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Expanding Solar Ambitions in ASEAN Countries Cannot be Overlooked

The bullish news from Deutsche Bank on the solar industry's strong prospects for 2014 will come as welcome relief after this year's trade-war turmoil. But emerging concerns about supply constraints on the back of the fast-growing markets in China and Japan merit a note of caution and underline the need for all firms in the global solar supply chain to adopt a balanced international strategy, spreading risk between different markets.

The solar energy market in the ASEAN countries (Association of Southeast Asian Nations) has long been in the shadow of the region's economic superpowers, China and Japan.

Partly, this is a matter of fragmentation. After all, ASEAN is comprised of ten member states, each with their own energy policies at different stages of evolution. 

Yet the solar energy sector throughout the region is growing fast. With political support becoming more consistently positive, that expansion looks set to continue for several years — and will embrace major solar farms as well as mini- and off-grid projects.

Recent research from IMS predicted that PV installations in Southeast Asia will reach 5 GW by 2016 and that the region's solar market will grow by 50 percent a year on average over the next five years — pushing its global market share of PV installations up from 1 percent to 4 percent by 2015. 

Thailand is regarded as the leader of the ASEAN pack. When the Bangkok government announced major plans to boost the country's solar rooftop market last month, it was just another stage in its long battle to establish itself as a regional leader in renewable energy, and the solar sector in particular.

The principle of supporting renewable energy has been accepted by successive Bangkok administrations for more than two decades, although like many countries, Thailand has been struggling with the problems of developing coherent and consistent solar energy policies.

Fast-developing technologies, rapidly falling prices of photovoltaic panels and unstable supply chains — all against the backdrop of the global economic crash — have meant that government and corporate strategies around the world have changed almost daily.

But despite all the caveats, the logic for Thailand of boosting its commitment to renewable energy is inescapable. 

There are large deposits of natural gas in the Gulf of Thailand, yet the country imports almost 70 percent of its energy needs, and with electricity demand rising in a growing economy, that percentage is not going to fall. In addition, with ever higher prices of fossil fuels and increasing resource competition from other fast-growing economies in the region, that state of affairs is economically risky, if not unsustainable.

The result is that today Thailand is regarded as a regional leader in solar energy, and as other ASEAN and neighbouring states look to follow its example, Thailand’s solar sector is discovering that its expertise is an increasingly desirable, and exportable, asset.

The Thai solar energy sector is also attracting growing international attention from manufacturers, developers and financial institutions, both as a market in its own right, and as a platform for expansion across the Asia Pacific region.

In July, in the latest in a long line of announcements increasing the emphasis on solar energy, the Thailand's National Energy Policy Commission approved two policy packages increasing the country's target installed PV capacity by 50 percent to 3,000 MW, focusing on rooftop and community solar projects. 

What is more, backing the Thai solar sector to date has been a successful move for investors, with many projects outperforming expectations, whetting the appetite for firms to develop international partnerships in regional markets, for example in Myanmar, Laos and Cambodia.

Yes, the markets in China and Japan are huge. But investors, developers, manufacturers and suppliers should make sure their strategies do not overlook ASEAN's power and potential. The market is growing fast and it is here to stay. 

A detailed study of the solar energy market in the ASEAN region will be the focus of a new conference taking place on December 3 and 4 at the Impact Convention Centre in Bangkok. Find more information here.

Lead image: ASEAN countries via Shutterstock

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