Seven opportunities: Thailand Solar Energy Update 2017

While Thailand seemed to outshine ASEAN in solar power in 2015, the developments in 2016 showed delays and uncertainties. However, after only 470 MW solar power had been installed in 2014 and 722 MW in 2015, according to the latest data officially published by the Energy Regulatory Commission (ERC) 732 MW have been installed just in the first nine months of 2016. And 2017 promises to show real growth and continuing development. This opens seven (7) opportunities for foreign investors to participate in Thailand’s solar power energy.

Walking on sunshine: Thailand’s solar energy blueprint

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 targeted percentage of renewable energy production seems to be increased in the future.

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 in 2017 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.

Technical enhancements and cost reductions might bring governmental incentives to an end, should the production of photo-voltaic and the solar energy production reach competitiveness with traditional power production. The legal impacts of such technological improvement have to be awaited with excitement.

A brief history of time in Thailand’s solar energy

The overall developments in 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 or 23 UScent/kWh for 10 years)

2010: Solar PV target: 2,000 MWp. Since there were huge 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. 

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)

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.

Policy changes in 2017

1.  The new 40% target: Thailand’s current Alternative Energy Development Plan aims to promote alternative energy usage to 25% of energy consumption. Recently, energy policymakers seem to have revised this percentage to 40% of the country’s total power generating capacity by 2036. This new target would result in total renewable power-generating capacity to 40,000 MW in 2036, up from 19,600 MW under the previous plan. 

2. Firm, semi-firm and non-firm PPAs: Power purchasing agreements will change from non-firm to semi-firm or firm power delivery contracts. During peak times for the power source, the PPA will contain a legal obligation to supply electricity to the governmental utility. Possible quota are

  • 100% output at peak time
  • 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. In addition, the terms and conditions of the PPA may be more flexible and subject to an aggressive bidding process. This will affect new licenses for solar, wind, biomass, biogas and waste-to-power energy PPAs with a combined capacity of 1,000 MW to be granted to investors this year.

3. Investor pre-screening: The ERC will screen investors for active business. Inactive investors are disqualified from current biddings. This has to be seen in the light of roughly 200 MW of projects that obtained licenses in 2016 but did not invest at all. The exact criteria for the activity test are not yet disclosed – and might not be fully disclosed in the future.

4. May 2017: Although the collapse in solar panel prices is an international commonness, Thailand’s solar industry requests an increase of the feed-in tariff rate from currently THB 4.12 to the rates of 2013 (THB 5.66) or even the THB 8.50 as of the year 2006.

Seven business opportunities to participate in Thailand’s second solar gold rush in 2017

Business case 1 – Agro-Solar 2: The year 2017 will see the realization of the delayed 518 MW Agro-Solar phase 2 tranche at a feed-in tariff rate of 5.66 baht/kWh over 25 years. These project will still require the cooperation with governmental agencies and agricultural cooperatives, which is far from being free and easy. Phase 2 caught public attention by a petition filed by 2,000 agriculture cooperatives to stop and drop embarrassing formalities of a public tender for a lucky draw decision by the government’s agency EPPO. At least the chances for a swift drive forward reach nearly zero.

Business case 2 – Agro-Solar 1: The successfully awarded 67 projects under the Agro-Solar phase 1 solar farm program with a combined capacity of 281 MW are on the market and some of them still open for a participation or joint venture.

Business case 3 – SPP hybrid firm (10+ – 50 MW): The Energy Policy and Planning Office (EPPO) will soon announce the new tender process “SPP hybrid firm” with a combined power-generating capacity of 300 MW. It will base on a firm PPA under which operators are obliged to supply an exact amount of power into the grid. To enable this, even when the sun does not shine, and the wind does not blow, the facility will have a biomass, biogas or similar energy generating facility backup, which results in its classification as a hybrid. FIT of THB 3.66(?)

Business case 4 – VSPP (max 10 MW): According to an announcement of the Energy Policy and Planning Office (EPPO) from November 2016, in 2017 solar farm licenses for VSPP will be granted to private firms (without governmental or quasi-governmental participation). The FiT will drop from 5.66 baht in 2016 to 4.12 baht in 2017 and 2018.

Solar, but also biomass and other renewable energy facilities with a total capacity of 289 MW will be the subject of VSPP licenses during this year. Terms and conditions to be announced soon by the ERC.

Do you like to know more? The law firm keeps foreign companies up-to-date on investment opportunities in Thailand’s energy and infrastructure sectors in its newsletter “Seven Opportunities“. Further information is available here.

Business case 5 – SPP non-firm (10+ – 90 MW): Power producing licenses to solar farm SPP (small power producer with a total power-generating capacity of 10-90MW) are currently under consideration.

Business case 6 – Rooftop with license: Thailand’s energy policymakers started to provide the private sector with better access to the state solar rooftop program in an attempt to promote the use of solar power. The program is now allowing private companies to apply for solar rooftop development licenses. Currently, companies are still barred from selling power back to utilities. Households and factories may be allowed to sell electricity from solar rooftops to the national power grid starting September 2017. It is yet undecided by the government whether this will need a license or not.

Business case 7 – Rooftop without a license: To go one step further, the solar power production for self-consumption (without the need for a power production license) will most likely gain relevance and importance. This relates in particular to solar rooftop PV facilities which currently have roughly 5% of Thailand’s total solar markets. Net metering and a smart grid concept are buzzwords for new technologies and policies.

The solar energy market in Thailand is still very active. PVTECH, the London-based solar industry authority wrote about our solar energy 2017 research <here> Our insights had been published in the Thailand Country Report of the Asian Power Magazine <here>. Ask the law firm for more details and a comprehensive support and legal assistance of your alternative energy project. More about solar energy in Thailand at pugnatorius.com/category/solar


If you have any queries about what we do, or if you would like to approach us to discuss your legal requirements, please e-mail, message or call us using the details set out on the top of this page. 

Comments are now closed for this article.