Thailand’s solar sector faces hurdles in net-zero push – A greener life, a greener world

By Chalie Charoenlarpnopparut

Entrenched gas interests and domestic issues put a strain on Thailand’s solar potential, writes renewable energy expert Chalie Charoenlarpnopparut.

Over the last decade, Thailand has been very aggressive on solar power development. 

There was a time when anyone who produced solar electricity would receive a buyback, resulting in the construction of numerous solar farms, which reached a capacity of around 3 gigawatts (GW) at the time.

Thailand then changed the system to a feed-in tariff, in which renewable energy producers are given fixed prices to feed the grid, which is still a very attractive offer per contract. 

But now the price of solar panels and solar systems is much cheaper, and the feed-in tariff no longer applies.

Solar panels can be made in Thailand, or they can be made in China. 

But the most important point is whether or not Thailand can install enough of them to reduce its carbon footprint fast enough to meet net-zero carbon by the year 2050. 

With the current plan, this seems impossible.

For Thailand to go net-zero by 2050, it needs around 250 GW of solar power. 

That number currently stands at just 3.78 GW [and projected to reach 6.97 GW by 2030]. So to reach this goal, Thailand needs to start early and very aggressively.

The role of solar in Thailand’s energy ambitions

Thailand will this year publish a new Power Development Plan (PDP) covering the next 12 years to 2037, and the current draft hints at a few trends.

The first is that renewable energy will make up a large portion of Thailand’s portfolio. By 2037, Thailand aims to have 51% renewable energy. 

This sounds good, but 17% is hydropower. Most of that hydropower comes from Laos, importing electricity from controversial dams which have been a subject of environmental concerns on both sides of the border.

Our studies show the Thai power system can accept at least 25-30% of renewable energy without any problems or upgrades.

But right now, renewable energy makes up between 15% and 18%.

What’s more, only 11% of the projected PDP will be solar, which is much lower than expected. 

Solar energy currently makes up less than 4% of Thailand’s energy generation portfolio, and while the solar sector is growing, it is not growing fast enough.

A second trend is that right now we are at around 60% natural gas for electricity generation, but in 2037, the end of the plan, gas will still be 41% – another disappointment.

The third is that the 2025 PDP is expected to set out plans to build 3.5 GW of gas power plants, despite the fact that Thailand already has an overcapacity. 

We have approximately 11 IPP (Independent Power Producer) gas power plants, and six out of 11 are not operating at full capacity, yet Thailand plans to build more.

Solar faces opposition from the gas industry

Gas has always been dominant here, which is understandable considering Thailand has its own natural gas resources, including in the Gulf of Thailand and with infrastructure to import natural gas from Malaysia and Myanmar. 

There are many companies that benefit from having gas as the main energy source in Thailand.

This means that when it comes to renewables replacing gas, there has always been resistance, whether it’s in terms of under-the-table politics or influencing decision makers.

Also, despite the infrastructure, there is still not enough gas in the country. 

Thailand has to import liquefied natural gas (LNG), and this has become a growing business because the PTT gas company dominates the market in Thailand and is expanding its operations by building more plants, LNG hubs, and LNG terminals.

Currently, there are two plants, and Thailand is about to build a third. 

One might wonder why they build gas plants without fear of them not being used. 

The answer lies in long-term contracts, with gas users like IPP or the [state-owned Electricity Generating Authority of Thailand] EGAT, who use a lot of LNG, entering into long-term contracts. 

So in this sense, the revenue is guaranteed because the terminal will receive income no matter what. In the end, even if Thailand doesn’t buy gas, Thailand ends up paying for gas anyway. 

There is a strong opposition to solar from gas groups. And this has had a great deal of influence on renewable energy development. As long as policy tries to protect gas, gas will remain the most important element in the portfolio.

Is the US trade war with China impacting solar in China?

The US recently increased solar tariffs on Thailand to 375% as part of the growing trade spat with China. 

But this may not have much of an effect on Thailand’s prospective domestic solar goals.

Thai companies import quite a large portion of solar panels, and domestic use is less than 10% of total production. 

So, even though a lot of panel facilities are being shut down, Thailand has enough solar panel manufacturers for domestic use.

We do have a lot of imports from China, but we are producing more and more of our own parts. 

The tariffs will have very little effect because China and Thailand are pretty close, and even though some of the planned production manufacturing plans for the solar sector are closing down, importing panels as part of solar development will continue.

Thailand and China have also been cooperating on floating solar projects. EGAT is the biggest energy producer in Thailand and owns all the domestic dams in the country. Their surface area is used for floating solar farms.

Solar must also contend with utility companies that have a vested interest in keeping solar from growing too quickly. 

For example, every solar rooftop reduces the amount of electricity sold through the meter, which is the main income for local utility companies.

Because this revenue relies exactly on the number of units of electricity sold through the grid, more solar rooftops mean a reduction in revenue for Thailand’s Provincial Electricity Authority and the Metropolitan Electricity Authority. 

So they will not support the idea of increased solar rooftop installation.

Solar farms, on the other hand, are different because the PEA and MEA buy from them and sell on to the customer, so they gain revenue with every unit sold.

The government has also been guilty of overregulation, with three or four approvals needed to install solar systems. 

This is a huge hurdle for solar panel development, though the coalition government, which took control in 2023, has now removed one of the checks that required anyone developing a system larger than 1 MW to apply for a power plant licence.

Ultimately, the Thai government or policymakers are scared of solar development. Thailand is a country that has relied on natural gas for a very long time, and natural gas is the foundation of the Thai electricity generation system.

But there are many parties who are fighting for the development of solar, like the Thailand Consumer Council, an organisation promoting consumer rights based on Thailand’s constitution. 

It has a specific committee on energy development, especially rooftop solar, and is trying to encourage the introduction of quotas for new solar. 

It’s not just the government with power; on the people’s side, on the civil society side, we are fighting very hard as well.

Chalie Charoenlarpnopparut is an energy analyst and an expert in electrical engineering in Thailand at Thailand’s School of Information, Computer, and Communication Technology (SIIT).

First published in Dialogue Earth.