Solar and wind
Thailand has the highest solar and wind power output in
ASEAN. The Thai regulators adopted an adder tariff policy, and
subsequently a feed-in tariff policy, which provided incentives
for renewable projects.
As of April 1 2018, the number of solar projects which had
achieved a commercial operation date (COD) in Thailand was 531
with a total selling capacity of 2,567 MW. This included seven
small power project (SPP) power purchase agreements (PPAs)
signed with the Electricity Generating Authority of Thailand
(EGAT) (436 MW), and 523 very small power project (VSPP) PPAs
signed with the Provincial Electricity Authority
(PEA)/Metropolitan Electricity Authority (MEA) (2,130 MW). The
receipt of applications for open grid projects has been
suspended due to the large number of applications received.
Solar PV rooftop projects are still being accepted.
Fifteen wind projects had achieved COD in Thailand as of
April 1 2018, with a total selling capacity of 459 MW. This
includes nine SPP PPAs signed with EGAT.
On March 28 2018, the Minister of Energy stated that there
would be no purchasing of state renewable power for five years
from 2018 to 2023. Unless the cost was lower than THB2.44
(around $0.08) per kilowatt hour, the government would not
consider buying additional renewable energy. His primary
concern was the amount of subsidies in the tariffs, compared to
purchases of power from gas-fired power projects. This will not
affect the existing PPAs signed by EGAT, PPA and MEA. It will
result in no further investment in solar or wind projects until
satisfactory clarification on tariffs for renewables. In May
2018, the Federation of Thai Industries (FTI) and
representatives of the industrial sector of renewable energy
asked for clarifications and a clear policy framework from the
This policy is contrary to recent policies to increase the
use of renewable power, and Thailand's pledge to a 20 to 25%
reduction in its emission of greenhouse gases by 2030. It is
contrary to the Alternative Energy Development Plan 2015 to
The new national Power Development Plan (PDP) 2018 is going
through the preparation process by the Ministry of Energy with
the main target being to secure the public's interest without
increasing power utilisation costs. The Ministry of Energy aims
to complete the new PDP by September 2018.
In 2017 the Petroleum Act (PA) and the Petroleum Income Tax
Act (PITA) were amended to establish two new contractual
regimes for exploration and projection, in addition to the
- Production sharing contracts (PSC): the
model PSC was issued on March 8 2018. It provides for a cost
recovery ceiling of 50%, and a ceiling on the contractor's
share of 'profit oil' of 50%.
- Service contracts: no model service
contract has been issued.
In December 2017, the Minister of Energy announced that two
public tenders would be conducted in 2018:
- Auctions of the Bongkot and Erawan gas
blocks in the Gulf of Thailand. The existing concessions on
these fields (after one 10-year extension) expire in 2022 and
2023. Under the PA, a second extension is not allowed. The
terms of reference were issued on April 23 2018.
- The new, 21st-bid round for rights to
explore, develop and produce petroleum on 22 blocks.
The Thai petroleum concession has proven to provide a very
stable foundation for investment in oil and gas and downstream
projects in Thailand since 1971. However Thailand has limited
geological prospectivity. It imports more than 40% of its
natural gas demand and 75% of its fossil fuels demand. Its
petroleum reserves are declining with increasing demand.
It remains uncertain how the new contract regimes will be
implemented and administered, and whether the oil and gas
industry will accept the proposed new terms. The PSC cost
recovery limit of 50% and the 50% minimum government share of
'profit oil' may not be economically viable with the prevailing
low oil prices.
The PA could have simply been amended to allow second and
subsequent extensions of existing concessions. This is the
practice in most other producing jurisdictions, in which
subsequent extensions are negotiated and granted, often on
improved terms for the host government.
The termination of the Bongkot and Erawan concessions, the
auctioning of those fields under PSCs, the settlement of
decommissioning obligations, and the transfer, removal or
abandonment of assets, will present interesting issues.