As part of its integrated energy blueprint, the Thai government is placing increasing emphasis on renewable energy. In particular, this means a heightened focus on solar power, which is expected to see continuing growth and development in 2017. And lawyers in Thailand are already witnessing an uptick in related work. By Ranajit Dam

 

Thailand’s solar power sector, already a leader in Southeast Asia, continues to shine brighter with each passing year. If 2014 saw 470 MW of solar power capacity being newly installed, the figure rose to 722 MW in 2015. And based on the latest data officially published by the Energy Regulatory Commission (ERC), 723 MW had been newly installed just in the first nine months of 2016 alone. This growth and development is only expected to continue in 2017.

Jessada Sawatdipong, senior Partner at Chandler MHM, says that much of this is due to the government’s commitment to develop the sector. “With the continued resistance to new coal-fired power plants in Thailand, we note more interest in renewable energy projects, including solar projects here,” he says. “The government’s strong commitment to renewable energy, with a focus on solar, has also supported client interest in solar projects. And finally, the decreasing cost for developing solar projects – including low tariffs for solar generation – and the time-frame involved in solar power start-ups, as compared to, say, gas, coal or other renewable projects has also driven client interest in this renewable energy sector.”

Jessada cites some of the government’s measures to support renewable energy growth. These include Board of Investment (BOI) incentives such as exemption of import duty on equipment and machinery, and exemption of corporate income taxes resulting from the sale of renewable energy or the saving of energy for periods of up to eight years; investment grants from the Department of Alternative Energy Development and Efficiency (DEDE) at the Ministry of Energy/Energy Policy and Planning Office; data support in the government’s commitment to provide solar (and wind) data maps and a one-stop-service center at DEDE; and the Energy Service Company (ESCO) Fund, which is financial support by DEDE to lower the risk for investments in renewable energy-focused business, equipment leasing and credit guarantee facilities.

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CLIENT INTEREST

The government’s commitment is being matched by investor interest. “Regarding solar matters in Thailand, Chandler MHM is often asked to advise clients on possible new rounds of bidding for solar projects, site issues, such as zoning, licensing and land titles, and on regulations affecting various solar programs, such as agricultural coops, educational institutions, solar rooftops, and others, and their legal authority to enter into solar energy arrangements in Thailand,” says Jessada.

“Other issues the firm is asked to provide advice on include tariff-related concerns, creation of security under the recently introduced Business Collateral Act, and the financing limitations imposed by security and assignability of PPAs.”

For clients who want to get into the solar sector, Jessada’s firm stresses the importance of having good local representation with a strong track record of assisting with energy and natural resources projects. “A thorough due diligence exercise is highly recommended, as well as a complete understanding of any caveats to an announcement for any bid round for renewable projects,” he adds.

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GREAT PROSPECTS

At the end of 2016, Thailand’s renewable energy market remained the most established in Southeast Asia. In addition, targets set by the National Energy Policy Council (NEPC) to triple the country’s installed solar PV capacity of 2,021 MW in 2015 to 67,000 MW by 2036 remain in place, observes Jessada. “We expect that the solar power industry in Thailand will continue to grow during the next few years, as the government continues to open bids for solar projects. In addition, we see a market trend toward more rooftop solar projects which either sell electricity to government offtakers such as the PEA and the MEA, or to the private sector, such as major hyper markets, warehouses, factories and office buildings,” he notes.

Jessada’s firm also continues to track innovation in solar technology. “This year may not be the year that delivers new and groundbreaking solar technology, but we do anticipate that module makers will push forward development schedules for improved module efficiency which in turn will provide reduced pricing and thus even greater motivation for solar uptake in the years ahead,” he says. “Over time, the combination of technological advances and continuing price reductions could also affect the need for government incentives. We continue to monitor private sector R&D and government developments carefully.”  

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KEY LAWS AND REGULATIONS

— Energy Regulatory Commission (ERC) notifications and regulations;

— BOI notifications on incentives for specific business activities;

— Electricity Generating Authority of Thailand (EGAT), Provincial Electricity Authority (PEA), and Metropolitan Electricity Authority (MEA) regulations;

— Foreign Business Operation Act (FBOA);

— Town Planning Act and Ministerial Regulations;

— Land Code, specifically the prohibition on land ownership by foreigners;

— Enhancement and Conservation of National Environment Act.

Source: Chandler MHM

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