Thailand: Setting Up Solar Business In Thailand

Last Updated: 22 December 2016
Article by Hideshi Obara, Jirapong Sriwat and Apinya Sarntikasem

Private investment in the business of electricity generation in Thailand can be classified into three types based on the total electricity production capacity: (i) IPP (Independent Power Producer), (ii) SPP (Small Power Producer) and (iii) VSPP (Very Small Power Producer) which refer to a private power project generating and selling electricity with the total production capacity exceeding 90 MW, between 10 to 90 MW and less than 10 MW, respectively. What is of particular note in the Thai system is that Thai electricity supply industry is based on a state-owned scheme. Thus, a single buyer of power generated from the IPP and the SPP is the Electricity Generating Authority of Thailand ("EGAT") whereas a single buyer of power generated from VSPP is the Provincial Electricity Authority ("PEA").

Provided the bidding system utilized for selecting the project operator of the IPP, the bidders are typically driven to enter a low bid to be selected. Thereby, investment in the IPP is generally not as commercially profitable and hence not as prevalent among the investors as compared to the investment in the SPP. Similarly, the VSPP scheme is basically devised to accommodate the very small-scale private energy business, especially the operation of rooftop solar project; hence, overall, it is not as commercially profitable as the investment in the SPP. Therefore, most investment in the solar business in Thailand is made in the form of the SPP and this article hence mainly focuses on the SPP under the perspective of Thai laws and regulations.

1. Establishment of the SPP

The SPP is defined in the Regulation on Power Purchase from the SPP for the Electricity Generated from Renewable Energy A.D. 2007 (as amended) and the Regulation on Power Purchase from the SPP for the Electricity Generated under the Cogeneration System A.D. 2007 (as amended) as a project operated by a private or a state entity that generates electricity either from (a) non-conventional sources such as wind, solar and mini-hydro energy or fuels such as waste, residues or biomass, or (b) conventional sources such as natural gas, coal or oil by using cogeneration system.

To apply for the license to operate the SPP for the electricity generated from renewable energy, including solar project, the applicant would be required to submit documents and relevant certificates such as company affidavit, piping and instrument diagram and requisite guarantee, together with a request and an offer to sell power to EGAT. Within 90 days from the date of document submission, EGAT would send a notification to inform the applicant whether or not the license is granted (i.e. whether EGAT would purchase power to be generated by the applicant). If the license to operate the SPP is granted, the Power Purchase Agreement (PPA) shall be concluded within two years therefrom; otherwise, the request and offer to sell power initiated by such applicant shall be deemed cancelled.

Figure: Process from applying for the license to operate the SPP until COD

After obtaining the license to operate the SPP from EGAT, the SPP operator shall fulfill the additional conditions as stipulated in the Regulation on Power Purchase from the SPP for the Electricity Generated from Renewable Energy before commencing the electricity transmission, which includes (i) submitting the Environment Impact Assessment Report at least 15 days before the conclusion of the PPA (if applicable), (ii) submitting the requisite licenses for the operation of the energy project, the examples of which are provided in the table below, at least ten days before the Commercial Operation Date (COD) set by EGAT and (iii) concluding the Sale Contract on Secondary Electricity, the Agreement on Electricity Security Service and the Agreement on Electricity Grid Connection along with other agreements required to be concluded with EGAT.

For your information, please find below examples of the licenses required to be submitted to EGAT for the operation of SPP.

Certificates and Licenses Grantors
Factory License (Ror.Ngor. 4) Department of Industrial Works
Certificate of Building Construction (if applicable) The relevant local administration (e.g. Sub-district Administrative Organization or District Office) or the Industrial Estate Authority
Energy Industry Operation License Energy Regulatory Commission
Controlled Energy Production License Energy Regulatory Commission
Electricity Industry Operation License Energy Regulatory Commission
Certificate of Electricity Quality EGAT

The operation of the SPP can be categorized into two types; the so-called "non-firm and firm agreements". Firm agreement refers to a long-term PPA with a term designated between 20 to 25 years, in which the project operator is required to provide electricity during the peak months to serve the high demand of electricity. On the other hand, the non-firm agreement refers to a short-term PPA with a term of not exceeding five years in which the project operator would not be required to provide electricity during the peak months, but may receive payment for the electricity sold to EGAT in a lower rate than that paid to the project operator of the firm agreement.

The standard form of the PPA set by EGAT will be used for both firm and non-firm agreements entered into between EGAT and the project operator. For the firm agreement, EGAT would be entitled to curtail the power generated by the SPP in the case of force majeure with compensation for the project operator. On the other hand, the standard form of the non-firm agreement has no such provision that will enable the project operator to be compensated for the curtailment in the event of force majeure.

2. Energy Payment

Since 2007, the adder rate structure was employed by EGAT to calculate the electricity price paid to the project operator. Under such adder rate structure, the adder rate would be included in the energy payment on top of the prevailing wholesale price of electricity, which could be as high as 8 Baht per kW in the case of electricity generated from solar energy. Provided that the adder rate would be in fact fall on the consumers in the form of Ft rate included in the electricity price which varies according to the costs incurred to EGAT, it could put too much burden on the consumers. As a result, recently in 2015, the Energy Regulatory Commission has implemented the Feed-in-Tariff (FiT) policy to replace the adder rate structure for the purchase of electricity generated from renewable energy, which would be applicable particularly to the applicants whose applications for the license to operate the SPP have not yet been accepted under the adder rate scheme.

3. Promotion for Solar Business in Thailand

In December 2014, Thailand Board of Investment (BOI) has announced new incentives to promote the investment in renewable energy projects. Under the BOI's investment promotion scheme, solar business would be granted incentives of an eight-year corporate income tax exemption, accounting for 100% of the 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 one year, which can be extended as deemed appropriate by the BOI; and other non-tax incentives.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.