power

• Surehome

• Process Engineering Services

• Solartron

• BWH

• Tsus Excellent Engineering • SPCG

• Leonics • Power solution Technologies • McTricity Source: Ministry of Energy 37

© 2014 IHS

Thailand – competitive analysis PV development activity by developer Tang Kim Heng Group Operating

SunEdison Yan HC Solar Power Co.

Under construction

Thai Solar Energy Co. Ltd

Contracted Pipeline

Solarco Solar Soleq Solar Natural Energy Development Co Energy Absolute PLC (EA Solar) Bangchak Petroleum PLC SPCG PCL 0

100

200

300

400

MW Source: IHS

© 2014 IHS

© 2013 IHS

38

Thailand – PV competitive analysis PV construction activity by EPC Bangchak Solar SunEdison

Gunkul Engineering Phoenix Solar juwi Italthai Engineering Co Annex Power Solartron PCL Sharp SPCG PCL 0

50

100

150

200

250

300

350

MW

Operating

Under construction

Source: IHS

© 2013 IHS

Market Tracker | Country Briefs | Emerging Solar PV Markets Tracker - Q4 2013

© 2014 IHS

39

Thailand – PV supply Module supplier (operating and under construction)

Kyocera Sharp

24%

26%

Canadian Solar

REC Suntech

1%

Conergy

1% 1% 1%

ReneSola SCHOTT Solar EcoKes

1% 5%

12%

First Solar

6% 7% Source: IHS

© 2014 IHS

DupontApollo

8% 7%

Phono Solar undisclosed © 2013 IHS

40

Thailand – PV supply Inverter supplier (operating and under construction)

SMA Elettronica Santerno 36%

36%

Schneider Electric Conergy Emerson

Leonics 0% 1% 1%

Dasstech 6%

12%

undisclosed

8% Source: IHS

© 2013 IHS

41

© 2014 IHS

Local manufacturing Local manufacturing – In operation Technology

Company

Location

Capacity (MW/y)

TF mod

Bangkok Solar

Banpho, Chachoengsao

30

c-Si cells/mod

Ekarat Solar

Banpho Rayong Amati

30/30

c-Si mod

Istar Solar

Lahan Nonthaburi

7

c-Si cells/mod

Solartron

Pakchong

25/30

Inverters

Leonics

Chachoengsa

TBC

Inverters

Delta Electronics

Samutprakarn

TBC

Source: IHS

© 2014 IHS

© 2014 IHS

42

Conclusions • Thailand is a maturing PV market, driven by subsidies and a 3 GW

target • Thai developers are installing projects under the adder scheme (last

rush) • Mainly foreign EPC companies and module suppliers

• Private financing has allowed rapid build-out of large-scale projects • Rooftop systems are still in their infancy • Barriers to overcome – exist in most new rooftop markets

• Political unrest could quickly change the outlook for investors

43

© 2014 IHS

IHS Solar Solutions Solar solutions from trusted experts

Any Questions? Josefin Berg Phone: +44 1933 402255 [email protected] www.ihs.com/solar

© 2014 IHS