Thailand’s 2022 – 2030 Renewable Energy Procurement Starts Now

Introduction

Following the public hearing in July 2022 (see our previous newsletter LINK), the Energy Regulatory Commission (ERC) released the Regulation for Procurement of Renewable Energy under Feed-in Tariff (FiT) Scheme for the Period of 2022 to 2030 (the “Regulation“), which took effect on 28 September 2022.

As mentioned in our previous newsletter, this new round of procurement will be in the form of 1) non-firm purchases for power generated from biogas (from wastewater and solid waste), wind and ground-mounted solar power generated by greenfield small power producers (SPPs) and very small power producers (VSPPs); and 2) partial-firm purchases for power generated from ground-mounted solar with battery energy storage systems (BESS) generated by greenfield SPPs.  Power generated from the SPPs (selling more than 10 MW but not exceeding 90 MW) and the VSPPs (selling not exceeding 10 MW) will be sold to 1) the Electricity Generating Authority of Thailand (EGAT), and 2) the Provincial Electricity Authority (PEA) or the Metropolitan Electricity Authority (MEA), respectively.

The Power Development Plan 2018 – 2037 (Revision 1) (PDP) currently envisions over 5 GW of additional renewable energy capacity coming online by 2030. The current PDP sets out target procurement quotas and SCODs for these energy sources as follows:

Qualifications of power producers

The key qualifications of power producers prescribed by the Regulation are set out below. Of particular note are the Regulation’s restrictions on foreign ownership and management.

1. Types of entity: Power producers must be juristic persons incorporated under Thai law or registered in Thailand.
2. Shareholders: In the event a power producer is a limited company, the ultimate foreign shareholders of the power producers may not exceed 49% of all shares. Further, the number of foreign shareholders of the power producers may not exceed half of all shareholders.
3. Shareholding maintenance: Power producers must maintain a shareholding ratio of original shareholders per the offers for sale of electricity for not less than 50% of all shares until the third anniversary following the commercial operation date (COD), unless the power producers are public limited companies with their shares listed on the Stock Exchange of Thailand.
4. Directors: Not less than half of all directors must hold Thai nationality.
5. Authorised directors: Authorised directors must hold Thai nationality.
6. Registered capital: Power producers must have registered capital of not less than THB 2,000 per kW of electricity proposed to be sold per the offers for sale of electricity.
7. Bid bond: Power producers must place a bid bond in an amount of THB 1,000 per kW of electricity proposed to be sold per the offers for sale of electricity.

Note that the foreign shareholding restrictions imposed by items 1. – 2. do not apply in the event the applicant benefits from exemptions under the General Agreement on Trade in Services (GATS) providing for Specific Commitments (Mode 3), and the restrictions on foreign directors set out at items 4. and 5. do not apply in the event the applicant benefits from exemptions under the GATS providing for Specific Commitments (Mode 4) granting national treatment, or other applicable laws.

Green commitments

Renewable energy certificates (RECs) or carbon credits will belong to the EGAT, PEA, MEA (as offtakers) or the relevant government sector in exchange for subsidies granted by the government sector in the form of the FiT.

The ERC also reiterated in the Regulation the commitments of the ERC, the offtakers and power producers to comply with any international rules or local statutes and guidelines with respect to the environment and energy.  The Regulation also states that power producers are required to comply with applicable laws to provide data for the purposes of creating a greenhouse gas database.

Timeline

Based on the ERC’s press release and the Regulation, key milestones of the procurement will be as follows:

Potential bidders should note that the qualifications set out above are not exhaustive and that other factors will also be taken into consideration in the bid process including, but not limited to:

1. Development stage of the proposed project including real estate and permitting procurement status
2. Grid access
3. Track record of developers for proposed projects
4. Financial support for the projects