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Southeast Asia forecast to install 27 GW of PV capacity from 2021 to 2025
15 July 2021
The regional PV market has picked up in the last two years,
thanks to the impressive growth of Vietnam in 2020. Regional
policy, combined with an increasing demand for renewable power in
the manufacturing industry, will lead to 27 GW of new PV
installations over the next five years, as per our latest report on
Southeast Asia. PV capacity addition in these countries are
attractive FiTs, net energy metering, tariff-based auction
mechanism, and other policy support and incentives.
Of the eight largest PV markets in the region, at the end of
2020, Vietnam, Thailand, Philippines, and Malaysia had installed
98% of the operating PV capacity. Vietnam was the only country that
steadily installed PV systems throughout 2020, despite the ongoing
COVID-19 crisis. About 76% of the installations in Vietnam came
from rooftop and remaining 24% was covered by ground mount under
the feed-in tariff (FIT) 2 regime. After having been major
ground-mount PV markets over the past decade, the Thailand and
Philippines markets are currently mainly driven by rooftop
installations up to 5 MW in size. In Malaysia, the large-Scale
Solar (LSS) projects have contributed to recent growth beyond
rooftop systems. Emerging markets, Cambodia and Indonesia have to
date been PV markets with sporadic large ground-mount
installations.
PV project pipeline by Developer
PV activity in Southeast Asia is mostly dominated by Asian
developers, in most cases local companies that are active in a
specific market. In Philippines, Solar Philippines is one of the
developers with the highest numbers of project pipeline across
Southeast Asia. For Vietnam market, Xuan Thien Group holds the
second position with 1.14 GW of completed projects and another 597
MW of planned projects. Trungnam Group is competing with Xuan Thien
Group by completing 1.06 GW of projects as of 2020. In Thailand,
Superblock is leading, followed by Energy Absolute and SPCG, in
terms of completed projects. Unlike other Southeast Asian
countries, Malaysia has a mix of international and national
developers. During the LSS3 PV tender, Malaysia awarded most of the
projects to international developers, whichopened the market for
large-scale PV development in the country.
Policy support and incentives
Vietnam PV construction activity gained its
pace in 2020, wherein rooftop PV significantly jumped with 9.2 GW
of installations. However, PV installation in 2021 is going to slow
down unless a new FIT for the rooftop and auction scheme for
ground-mounted projects is approved by the government. As per the
proposed draft version of National Power Development Planning (PDP)
VIII, 9.1 GW of ground-mounted PV projects are under the planned
and pre-planning stages. Out of 9.1 GW, 6.3 GW is targeted to be
completed by 2021‒25 and 2.8 GW by 2026‒30. These projects are
planned to come under direct DPPA with 400‒1,000 MW capacity and
the PV auction scheme. PDP VIII also mentions an 18.6 GW PV target
by 2030, which was already achieved by 2020. However, the target is
mostly likely to be revised in the final approved version.
Thailand PV installation activity started to
pick up from 2019 and was again hit by the COVID-19 crisis in 2020.
As per government data, there were no ground-mounted installations
in 2020. However, installation in the C&I sector continued
without much interruption. IHS Markit projects steady growth in the
C&I segment throughout the forecast period. The C&I sectors
are mainly built under the capex with the self-consumption model,
wherein customers do not export electricity to the grid. This model
is widely accepted by industries across Thailand.
Malaysia PV market continues to be driven by
utility-scale projects under the LSS program. With the exception of
2020, the government has awarded PV tenders yearly since 2017. As
of 2021, the upper project size limit has been raised to 100 MW.
The LSS4 PV tender in 2021 awarded 823 MWac of PV capacity, with
projects to be installed in 2023 and 2024. The first tender, LSS1,
awarded 450 MWac, followed by 563 MWac in LSS2 and 490 MWac in
LSS3. While LSS1 projects have been fully commissioned, 311 MWac of
LSS2 projects are pending completion in 2021 and 2022. As per the
government plan, LSS3 projects were due to come online in 2021, but
because of COVID-19, the schedule is now set to the end of 2022 and
early 2023. The strong oversubscription of the tenders indicates
that the capacities of future LSS tenders are likely to remain
stable or to be increased.
Philippines rooftop market is doing
increasingly well thanks to the high electricity tariffs in the
commercial segment. Rooftop owners with available space are
actively seeking to to install C&I PV systems. Captive PV
systems for direct consumption at shopping malls, educational
institutions, cold storage, and factories are mushrooming as
permits are easy to obtain. The Philippines PV market is a clear
example of a market driven by the competitiveness of PV, without
the need for explicit policy support.
Myanmar's ongoing political crisis and military
rule, has created great uncertainty around the 1 GW of PV projects
that were awarded in 2020. Most of these projects were won by
Chinese developers including Sungrow Renewables and China Machinery
Engineering Corp (CMEC), at an average tariff range of
US$0.0422/kWh, with the original project completion deadline on 9
March 2021. However, with the current situation, developers are
reconsidering their projects and may pull out. Project funding is
also not available for the developers, as most of the financing
entities are not ready to provide loans. At the moment we remain
cautious on the Myanmar PV market.
Laos relies on hydropower and coal-fired power
plants, with a great share of electricity being exported. However,
as electricity from hydropower declines in the summer, the
government ends up importing electricity. To diversify the
electricity mix, the government has started allotting PV projects,
such as the 76 MW PPA between nValid Precision Engineering Pte Ltd
and Electricite du Laos (EDL), or the intent of Wealth Power Group
to build 580 MW, both announced in 2020.
Cambodia's government has to date installed 260
MW of PV capacity, mainly in ground-mount unsolicited installations
outside the auction scheme. Since 2019, the government has been
working on a 100 MW auction scheme in collaboration with ADB. In
2019, the government awarded 60 MW capacity to Prime Road
Alternative Company Limited, at US$0.3877/kWh. The project is
expected to be completed by the end of 2021. Another 40 MW of
capacity is under the second stage of the tendering process. Apart
from the auction scheme, 455 MW of unsolicited PV are under
different stages of development, mainly very early stage.
Indonesia's PV market is dominated by 125 MW of
ground-mount installations. The government has a target of 6.5 GW
PV capacity by 2025 and 45 GW by 2050. As per our project tracking,
Indonesia has 841 MW of PV projects in the pipeline, under
different stages of development. Most projects are expected to be
realized during the forecast period, including174 MW of floating
projects. State-owned electricity utility company Perusahaan
Listrik Negara (PT PLN) is also working on a PV auction mechanism,
and IPPs have been invited to enroll in the scheme.
The PV market in Southeast Asia covers the full range of
opportunities, from large-scale auctions to private C&I
projects. At the same time, regulatory uncertainty elevates the
risk for investors. Despite the uncertainty, activity is elevated
with more and more developers and suppliers seeking to capture a
share of the 27 GW that we forecast will be added through 2025.
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