Understanding the Thailand concept of green energy to inspire domestic policies

Energy demand is growing rapidly in Thailand, according to the number of inhabitants and the positive increase of gross domestic product (GDP).

At the same time, governmental approach has been taken since 2010, with the implementation of the Energy Efficiency Programme which pledges to reduce energy use by 30% by 2036, promoting new alternatives forms of energy swapped from old and consuming power plants.

Population growth leads to higher consumptions: to make an example, the population still uses biomasses for cooking. Demographic growth leads automatically to higher request for conventional resources.

Thailand decided to apply a preventive policy, by investing on wind and solar energies, transportation infrastructures and the replacement of old sources of energy for renewable ones.

Another reason behind Thailand positive approach is political and economic: its dependence on energy import is increasing and is expected to reach a 78% by 2040, especially due to natural gas imports.

Consequently, Thailand’s ambitious 10-year-action plan for renewables (Alternative Energy Development Plan (AEDP)), aims to achieve a 25% energy consumption from renewable energy sources by 2021 (currently 8%). This plan is for both Thailand and neighboring countries, and imposes to every Thai company or private investor to focus on power purchase agreements (PPAs), renewable projects located abroad.

Thailand has a high solar resource, while its neighboring countries can take advantage of wind and hydropower. Its promotion goes at economic level too, with subsidies given to renewable energy companies to prevent volatile gains and give solidity that could call for new investors.

All these initiatives have been positively welcomed by the population, and already 31 projects have been signed, under the PPA, together with the Electricity Generation Authority of Thailand (EGAT) as per March 2016.

With a stable BBB+ (S&P as of 31/03/2016) and thus a similar rating as in Mexico, Poland or Spain, the government expects international investors will be attracted to enter this new market. Japan and the UAE are expected to be major investors, whereas European utilities like Engie already have well-stablished entities in Thailand.