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Solar Energy Development in Thailand

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Solar Energy Development in Thailand 8 May 2018 SOLAR ENERGY DEVELOPMENT IN THAILAND OVERVIEW On 7 September 2017, the government announced that it will lift the ban on selling electric power generated by solar rooftop PV in the fourth quarter of 2017. This includes solar facilities on detached houses, warehouses, factories, and offices. According to the Energy Ministry, the Electricity Generating Authority of Thailand (“EGAT”) will exclusively buy at a rate below THB 2.6 per kilowatt-hour. Currently, EGAT sells electricity to consumers at a rate of about THB 4 per kilowatt- hour. The details, conditions, and processes will be finalized in October 2017. There may be a license requirement and total capacity limitations. Notwithstanding the development in solar energy and also other renewable energy in Thailand during the past several years, on 28 March 2018, Dr. Siri Jirapongphan, Energy Minister, stated that there will be no state renewable power buying for 5 years from 2018 – 2023.1 Even though the Energy Minister’s statement remains arguable,2 subject to further implementation by government agencies of energy sector in compliance with that vision of the Minister, it is unlikely to have the new PPA for renewable energy sector during such period. This would not effect to the existing PPA signed by EGAT or PEA. Number of Solar Projects3 The current number of solar projects which have achieved their Commercial Operation Date (“COD”) in Thailand is 531 projects, with a total selling capacity of 2,567.010 MW. Information from the Energy Regulatory Commission’s (“ERC”) website as of 8 May 2018. They include: • 7 Small Power Producer (“SPP”) Power Purchase Agreements (“PPA”) signed with EGAT, with total selling capacity of 436 MW, details as follows: No. Name of Project Installed Selling COD Capacity Capacity 1. BCPG, Ayutthaya 34.2 30 16/07/12 2. Natural Energy Development Lopburi 73 55 22/12/11 3. Serm Sang Palang Ngan Lopburi 52 40 02/02/15 4. EA Solar Nakornsawan 126.126 90 23/12/13 5. EA Solar Lampang 128.396 90 17/02/15 6. EA Solar, Pitsanulok 133.92 90 01/04/16 7. SPP Six, Lopburi 41 41 30/12/15 1 https://www.bangkokpost.com/business/news/1436223/siri-no-state-renewable-power-buying-for-5-years 2 https://www.bangkokpost.com/opinion/opinion/1437543/give-renewable-energy-a-chance 3 Based on information published in ERC’s website as of 3 April 2018, which the last update by EGAT was on 07/05/2018, PEA on 07/05/2018 and MEA on 07/05/2018. Memo re Solar Energy Development in Thailand (FT 8 May 2018)_(328363_19).DOC 1 • 523 VSPP PPAs signed with PEA/MEA and achieved COD, with total selling capacity of 2,130.020 MW. Suspension of Receipt of Applications Receipt of applications for sale of power from solar projects was suspended by both EGAT and PEA in April 2010. At that time, a large number of applications had been received. In the case of PEA, applications without any bid security, evidence of financial or technical knowhow, rights to land, etc. On 8 December 2014, applications for 178 ground-mounted solar projects that had submitted PPA applications prior to the suspension in April 2010 were accepted for consideration. According to a summary of status of solar projects provided at the National Energy Policy Council (“NEPC”) meeting no. 3/2558 dated 13 August 2015, 171 applications were accepted with total installed capacity of 983 MW, of which 100 PPAs have been signed with total installed capacity of 584 MW, and 71 applications with total installed capacity of 399 MW are in the process of signing PPAs. Attachment 1 is an English translation of a PEA standard form 25-year VSPP PPA for applicants for sale of power under original adder system, providing for Feed-in-Tariff (“FiT”) in Section 7. Solar PV Rooftop Projects In 2013 and 2015, applications were accepted for solar PV rooftop projects, and 8,811 PPAs were signed, with total installed capacity of 167 MW. Ground-mounted solar projects for Government Agencies and Agricultural Cooperatives In 2015, rules were announced for purchase of power from ground-mounted solar projects for Governmental Agencies and Agricultural Cooperatives. Only one application may be made by an agency or cooperative. The application may not be for more than 5 MW. Applications may be submitted to ERC from 1 to 10 November 2015. All supporting documents must be submitted by 20 November 2015. The Committee will screen applications and announce the list of applications that have passed qualification screening on 11 December 2015. Those applications that pass qualification screening are entitled to participate in the second step of selection by “drawing lots” on 15 December 2015. The power purchase target is prescribed for each area, but will not exceed 800 MW. The power purchase target in Phase 1 is 600 MW (not exceeding 300 MW for government agencies and not exceeding 300 MW for agricultural cooperative). • Phase 1 will be for projects, in areas with transmission line availability and potential of other fuels, with the Scheduled Commercial Operation Date (“SCOD”) no later than 30 September 2016. • Phase 2 will be for other areas with SCOD from 1 January 2018 to 30 June 2018. The schedule for power purchase by drawing lots or “lucky draw” was: Schedule Activity 21 September 2015 -15 October 2015 The Power Utility opens for application for inspection of the point connecting the power network system under clause 5(1) of Notification dated 17 September 2015 1-10 November 2015 Filing an application for sale of power in the project (09.00- 16.00 hrs.) Online applications may be made in ERC’s website 20 November 2015 Closing date for documents in support of the application for sale of power in the project (additional) Memo re Solar Energy Development in Thailand (FT 8 May 2018)_(328363_19).DOC 2 11 December 2015 Announcement of the list of projects that have passed qualification screening 15 December 2015 Selecting by drawing lots and announcing the result 24 December 2015 ERC will officially announce the projects that have passed the scrutiny and ERC will submit the matter to the RE Committee for information However, subsequent to the above Schedule being announced, on 14 December 2015, the ERC circulated a further Notification regarding Postponement of the Drawing of Lots for the Purchase of Power from Ground-mounted Solar Farm Projects – specific to Government Agencies and Agricultural Cooperatives. This Postponement changed the selection proceedings from 15 December 2015 to 22 December 2015. On 18 December 2015, the ERC circulated a Notification regarding Postponement of the Drawing of Lots for the Purchase of Power from Ground-mounted Solar Farm Projects − specific to Government Agencies and Agricultural Cooperatives (No. 2). This Postponement was made in order to enable the ERC to consider petitions from “unqualified” projects which had not been included in the list of projects that had passed the qualification screening announced on 11 December 2015. On 11 March 2016, the NEPC approved an extension of the SCOD for Solar Farm Projects for Governmental Agencies and Agricultural Cooperatives from 30 September 2016 to 30 December 2016 for areas where transmission systems are ready (Phase 1). On 1 April 2016, the ERC circulated a Notification regarding schedule for power purchase by drawing lots or “lucky draw” as follows: Schedule Activity 18 April 2016 Announcement of the list of projects that have passed qualification screening 21 April 2016 Selecting by drawing lots and announcing the result 26 April 2016 ERC will officially announce the projects that have passed the scrutiny and ERC will submit the matter to the RE Committee for information On 26 April 2016, the ERC announced the names of 67 projects selected by lottery to participate in Purchase of Power from Ground-mounted Solar Farm Projects for Governmental Agencies and Agricultural Cooperatives program. Attachment 2 is an English translation of a PEA standard form 25-year VSPP PPA for applicants for sale of power for Governmental Agencies and Agricultural Cooperatives. Receipt of New Applications The government has not announced when applications for solar projects in general will be open. BOI Incentives In December 2014, the BOI announced new incentives for promotion of investment, including renewable energy projects. Developers of solar power plants can apply for BOI promotion under category 7.1.1.2: Production of electricity or electricity and steam from renewable energy, such as solar energy, wind energy, biomass or biogas, etc. except from garbage or refuse derived fuel. The specific condition required for this category is that the project must be approved by the relevant government agencies. Category 7.1.1.2 will be granted incentives under Group A2 as follows: Memo re Solar Energy Development in Thailand (FT 8 May 2018)_(328363_19).DOC 3 • 8-year corporate income tax exemption, accounting for 100% of investment (excluding cost of land and working capital). • Exemption of import duty on machinery. • Exemption of import duty on raw or essential materials used in manufacturing export products for 1 year, which can be extended as deemed appropriate by the Board. • Other non-tax incentives. Current information can be found in the ERC’s website www.erc.or.th and the Department of Alternative Energy Development and Efficiency’s (“DEDE”) website www.dede.or.th Proposed new legislation In 2014 the IFC worked with DEDE on a draft Alternative Energy Act (primary law to govern alternative energy projects), which is under review by the Ministry of Energy. Timing of possible enactment is uncertain. The intent of the draft Act is to promote all forms of alternative energy sources.
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