What’s Next: Thailand
Under the backdrop of restructuring electricity market mechanisms in the Asia-Pacific region, Apala Group has launched a new article series, What’s Next?. This series aims to explore future trends in the renewable energy market across the region and provide key priorities for renewable energy buyers.
With several new initiatives and programs, 2025 is shaping up to be a significant turning point for corporations looking to transact renewable energy in Thailand. Historically, Thailand's electricity industry operated under an Enhanced Single Buyer (ESB) model. At that time, the electricity sector operated under a legal monopoly structure. Three utility entities—the Electricity Generating Authority of Thailand (EGAT), the Provincial Electricity Authority (PEA), and the Metropolitan Electricity Authority (MEA)—collectively known as "the Utilities," maintained exclusive rights over electricity transmission and distribution. The regulatory framework prohibited private sector entities from selling electricity directly to end users. Instead, private producers were required to sell their generated electricity exclusively to the Utilities, which then distributed and sold it to consumers.
Although the Energy Industry Act B.E. 2550/2007 broke the long-standing monopoly of utilities by allowing other energy industry licensees to connect to and use the existing grid, there remained ambiguities regarding the requirement for applying license and wheeling and distribution permit.
In recent years, the Thai government has actively increased competitiveness in the electricity market and promoted ESB reform to respond to electricity users' demands and, more importantly, attract foreign investment, particularly data centers. In January this year (2025), Thailand officially launched the Utility Green Tariff 1 (UGT1). UGT1 is a green power tariff program that allows users to purchase renewable energy without specifying the source through a premium pricing model that includes Renewable Energy Certificates (RECs) provided by EGAT, MEA, and PEA. The applications of UGT1 were opened from February 7 to 28 of the same year. UGT1's power generation comes from EGAT's seven hydropower plants, with an expected annual supply of 2000 GWh. Although UGT1 does not allow the selection of specific generation sites, it undoubtedly represents a significant step toward diversifying renewable energy procurement in Thailand. Beyond UGT1, Thailand plans to introduce more procurement options this year. So... What's Next?
UGT2 Expected to Officially Launch Mid-2025
The Energy Regulatory Commission (ERC) is expected to officially launch UGT2 in mid-2025. UGT2 will address UGT1's limitation of generation sites selection. Furthermore, renewable energy technology will expand from hydropower to solar, wind, and solar+battery storage systems. Coupled with ten-year contracts, this provides renewable energy consumers with long-term supply security.
Additionally, UGT2's pricing structure will reflect actual costs. The ERC has announced that UGT prices will include generation costs, transmission and distribution costs, retail administrative fees, wholesale administrative costs, wholesale policy fees, retail policy fees, and adjustment factors. Currently, several aspects of UGT2 remain uncertain, which can be summarized in the following points:
Detailed composition and characteristics of each investment portfolio: Official information mentions that underwriting will be conducted through portfolio groupings. However, the specific portfolio structure, including which generation projects are included, their exact contracted capacity, generation share, and supply reliability details, have not yet been determined.
Final pricing: Officials have mentioned that "UGT2 will reflect the different reliability of each investment portfolio, which will lead to uneven utilization of power system capacity." How this "uneven utilization" will be specifically reflected in pricing requires more explicit mechanisms from officials.
Specific mechanisms and limitations for users to designate renewable energy sources: A core feature of UGT2 is that users can specify their renewable energy power sources. However, to what extent can users choose specific power plants or technologies? Are there limitations to these choices? How does the designation process operate?
In summary, as a more customized renewable energy procurement solution, UGT2 still has many details yet to be announced. According to the timeline for its scheduled launch, these details should be released soon, making this development particularly noteworthy for many renewable energy buyers.
Comparison of UGT1 and UGT2
TPA and Direct PPA Set to Launch Together
Third Party Access (TPA) is a mechanism that allows qualified third parties (such as Independent Power Producers or Small Power Producers) to connect and use existing power transmission and distribution networks. Simply put, TPA breaks the limitation that only the Utilities can use the national grid, allowing private enterprises to use the grid under agreements with the Utilities and sell electricity directly to consumers. The emergence of TPA is undoubtedly a key foundation for enabling Direct Power Purchase Agreements (Direct PPA).
In fact, the Thai government passed legislation incorporating the TPA concept as early as 2007. However, the policy did not clearly define key roles and processes, leading to many ambiguities that hindered implementation. In 2022, the ERC established the TPA Framework Guideline and required the three major distribution companies (EGAT, PEA, MEA) to prepare and submit draft Third Party Access Codes for ERC review. The three distribution companies submitted these to the ERC in mid-2024. The ERC initially expected to release the official TPA code by the end of 2024, but current official estimates suggest this may happen in 2025 or even later.
The TPA Code includes three sub-regulations that help us better understand the TPA mechanism:
TPA Service Code: Primarily regulates application processes for connecting to and using the grid, qualification requirements, principles for allocating Available Transfer Capacity (ATC), etc.
TPA Connection Code: Specifies technical requirements and standard procedures for grid connection.
TPA Operation Code: Specifies the responsibilities and obligations of power generators (and their customers) connected to and using the grid, including capacity management and imbalance power management.
Using TPA services requires payment of relevant fees, including connection charges, wheeling charges, system security/ancillary charges, imbalance charges, and policy expenses. The rate setting is expected to reference UGT proposals.
Direct PPA maximizes the facility of TPA by allowing private power generators and consumers to trade directly, bypassing intermediaries and negotiating their own power supply conditions. Although complete TPA regulations are not yet available and Direct PPA cannot begin operation before then, the Thai government has established conditions for a Direct PPA pilot program, primarily targeting data centers requiring 100% renewable energy. Only data centers invited by the Thai government can participate in this pilot program.
The pilot program has several limitations:
Transaction volume cannot exceed 2,000 MW
Excess power cannot be sold back to the grid
Although it will be some time before the program opens to all businesses, the launch of this program marks an important step for Thailand's electricity market toward greater openness and competitiveness. For renewable energy generators and large enterprises with procurement needs, this means more flexible trading models will be available in the future.
Future Outlook
2025 will undoubtedly be an exciting year for Thailand's renewable energy market, especially if UGT2 and TPA launch as scheduled. In addition to monitoring these anticipated procurement options, the implementation of UGT1 is also of interest, with applications closing in February and power supply expected to begin in mid-year. Finally, the ERC Sandbox program is currently attempting to launch a REC transaction platform, P2P energy trading platform, Virtual Power Plant, and Virtual PPA projects, demonstrating Thailand's active positioning in the energy market. Thailand is finally no longer a country where renewable energy can only be purchased through onsite projects or unbundled RECs!
As these policies continue to improve, the Thai government clearly aims to establish a more competitive and sustainable electricity market. For businesses, especially data centers and multinational companies pursuing ESG goals, Thailand is gradually becoming an attractive investment destination in Southeast Asia. However, the effectiveness of policy implementation remains to be seen, particularly regarding infrastructure development, grid reliability, and price competitiveness.
In the coming years, we have reason to believe that Thailand's renewable energy market will experience significant growth and transformation, with these new procurement mechanisms serving as catalysts for this transformation. As observers and participants in the regional energy market, we will continue to monitor developments in this field and share the latest policy analyses and market trends.