Thailand bets on rooftop solar to guard against LNG price shocks

Bangkok, September 2: Thailand plans to assist one million households in installing 5 gigawatts of rooftop solar panels within the next year, according to Energy Minister Akanat Promphan. This initiative aims to protect citizens from escalating energy prices stemming from the Iran conflict, as reported by Reuters. The project is funded by a 200 billion baht ($6.01 billion) emergency energy transition fund.

This strategy reflects a growing trend among major Asian liquefied natural gas (LNG) importers, such as the Philippines and Bangladesh, who are utilizing rooftop solar to mitigate rising energy costs, following the Iran war. Currently, renewables like solar account for roughly 10 percent of Thailand's power generation, whereas gas supplies over 60 percent, as per government data from the first half of the year.

Over a quarter of the gas utilized for electricity generation in Thailand is imported, as indicated in IEEFA data. Additionally, half of Thailand's LNG is purchased on the spot market, making the nation more susceptible to price volatility in the LNG market, particularly since the U.S. and Israel initiated military action against Iran six months ago.

Energy Minister Promphan stated that this emergency fund is primarily intended to facilitate the energy transition, as reliance on Middle East LNG prices will persist indefinitely otherwise. The 5 GW rooftop solar target will be integrated into Thailand's long-term power development plan, which will be unveiled next month. Upon realization of this objective, Thailand's small-scale solar capacity would more than double, accounting for over 7.6 GW, as per TransitionZero's energy projections.

Presently, residential rooftop solar constitutes 1.4 GW of this capacity. In 2018, Thailand was Southeast Asia's leading solar adopter; however, installations declined after incentives diminished, allowing Vietnam to surpass Thailand in recent years. The government intends to provide financial assistance of 50,000 baht ($1,500) per household, along with loans, to facilitate rooftop solar panel installations.

Furthermore, the government is exploring new domestic gas sources in offshore fields and pursuing new long-term LNG purchase agreements to diversify its import portfolio, according to Akanat Promphan. PTTEP, the exploration and production division of the state-owned energy conglomerate PTT, has allocated funds for investigating new gas fields in the Andaman Sea and Myanmar.