Clean Energy Trends in Thailand

Clean Energy Trends in Thailand

At the beginning of 2023, electricity prices for businesses in Thailand jumped by 20.5% compared to the previous year, reaching a record high of THB 5.69 per kWh. The main driver of tariff volatility is the country’s dependence on imported fossil fuels, which still account for the majority of power generation. At the same time, energy consumption continues to grow. Thailand ranks third among Southeast Asian countries in electricity consumption and fourth in CO₂ emissions. In response, the country is actively seeking solutions through the development of renewable energy sources.

In 2024, the government introduced a revised Power Development Plan (PDP) along with an updated Alternative Energy Development Plan (AEDP). These documents outline key steps for grid infrastructure reform, set targets for expanding renewable energy, and introduce measures to simplify regulatory procedures. Below, we explore the key trends shaping the market.

Where Is Thailand’s Energy Sector Heading?

The core objective of PDP 2024 is to decisively shift Thailand’s energy mix toward renewables. By 2030, clean energy is expected to supply 33% of the country’s electricity demand, rising to 51% by 2037.  The plan outlines the addition of 43 GW of new capacity by 2037. Of this, 24 GW will come from ground-mounted solar and another 3 GW from floating solar, while the remainder will be provided by wind, bioenergy, and 6 GW of gas turbines. Notably, no new coal projects are included.

Solar’s growing role is backed by economics. Studies show that the levelized cost of electricity (LCOE) for utility-scale solar in Thailand ranges from $33 to $75 per MWh, compared to $79–86 per MWh for new gas turbines and $74–96 per MWh for coal. This cost advantage is a key reason why solar is expected to lead the transition.

Still, the targets remain ambitious given today’s starting point. As of 2024, more than 80% of Thailand’s electricity generation comes from gas and coal, with gas alone accounting for 68%. Domestic solar and hydropower together contribute only around 5%.

PDP 2024 also envisions a gradual phase-down of gas projects, a major expansion of energy storage, including 26 GWh of batteries and 20 GWh of pumped hydro, as well as closer cooperation with neighboring ASEAN countries on cross-border power trade.

Clean Energy Support Measures

Alongside PDP 2024, the government has rolled out an updated Alternative Energy Development Plan (AEDP 2024), introducing a set of mechanisms to accelerate the transition.

Utility Green Tariff (UGT)

Launched on January 23, 2025, the program allows businesses to purchase certified green electricity from state-owned hydropower plants. In its first phase, UGT1 allocates around 2 billion kWh per year. The tariff comes at a premium of THB 0.0594 per kWh above the standard rate and is available to medium and large consumers. Companies are willing to pay this premium because verified green energy helps meet ESG requirements, maintain access to global supply chains, and mitigate regulatory and reputational risks. In the upcoming UGT2 phase, customers will be able to select specific renewable sources, including wind and solar.

Direct PPA (DPPA)

Thailand’s National Energy Policy Council has approved a pilot scheme for Direct Power Purchase Agreements (DPPA), allowing companies to buy electricity directly from producers. The initial quota is set at 2 GW. Until recently, all electricity in Thailand was sold through a state monopoly. Under the new model, the national grid acts as an infrastructure operator rather than a market participant. This shift opens the door to a genuine corporate renewable energy market.

The mechanism is particularly important for data centers, which are increasingly required to run on renewable energy under the corporate policies of major global players such as Google, Microsoft, Amazon, and Meta.

Tax Incentives

Thailand’s Board of Investment (BOI) continues to offer tax holidays and accelerated depreciation for solar projects.

Solar Energy as a Key Growth Driver

Solar power is emerging as the backbone of Thailand’s energy transition. Under PDP 2024, it accounts for nearly half of all planned capacity additions, with 24 GW out of 43 GW coming from ground-mounted projects alone. This momentum is driven by several structural factors.

• Thailand has a vast untapped solar resource. Total potential is estimated at around 300 GW, while current installed capacity represents less than 1% of that figure, leaving enormous room for growth.
• Rapid cost declines. Over the past decade, solar panel prices have dropped by more than 80%, making solar one of the most cost-competitive energy sources in the country.
• Growth is happening across multiple segments. It is no longer limited to large-scale power plants. Corporate installations, industrial and commercial rooftops, and floating solar projects integrated with hydropower are all expanding rapidly.
• Diverse growth across segments. Expansion is no longer driven solely by large-scale power plants. Growth is also coming from the corporate sector, rooftop installations on industrial and commercial buildings, as well as floating solar projects integrated with hydropower.

By 2030, ground-mounted solar is expected to reach around 18 GW, rooftop systems about 12 GW, and floating solar approximately 3 GW. These estimates are based on the targets set in AEDP 2024. While the actual distribution may vary, the overall trend is clear: solar energy is set to become the largest source of new capacity in the coming years.

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Regulatory Changes

The expansion of renewable energy in Thailand depends not only on economics, but also on simplifying regulatory procedures. Over the past two years, the government has introduced several key reforms.

Removal of factory licensing for rooftop solar

As of December 28, 2024, the Ministry of Industry has eliminated the requirement to obtain a “factory license” for rooftop solar installations of any size. Previously, systems above 1 MW required approval from the Department of Industrial Works (DIW), adding time and cost to projects. Operators are now only required to comply with general energy and construction regulations.

Simplified construction permits

On November 17, 2025, the Ministry of Interior introduced new regulations excluding solar panel installation from the definition of “building modification,” provided the system weight does not exceed 20 kg per square meter. The regulation removes the need for structural stability certification and local authority notification, significantly reducing administrative barriers across all building types.

Eased rules for small-scale systems

New rules allow rooftop systems of up to 10 kW to be installed without permits, provided they are not connected to the public grid. The maximum panel weight remains capped at 20 kg per square meter.

Taken together, along with the launch of UGT and DPPA, these changes make the market more accessible for smaller consumers and investors, reducing both the time and cost required to deploy solar systems.

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Challenges and Risks

Despite clear progress, investors should take into account a number of risks and structural constraints.

Grid limitations and market structure

Exporting renewable energy requires market-based mechanisms, open grid access, and the ability to manage system and financial risks, conditions the current model is not fully equipped to handle. Thailand’s national grid is owned by EGAT (Electricity Generating Authority of Thailand), and third-party access remains limited.

As a result, while Thailand can transmit electricity across its territory, it does not yet operate as a true export market. Instead, it functions more as a transit country than a regional energy hub. Unlocking large-scale renewable deployment will require reforms that allow broader access to grid infrastructure.

High tariffs and gas dependency

As noted earlier, electricity prices remain closely tied to LNG costs. With domestic gas reserves declining and geopolitical risks increasing, continued investment in gas-fired generation, even at a reduced scale, adds financial pressure to the system.

The government bears the risk of tariff instability, consumers face rising electricity costs, and investors must account for long-term uncertainty in project returns. Renewable energy investments remain attractive, but tariff volatility must be factored into financial models.

Policy uncertainty

The growth of renewables has been slowed at times by inconsistent policy decisions, including past suspensions of new projects and delays in existing programs. Investors are advised to closely monitor official announcements and actively participate in public consultations and auctions.

Execution and infrastructure risks

There is a significant gap between announced capacity targets and the current state of the sector. Large-scale projects may face delays due to land constraints, lengthy approval processes, or limited local resources.

Regional differences also matter: northern provinces offer stronger solar potential but weaker infrastructure, while the south presents the opposite dynamic.

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What This Means for Investors

Utility-scale projects with storage. With solar expected to dominate capacity additions under PDP 2024 and battery costs continuing to decline, large-scale projects paired with energy storage are becoming increasingly viable. These systems enable long-term PPAs with government or corporate offtakers while reducing exposure to tariff volatility.

Utility-scale projects with storage. With solar expected to dominate capacity additions under PDP 2024 and battery costs continuing to decline, large-scale projects paired with energy storage are becoming increasingly viable. These systems enable long-term PPAs with government or corporate offtakers while reducing exposure to tariff volatility.

Corporate segment and rooftop installations. Simplified regulations, along with UGT and DPPA programs, are making it easier for factories, shopping centers, and data centers to install rooftop solar. This model allows businesses to significantly reduce energy costs while improving sustainability metrics.

Floating solar projects. Combining solar with existing hydropower infrastructure allows for efficient use of reservoirs. AEDP 2024 targets around 2.8 GW of floating solar capacity, creating opportunities for specialized EPC contractors.

Turnkey projects with direct PPAs. Pilot DPPA agreements for data centers are setting a precedent for a broader direct contracting market. Over time, this model could expand to industrial players and large retail chains, providing stable revenue streams for energy producers. Ultimately, project profitability will depend on financing structure, grid access, and the ability to work with reliable engineering and construction partners.

Corporate segment and rooftop installations. Simplified regulations, along with UGT and DPPA programs, are making it easier for factories, shopping centers, and data centers to install rooftop solar. This model allows businesses to significantly reduce energy costs while improving sustainability metrics.

Floating solar projects. Combining solar with existing hydropower infrastructure allows for efficient use of reservoirs. AEDP 2024 targets around 2.8 GW of floating solar capacity, creating opportunities for specialized EPC contractors.

Turnkey projects with direct PPAs. Pilot DPPA agreements for data centers are setting a precedent for a broader direct contracting market. Over time, this model could expand to industrial players and large retail chains, providing stable revenue streams for energy producers.

Ultimately, project profitability will depend on financing structure, grid access, and the ability to work with reliable engineering and construction partners.

The Role of Engineering Companies and EPC Partners

Strategy alone is not enough. In practice, many projects face technical and organizational challenges: structural mismatches, incorrect rooftop load assessments, delays in permitting, and inaccurate generation or ROI calculations. This is where experienced EPC partners become critical.

Siriteja Energy acts as an EPC integrator, combining engineering expertise with a deep understanding of the regulatory and market landscape. We identify potential risks early in the planning phase: assessing roof load capacity in line with local standards, modeling energy generation based on regional conditions, evaluating grid connection scenarios, and designing optimal storage integration. We also work closely with regulators and support clients in obtaining the necessary approvals in a constantly evolving regulatory environment.

Conclusion

The question is no longer whether Thailand will transition to clean energy. It will. PDP 2024 and AEDP 2024 have set a clear direction, with solar energy emerging as the primary driver of this shift. However, successful implementation will depend on grid reform, flexible connection rules, and a stable investment environment. For investors, success will come from combining a strategic understanding of policy with deep engineering insight. This approach allows for a realistic assessment of site suitability, grid integration risks, and long-term project returns.

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