Thailand’s solar rooftop developments
UPDATE 07/06/18: Statement by Thailand’s Minister of Energy
1. B2G: Private, as well as commercial and industrial rooftops, have to be “accepted” (licensed?) to sell solar power to the grid.
2. FIT: The FIT will be “up to” 2.44 THB/kWh. This FIT is explained by the fact that the costs to develop rooftop solar photovoltaic panels have declined.
3. B2B: According to the Ministry of Energy, “households are allowed to participate in the power generation from their own rooftops and to receive revenue from selling the surplus electricity.” Whether this includes private PPAs for solar panels installed on foreign rooftops and selling 100% of the generated energy has not yet been explicitly declared.
4. Timeframe: Details such as business model, investment budget, power tariff, net metering system, supporting region and capacity from each building are still under development. The investment conditions are expected to be concluded this year.
5. 2036: The government aims to increase the country’s total renewable energy power generation from now 10% to 30% in 2036. Current policies may be accelerated to increase the proportion of renewable energy and meet the target sooner than projected.
Solar rooftop deregulation, legislation, and industry practice
Currently, 95% of Thailand’s solar energy is produced in ground-based solar farms. Under a deregulation and liberalization of the whole industry, the small rooftop quota will increase rapidly. Solar rooftop developments installations on commercial, industrial, governments, public institutions (e.g., schools and hospitals), residential, and any other type of buildings are going mainstream with the introduction of non-utility offtake deals and the opening of the energy market to sell rooftop electricity on demand into the grid.
Thai companies in the manufacturing sector can utilize rooftop solar not only to improve their environmental profiles but also to lower their operating costs. This offers attractive opportunities, among others, for foreign investors in Thailand’s solar energy industry.
A new national Power Development Plan (PDP) is in the making, which will replace the 2014 version. A member of the National Energy Reform Committee is quoted in a Bangkok Post report on 18/01/18 with the words: “Power consumers in Thailand now pay monthly bills for their electricity, but in future, they could generate their own electricity through solar rooftops and sell the surplus power to other users. The coming years will see the rise of prosumers. Prosumers may generate power for their local communities and even sell the surplus outside of that community. ”
Limitations of off-grid solar photovoltaic rooftop facilities
Solar panels installed on the own rooftop for self-consumption “behind-the-meter” are already widely popular in Bangkok as well as the various production plants in the Eastern Seaboard. The owners of factories, buildings, and residences have installed solar rooftops to produce their own electric power and cut back on expenses. Reductions in technology prices and innovative financing structures help to make government subsidy programmes unneeded and obsolete and made photovoltaics competitive with fossil fuels energy sources.
Under a regulation of the Energy Regulation Commission as of 2013, solar rooftop energy of up to 10 MW can be sold to the governmental utilities PEA and MEA. The regulation defines the criteria, procedures, and conditions of a power purchase.
The rooftop is defined as a roof, deck, or any part of the building. “Building” means a building according to the Building Act in which persons can reside or utilize. The definition does not include wall, fence, banner or banner’s structure, parking area, U-turn area, access way for vehicle, or likewise structure.
Rent a rooftop: Deregulation allows grid-connected photovoltaic rooftop facilities
Latest governmental announcements predict a sunny future: In the next months, it will be allowed to sell electricity, generated by privately owned solar rooftops, to state utilities. This will open the sun gate to substantial investments in solar rooftop developments. However, this will not be more than the first step in an open energy market.
On an international level, energy consuming businesses are taking advantage of third-party ownership options. Under solar leases or private power purchase agreements, electricity customers gain financial benefits without a substantial investment or pre-payment. However, the devil is in the detail and the commercial agreements for the solar rooftop venture have to be adjusted to the specific legislation in Thailand which is not yet disclosed. The alternative is to purchase or lease a solar system by the rooftop owner to produce electricity on his own.
Thailand’s solar energy projects: Ready for the grid-parity?
Thailand’s Ministry of Energy aims to introduce nonsubsidized solar rooftop power, which does not rely on the Thai feed-in tariff (FIT) regime. Under such economics, electricity will be sold at a discount to the price of electricity purchased from the fossil fuel-dominated national grid, thereby achieving solar power production at parity with the grid.
More about the new legislation:
Main structural questions of the new legislation cover three topics:
- Regulatory and commercial terms for a power purchase agreement with EGAT (firm PPA, etc.)
- Possibility to enter into a commercial or industrial power purchase agreement (C&I PPA) to sell electricity to a private party
- Electricity production license requirements and a possible total capacity limit.
Various other legal and commercial issues have to be taken into consideration under the new regulatory framework. Maybe most important will be the scope of flexibility to reflect changes in the business environment during the lifecycle of the project.
Professional services in the emerging solar rooftop industry
PUGNATORIUS Ltd. is a Bangkok-based specialist provider of bespoke transactional legal and tax advice in the corporate and property legal and taxation industry sectors. With respect to Thailand’s sustainable energy industry, the law firm is specialized to guide foreign developers and investors through the red-tape requirements, legal hurdles, and industry practice of solar power projects in Thailand.
The professional services include:
- Preparation of a legal specification sheet for developers to invest in Thai solar panels on rooftops of private or governmental buildings.
- Design and drafting of the comprehensive contractual arrangements for the solar rooftop development venture
- Drafting and negotiation of reservation agreements with rooftop owners for a cooperation with foreign developers and investors.
- Drafting and negotiation of C&I PPA’s under the new legislative regime
- Design of a tailor-made foreign investment structure in compliance with the new solar rooftop energy legislation in 2018.
- Support in the comprehensive application process for investment promotion by the BOI Board of Investment
Ask the law firm for a consultancy and support offer to participate in Thailand’s second solar gold rush. Get solar lessons you do not want to learn the hard way.