Govt warns investors of solar power oversupply

A source from the ministry said many agreements are being signed to set up such projects, even thought the ministry stopped purchasing as of June 28, 2010. There are 3,500 megawatts of projects in the pipeline, compared to the target of 1,500MW.
However, the 10-year alternative-energy development plan approved recently by the National Energy Policy Committee has a target to produce 2,000MW of solar energy per year, up from 500MW.
The ministry is in the process of screening all proposed projects to ensure that each one is practical.
“Legally, we cannot prohibit any changes in the shareholding structure, so, the person who holds the agreement can sell it and keep a few shares for himself, but cannot change the name of the company,” said the source.
While the ministry does not encourage the sale of these electricity agreements, the only things preventing the practice are prohibitions on changing the company name, the proposed area of production, the technology to be used and the method of production, as indicated in the proposal.
However, production could be postponed if, for instance, a flood prevented work from commencing. Other than that, those who wish to repurchase an approved agreement should consider all the conditions carefully,” the source said.
Chingchai Chonchiwat, president of Four Us Technology Thailand is preparing to form a joint investment with Galip GmbH from Germany to develop an 84MW solar-cell power-production project worth Bt8.2 billion in Thailand.
The Four Us Group will own 60 per cent while Galip will own the remainder.
The venture has negotiated to buy another company’s existing power purchase agreement (PPA) with the Provincial Electricity Authority (PEA).
Currently, this agreement is only allowed to produce 30MW, so the remaining 54MW will need to be acquired under other approved agreements.
Most solar-cell producers have multiple PPA agreements in different areas.
Companies whose projects have been approved but that are not ready to proceed usually seek joint-venture partners.
There are many investors, mostly from abroad, interested in developing solar cell projects in Thailand.
The government has stopped purchasing power from solar-cell producers, because they are concerned about oversupply.
Those looking to purchase approved agreements must negotiate a price based on capacity and location.
“We are currently buying at an approximate cost of Bt4 million to Bt5 million per megawatt,” Chingchai said.
The joint venture between Four Us and Galip covers seven locations: Lampang, Phrae, Uttaradit, Sukhothai, Surin, Chon Buri and Prachuap Kiri Khan, with each plant producing 6-8MW.