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Bangkok Post
12 hours ago
- Business
- Bangkok Post
Fresh hope for clean energy targets
The new deadline for implementation of the much-delayed power development plan (PDP) offers a blueprint for Thailand to align with its clean energy goals. Prasert Sinsukprasert, energy permanent secretary, expects the PDP to take effect from 2025 to 2037, with enforcement starting by the end of this year following a major revision required by energy analysts. Thailand expected to start using the new PDP last year, but maintained the 2018 version, which stalled plans to raise renewable energy development. Under the new PDP, the country aims to have renewable energy comprise 51% of total fuel use by 2037, up from the 22% target in the preceding PDP. At the end of 2023, Thailand's renewable energy proportion tallied 20%. The renewable energy target and a reasonable projection of electricity demand over the next 12 years were among the issues discussed during the PDP revision. The Explainer looks into the debate and the impact for Thailand if changes to the PDP are not quickly finalised and forwarded to the National Energy Policy Council for approval. Is a 51% contribution from renewable energy adequate? Energy analysts want the government to increase the proportion of renewable energy to support plans to cut carbon dioxide emissions. The PDP does promote greater use of renewable power, but the proportion is too low, raising doubts over whether it will help Thailand achieve its net-zero target, said Naruechon Dhumrongpiyawut, chief executive of Gunkul Engineering, an integrated clean energy developer. Former premier Prayut Chan-o-cha announced in 2021 at the 26th UN Climate Change Conference that Thailand would be more aggressive in addressing climate change, striving to reach carbon neutrality, a balance between carbon dioxide emissions and absorption, by 2050 and a net-zero target, which is a balance between greenhouse gas emissions and absorption, by 2065. Some other nations in Southeast Asia set 2050 as their target for net-zero, meaning Thailand could be slower to curb greenhouse gases in the region. Areeporn Asawinpongphan, a research fellow at Thailand Development Research Institute, suggested the government increase renewable energy development by using more solar power. Authorities are not prioritising solar energy and battery technology, though their prices have begun to decline, she said. "We would like the government to specify clearly in the PDP an electricity generation target from solar energy," said Ms Areeporn. Rooftop solar panels can help businesses and households save on electricity bills, which can become expensive if oil and gas prices fluctuate in the global market. Thailand increasingly depends on costly imported liquefied natural gas for power generation as the cheaper domestic gas supply is dwindling. As solar power generation costs are not expensive, the government should take this opportunity to invest more in the development of this type of renewable energy, as well as an energy storage system to ensure a steady supply of electricity, she said. Natural gas comprises 60% of the fuels used for Thailand's power generation and will likely continue to be a crucial fuel for electricity supply, said Kurujit Nakornthap, executive director of the Petroleum and Energy Institute of Thailand. "We want to go green, but efforts must be done at a measured pace," he said. Natural gas is expected to be a key fuel for the world over the next 30-40 years as countries transition to clean energy, said Mr Kurujit. The government is aware of calls by energy analysts for more renewable energy promotion and is considering an appropriate target for carbon dioxide emission reductions, said Mr Prasert, the energy permanent secretary. Should Thailand's power demand projection be changed? The estimation of power demand in the 2024 PDP follows the same miscalculation of the nation's long-term electricity consumption that has been made over the past 28 years, said Ms Areeporn. The PDP expects power demand in Thailand to increase to 112,391 megawatts by 2037, up from 51,000MW in 2024. "If the projection is not changed, electricity users will shoulder unnecessary costs caused by the construction of new power plants," she said. The additional costs, widely known as an availability payment (AP), commits the government to pay for electricity throughout an entire period under power purchase agreements made with companies, though the actual usage may be less during that time frame. The AP benefits electricity suppliers but increases the power tariff, which is used to calculate electricity bills. Are there negative impacts if Thailand does not finalise the PDP? Delays in implementing the PDP can affect the country's attempts to draw foreign investment, said Ms Naruechon. If the PDP is not approved, Thailand cannot enforce the National Energy Plan, designated to take effect between 2024 and 2037 and serve as a roadmap for a low-carbon society. The PDP is among five long-term energy management plans in the National Energy Plan. The others are the oil plan, the gas plan, the alternative energy plan and the energy efficiency plan. The postponement of the National Energy Plan is an obstacle for Thailand, which needs to attract foreign investors who demand clean energy to operate their businesses, said Ms Naruechon. Though Thailand may develop attractive investment incentives for foreign companies, they are unlikely to quickly expand their businesses here if the promotion of renewable energy supply is unclear, she said.
Bangkok Post
4 days ago
- Business
- Bangkok Post
Clean energy dearth dents foreign interest
Ongoing political instability may slow Thai economic growth, but a larger hindrance is in the energy sector, as Thailand risks losing 1 trillion baht in foreign investment opportunities if the government does not step up efforts to facilitate renewable power usage, according to Thailand Development Research Institute (TDRI). Many foreign companies, especially those in data centre and cloud service businesses, are waiting for authorities to allow peer-to-peer power trade, eager to know how clean electricity will be bought and sold under a new law. Companies are still prohibited from buying renewable power directly from producers, but foreign investors want the government to adjust this outdated regulation. The current rule requires them to buy electricity through state electricity agencies such as the Electricity Generating Authority of Thailand. Many of these foreign companies increasingly depend on greater use of clean power. "Slow progress in new clean energy management can deprive Thailand of the ability to attract foreign investment and maintain the country's economic development," said Areeporn Asawinpongphan, a research fellow on energy policy at TDRI. Many industries are located in the Eastern Economic Corridor, but this economic zone envisioned as the country's high-tech industrial hub cannot ensure sufficient renewable power supply, she said. In June 2024, the National Energy Policy Council approved a pilot direct power purchase agreement (PPA) project, enabling companies to buy renewable electricity directly from producers, following a request from foreign data centre developers. The Energy Regulatory Commission and the Energy Policy and Planning Office already conducted a feasibility study on this project, aimed to have companies sell and buy 2,000 megawatts of clean power under direct PPAs, but the project has progressed at a snail's pace. This is an obstacle for companies that need renewable power for their operations to avoid the impact of the European Union's Carbon Border Adjustment Mechanism, which imposes a fee on imports of products using carbon-intensive manufacturing into the EU. Ms Areeporn said insufficient efforts to prepare for the shift towards clean energy can also affect many workers in industries that emit large amount of greenhouse gases. Green jobs promoting eco-friendly energy and manufacturing must be generated for workers who need to change careers, she said.
Bangkok Post
6 days ago
- Business
- Bangkok Post
Reform agenda to the fore
Although Thai businesses are relieved the US has reduced its import tariff on Thai goods to 19%, on par with other countries in the region, improving long-term competitiveness remains a challenge for domestic firms, in addition to attracting foreign investment. Finance Minister Pichai Chunhavajira recently said regardless of US tariff levels, Thailand should expedite structural economic reforms. Mr Pichai said the country must transform into a technologically advanced nation to achieve GDP growth of more than 3% in the long term. Without action, Thai GDP growth may only reach 2.2%, he warned. TIME TO UPGRADE Nonarit Bisonyabut, a research fellow at Thailand Development Research Institute, said the reciprocal tariff policy initiated by US President Donald Trump has made the global economic pie smaller. He said Thailand needs to adapt and become more competitive, stop supporting inefficient sectors, liberalise the service sector, and attract artificial intelligence (AI) and digital industries to the country. "The Trump tariffs shrink the global economy, decrease trade, and a could lead to a decline in global foreign direct investment. When these three components shrink, it means nations must become more capable," said Mr Nonarit. "When the economic pie is large, it's easier to share. Now that the pie is shrinking, we need to return to our fundamentals, especially competitiveness. We must produce goods that are in demand and enhance our technological capabilities. Our children must become more skilled, and we need to tap into new markets." First of all, the government must admit that subsidising some parts of the economy such as agriculture may be inefficient, he said. State assistance must be changed and free financial grants need to be shifted to measures that improve productivity and increase the use of technology, said Mr Nonarit. Thailand must pivot towards industries that are more skill-intensive, meaning labour-intensive industries will no longer be sustainable in the country, he said. As for the service sector, Mr Nonarit said it is time to allow more competition, raise standards and eliminate domestic monopolies, opening up opportunities for small players to better compete in the market. Regarding investment promotion via the Board of Investment (BoI), which is performing well, he said the BoI needs to develop further, especially in terms of target industries. Mr Nonarit said the BoI must accelerate investment in AI and various digital industries. "We must figure out how to make such industries flourish in Thailand and ensure a long supply chain. This means going beyond the BoI's broad-based privileges -- we need tailored, specific incentives for individual businesses," he said. "If we want to become a trading nation or a transshipment hub, even with tensions between China and the US, we can still bring goods to be warehoused in Thailand, establishing a global trade centre." For example, if Thailand wants to become a centre for equipment repair, the country needs to create policies that allow imported equipment to be warehoused here temporarily without taxation, said Mr Nonarit. The country must realise that various industries have different needs and require tailored policies to encourage development here, he said. INVESTOR APPEAL Poj Aramwattananont, chairman of the Thai Chamber of Commerce, said Thailand possesses growth potential aligning with the chamber's "Unlocking New Growth" strategy launched earlier this year. The trade war presents a good opportunity for Thailand to reshape its economy and enhance its appeal to investors in the short, medium and long term. In the short term, he said Thailand needs to boost business confidence, streamline business operations, and urgently reform regulations and bureaucracy to improve transparency and efficiency. This includes re-evaluation of various permits, such as environmental impact assessments, BoI approvals, and processes for importing foreign workers, said Mr Poj. The criteria for investment promotion under the BoI also needs to be reviewed to better attract foreign investors, he said. Furthermore, clear economic policies are essential for businesses to effectively plan and invest, particularly when it comes to free trade agreement negotiations with key partners. For the medium term, Mr Poj urged the government to enhance infrastructure and industrial capabilities, as well as support traditional sectors such as food production, agriculture and tourism. By leveraging innovation and technology, he said these industries could significantly elevate their value. In addition, the government must support entrepreneurs by providing access to capital and knowledge, enabling them to thrive in the digital age. For the long term, Mr Poj called for strategic investments in education and labour reforms to ensure the workforce is equipped with essential skills in AI and automation, as well as knowledge about net-zero emissions. Creating a supportive ecosystem for the next generation of entrepreneurs is vital, he said. "Thailand has growth potential despite challenges such as the trade war and political uncertainty," said Mr Poj. "We must embrace reforms in rules, regulations and mindsets to simplify and enhance investment opportunities. This approach is crucial to attract both domestic and international investors." INCREASING LOCAL CONTENT Manufacturers in Thailand should focus more on using locally sourced raw materials in their production to avoid additional tariffs for transshipment to the US via Thailand, said the Federation of Thai Industries (FTI). "We need to develop appropriate measures for the transshipment issue," said Kriengkrai Thiennukul, chairman of the FTI. Transshipment is another US tariff barrier that could be applied in addition to the 19% import duty on products from Thailand. Vietnam faces a 20% reciprocal tariff and 40% levy on products exported from the country of origin via Vietnam to the US. This tactic targets Chinese manufacturers seeking to bypass US duties, according to media reports. The FTI is conducting a survey covering 47 industries to establish how much domestic raw materials are used in their manufacturing processes. "We talked with entrepreneurs from more than 20 industries and found 17 of them have a local content rate of 40%," he said. "Manufacturers of internal combustion engine-powered cars use a greater amount of local content than other industries, amounting to 80%." It remains unknown how much local content the US is seeking for certain industries and whether the target is only materials or products coming from China. Thai officials hope to clear up the issue in discussions with the US. Transshipment tariffs are a new challenge for Thai manufacturers, possibly forcing the adaptation of investment plans if there are requirements concerning the proportion of locally sourced raw materials, said Mr Kriengkrai. He called on the government to consider establishing a new fund to help companies, particularly small businesses with a limited budget, to keep them aligned with the US's transshipment rules. Mr Kriengkrai said the US's new trade policies require Thailand to rejigger its priorities. "In the short term, our exports will face more price competition, while domestically we have to compete with imported products as we open our market to certain American products," he said. In the long term, the government and business sectors must work together to increase the productivity of manufacturers through greater use of innovative technologies and improving worker skills, said Mr Kriengkrai. AI FACTORY Supparat Sivapetchranat Singhara na Ayutthaya, vice-chairman of Thailand Data Center Association, said to remain relevant in the evolving global economy, Thailand must move beyond its traditional economic pillars of tourism, agriculture and low-cost manufacturing, positioning itself as a hub for advanced industries. This goal can be achieved by becoming either an indispensable node in global supply chains or a magnet for innovation and digital talent, said Mr Supparat. Thailand should capitalise on its geographical and geopolitical advantages to establish itself as the "AI factory" for Indochina, he said. This strategy involves ensuring continued access to the world's most advanced computing hardware, particularly the latest Nvidia graphics processing units, by implementing robust export control frameworks that meet international trust and compliance standards. Mr Supparat said such a policy would unlock significant capital flows into the digital infrastructure sector, potentially driving more than 500 megawatts of new data centre capacity within two years, representing more than US$5 billion in investment. "This will not only diversify the Thai economy, but also position the country as a regional digital powerhouse serving the broader Mekong and Southeast Asian region," he said. INFRASTRUCTURE UPGRADE Based on the World Economic Forum's Travel and Tourism Development Index 2024, Thailand had the lowest score in tourist services and infrastructure compared with its other dimensions. Patom Siriwattaprayoon, chief executive of PCL Hospitality, a management firm and consultancy, said Thailand needs to reform the sector to be seen as a high-value destination that can attract new tourism investment. He said the country needs to resolve long-standing issues concerning safety and the way Thailand is promoted, which could generate confidence among tourists and investors interested in new projects here. A start would be upgrading public transport that connects major airports serving the inner districts of tourist destinations, said Mr Patom. This type of infrastructure has yet to be fully developed and airports nationwide require expansion in the coming years, he said. The government should also accelerate the process of convincing unregistered hotels to enter the tax system to ensure fair competition and equal taxation, while ensuring safe stays for tourists, said Mr Patom. Poomchai Mattayompoppinyo, managing director of Southern project development at Sansiri Plc, said provinces with high potential such as Phuket should be regulated as special administrative districts, resembling the way Bangkok and Pattaya are administered. If enacted, this move could allow for more effective budget management to address the island's persistent problems, such as a lack of public transport, an insufficient road network, and water shortages, he said. This shift would benefit the booming tourism and real estate sector on the island, said Mr Poomchai. Phuket now has more than 2 million residents, long-stay workers and short-stay tourists. As a real estate developer, he suggested the government raise the leasehold period to 90 years from 30 years with the ability to extend, offering more prospective foreign buyers and investors an incentive to invest in Phuket. CALL FOR DIVERSIFICATION Ongart Kittikhunchai, president of the Thai Food Processors Association, said in the immediate term Thai businesses must expand into new markets to diversify risk and enhance their production processes to reduce costs, while simultaneously producing higher-quality goods. In the medium term, businesses must restructure to adapt to global changes, particularly regarding financial and management systems, he said. This restructuring is necessary to adjust to the US tariff hike and Thailand becoming an ageing society, said Mr Ongart. For the processed food industry, which is closely tied to the agriculture sector, it must diversify its product offerings, he said. Exporters should focus on creating a wider variety of innovative products, while ready-to-eat food producers must penetrate new overseas markets, said Mr Ongart. Sidthisak Limvatanayingyong, president of the Thai Silver Exporters Association, said the private sector needs government assistance in exploring new markets to lessen Thailand's dependency on the US, which represents 29% of the country's total silver jewellery shipments. He urged the government to finalise negotiations for a free trade agreement with the EU to benefit Thai exporters, including the silver jewellery segment. Mr Sidthisak said he hopes the government can also provide assistance to enhance production technology, such as facilitating the import of advanced technologies or fostering the development of local production technology. He said tax incentives would be vital to drive progress in this area. A manufacturing facility operated by Sony Device Technology (Thailand). Mr Supparat says Thailand should capitalise on its geographical and geopolitical advantages to establish itself as an AI factory for the region.
Bangkok Post
02-07-2025
- Business
- Bangkok Post
Power plan to be completed by year-end
The oft-delayed power development plan (PDP) is expected to be completed within this year following a revision, said Prasert Sinsukprasert, energy permanent secretary. Authorities need to revise key electricity generation issues in the PDP due to objections raised by energy analysts, though it sailed through a public hearing last year. The government finished drafting the PDP, which is scheduled for implementation from 2024 to 2037, in May 2024, but the National Energy Policy Council (NEPC) has yet to provide final approval. Energy analysts have requested adjustments to the PDP, which need to be considered before it is forwarded to the NEPC, chaired by the prime minister. Experts want the government to determine an appropriate target for carbon dioxide emission reductions, as the new PDP promotes greater use of renewable energy, said Mr Prasert. They also want a more realistic projection of Thailand's electricity demand in the long term, he said. Mr Prasert's comments were made as he presided over the 2025 Asia Sustainable Energy Week, which highlights energy technologies and solutions that promote clean energy. The three-day event got underway on Wednesday. Under the PDP, total electricity generation in Thailand is expected to stand at 60,208 megawatts by the end of the plan, comprising 34,851MW from renewable power, 6,300MW from combined cycle power plants, which use gas and steam turbines to generate electricity, 600MW from thermal power plants or small modular nuclear reactors, 3,500MW from electricity imports and 2,000MW from other forms of energy. The remaining 12,957MW would come from two types of energy storage technologies -- 10,485MW from battery energy storage systems and 2,472MW supplied by a pumped storage hydropower system. Areeporn Asawinpongphan, a research fellow on energy policy at Thailand Development Research Institute, said earlier this version of the PDP could lead to overinvestment in new power plant development, though power demand may not increase considerably between 2024 and 2037. This uptick in investment would raise electricity prices, driving up the cost of living for people, she said. Another factor that caused a delay to the PDP enforcement involves what should be an appropriate renewable energy proportion set by the Energy Ministry. The state's push for the second-phase renewable scheme with capacity of 3.6 gigawatts has been put back, following a dispute on criteria that gives a larger quota of renewable energy development to firms that failed to win renewables projects in an auction under the first phase of the scheme.
