Southeast Asian Power Market On A Liberalisation Spree: Report

Global Market Outlook report sheds light on the growth of corporate PPAs in Southeast Asia

The recent Global Market Outlook report on solar power by Intersolar Europe and Global Solar Council claimed that several countries in the Southeast Asian market are on a liberalization spree to reform their power sector. These reforms aimed to boost the production of renewable energy and its use to cater to the power needs of corporate clients across the region. 

The report, which presents a sneak peek of the power sector in the region for the period 2023-27, claimed that countries like Thailand, Malaysia, and the Philippines had taken several measures in this direction. It said that several power sector reforms had made the onsite and offsite use of solar energy for corporate clients less cumbersome. 

The report said this has led to the signing of more corporate Power Purchase Agreements (PPAs). Under these PPAs, corporate clients take power from renewable energy generators directly or through some arrangements. 

The report said several of these Southeast Asian countries have also committed to their renewable targets and decarbonization of their industries. It said that keeping this in light, the corporate PPAs have given the C&I consumers a new ray of hope in these countries. 

“For businesses facing rising prices from conventional generation sources, PPAs present an ideal opportunity to get access to clean, low-cost electricity, boosting their corporate carbon footprint and contributing to national targets,” the report said. 

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The report has taken a deeper analysis of three different Southeast Asian countries on the matter. 

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Thailand-rise of leased RE sources

In Thailand, the authorities permit privately-owned rooftop solar installations under two models. Under this arrangement, corporate clients can use their renewable assets and self-consume the electricity produced from these sources. However, it also comes with higher upfront costs. To counter this, another model is available where the corporate leases its roof to a solar developer who sells them electricity under a corporate PPA. 

“The growth of the C&I off-taker market was initially driven by a Feed-in-Tariff (FIT) programme started in 2013, which targeted 200 MW of rooftop solar across C&I and residential installations. Through this, 100 MW of commercial-scale rooftop solar PPAs were awarded to 193 separate bidders,” the report said. However, since then, the support of Commercial and Industrial (C&I) consumers remained lukewarm. However, the rise of conventional power from state agencies in the state bolstered the demand for such PPAs. 

“Due to the high CAPEX required at the start of the lifecycle of a solar installation, and a nascent debt market for renewables, leasing is a common practice in Thailand, with companies paying a fixed fee to asset owners that are competitive in comparison to grid-supplied energy…This offers increased flexibility for both buyers and suppliers, particularly when it comes to the financing of the construction, maintenance, and operation of the system,” the report said. 

Malaysia-Green Power Programme

The report claimed that the electricity market liberalization in this country started way back in 1990 when the National Electricity Board was privatized to form Tenaga Nasional Berhad (TNB). TNB is now the country’s single buyer of electricity, transmission, and distribution. The report said that Malaysia has good potential for rooftop solar and the government is also taking encouraging steps to unleash the potential of the C&I segment.  

The report claimed that the Corporate Green Power Programme (CGPP), introduced in 2022 to increase the adoption of green electricity among corporate companies, is aiding corporate PPAs’ growth. This works on a virtual or financial PPA model. 

“The current first round of the CGPA started with 600 MW to be awarded. The quota was raised to 800 MW in March 2023, and a lower limit of 5 MW was imposed on CGPAs, along with an upper limit of 30 MW. The current window is running until 31 December 2023 or until all 800 MW have been awarded. Successful bids will have until 2025 to have their plant fully operational. The report said that applying to the CGPA scheme requires a developer and a corporate off-taker to agree on a PPA before applying to the scheme,” the report said. 

Philippines-Open Access

The report claimed that the Philippines offers a unique case of liberalization of the energy sector in the whole of Southeast Asia due to the widespread of private electricity players in addition to state players. It also allows open access and private players’ entry into the sector with more liberty than others. 

“The distribution sector is dominated by the privately-owned utility, Meralco, but there are over 100 other privately owned distribution utilities active in the market. Market liberalization in the Philippines has brought significant benefits to the C&I segment that have given larger power consumers a choice over which electricity providers they use,” the report said. 

The report said that the main catalyst for growth of the C&I segment and PPAs in the Philippines came when Retail Competition and Open Access (RCOA) was introduced in the Electric Power Industry Reform Act of 2001, This was followed by several other norms to boost the growth of RE in the country. 

The report said that in the country, the privately-owned utility, Meralco, dominates the distribution sector, but over 100 other privately owned distribution utilities are active in the market. “Market liberalization in the Philippines has brought significant benefits to the C&I segment that have given larger power consumers a choice over which electricity providers they use,” it said.