Permalink
Executive Summary
Thailand has long been promoting and supporting energy development, especially in the field of renewable energy and energy efficiency. The Thai government has been promoting renewable energy to reduce the use of fossil fuels, especially natural gas, and reduce the environmental impact from traditional energy sources. Renewable energy development in Thailand includes solar, wind, small and large hydropower plants, biomass, biogas, municipal solid waste (MSW), geothermal power, and biofuels (ethanol, biodiesel).
Under the Alternative Energy Development Plan (AEDP) 2018, integrated into the Power Development Plan (PDP) 2018 Rev.1, the Thai government is striving to develop more renewable energy power plants over the next 20 years. The government’s goal is to increase the proportion of renewable energy to 30% (including imported hydropower) of total energy consumption by 2037. The renewable energy purchasing target will be maintained at 18,696 megawatts.
With an ambitious renewable energy development plan, the share of renewable energy to total energy production could surpass the national target of 30% before 2037. This renewable deployment could save over $9 billion per year, according to the International Renewable Energy Agency (IREA) and the Ministry of Energy.
With regard to Thailand’s transition into a low-carbon economy, the implementation of smart energy, particularly smart grids, is a national policy priority for the Ministry of Energy. This policy calls for the state-owned enterprises to invest approximately $6.4 billion in smart grids before 2036 to enhance energy supplies, increase efficiency, strengthen grid resilience, and reduce carbon emission.
Regarding the power sector, the total renewable energy generating capacity has doubled since 2012. Within the power generating mix, bioenergy and hydropower hold the biggest shares, while the portion of solar PV and wind power have quickly caught up. These gains are attributed largely to the generous and favorable feed-in-tariff (FiT) system, Adder. This positive trend should continue as long as the government’s policies remain clear and supportive of renewable energy.
Permalink
Current Market Trends
According to the Department of Alternative Energy Development and Efficiency (DEDE), in 2019 Thailand’s renewable energy installed capacity was 11,852 MW; up 4.2% from the previous year.
The country’s renewable energy consumption was 14,136 ktoe in 2019, accounting for 16.5% of total energy consumption. The three main consumers of renewable and alternative energy in Thailand are electricity, heat, and biofuels.
*Including off-grid power generation
Source: The Department of Alternative Energy Development and Efficiency (DEDE)
Biomass power plants hold the largest share (28.8% of total installed capacity) followed by solar (25.2%), large hydropower (24.6%), wind (12.7%), biogas (4.5%), municipal solid waste (MSW) (2.7%), and small hydropower (1.5%).
Renewable energy for electricity use was the second highest at 3,245 ktoe or 10,536 MW in 2019, most of which came from solar, biomass, and large hydropower. Thailand’s biomass is produced from rice husks, bagasse, woodchips, palm residues, and corn through direct combustion and thermochemical conversion processes. Thailand aims to increase energy from biomass to 22,100 ktoe per year over the next 16 years.
Lastly, biofuel consumption was driven by the production of ethanol, biodiesel, and compressed bio-methane gas. In 2019, Thailand consumed 4.7 million liters of ethanol, 3.8 million liters of biodiesel, and six tons of compressed bio-methane gas per day. Under the AEDP 2018, it aims to increase power generation capacity from biomethane gas generated by community power plants under the “Local Economy” project. This project involves the development of power plants operated by villagers to earn income for their communities by partnering with a private entity to produce and sell power to the Metropolitan Electricity Authority (MEA) or the Provincial Electricity Authority (PEA).
Thailand has encouraged private companies to enter the power generation market. Most of the power producers for renewable energy in Thailand are Small Power Producers (SPPs) and Very Small Power Producers (VSPPs).
Number of Power Plants and Installed Capacity by Renewable Sources
Source: DEDE
The Thailand Department of Energy announced its Five Year Civil Service Action Plan, with the first phase between 2020-2022, which highlights three main initiatives to improve the country’s energy efficiency:
- Increase household electricity accessibility from 99.76% to 99.99% and increase the accessibility of clean energy for cooking to 82.29%
- Increase alternative energy consumption from 15.6% to 30% of total energy consumption
- Reduce energy intensity (EI) to 30%, or from 7.87 ktoe to 5.98 ktoe per 1,000 million baht by 2026
Summary of Trends for Power Generation Sectors by Renewable Source from 2019-2021
Source: Krungsri Research
With the PDP 2018 Rev. 1 and AEDP 2018; the total new capacity of renewable energy is 20,766 MW. The total target for new renewable energy capacity under the AEDP 2018 is 18,696 MW by 2037. Thailand’s power demand is expected to be 56,431 MW in 2037. The below figure is a breakdown of the AEDP 2018 targets.
Over the next five years, the Ministry of Energy aims to purchase electricity from renewable energy companies totaling more than 3,042 MW, with 1,933 MW from community power plant projects, 400 MW from community waste, 270 MW from, and 250 MW from solar. The purchasing plans were added in the AEDP 2018 along with the country’s power development plan (PDP2018 Rev.1).
Energy Transition - Smart Grid
According to the Global Energy Transition Index 2019 from the World Economic Forum, Thailand was ranked 51 out of 115 countries globally. The country moved up three places from the previous year due to improvements in energy stability and adoption new technologies, including storage and demand management. The main policy driving the improvement is the Power Development Plan (PDP) 2018 and the Solar Power Plan — Public Solar Project, a 10-year project with a capacity of 10,000 MW. This solar project will encourage households to participate in energy generation and is expected to increase renewable consumption from 15% to 30%. The PDP will also provide a transition to smart grid adoption in Thailand through the Smart Grid Development Master Plan (2015–2036) and the Smart Grid Action Plan (2017–2021), which have been developed to promote a sufficient, efficient, and sustainable electricity supply.
This pilot project includes the first smart microgrid site in Thailand, operated by the Provincial Electricity Authority (PEA) in Ban KhunPae, Chom Thong District, Chiang Mai Province. This smart microgrid system utilizes electricity generated by hydro (100 kW) and solar PV (100 kW). It’s equipped with high-efficiency energy storage (100 kWh), serving the KhunPae Royal Project and Ban KhunPae Community of 700 households. The microgrid system is designed to manage grid connection, charging, storage, and load balancing; enhancing people’s quality of life in the KhunPae community.
The PDP 2018 initiative extended the Small Power Producers (SPP) cogeneration contracts that expired during 2016-2025, helping to expand generating capacity and raising investment in new power plants. The expirations impacted 25 operators with a generating capacity of 2,974 MW, 20 of which used natural gas, and five of which used coal. As a result of the contract expirations, increased investment is expected in three classes of power generations:
- For independent power producers (IPPs), the open bidding should take place within the next three to five years for the replacement of large-scale power plants utilizing natural gas. These plants will reach the end of their supply contract and lose their access to the grid during the 2025-2027 timeframe, resulting in 700 MW of capacity up for auction.
- SPPs will increase their generating capacity and drive more investments in new power plants, especially for natural gas-fueled cogenerating power plants, whose contracts expire in 2016-2025. At the same time, these SPPs will invest in renewables through mixed-fuel power generators or “hybrid firms.”
- There will be more investments in solar power from private rooftop solar cells with support from the government to purchase 100 MW of supply for the next 10 years (started in 2019). Investment opportunities in wind and hydro are expected after EGAT builds the necessary transmission lines.
Thailand’s power generation sector is expected to continue to grow steadily, supported by both solid demand and government support for investment. The PDP 2018 rev.1 together with the extension of existing SPP co-generation contracts will help expand generating capacity and raise investment in new power plants in the near term.
COVID-19 Pandemic Effect
According to Minister of Energy Supattanapong Punmeechaow, the COVID-19 pandemic is affecting the global economy and Thailand’s energy sector, as it considers adapting to the “new normal”. In the past, the government, including the Ministry of Energy, has acted to mitigate the impact on all sectors through both income assistance measures and reductions in energy costs. The Ministry will continue to carry out all measures, especially job creation efforts. Since the crisis may last another 12-15 months, the Ministry of Energy is introducing long-term measures to promote both the public and private sectors. The goal is to help companies align their business models with the BCG economic policy (bioeconomy, circular economy, and green economy), permitting the development of sustainable economic models to meet unexpected challenges.
Regional Perspective
The Lower Mekong region, comprised of Cambodia, Laos, Myanmar, Thailand, and Vietnam, has an abundance of energy resources including solar, biomass, biogas, wind, and hydropower. Usage of fossil fuels for energy production is expected to be reduced to almost zero over the next 20 years, replaced by local renewable energy. However, not all renewable energy sources are equally sustainable. Hydropower and biomass can have significant environmental and social impacts. Solar, wind, and geothermal plants need to be properly planned to avoid harm, but in general, their impacts are low.
Permalink
Competitive Landscape
Thailand is in an age of energy disruption. The country needs to adapt to new technologies in the energy sector, and electricity is not only for large corporations anymore. The PDP 2018 Rev. 1 will play a significant part in Thailand’s energy future by making electricity more accessible to the public while reducing environmental impacts. This is an area where U.S. companies could potentially play major roles as service and technology suppliers.
International companies active in the market include Suntech (China), Trina Solar (China), First Solar (U.S.), Siemens (German), Gamesa (Spain), and GE Renewable Energy (U.S.). All have signed contracts or have existing business in Thailand.
Permalink
Market Issues & Obstacles
The main issues facing renewable energy are high costs and technological development. Currently, most renewable energy technologies in Thailand are imported with a small portion of components produced locally. Further expansion depends in part on utilizing the entire value chain of locally produced bioenergy, adopting local expertise in solar thermal technologies, developing solar PV and wind power generation technologies, and expanding electrical vehicle (EV) manufacturing capacity (including two and three-wheelers) in Thailand.
Permalink
Regulatory Environment
There are no regulations or requirements concerning carbon capture and storage technology currently. Energy reform is being carried out under PDP 2018 (2018-2037), which emphasizes the use of renewable energy. To increase the security of the supply from renewable and alternative sources, PDP 2018 supports the development of power generation facilities using biomass and waste, relaxes rules for installing rooftop solar systems, and promotes investments in energy storage.
The Thailand Board of Investment (BOI) offers a wide range of tax and non-tax incentives for projects that meet national development objectives. Tax incentives, including exemptions or reductions of import duties on machinery and raw materials, and corporate income tax exemptions of up to eight years. Non-tax incentives include permission to bring in expatriates, 100% foreign ownership in renewable energy projects, permission to own land, and streamlined remittances of foreign currency. For more information, visit at www.boi.go.th.
In addition, the Energy Policy and Planning Office (EPPO), the Department of Alternative Energy Development and Efficiency, the Ministry of Natural Resources and Environment, and the Ministry of Science and Technology provide various programs and policies of support.
Permalink
Market Entry Strategies
Typically, market entry into Thailand is by two main channels. The first is through local distributors in Thailand. Normally, this process requires a trial period due to the complexity of the equipment and the need to develop a working relationship. A second is through an agency. Despite the higher costs associated with agencies, it is a convenient way to manage local distributors, which can reduce processing times and personnel costs.
Permalink
Upcoming Trade Events
POWERex & Electric Asia 2020
November 25-27, 2020
Bangkok International Trade & Exhibition Center (BITEC), Bangkok, Thailand
The Powerex & Electric Asia 2020 brings together an international congregation of government and private power, electric, and renewable energy companies and supporting industries to showcase the latest developments in the electrical, power generation, and renewable energy industry. www.asiapowerexpo.com
International Conference on Smart Power & Internet Energy Systems (SPIES) 2021
Date: TBD
Location: TBD
SPIES is one of the principal events for power and energy experts from academia, industry, utilities, power and energy service providers, researchers, and scientists across the globe to exchange ideas and experiences in emerging energy technologies. https://www.icspies.org
ASEAN Sustainable Energy Week 2021
Date: TBD
Bangkok International Trade & Exhibition Center (BITEC), Bangkok, Thailand
This show highlights renewable energy sources and the latest technologies, including wind, solar power, thermal, waste-to-energy, hydro-powered, biomass, and other green technologies.
https://www.aswe-expo.com
Permalink
U.S. Commercial Service Contact Information
For additional information, please contact:
Ms. Suttharud Liangwonnaporn
Commercial Specialist
U.S. Commercial Service Thailand
sliangwo@trade.gov
