Seven opportunities in Thailand’s Solar Energy 2020

Panel Discussion: The Main Drivers of the Thai Solar Industry and how to Strengthen them Sustainably

  • Solar farms, solar rooftop, floating solar and P2P power trading – does Thailand need four separate regulatory frameworks?
  • Ups and downs in Thailand’s power development plan (PDP) – renewable energy policy as a moving target
  • Foreign investors and deceptive announcements of regulatory facilitation – bridging the cultural gap

Walking on sunshine: Thailand’s solar gold rush

Private energy investments: Thailand’s electricity generating sector is considered to be one of the most secure businesses in Thailand for private operators given the long-term power purchase agreement with the three state utilities EGAT (Electricity Generating Authority of Thailand), MEA (Metropolitan Electricity Authority and PEA (Provincial Electricity Authority). 

Renewable energy opportunities: The most bright spot in the sector of renewable power plant businesses which had traditionally been promoted by the government to reduce the heavy reliance on fossil fuel, especially for gas, and to reduce the environmental impact. While the whole value chain from generation to transmission and distribution is and will remain largely a state-controlled industry, ongoing liberalization will open the door to new business opportunities for foreign companies, technologies, and concepts.

Solar milestones – from 3 GW to 3.4 GW at the end of 2019: At the beginning of 2019, Thailand looks back to eight tumultuous years of mostly favorable solar energy developments and a few failures. While 2010 saw the first significant installations of solar panels, the year 2017 marked the achievement of a significant milestone, a total of 3 GW of solar installations in the Land of Smile. This amounts to 50% of the 2036 target under the current 20-year roadmap (AEDP 2015). Total solar power capacity of roughly 3,500 MW can be predicted for the end of 2019.

An increase of renewable energy: Thailand’s >3 GW share exceeds 60% of total installed capacity in the ASEAN region, followed by the Philippines, Malaysia, and Singapore. To put this into perspective, Germany installed already 40+ GW solar power. Thailand’s renewable energy quota (solar, wind, biomass) will be increased to 30% by 2030. Solar power from households will be the main source of power under the AEDP (Alternative Energy Development Plan). However, due to the decrease in production costs, grid parity should be achieved soon.  

Regulations and roadmaps: Thailand is continuing its integrated energy blueprint, consisting of a gas plan, oil plan, the Energy Efficiency Plan (EEP), the Alternative Energy Development Plan (AEDP) and the Power Development Plan (PDP) with the Smart Grid Plan (SGP). The “IRENA” report, published in November 2017 by the International Renewable Energy Agency in cooperation with the Thai Ministry of Energy, showed new plans for expansions and further developments.

The IRENA report: According to the IRENA report, the share of renewable energy should increase from currently 12% to 37%. Under such new roadmap (REmap 2036), solar power alone would reach in 2036 a total capacity of 17 GW instead of the previously targeted 6 GW. Such new target could be easily achieved taken into consideration the decreased solar panel costs and Thailands abundant solar energy resource potential. The average solar radiation in Thailand is 5 kWh/m2/year.


The regulatory framework for Thailand’s solar energy in 2019

New PDP 2019: A new national Power Development Plan (PDP) will be introduced in the first quarter of 2019 to replace the 2014 version. Under the new PDP, EGAT will remain the nation’s power generation backbone. However, the 30 years old enhanced single buyer (ESB) model will be disrupted. Under such ESB model, each private power producer must currently sell surplus electricity to the three state utilities EGAT, MEA, and PEA.

The Energy Policy and Planning Office (EPPO) presented its brand new Power Development Plan #PDP beginning of December 2018  at a public hearing. As a key takeaway, the renewable energy quota will be increased to 18% (20,757 MW) by 2037, above others by deriving more electricity from private solar-panel rooftops. Solar power generated by the private sector is expected to be 10,000 MW. 

New solar rooftop regulations 2019: Thailand plans to further open its energy market to allow private electricity trading. The traditional power distribution is transformed from large power plants into a decentralized blockchain system utilizing the national electricity grid as the submission line. Under the new business model, solar PV owners will be connected to the grid and pay to the public utilities a transmission fee for retail power trading based on how much the power is transferred and how congested the line is.

Solar freeze: A new regulatory framework in the business-to-government (B2G) segment might loom dark clouds. A “solar freeze” is under discussion which would mean that for the next five years solar energy will be acquired under grid-parity conditions only. However, given the current industry and economical developments, grid-parity would not mean the death sentence for new profitable solar projects.

New FIT: Thailand’s Minister of Energy affirmed the 15-year target to raise the share of renewable energy from currently 10% to 30%. The FIT will have a price range of THB 2.40 to THB 2.50. 

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A brief history of Thailand’s solar energy

The overall development of Thailand’s legislation and governmental policy can be summarized as follows:

1993: Solar off-grid program for rural non-electrified areas for villages, schools, health care clinics and water pumping. 100% governmental support with regular maintenance, 30 MWp in total.

2007: Introducing of “Adder (Feed-in Premium)” policy for the VSPP and SPP for all renewable energy generation up to 90MWp. (Solar PV target: 500 MWp, Adder: 8 baht/kWh for 10 years)

2009: Under a 15-year plan (REDP) the solar target has been set to a capacity of 500 WM by 2022

2010: Solar PV target: 2,000 MWp. Since there were a huge amount of applications, the Adder decreased to 6.5 baht/kWh (or 18.6 US cent/kWh) for 10 years and an application moratorium had been introduced since June 2010.

2011: Under a 10-year plan (AEDP) the solar target has been set to a capacity of 2 GW till 2021. 2011 marks the policy change from the Adder scheme to the FIT scheme.

2013: The solar PV target increased to 3,000 MWp. Solar farm: 2,000 MWp with Adder for 10 years. Solar Rooftop: 200 MWp with FiT 6-6.84 baht/kWh for 25 years. Solar for community 800 MWp with decreasing FiT for 25 years

2014: Solar PV target increased to 3,800 MWp. Solar farm 1,800 MWp with Adder for 10 years, solar farm 1,000MWp-applied before June 2010, changed from Adder for 10 years to FiT 5.66 baht/kWh for 25 years, solar rooftop 200 MWp with FiT 6-6.84 baht/kWh for 25 years and solar for community 800 MWp – changed to solar for governmental agencies and agricultural cooperatives – with FiT 5.66 baht/kWh for 25 years

2015: Phase 1 of the Agency and Agricultural Cooperatives Program (Agro-Solar). Under the AEDP 2015 plan, the target solar capacity has been set to 6 GW till 2035.

2016: Pilot project for Solar PV rooftop (for self-consumption) of 100 MWp and phase 2 of the solar for government agencies and agricultural cooperatives. 67 projects have won the right to sell a combined 281.32 megawatts (MW) of solar power to the national electricity grid for 25 years. Under the 2016 pilot project, the Energy Policy Management Committee divided in a resolution as of February 24, 2016, the 100 MW into 10 MWp for households (below 10 kWp) and 40 MWp for commercial use for EGAT and PEA each.

2017: Semi-firm and non-firm PPAs have been introduced which require hybrid renewable energy facilities. The new roadmap increases the 2036 target from 6 GW to 17 GW. 

The first “SPP hybrid firm” tender, launched in 2017, has a combined power-generating capacity of 300 MW with a FIT of THB 3.66 for the whole 20 year period. The ERC announced that they received applications from 85 firms with a combined capacity of 2,464 MW and that most shortlisted firms offered a FIT below THB 2.50.

January 2018: Announcement of a public tender for solar farms of totaling 269 MW, based on semi-firm power purchase agreements. These projects seem to be abandoned.

April 2018: Thailand country report “The sunny prospects and hazy risks of Thailand’s next stage of solar growth” Link

05/03/19: Thailand Solar Energy Profile is featured in the March 2019 issue of the Solar Magazine. Link

24/05/19: The pilot program for 100 MW of household solar rooftops has been launched. It requires a power generation capacity of 5-10 kW, which results in installation costs of THB 350,000-400,000. On its first day, 70 households had secured a total of 393.11 kW for installation. 

“The on-grid solar model has been dropped from the latest PDP, which has shifted competition in the segment to the solar rooftop model.” Press report 27/05/19 

04/07/19: Thailand’s Ministry of Energy has amended its Alternative Energy Development Plan (AEDP) 2018. Under the 2019 version of the AEDP 2018, electricity generated from renewable energy sources will be fed into the national power grid as follows:

  • solar power generating 15,574 MW,
  • biomass generating 5,786 MW,
  • wind turbines generating 2,989 MW,
  • hydroelectric power from domestic generators and from Laos generating 3,000 MW, and
  • waste to energy generating from previously 500 MW to now 900 MW.

These renewable power sources will contribute a total of 29,358 MW, or 33 percent of the national electricity generating capacity. The cost of electricity generated from renewable energy will be approximately THB 2.44 per unit. The Ministry of Energy expects that this will not affect the general public’s electricity bills.

12/07/19: Power capacity under the scheme starts at 100 MW per year during 2019-27 for households and increases solar power generation to 1,000MW per year from 2028 on, ultimately reaching 10,000 MW by 2037. As of early July, the Energy Regulatory Commission (ERC) reported that the enrolment from households achieved only 8.74 MW from the target of 100 MW.

Seven business opportunities for solar projects in 2019: From new solar farm biddings to the blockchain-driven Internet of Energy

Opportunity #1 – New land-based solar farms: Under the current legislative framework, governmental utilities have the monopoly to buy electricity. Therefore, a governmental power purchase agreement with EGAT, MEA, or PEA would be required to develop new land-based solar energy farms. 

This sector of renewable energy is typically subject to a public tender procedure. It has to follow pre-defined steps and offers a certain degree of transparency and fairness. In the past, a lucky draw had been one element in the solar tender procedure. 

Tender procedures might request a firm or semi-firm PPA with the legal obligation to supply electricity to the governmental utility even during peak hours. This requires the combination of solar panels with a biomass, biogas or similar energy generating facility backup, which results in its classification as a hybrid.

Typical quota are (i) 100% output at peak time +/- 2% and (ii) 65% output at off-peak. While “firm” means throughout the year, the “semi-firm” is defined as “firm” for six months of the year (including March till June) and non-firm for the remaining six months. Underperformance might require the power producer to pay (liquidated?) damages.

Future public tender procedures will have further regulatory requirements concerning location, capacity, PPA conditions, and overall feasibility. Although new projects had been announced for 2018, they are now postponed to 2019. 

Currently announced projects: None (This section will be updated, depending on future developments).

Opportunity #2 – Off-market solar farms: It is not a secret that several solar energy projects are realized off-market and outside of a formal public tender process. Foreign investors will need a close connection and cooperation with a Thai partner and may have to adjust their business policies to local standards.

As a general aspect of investments in Thailand, the political risk of a (retrospective) cancellation of renewable energy incentives is small, but not non-existing. Section 44 of the Interim Constitution (“S44IC”) will be still in place till the elections in 2019+ and gives the army manned NCPO (National Committee for Peace and Order) full and uncontrolled authority to reshape the energy legislation and regulatory framework without grandfathering, loss compensation, legal or court protection.

Opportunity #3 – Acquisition of existing solar farms: While the last few years saw a pretty flourishing trade of electricity production licenses and power purchase agreements, several semi-finished or already established and electricity producing solar farms are for sale. Such projects can be acquired through an asset acquisition or the transfer of the shares in the solar farm company.

PUGNATORIUS Ltd. is the proven contact person for sellers of solar developments in Thailand as well as for foreign investors into solar farm, solar floating or solar rooftop projects.

Opportunity #4 – Utilization of own rooftops: As a cost-effective way to leverage solar energy, commercial and industrial property owners are allowed to install solar panels onto their own roofs and to produce electricity “behind-the-meter” for self-consumption. Such investment can be delivered, financed and maintained by third parties under EPC (Engineering, Procurement, and Construction), O&M (Operating & Maintenance) and finance agreements.

Beyond the rooftop: Other opportunities for the future are grid-connected offsite solar facilities. Under this scheme, the C&I consumer produces its own electricity away from its physical premises feeds the electricity into the grid and draws the same amount at another access point near its premises out of the grid. This requires no PPA and no net-metering scheme.

Opportunity #5 – Solar rooftop investments: Under Thailand’s upcoming solar rooftop legislation, (foreign) investors and developers are (hopefully) allowed (i) to cooperate with commercial and industrial rooftop owners, (ii) to generate electricity, (iii) to sell the electricity to the grid (net metering) and (iv) to enter into power purchase agreements with commercial and industrial parties (C&I PPA).

Details can be found at “Thailand’s new solar rooftop developments” while the upcoming legislation is commented in the LinkedIn article Seven questions: Thailand’s new solar rooftop legislation“.

Opportunity #6 – Floating solar farms: As the Third Way, the development of floating solar arrays (floatovoltaics) should be the next big thing. Nine new projects are on the way and details can be found at “Floating solar farms in Thailand“. 


Opportunity #7 – Internet of (Solar) Energy: Internet of Energy (IoE) means the implementation of Internet of Things (IoT) technology with distributed energy systems to optimize the efficiency of the generation, transmission, and utilization of electricity. As soon as Thailand and its regulatory framework are ready for a peer-to-peer energy trading community, every person can trade their energy directly, using a blockchain technology without any middleman.

Professional service offer on solar energy projects

Solar energy and other forms of renewable energy are one of the law firm’s areas of proven competence, long-standing experience, and unique market reputation. The scope of services covers these seven main activities:

  • Scouting and evaluation of market opportunities
  • Corporate structures
  • BOI investment promotion
  • Acquisition support
  • Commercial contracts
  • Deal arrangements, solar project marketplace and transaction support services
  • Legal opinions

Details are described at “Legal advice, tax structuring, transaction support services and business matchmaking on Thailand’s renewable energy markets.”

Disclaimer: A little knowledge is a dangerous thing. This low-resolution high-level outlook constitutes neither legal advice nor an attorney-client relationship.

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