By Fitch Solutions
- We expect Thailand to continue its strong renewables growth momentum over the coming decade, as the government continues to advance their drive towards sustainability.
- Thailand’s growing agriculture and bio-based industries, supported by its five-year economic recovery model, will play a key role in the country’s acceleration of renewables growth from biomass and waste.
- Schemes offered by the Thai government for sustainability projects will also spur growth by attracting interest from the private sector.
We expect Thailand to continue its strong renewables growth momentum over the coming decade, as the government continues to advance their drive towards sustainability. Thailand currently aims to reduce greenhouse gas emissions by 20% by 2030, with newly-announced proposals to achieve carbon neutrality by 2065-2070 via the new National Energy Plan 2022, which was approved by the Ministry of Energy in August 2021. This proposal is currently set for public consultation till October 2021. Prior, the Ministry of Energy also set in policy, via the Alternative Energy Development Plan (AEDP 2018-2037), to increase renewables to cover 30% of the country’s final energy consumption before 2037. With the regulatory landscape encouraging renewables implementation in the country, we maintain our view for Thailand to be a renewable power out performer in Southeast Asia. Overall, we forecast Thailand’s non-hydro renewables capacity to reach over 17GW by 2030, from an estimated 8.9GW in 2020.
Thailand’s Robust Renewables Growth
In particular, Thailand’s growing agriculture and bio-based industries will play a key role in accelerating renewables growth from biomass and waste. Thailand has looked to tap into its agriculture and bio-based industries to support its economic recovery from the Covid-19 pandemic, as several key GDP-contributing industries, such as the tourism industry, will continue to face headwinds in the near term. This view is supported by the fact that Thailand is developing their Eastern Economic Corridor (EEC) as a hub for biomass production, and their five-year economic recovery model – the Bio-Circular-Green Economy (BCG) Model – encompassing bioenergy as an industry to develop. Bio-economy involves the use of turning biomaterials into more value-added alternatives, the Thai government has stated an example of turning sugarcane to biofuels (ethanol and biodiesel) and biomass energy (biogas). Thailand’s BCG model will also encourage growth in the food and agriculture industry and the bioenergy, biomaterial and biochemical industry, supplementing growth in the biomass and waste sector. With an increase in agricultural activities, we expect increased amounts of biowaste, which will generate appeal for biomass power. Furthermore, the BCG model also promotes supplying community-based power plants with renewable energy from waste, biomass and biogas. As such, we forecast biomass generation to reach 36.5TWh by the end of 2030, which will be higher than solar.
Thailand Biomass And Waste Generation To Stay Ahead Of Solar And Wind
Schemes offered by the Thai government for sustainability projects will also spur growth by attracting investments from the private sector. In addition to growing bio-based industries, the Thai government has rolled out financial incentives to encourage private sector participation in developing bioenergy projects in Thailand, such as:
- Corporate Income Tax (CIT) exemptions of up to 8-year CIT, offered by the Board of Investments (BOI) for projects generating electricity from renewable sources (biomass included) and projects that manufacture fuel from agricultural products or waste.
- Feed-in Tariff (FiT) rate of THB2.39 – THB3.13 (USD0.07 – USD0.09) per kWh for up to 20 years, for producers of energy from biomass with capacity of up to 200kWh.
In addition to these incentives, the Ministry of Energy has also developed the ‘Energy for All’ scheme to make energy accessible to rural parts of Thailand. This scheme plans to achieve this by pushing for biomass and waste-to-energy power plants through joint investments between community enterprises and investors. Projects that fall under this scheme are set to commence operations by 2022, with power being supplied to consumers by 2024. These partnerships are to be led by the Provincial Electricity Authority’s investment arm, PEA ENCOM.
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