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ADB Loan for Solar Plant to Support Thailand's Renewable Energy Target
MANILA, PHILIPPINES - The Asian Development Bank's (ADB) Board of Directors has approved investment in a 73-megawatt solar power plant in central Thailand. The plant, likely to be one of the largest solar photovoltaic projects in the world, will be central to Thailand's efforts to generate much more of its energy from domestic, renewable sources.
ADB will lend up to $70 million equivalent in Thai baht to Natural Energy Development Company, a Thai company jointly owned by CLP Holdings Ltd., Japan's Mitsubishi Corp., and the Electricity Generating Public Company Ltd., Thailand's first independent power producer, to build the plant. The loan will come from ADB's ordinary capital resources, and the plant will be located in Lopburi province in central Thailand.
Thailand is already a large energy consumer and demand is rising. If unchecked, the rapid growth in energy consumption will increase the economy's carbon intensity. Energy consumption is currently responsible for over half of the country's greenhouse gas emissions.
Currently, around 90% of Thailand's power comes from natural gas, coal, and lignite. In an effort to diversify the country's energy mix and promote renewable energy, the government has prepared an Alternative Energy Development Plan that aims to generate 20.4% of primary commercial energy from renewable sources by 2022. This implies a sharp increase in renewable capacity to 5,608 megawatts from the current 1,750 megawatts.
"Solar energy is an abundant resource throughout Thailand and therefore has huge potential to fill the rising demand from Thai businesses, communities and households," said Joe Yamagata, Deputy Director General in ADB's Private Sector Operations Department.
"This private sector undertaking should demonstrate clearly to other investors the viability of investing in solar projects if the right financing structure including carbon credits is in place," he said.
The Electricity Generating Authority of Thailand, the country's largest electricity generator and sole distributor, has committed to buy all of the net 55 megawatt generated electricity from the plant. Natural Energy Development Company is also working with ADB to prefinance certified emission reductions under ADB's Carbon Market Initiative.
"Long-term financing - beyond the 10-year tariff subsidy period - greatly improves the financial viability of renewable energy projects, such as solar and wind, because they have high upfront investment costs and intermittent revenue generation," said Daniel Wiedmer, Investment Specialist in ADB's Private Sector Operations Department.
In addition to the loan, ADB will provide a $2 million grant from its Clean Energy Financing Partnership Facility to cover any contingency costs arising from the use of highly complex, innovative thin-film photovoltaic technology on a large scale. Typically, such technology has only been used in smaller plants.
Thin film photovoltaic technology uses thin film semiconductors, which are cheaper to produce than other types of photovoltaic cells. Thin films also work better in countries such as Thailand that have higher average temperatures but where clouds create diffuse rather than concentrated light.