We expect the average capex and investment spending of the major private power producers in the next five years to be around THB150 billion-180 billion per annum, similar to the three-year average during 2019-2021.
There are also potential additional investments in new businesses such as energy storage systems (ESS) to enhance business integration. We expect ESS demand to rise, particularly in electrochemical technology, led by rising ESS implementation to enhance renewable energy plants' reliability, rapid development in Thailand's electric-vehicle value chain, and lower battery costs.
These investments, along with high commodity prices affecting profitability in the near term, may keep their financial leverage high, although they would gradually deleverage over the medium term, with net debt/EBITDA around 5x-7x. The leverage should be tempered by sound revenue predictability from some cost pass-through for existing thermal power projects and long-term contracts, including additional earnings from new projects that start operating.
The report "Thai Private Power Producers" is available at www.fitchratings.com or by clicking the link in this media release.
Source: Fitch Ratings