Southeast Asian countries have been increasing their installed solar capacity. According to research firm Rystad Energy, more than $76 billion will be invested in the renewable energy sector from 2023 to 2025, and this investment shows no signs of slowing down.
Much of this spending will be driven by solar, wind, and geothermal investments, with Vietnam, the Philippines, and Indonesia leading spending in Southeast Asia's low-carbon sector between 2022-2026.
With more than $35 billion spent on all types of renewable energy, of which onshore wind accounts for the bulk of spending, Vietnam's solar sector still has considerable potential.
Vietnam, Philippines, Indonesia
In May 2023, the Vietnamese government approved a renewable power development program that includes plans to build rooftop solar for household and commercial sites. By 2030, half of office buildings and homes will generate their own electricity for on-site use using rooftop solar, but the electricity generated will not be sold to the national power system.
The Philippines is spending more than $30 billion on renewable energy, the second highest expenditure in Southeast Asia. Compared to other countries in the region, the Philippines will have the highest spending in solar energy. from 2022-2026, the spending will be more than $10 billion.
Tristan Pheh, junior analyst for renewable energy and power at Rystad Energy, said the Philippines is the most active market in the area of offtake mechanisms for solar developers, such as tenders and power supply agreements with distributors.
The law also allows for full foreign ownership of renewable energy, which could attract foreign renewable energy developers. In addition, the Philippines has an ambitious solar energy development program. In the National Renewable Energy Plan released by the Philippine Department of Energy, the Philippines aims to reach 27GW of installed PV capacity by 2040.
Global Energy Monitor data shows that as of January 2023, the Philippines had 1.8 GW of solar plant capacity.To achieve its solar growth targets, the Philippines will be undertaking several projects in the near future, including a 1.3 GW floating photovoltaic (FPV) project to be constructed on Laguna Lake. Meanwhile, the Philippine Department of Energy (DOE) also signed 1.96GW of solar PV projects in the latest round of green energy bidding.
Of this 1.96GW capacity, almost all of the projects are ground-mounted PV projects with a construction period of 2024-2026, of which 90MW are floating PV projects and about 10MW are rooftop projects. The Department of Energy has released a full list of winning bidders for a range of projects.
Coming in behind Vietnam and the Philippines is Indonesia. Indonesia's spending on renewable energy is expected to reach about $30 billion, with hydropower, geothermal and solar being the most popular areas of interest.
"Vietnam, the Philippines, and Indonesia are rich in renewable energy resources, including but not limited to solar, wind, geothermal, and hydropower potential, and the growth of renewable energy diversifies energy supply and contributes to energy security, as these countries typically rely on the use of coal."
Challenges to developing solar energy
However, investing in renewable energy in Southeast Asia faces multiple challenges.Pheh said policy support is also an important factor in developing solar energy, as incentives in most countries are sometimes inconsistent and unclear in terms of timing.
"For example, Vietnam has not provided an offtake mechanism for solar energy for two years. But this year, Vietnam announced interim pricing for completed but not yet commissioned projects, which are priced at close to 50 percent of the feed-in tariff. In Malaysia, solar tenders have also been suspended from 2021. The regulator did not reintroduce large-scale ground-mounted solar projects through corporate power purchase agreements (PPAs) until this year."
Pheh added that land availability is one of the main issues that could hinder solar development in this region.
"Land in Southeast Asia is widely used for agriculture," and while the use of floating projects can alleviate this problem to some extent, land is still in short supply across the region." In Thailand, for example, developers have been involved in disputes with the agriculture sector over the use of land set aside for plantations.
Floating PV in Southeast Asia
Previously, PV Tech reported that the global FPV market will exceed 6GW by 2031, with China, India and Southeast Asia accounting for the majority of the share as developers in Southeast Asia seek space for new projects.
Cumulative floating PV installations in China will exceed 13GW by 2031, while India and Indonesia will exceed 10GW and 8GW, respectively.Among the top ten countries with cumulative FPV capacity of more than 500MW by 2031, Southeast Asian countries Vietnam (3,265MW), Thailand (3,265MW), Malaysia (2,201MW), and Laos (1,874MW) are four of them.
According to a report by the National Renewable Energy Laboratory (NREL), by 2037, Thailand plans to build more than 2.7GW of FPV on nine different hydroelectric reservoirs.Thailand has a huge potential for FPV technology, with 33-65GW of power generation from reservoirs and 68-152GW from natural water bodies.
Malaysia has more potential to build FPV on reservoirs (23-54GW) compared to natural water bodies (13-30GW).
Speaking about this phenomenon, Pheh said that most countries are geographically located with high solar irradiance, thus allowing for the construction of solar PV plants on natural water bodies.
"The development of floating PV projects also complements the widespread use of hydropower in this region, as reservoirs are the most favorable environment for floating PV."
Investment from European companies
Not only are renewable energy companies from Southeast Asia developing solar projects in this region, but so are European companies.
In September, German renewable energy company BayWar.e announced a partnership with Swiss infrastructure investment manager SUSI Partners to use funds from SUSI Partner's Southeast Asia-focused Asia Energy Transition Fund to develop rooftop PV projects in partnership with commercial and industrial companies.
The partnership centers on the end-to-end development, construction and operation of PV projects of up to 20 MWp each, initiated through power purchase agreements with established companies.
Thailand, Malaysia, Vietnam, the Philippines and Indonesia will be the main markets for this partnership.
Niranpal Singh, General Manager, Malaysia, BayWar.e. Asia Pacific, said, "We hope that through this partnership, companies will be able to adopt PPAs and rooftop-mounted technologies faster and more efficiently." Projects will still need to be developed locally based on the country's economy.
"This may change over time, and cross-border participation by private project owners and investors will kick-start the trend."