SPC was established in 1996 to engage in the development of grid-connected solar power projects. It is directly owned by its management team led by Wandee Khunchornyakong (57.7%), President and Chairman, Chanchai Kultavarakorn (12%), Executive Chairman, and Kevin Parnell (3.1%), Executive Vice President. Kyocera Corporation has a 2% shareholding and the remaining 25.2% is owned by employees of SPC and the family of Ms. Khunchornyakong. Ms. Khunchornyakong has more than 30 years of solar industry experience with Arco Solar, BP Solar, and Solartron which she established and took public. Mr. Parnell has been involved in the solar industry for 30 years with companies such as Arco, Neste, Singulus, and Leybold Optics Solar Division. SP(KR1) will be 66.1% owned by SPC, 19.6% owned by IFC and 14.3% owned by the Energy for Environment Foundation (“EFE”), the fund manager for ESCO, a Thai government-owned investment fund set up to support renewable energy projects. SPC will also be the lead investor and sponsor of subsequent solar projects in its pipeline though it may have different partner shareholders for these projects.

The project cost for SP(KR1), is estimated at US$22.2 million which is being financed with 60% debt (US$12.8 million), and 40% equity (US$8.6 million). Future projects are expected to have lower cost, estimated at US$20 million thanks to lessons learned from the first project and declining prices for solar PV panels. The future projects are expected to be financed with 70% debt and 30% equity as the local banks get more comfortable with solar power projects. The proposed IFC financing is an equity investment in SP(KR1) of up to ThB55 million (approximately US$1.7 million) (representing a 19.6% shareholding). Associated with this investment in SP(KR1), IFC will receive (i) an option to buy shares in SPC up to a value of ThB55 million (approximately equivalent to US$1.7 million); and (ii) the option to contribute up to 20% of the equity in future solar projects of SPC. In March 2010, SPC began developing the next three solar projects (SPC2, SPC3 and SPC4) in its pipeline (6MWp each) and based on IFC’s option to provide equity to these, IFC proposes to provide an equity investment of up to ThB120 million (approximately US$3.7 million) for a 20% shareholding in each of these three subsequent project companies. (Average Exchange rate : 1 US$=32.35 ThB)

7.11 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	7.11

* These investment figures are indicative

The Project site for SP(KR1) is situated in Don Chomphu sub-district of the Non Sung district located in the Nakhonratchasima province in Thailand. The total site area available for this Project is approximately 13.5 hectares and is suitable for a PV installation with high solar irradiation and easy access to transmission lines. The site has access to a main road. The sites for the subsequent projects in SPC’s development pipeline are yet to be defined but are all expected to be in rural areas of central Thailand.

The project will have high development impact on the Thai solar market by supporting a small but professional Thai developer with their first four 6MW projects, creating a replicable model for the Sponsor and a demonstration effect for local and regional solar IPP developers. The Project will: a) promote private sector investment in the PV sector which is at an early stage of development in Thailand; b) support less carbon-intense economic development by substituting expansion of thermal power with zero-emission renewable energy and 4785 CO2 tons avoided per year for each 6MW project; and c) create direct and indirect employment opportunities in rural area of Thailand during construction and operation of each 6MW project.

IFC’s additionality will include: (1) leveraging IFC’s experience in financing PV manufacturing and grid-tied renewable energy projects to strengthen the project’s fundamentals; (2) ensuring compliance with IFC’s environmental and social Performance Standards and good corporate governance; and (3) sending a strong signal to the market that renewable energy, and PV in particular, is sustainable under the Government of Thailand’s new “adder” (solar projects receive a premium price for their power) regulations and should be supported.

The proposed project equity investments in SP(KR1); SPC2, SPC3 and SPC4; together with an option to invest in SPC and SPC’s future solar project subsidiaries is a Category B project because a limited number of specific environmental and social impacts may result, which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The key aspects of relevance to the project include social, environmental, health and safety management systems; the identification and mitigation of social and environmental impacts on account of each of the four individual projects; site selection and land acquisition; community consultation and engagement; labor working conditions during construction and operation; pollution prevention and abatement during construction and operation; and community health, safety and security. In view of the fact that location and siting of all projects to be developed by SPC are as yet not known, IFC’s review of this proposed investment also focused on social, environmental, health and safety management systems of SPC. Potential impacts in construction besides being mitigable are likely to be limited to project site; short term; and will likely not have any impact on environmentally sensitive areas. Further, it is possible to readily design and implement engineering and management measures to mitigate adverse impacts during construction and operations. SPC will manage its environmental and social performance in accordance with applicable local laws and regulations and international standards, including IFC’s Performance Standards on Social and Environmental Sustainability.

The three subsequent projects (SPC2, SPC3 & SPC4) are still under development, and project designs and social and environmental documentation are under preparation. IFC will, as per an action plan agreed with SPC, review these projects for their conformance to IFC Performance Standards.

A summary discussion on the social and environmental aspects of relevance to the Project including the company’s plans to address these impacts has been provided in the Environmental and Social Review Summary (ESRS) prepared by IFC. This ESRS will be updated to reflect the outcome of IFC’s review of SPC2, SPC3 and SPC4, as and when the review is completed.