Comment: Thailand – 4.3 GW of renewable energy with feed-in tariffs

Paul Gipe

Since the introduction of its small power programme in 2006, Thailand has signed contracts to develop 4.3 GW of renewable generation. Nearly half of the contracts – 1.8 GW – are for solar energy alone.

Currently 850 MW of renewable energy generation is online as a result of the programme, says Chris Greacen, a former consultant to the Thai Government. The large majority of that, 700 MW, is from biomass. Only 16 MW of solar is in operation, but the number of projects is growing rapidly, according to Greacen.

Thailand's Very Small Power Producer (VSPP) programme uses the ‘bonus model’ of feed-in tariff design where the final tariff paid is composed of several ‘adders’ on top of the avoided wholesale cost of generation.

As in successful programmes elsewhere, the Thai feed-in tariffs are differentiated by technology. However, the Thai feed-in tariff programme for renewable energy contains several unique features.

There is a specific ‘adder’ or bonus for offsetting diesel-fired generation. There is also a location adder or risk premium for projects in three southern provinces and an adder to compensate for fossil-fuel price volatility.

Thailand joins several other Asian countries, such as China, Malaysia, and the Philippines, that have moved to feed-in tariffs or are in the process of doing so.

The Thai renewable energy programme includes anti-gaming provisions to discourage ‘briefcase’ project developers from clogging the programme with applications that are unlikely to be built.

The programme requires 200 baht/kWh (US$6/kW) deposit to prove the developer's good faith. Further, no adder will be paid if project completion is more than one year past its due date.

Renewable energy contracts to date are dominated by proposed biomass and solar thermal electric projects. There are 1.4 GW of solar thermal electric projects under contract, and 2.1 GW of biomass projects under contract.

To increase project diversity, Thailand is providing government-backed loans at 4% interest up to 50 million baht (US$1.6m) per project. Similar to Germany's KfW (the German Bank for Reconstruction and Finance), the Government has loaned 4 billion baht to 13 banks at 0.5% interest for use in the renewable energy programme.

The Thai programme followed the introduction of a net-metering policy in 2002. The current feed-in tariff programme went into effect in 2006.

  • Projects are limited to 10 MW.
  • Contracts vary from 7 to 10 years.

Most solar PV projects under contract are large, ground-mounted arrays. Interestingly, nearly all will use inverters made by a domestic Thai manufacturer.

Payment for a typical solar project not located in the southern provinces would include 8 baht/kWh solar bonus, 2.6 baht/kWh for the wholesale avoided cost, plus 0.93 baht/kWh for the fuel volatility bonus. The total payment, 11.5 baht/kWh is about US$0.38/kWh. However, solar contracts are good for only 10 years.

This feed-in tariff news update is partially supported by An Environmental Trust and David Blittersdorf in cooperation with the Institute for Local Self-Reliance. The views expressed are those of Paul Gipe and are not necessarily those of the sponsors.

Paul Gipe
661 325 9590, 661 472 1657 mobile
pgipe@igc.org, www.wind-works.org

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Bioenergy  •  Photovoltaics (PV)  •  Policy, investment and markets  •  Solar electricity