Pugnatorius, Independent legal practice based in Bangkok, Thailand recently published an research on Seven opportunities in Thailand’s Solar Energy 2020.
Thailand in 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 . This amounts to 50% of the 2036 target under the current 20-year roadmap (AEDP 2015). The total solar power capacity of roughly 3,500 MW can be predicted for the end of 2019.
The research agency has highlighted following opportunities:
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 predefined steps and offers a certain degree of transparency and fairness.
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.
Opportunity #4 – Self-consumption schemes: 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 investments can be delivered, financed and maintained by third parties under EPC (Engineering, Procurement, and Construction), O&M (Operating & Maintenance) and finance agreements.
Opportunity #5 – Solar rooftop investments: Under international solar rooftop legislation, (foreign) investors and developers are 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). Meanwhile, Thailand’s regulatory framework lacks these full scope of opportunities. Details can be found at “Thailand’s new solar rooftop developments“.
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 – Thailand’s power grid: The revised version of the power development plan (PDP) for 2018-37 is focused on new investments in renewable power by opening private participation and investment with local communities in order to share profit and revenue with locals. This new regulatory framework opens new business opportunities for foreign solar companies in a peer-to-peer (P2P) power trading model to decentralize the power generation system in the land of smiles. This will require to set-up a Thai company to enter into a joint-venture with small communities.
P2P power trading will include biomass, biogas, waste and solar energy, depending on the potential in each province. Existing and new power-distributing infrastructure and transmission lines will be the key factor when designing the venture. Thailand’s new Energy Minister is quoted in the local press “The project will be open for participation from businesses of all sizes that are interested in the electricity value chain, so peer-to-peer power trade can combine blockchain, smart power meters and a new sandbox for the power business.”
According to Pugnatorius, 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, Shady Germany installed 40+ GW solar power. Its renewable energy quota (solar, wind, biomass) will be increased to 30% by 2030 and Solar power from households will be the main source of power under the AEDP (Alternative Energy Development Plan).
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, MEA, and PEA. Due to its low staffing level, spacious grounds without social distancing issues, and its necessity even under a lock-down scenario, it can be deemed to be largely pandemic-unaffected as well..