ASEAN KEY DESTINATIONS
Solar projects to increase Demco inventory
The SET-listed contractor Demco Plc expects its construction backlog to expand to 6 billion baht this year after signing an 850-million-baht (US$27.4 million) solar cell construction deal with IFEC Green Power Plus, an alternative energy developer.
IFEC Green Power Plus, a subsidiary of Inter Far East Engineering Plc, has chosen Demco to build two five-megawatt projects in Bo Phloi in Kanchanaburi. With a combined investment of 1 billion baht, the plants are expected to begin construction in March and finish in October to November.
Electricity generated will be sold to the Provincial Electricity Authority at a price of 11 baht per unit, including an eight-baht adder tariff, an incentive given to renewable energy producers. "The project will help increase our backlog to nearly six billion baht this year, but as we remain conservative, we expect our revenue to total five billion for the rest of the year, in line with earlier estimations," said Arkom Manakaew, Demco's deputy managing director for sales and marketing.
Demco is also planning to set up a subsidiary to invest in the alternative energy business, for which it is currently preparing to seek approval from shareholders."While Demco will be responsible for contracting, Demco Power, our subsidiary, will be in charge of investment," said Mr. Arkom.
He said the company was preparing to bid for a 200-MW solar cell project worth 20 billion baht, for which results will likely be known this month.
Maris Tarab, the CEO of IFEC Green Power Plus, said the 240-rai solar farm would generate revenue for the first year of 174 million baht, and 2.8 billion over 25 years.
He said 70 percent of the one billion baht for the projects would be financed by loans with an expected payback period of seven years, while 30 percent would come from co-investors.
He said the decision on whether to increase solar cell projects to around 30 MW would be made next month. The company is currently in talks with two Thai companies including Demco and one foreign company.
"We are currently looking to buy another 10-20 MW in the central or northeastern regions, where we might hold 30-50 percent of the shares," said Mr Maris.
"Thai businesses have the potential to invest in solar energy if the government opens its policies, since it has the least risk in the alternative energy sector. While wind energy faces uncertainty in terms of wind speed and biomass depends on raw material, sunlight is available on a daily basis."
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