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Analysis: Thai energy companies roll out expansions across Southeast Asia


By and Henning Gloystein

BANGKOK/SINGAPORE (Reuters) - Thai companies are on a roll. The national champion, a coal and power utility, upstart solar and wind companies, virtually all are expanding across Southeast Asia, applying practices and technology developed at home.

is reaping the benefits of two decades of government policies that have supported the sector. Companies are also profiting from prices that are recovering from a three-year slump, increasing demand due to economic growth, and that have become competitive against fossil fuels.

Also, while the military junta that has ruled since mid-2014 has put no stamp of its own on the sector, it has targeted infrastructure spending to boost the economy and prioritised investment in hi-tech industries.

Long-standing reform policies have turned Thailand's state company into a successful international producer, encouraged the development of such as Generating, and fostered the emergence of like Absolute.

"The power businesses in have developed expertise in this sector, and are now well placed to support development across the region," said Robert Grant, at Canadian-listed SNC-Lavalin, an engineering and construction firm focused on energy, infrastructure and

The 10 members of the (ASEAN) together have a population of more than 600 million people, with a (GDP) of nearly $3 trillion, according to research company

ASEAN's use rose by 60 percent in the last 15 years, according to the International Agency (IEA), which also says the region's demand could grow another two-thirds by 2040.

Companies aiming to take part in the growth in ASEAN and beyond include B.Grimm Power, a Thai that already has assets in and Laos, and Banpu Power, which is building a coal-fired plant in

"You can already see increased activity by Thai investors in the ASEAN region," Grant said.

The expansion has been reflected in the local stock exchange, with shares of companies growing nearly 75 percent since the start of 2016, against a broader market gain of less than half that.

It's also sparked a rash of listings, with Thai power companies having raised more than $2 billion from initial public offerings (IPOs) in 2016 and 2017.

Thailand's third-biggest generator, Gulf Energy, in December held the biggest listing the country has seen in a decade, at more than $700 million.

Gulf has said it expects revenue to grow by 18 percent this year, fuelled in part by a major solar investment in The IPO funds will be used to repay loans and finance new regional power plants, it says.


Government policy "created an ecosystem for growth for Thai companies," said Maria Lapiz, at Maybank Kim Eng Securities, with the first reforms coming in the 1990s.

That's when the government began allowing small power generators (1-90 megawatts) to sell to the national grid. was also an earlier adopter of natural gas, which now generates about 60 percent of its

In 2012, was one of Asia's first countries to introduce "feed-in" tariffs to give solar developers additional payments on top of normal prices when selling to utilities, channelling investment into the sector.

Similar tariffs have been applied to other renewable power sources, including wind, small-scale hydro, biomass and biogas.

The privatisation of was another big boost to the sector. The government now holds a 51 percent stake in PTT, which operates as a private company with less political interference than state rivals like Malaysia's and Indonesia's Pertamina, both of which remain under full government control.

"was privatised in 2001, which helped drive growth in the sector from E&P to refiners and helped in the development of the Thai capital market," said Lapiz.

The growth trend is clearest in renewables, where is the first Southeast nation to crack the top 15 generators, according to the International Renewable Agency (IRENA).


"started development in renewable power much earlier than regional peers," said Thidasiri Srisamith, of

Thanks to the early start and good relationships with neighbouring governments, is "a in Cambodia, Laos, and Vietnam, and will continue to expand into these countries," she said.

Thailand's largest solar company, Superblock, plans to branch out with a $1.8 billion investment into wind farms in

And Thailand's biggest wind power generator, Wind Holdings, plans to invest in solar, hydro and biomass to back up its capacity, not just locally but also in Vietnam, Cambodia, Laos, Myanmar, and

Even in coal, a sector recently shunned due to public pressure to invest in cleaner energy, Thai firms are growing. Banpu in February reported a more than 250 percent surge in annual profit, partly because of new coal mine investments, including in Indonesia, and power projects in and

In oil and gas, - long the global carrier of the Thai exploration and production flag - is developing new assets in the region for the first time in years, with around $4.5 billion in cash on hand to invest at home and overseas.

Not all indicators point to an ongoing boom. Local consumption is stalling due to low population growth and improvements in efficiency, while domestic capacity is sufficient to meet basic requirements.

"Going forward, Thai power company growth will depend on the ability to secure capacity and have a steady stream of projects ... which (are) increasingly coming from overseas," said Kasikorn's Thidasiri.


GRAPHIC: Thai company stock market performance

GRAPHIC: Top 15 producers by installed capacity (2016)

GRAPHIC: renewables power generation capacity


(Reporting by in BANGKOK and in SINGAPORE; Writing by Henning Gloystein; Editing by Tom Hogue)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, April 11 2018. 16:26 IST