17 April, 2020
Thailand has issued a new regulation setting out criteria and conditions for power purchase agreements (PPAs) for very small power producers (VSPPs) under the Community Power Plants for the Local Economy project—part of the Electricity Generating Authority of Thailand’s (EGAT) Energy Policy for the Local Economy. The Regulation Re: Procurement of Electricity from Very Small Power Producers was issued on April 2, 2020, by the Energy Regulatory Commission (ERC) and published in the Government Gazette on April 10, 2020.
In order to qualify as a VSPP, a power producer must generate no more than 10 MW per project, and must comply with the requirements and restrictions set by the Executive Committee of Power Purchase from Community Power Plant Projects. Furthermore, prospective VSPPs may only use one of the following:
- Biomass
- Biogas from wastewater or waste
- Biogas from biofuel
- A hybrid of biomass with biogas (wastewater or waste)
- A hybrid of biogas (biofuel) with solar power
Under the ERC’s new regulation, a PPA with a VSPP will have a term of 20 years from the Commercial Operation Date (COD) and will specify the following feed-in tariffs (FIT) per unit of electricity, depending on the type of fuel:
- Solar: THB 2.90 per unit
- Biomass: THB 4.2636–4.8582 per unit (depending on the installed capacity)
- Biogas (waste): THB 3.76 per unit
- Biogas (biofuel): THB 5.3725 per unit
- Biogas (combination of waste/biofuel): THB 4.7269 per unit
These prices are based on the variable FIT rate for 2019 and will be increased by the ERC based on core inflation. There is also a FIT premium of THB 0.50 per unit for projects located in designated areas.
Applicants must also pay the following guarantees to either the Metropolitan Electricity Authority or the Provincial Electricity Authority:
- Application guarantee of THB 500 per kW of electricity offered for sale, payable at the time of application. This will be returned when the applicant withdraws their intent to sell electricity within the application period, if the applicant is not selected for the PPA, or when the applicant has signed the PPA.
- Performance guarantee of THB 500 per kW of electricity offered for sale, to be paid prior to signing the PPA. This will be returned on the COD.
Successful applicants must also sign the PPA within 120 days after the selected applicants are announced, or the PPA will be void and the application guarantee forfeited, unless the failure to do so is the result of a force majeure or the fault of a government agency. Furthermore, if the selected producer is unable to produce electricity for sale by the contractually specified COD (SCOD), the producer may be subject to fines of 0.33% of the guarantee payments per day, starting from 60 days after the SCOD. If the VSPP is still unable to supply electricity 360 days after the SCOD, the PPA will be terminated and the performance guarantee may be forfeited.
The application timeline and details of required supporting documents will be specified later by the ERC, which will also provide the application form and further criteria.
For further information, please contact:
Tanadee Pantumkomon, Tilleke & Gibbins
tanadee.p@tilleke.com
