Solar protection racket?

Ekarat Solar Co, Thailand’s top maker of solar modules, is urging the new government to adopt measures to shield the local industry from unfair competition.

Wiwat Sangtian, managing director of the wholly owned unit of the country’s biggest transformer maker, SET-listed Ekarat Engineering Plc (AKR), said Ekarat was joining with other solar module companies in making the request.

Mr Wiwat said the energy regulator should at least require the next round of licence seekers to use locally made modules.

In line with other manufactured goods, cheap Chinese products have become the first choice of Thai users — to the detriment of local producers.

Since 2009, solar modules and solar farm components have been hit hard by imported Chinese substitutes.

“We hope that the next round of solar power operating licences granted by the Energy Regulatory Commission will consider those operators that use locally made parts and components as a first priority,” Mr Wiwat said.

He was adamant that the Chinese equipment’s low cost comes with lower quality, less efficiency and poor durability, but solar power operators tend to opt for cheap prices over quality.

Ekarat Solar, founded in 2007, is shouldering a debt of 400 million baht.

Kietphong Noichaiboon, an adviser to parent company Ekarat Engineering, said Chinese solar modules lasted no more than four years and suffered diminished production capacity by then.

Many Thai producers blame their debt-ridden performance on the dumping of cheap modules from China.

Since 2009, a combined solar capacity of 1,240 megawatts has come online, with an additional 300 MW under construction.

Thailand aims to have 3,000 MW of solar power on stream by 2021, according to the country’s power development plan.

The expectation is for another 1,000 MW of capacity to be opened to investors seeking licences in the second half of this year.

The requirement for use of locally made parts and components by licence seekers is a tactic to help the local industry compete with China.

“Thai product quality can compete with products from the US and EU at a more affordable cost,” Mr Kietphong said.

Kraisi Karnasuta, a commissioner and former governor of the Electricity Generating Authority of Thailand, said the decision rested with the new government as to whether local businesses would receive protection.

Moreover, solar farm operators will have to bear the business risk for using low-quality modules in exchange for a lower cost.

“In the long term they’ll suffer, because the power purchase contract is as long as 25 years, but the cheap components’ lives are much shorter,” Mr Kraisi said.

Consequently, the costs must become greater to replace broken equipment and make sure it can feed power to the grid under contract.

Danucha Noichaiboon, managing director of Ekarat Engineering, said the company planned to diversify its subsidiary’s business to become a solar power operator as well instead of simply producing modules.

Other areas of potential interest for the unit include engineering, procurement and construction.

Ekarat Engineering expects total revenue in 2014 to finish on a par with last year’s 2 billion baht.

Mr Danucha said the slow growth was due to the political unrest in the first half of the year.