15 December 2015 by Susan Kraemer, Solarplaza
Thailand’s 2014 military coup has had “virtually no impact on the legal side,” insiders say.
Political instability in Thailand has not affected the stability of solar tariffs, according to Maggie Kuang, a clean energy analyst with Bloomberg New Energy Finance.
"We haven’t heard of any developers not getting paid in the country over the past years," said Kuang. "Contract law is respected in Thailand."
Attorney Dan Harris, of the international business law firm Harris Moure, has done extensive legal work for US firms in Asia and echoed Kuang's sentiment.
“What I can tell you is that the military coup in Thailand has had virtually no impact on the legal side, and that it is very much what I would have expected,” he said.
Yet even during the turmoil, the Thai government continued to increase the incentive supply for the PV sector, insiders said. A greater problem than getting paid might be the future of the solar policy itself, Kuang observed.
The Thai government's latest Alternative Energy Development Plan sets a goal of 3 GW to be achieved by 2020 but "solar policy in Thailand changed quite a bit in the last few years," she cautioned.
"I wouldn’t say the policy is very reliable. You may experience policy changes during your project development phase."
Partly this is due to solar's relatively recent rapid growth, rather than the military takeover.
There was under 2 MW of solar in Thailand in 2008. As of the end of 2015, 2.7 GW is expected to be grid-connected.
For a government to expand solar deployment from 2 MW to nearly 3 GW during a crackdown on freedoms (reading Orwell’s 1984 is now grounds for arrest, for example) seems improbable. But Harris was unsurprised.
"Well, the military must have liked it. And they can get things done," he said.
Harris was last in Thailand in May, and said everyday life there is pretty much the same as before the military intervention. "If there's chaos in the country, businesses start leaving. But there's not that chaos in Thailand,” he said.
“And in the courts, nothing's changed. There's not been any more changes in judges than usual. The laws have not been changed because of the military’s intervention."
Harris said the Thai military, more than anything, does not want businesses to leave, so will likely do whatever it can to honour contracts.
“When it comes to something like a breach of contract between two private companies, it's in everybody's best interests, whatever government is in power, to have that function well," he added.
In mid-2015, Thailand announced a $0.16/kWh tariff to drive 800 MW of solar development, to be awarded in 2016.
The 800 MW will be divided among a multitude of solar farms, with a 5 MW limit per developer. The Thai government expects to invest THB36 billion (USD$1 billion) in just the first year of commercial operations in 2017.
The Governmental Agency and Agricultural Cooperatives Program (Agro-Solar) is reminiscent of solar tariffs that drove the development of widespread small-scale solar farms throughout Germany.
Participants are expected to range from state agencies, businesses and universities to agricultural co-ops. For western solar developers, partnership with local firms will make sense.
An example is First Solar. The US-based vertical solar manufacturer and developer inked a deal in June of 2015 to partner with Thai property developer Sena Development and Thailand's Confidante Capital.
The group expects to win one of the 5 MW awards in the first year, and will fill it by offering solar leases on the property developer's homes.
This may jumpstart a solar third-party ownership model in Thailand, one of a growing number of opportunities for foreign investors unflustered by the prospect of dealing with the current regime.
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