A consideration of Thailand’s approach to Solar FIT in the context of renewable energy production objectives and how that approach has fared so far.
What do Feed-In Tariffs entail?
The purpose of a feed-in tariff is to encourage investment in renewable energy sources. This often entails giving small-scale energy providers, such as solar or wind energy, a premium price for the energy they send to the grid.
It is believed that feed-in tariffs are required to stimulate renewable energy sources in their early phases of development, when production is frequently not economically viable. Feed-in tariffs often entail long-term contracts and rates connected to the cost of energy generation. The long-term contracts and fixed pricing shield producers from some of the inherent risks of renewable energy generation, so promoting investment and development that may not have occurred otherwise.
In order to track and promote technical cost decreases, FITs frequently incorporate a “degression”: a steady decline in price or tariff.
small energy producers and feed-in tariffs.
A feed-in tariff is available to anybody who generates renewable energy, although individuals who take advantage of it are often not commercial energy producers. Homeowners, business owners, farmers, and private investors can be included. FITs typically have three clauses.
They guarantee access to the grid, which means that energy producers will have access to the system. They normally provide contracts with durations between 15 and 25 years. They provide guaranteed, cost-based purchasing prices, which means that energy producers are compensated according to the resources and capital used to create the energy.
Globally, feed-in tariff (FiT) has been the most prevalent form of renewable energy assistance. Numerous nations’ experiences with solar FiT assistance for renewables have demonstrated that long-term, steady FiT support appears to be a crucial requirement for market development.
Solar photovoltaic (PV) market development in Italy, Germany, and for a while in Spain has been driven by continuous and steady feed-in tariff incentives. The steady expansion of Germany’s renewable energy industry may be attributed to the country’s “best-in-class” national feed-in tariff policy, which is characterised by transparency, longevity, and predictability.
Thailand’s endeavor to promote Feed-In Tariffs throughout the previous 15 years
In terms of Thailand’s approach to encouraging additional solar energy, the Thai Cabinet authorized a feed-in tariff policy to encourage rooftop solar power investment in July 2013.
Early attempts by the government included a premium-price feed-in tariff, or Adder, provided for solar power between 2007 and 2010, resulting in 782 MW of solar power by the end of 2013. For a brief period in 2013, fixed feed-in tariffs were given for rooftop solar systems, resulting in modest growth, particularly in the residential rooftop solar industry.
Thailand enacted a premium-price feed-in tariff, known as the Adder measure, in 2007. A premium-price feed-in tariff consists of a standard tariff, which is normally the avoided cost of acquiring power for the utility, plus a premium paid on top of the normal tariff. The Adder charge of 8 Thai Baht/kWh is paid in addition to the avoided wholesale electricity cost, which varies month to month and ranged from 3.06-3.17 Thai Baht/kWh5 (9.4-9.8 US cents/kWh6) in 2014. For solar power installations that got Adder in 2014, the total tariff paid ranged between 34.05 and 34.38 US cents/kWh.
The Adder rates differ according on the technology, installed capacity, and location. Adder rates are paid for a period of ten years for solar and wind electricity and seven years for other renewables. The Adder program has been successful in stimulating RE investment, resulting in continuous growth of renewable power; however, one exception is the discontinuous support for solar power that resulted from the solar Adder’s oversubscription and policymakers’ and regulators’ concerns about the impact of electricity pass-through costs to ratepayers.
Solar is a significant component of Thailand’s 2018-2037 PDP (Power Development Plan), with solar estimated to account for more than half of total energy produced. According to ERC statistics, Thailand’s installed solar capacity has expanded from 49 MW in 2010 to 2,983 MW in 2020. The revised strategy intends to enhance installed capacity by 2037 by using the following strategies:
– 9,290 MW from license allotment for the construction of solar plants and the installation of solar panels on building rooftops.
- 2,725 MW from the installation of floating solar panels on 9 dams in Thailand that will be owned by EGAT.
Recent shifts in the policy framework
The National Energy Policy Council (NEPC) reached an agreement in December 2020 to increase the power feed-in price for the residential solar rooftop plan from 1.68 baht per kilowatt-hour (unit) to 2.20 baht per kilowatt-hour (unit), with the increase taking effect on January 1, 2021.
The National Energy Policy Council (NEPC) reached an agreement in December 2020 to increase the power feed-in price for the residential solar rooftop plan from 1.68 baht per kilowatt-hour (unit) to 2.20 baht per kilowatt-hour (unit), with the increase taking effect on January 1, 2021.
According to Kulit Sombatsiri, the permanent secretary for energy, who stated that the approval is likely to inspire more homes to produce and sell electricity to the state grid, the phrase “sell power to the state grid” was used.
The residential solar rooftop project was initiated in May 2019 and provides a feed-in tariff of 1.68 baht per unit for 10-year contracts. The program aims to produce a total of 100 megawatts of electricity annually between the years 2019 and 2028.
The Provincial Electricity Authority and the Metropolitan Electricity Authority, both of which are operated by the state, have been charged with the responsibility of purchasing production in amounts of 70MW and 30MW, respectively.
The solar project for families will help achieve the solar power goals of generating a total of 12,725 megawatts of electricity from the sun by the year 2037. This is in line with the updated edition of the national power development plan (PDP) for the years 2018-37.
However, the solar rooftop plan for homes has only received lukewarm enthusiasm from those living in those homes. As of the 25th of December in the year 2020, the plan had only generated 2.2MW, which was well below the objective.
After that, the government decided to reduce the aim for the program to 50MW each year.
As a response, Mr. Kulit stated that the NEPC has also agreed to extend state power purchases from the solar rooftop program to encompass schools, hospitals, and water resource development projects for agricultural reasons, with a total 50MW for 10-year contracts priced at 1 baht per unit.
It was decided in May 2022 to raise the feed-in tariff for the fourth phase of the rooftop solar power plan from 1.68 baht per kilowatt hour to 2.2 baht per kilowatt hour in order to encourage a greater number of people to take part in the program.
The Metropolitan Electricity Authority (MEA), which is in charge of Bangkok, Nonthaburi, and Samut Prakan, and the Provincial Electricity Authority are the two state agencies that are in charge of the distribution of electricity. Homeowners who are interested in participating in the program can do so by submitting applications to one of these two agencies (PEA).
Participants that meet the requirements will be awarded a 10-year power trading contract.
The National Energy Policy Council has given the ERC the directive to continue the rooftop solar power plan with an annual electricity output capacity of 10 MW until 2030.
In 2019, the fourth phase of the rooftop solar power project was initiated, with the primary objective being to have residences generate a total of one hundred megawatts (MW). The similar aim of an extra 100MW for the year 2020 was also established by the authorities.
Nevertheless, this strategy has not even come close to meeting its objectives. According to the ERC, there have only been 629 participants who have signed up for the scheme that is being run under the MEA, and their combined ability to generate power is 3,567 kW. A total of 953 participants, with a combined power generating capacity of 4,724 KW, have signed up for the program that is managed by the PEA.
Therefore, as a result of poor participation, the government was forced to once again realign its objectives to 10 megawatts (MW).
The national Alternative Energy Development Plan will be put into effect the following year, and it is anticipated that by the year 2030, the total power generating capacity of all solar energy facilities, including floating solar panels, would reach 4,900 megawatts (MW).
According to the International Renewable Energy Agency, the installed solar power generation capacity in Thailand increased to 3,049MW in 2018, which is a significant jump from the previous year’s figure of 1,420MW.
The challenge that the Thai government faces on an ongoing basis is to increase the number of people who participate in its feed-in tariff scheme. This can be accomplished in a number of ways, including more alluring pricing incentives, improved marketing and education, simplified procedures and regulations for installation, or perhaps a combination of all of these things.
Despite the fact that the government has recently moved the target year for its Net Zero targets from 2065 to 2050, there is still a significant amount of work to be done.
