MANILA, PHILIPPINES - The Asian Development Bank (ADB) is lending $170 million to build a new power plant in Thailand that will provide clean, affordable electricity to help meet the country's increasing demand for supply.
"This is the first large independent power producer (IPP) project to reach financial close in Thailand since the 2008 global economic crisis," said Daniel Wiedmer, Investment Specialist in ADB's Private Sector Operations Department. "It incorporates state-of-the-art technology to generate electricity far more efficiently than coal fired systems, which are the only domestic alternative for IPPs."
The 1,600 megawatt natural gas-fired plant, which will be built in Nong Saeng district north of Bangkok under a public private partnership arrangement, will help meet Thailand's rapidly increasing appetite for electricity.
By using clean burning, combined cycle technology to curb harmful carbon releases, the plant will avoid an estimated five million tons of annual carbon dioxide emissions that would otherwise be produced by coal-fired generators.
Affordably priced power is crucial for supporting Thailand's post global crisis economic rebound, for making Thai businesses competitive, and for expanding livelihood opportunities to help reduce poverty.
A subsidiary of J-Power―Japan's largest wholesale power supplier―will develop and operate the plant, with the electricity to be sold to the state-owned Electricity Generating Authority of Thailand under a 25-year power purchase agreement. Thai energy firm PTT Public Company will supply the gas, and a group of companies led by Japan's Mitsubishi Heavy Industries will build the facilities.
ADB's participation and willingness to provide a long-term loan helped draw co-lending support from commercial banks at a similar tenor. The availability of long dated finance gives J-Power the ability to pay down the plant's high upfront costs over a longer term, allowing it to provide low-cost energy to consumers in Thailand.
ADB is heavily involved in clean energy development in Thailand where it is helping to finance two private sector solar power projects, including one of the world's largest solar photovoltaic plants in Lopburi.
Alongside the investment by J-Power and ADB's 23-year loan, the Japan Bank for International Cooperation and commercial banks - Mizuho Corporate Bank, Ltd., KASIKORNBANK PCL, and Siam Commercial Bank PCL - are providing combined debt of over $1 billion. The plant is set to commence operations by 2014.