More diversifying into green energy

2010-05-07 10:49:00

Interest in investment in the alternative energy sector in Thailand has grown considerably in the past few years. Among the new investors tapping into the sector is Demco Plc, which has nearly 20 years of experience in electrical engineering and telecom system service. In an attempt to diversify its revenue from contracting, Demco is preparing to launch a solar-power project in the Northeast near the Pak Moon Dam. The 30-megawatt project is worth about 2.7 billion baht and the company is now negotiating a power-purchase agreement with the Electricity Generating Authority of Thailand (Egat). "Thailand has an advantage over many countries. We receive abundant amount of sunlight that can be used as clean energy that can replace the natural gas and coal which will run out eventually," said Phongsak Siricupta, a Demco deputy managing director. The MAI-listed contractor first ventured into renewable energy two years ago with a wind-turbine joint venture in Khao Kho, Phetchabun. The 60-megawatt project is 60% owned by Wind Energy Holding, 30% by Ratchaburi Electricity Generating Holding and 10% by Demco. It is due to start construction in October. Demco also has won construction contracts for nine more wind power projects developed by Wind Energy. Two of them, Huay Bong 1 and 2, with a combined capacity of 180 MW on 12,000 rai in Dan Khun Thot district of Nakhon Ratchasima, are expected to start construction in August. Seven others with a combined capacity of 800 MW are pending approval from Egat. Renewable sources such as solar, wind and biomass now account for 1-2% of the inputs used to produce electricity in Thailand. Natural gas makes up 70% and coal 20%. However, solar power is difficult for new players as projects requires a large area for development. To generate 30 MW, 500 to 600 rai of land would be needed to set up solar cells. However, Mr Phongsak said plants with a capacity of up to 90 MW have potential and are within the means of small producers. "The government has put renewable energy on the national agenda and wants more renewable energy producers," he told investors at a briefing at Money Expo yesterday. Incentives to promote green electricity production include "adder tariffs" on top of the normal purchasing prices for power. The Board of Investment also waives import tax on equipment if it cannot be produced in the country. According to the Energy Ministry, out of the 82 small power producers (SPPs) supplying power to the grid, 52 use renewable resources, with a total proposed sales of 479.9 MW, four use a combination of renewable and conventional inputs, and 26 use conventional fuels. For a wind-power project, operators need at least two years to collect wind data before gauging the investment potential. Investors also need to consider the impact on the local community and ensure they are not encroaching on national forest or land reform areas. Renewable energy projects could take about six to eight years to break even. Nakhon Ratchasima and Phetchabun have the best potential for wind-power projects, along with Chiang Rai and some southern provinces. Mr Phongsak said Demco was still committed to its main role as an electrical engineering contractor as it is the company's strongest point. "Expanding to take on construction work in the growing renewable energy industry is part of our strategy to spread risk," he said.

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