Thailand’s solar rooftop developments
From self-consumption though rent-a-rooftop schemes to grid-connected solar rooftop developments and blockchain-based peer-to-peer energy trading
Self-consumption: Solar panels installed on the own rooftop for self-consumption “behind-the-meter” are widely popular in Bangkok as well as the various production plants in the Eastern Seaboard. The owners of factories, buildings, and residences have installed self-financed 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.
Third-party ownership: The existing legal environment allows solar service providers to agree with commercial and industrial rooftop owners to sell and construct solar rooftop panels and enter into a long-term service contract to keep the panels operational. Depending on the agreements, the facility owner can finance the solar investment by the savings in electricity costs only.
Private PPA: Alternatively, a solar developer can rent the rooftop to install its own solar panels to build, own and operates the system (BOO) and produce electricity in a third-party ownership model. The electricity is sold to the rooftop owner under a private power purchase agreement. The license requirements (inclusive Regulated Energy Production License) for such a venture as well as BOI investment promotion options have to be taken into consideration.
Grid-connection: Previous governmental announcements predicted to allowed to sell electricity, generated by privately owned solar rooftops, to state utilities. Solar rooftop development 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.
Peer-to-peer energy trade: Thailand plans to 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. Details are described at “Prosumer, blockchain and the Thai power grid”.
A brief history of Thailand’s solar rooftop industry
13/08/2013: Notification of the Energy Regulatory Commission on Power Purchase from Solar PV Rooftop
30/08/2013: Under a regulation of the Energy Regulation Commission, 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.
2017: New developments as described at “Seven Questions: Thailand’s new solar rooftop legislation”
18/01/18: 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 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.”
07/06/18: Statement by Thailand’s Minister of Energy
- B2G: Private, as well as commercial and industrial rooftops, have to be “accepted” (licensed?) to sell solar power to the grid.
- 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.
- 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.
- 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.
- 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.
July 2018: 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.
Seven contracts for the solar rooftop development
#1. Sale or lease: To install the solar panels and inverters on the rooftop, a sale or a lease agreement has to be agreed.
#2. Construction agreement: The solar developer needs access to the rooftop to install the panels and accomplish the commissioning procedures.
#3. Service contract: Under a service contract the solar facilities had to be maintained in an operational status.
#4. C&I PPA: If the solar developer is the power producer, the electricity is sold to the rooftop owner under a power purchase agreement with a duration between 15 and 25 years. The PPA might include a guaranteed yield performance and a transfer of ownership at the end of the contract.
#5. EPC contract: The solar developer typically outsources to an EPC contractor the tasks engineering, procurement, and construction. A split of the turnkey contract into service and delivery contract might be required for a tax#efficient structure. For the technical design, standardized ERC Mini Code of Practice (Mini-CoP) could be agreed.
#6. O&M contract: Also, the solar developer typically outsources to an O&M contractor the tasks to operate and maintain the installment. EPC contractors typically offer O&M services.
#7. Governmental implications: The long-term solar energy project has to take into consideration the future liberalization of Thailand’s energy industry and the possibility to sell energy to the grid. Electricity production license requirements and a possible total capacity limit might have an impact as well. Also, the opening of the energy market by allowing blockchain-based peer-to-peer trade of solar rooftop electricity has to be taken into consideration.
Professional service offer on solar energy projects
Solar energy and other forms of renewable energy are one of the law firm’s areas of competence, long-standing experience, and unique market reputation. The scope of services cover these seven main activities:
- Scouting of market opportunities
- Corporate structures
- BOI investment promotion
- Acquisition support
- Commercial contracts
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