Project financing for utility-scale wind and solar power in Thailand: facilitating scale-up through standardizing project development

Phil Napier-Moore, Project Manager Session 13, Asia Clean Energy Forum 2011

Scene-setting (1)
Total Installed Capacity, Thailand (MW)

1000 900 800 700 600 500 400 300 200 100 0 2010 2011 2012 Solar Wind Solar & Wind

Fantastic growth in wind and solar power in Thailand How are these projects successfully attracting finance?

Scene-setting (2)
Few plants built in 2010 received project finance Expect that 90% of those built in 2011 and 2012 will be project financed (most on a non-recourse basis) Preconditions for this scale-up success include:
Robust power project finance experience among local banks, from thermal power sector A shaking out of credible plant developers Improving project development standards

Improving Project Development Standards

Typical initial barriers to project financing:

Uncertain expected power revenues Limited contractor/developer experience either with PV/wind power plants or non-recourse project finance requirements Permitting processes, in particular for wind power

Mitigation largely through repeat projects

Predicting power generation revenues

Modelling approaches appropriate for region? What is the solar irradiance or wind speed resource?
Quality/duration of long-term reference data Extent of need for on-site data collection

Performance of imported equipment under local atmospheric and temperature conditions

Project EPC contracting solar

International-local partnerships standard Most solar projects small for power sector benefit from using standard EPC contract forms e.g. FIDIC Silver Book Number of issues specific to solar, however, such as:
Performance tests Performance warranties

Improving experience among (small) developers on documentation standards for bankability

Project EPC contracting wind

Multi-contract approach typical in Europe

Wind Turbine Supply plus Balance of Plant (BOP) Likely to be seen in the region also, given lack of contractors with an EPC track-record (& premium)

Need for Lenders to gain comfort with interface risk

Ensuring interfaces reflect international standard Ensuring BOP contractor trained on the interfaces

Permitting pitfalls

Land rights lease rights to forestry, watershed and agriculturally designated land Need for environmental impact assessment Aviation radar interference Grid code compliance Changing adder tariff regulation Tax exemptions contract structuring

Summary

Thailands experience offers useful lessons

As a policymaker several permitting areas to address early, in parallel with feed-in tariff setting As a developer pointers for bankable energy yield assessment and EPC project contracting

Definite further scope for public-private cooperation in disseminating these lessons, within Thailand and beyond