Incentives for Renewable Energy in Southeast Asia: Case study of Thailand

This case study examines the investment incentive policies for renewable energy in Thailand, analyzing their effectiveness in overcoming barriers to deployment. It details a variety of financial, fiscal, and regional incentives, while highlighting the transition from a feed-in premium (adder) system to a fixed-price feed-in tariff (FIT) to manage costs and avoid overcapacity.

• Thailand's electricity generation is heavily dependent on fossil fuels, primarily natural gas. In 2011, the total installed capacity was 31,773 MW, with combined cycle plants accounting for 53% (16,900 MW) and renewable energy making up only 6.8% (2,156.9 MW).
• The 'adder' or feed-in premium program, introduced in 2007, provided additional payments on top of market prices for solar, wind, biomass, small hydro, and municipal solid waste. While viewed as the most attractive incentive by stakeholders, it led to over-subscription in solar energy, prompting the government to reduce the solar adder from THB 8/kWh to THB 6.5/kWh in June 2010 and eventually suspend solar purchases under the program.
• The Energy Conservation (ENCON) Fund serves as the primary source of public finance for renewable energy subsidies. It supports various programs, including investment grants for biogas, municipal solid waste (MSW), and solar thermal projects, with capital grants ranging from 20% to 100% depending on the technology.
• A revolving fund provides low-interest loans (maximum 4% interest for up to seven years) to renewable energy and energy conservation projects, with a maximum loan of THB 50 million per project. This scheme aimed to encourage commercial banks to lend to the sector; however, the government is phasing it out as banks have become more comfortable investing their own capital.
• The Thailand Board of Investment (BOI) provides fiscal incentives under the Investment Promotion Act, including corporate income tax exemptions for up to eight years for renewable energy generation and manufacturing, followed by a 50% reduction for years 9 through 13.
• The ESCO fund targets small and medium enterprises through equity investments and credit guarantees. In its first phase, nine projects received THB 235.2 million in support, which stimulated over THB 3,388 million in total renewable energy investment.
• Non-economic barriers significantly hinder renewable energy deployment, specifically the lack of published electricity transmission expansion plans and a slow, complex permitting process involving multiple government departments.
• High import duties on equipment, such as a 35% duty on solar panels and inverters, increase generation costs, though these are partially offset by other tax advantages.
• Analysis using the Total Cost Indicator (TCI) suggests that biomass provides better value for money than solar PV. In 2011, Thailand paid 0.21% of the market electricity price in premiums for an additional 1.65% of renewable energy generation, with biomass contributing the highest proportion of this increase.
• The SPM pig farm serves as a successful example of integrated biogas and solar power investment. With support from the ENCON fund and other agencies, the project achieved a payback period of less than four years and avoids approximately 69,130 tonnes of CO2 per year.

APA

Beerepoot, M., Laosiripojana, N., Sujjakulnukij, B., Tippichai, A., & Kamsamrong, J. (2013). Incentives for Renewable Energy in Southeast Asia: Case study of Thailand. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/investment_incentives_thailand.pdf

Chicago

Beerepoot, Milou, Navadol Laosiripojana, Boonrod Sujjakulnukij, Atit Tippichai, and Jirapa Kamsamrong. Incentives for Renewable Energy in Southeast Asia: Case study of Thailand. International Institute for Sustainable Development, 2013. https://www.iisd.org/system/files/publications/investment_incentives_thailand.pdf.

Wikipedia

{{cite report |last1=Beerepoot |first1=Milou |last2=Laosiripojana |first2=Navadol |last3=Sujjakulnukij |first3=Boonrod |last4=Tippichai |first4=Atit |last5=Kamsamrong |first5=Jirapa |title=Incentives for Renewable Energy in Southeast Asia: Case study of Thailand |publisher=International Institute for Sustainable Development |date=February 2013 |url=https://www.iisd.org/system/files/publications/investment_incentives_thailand.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{beerepoot2013incentives, author = {Beerepoot, Milou and Laosiripojana, Navadol and Sujjakulnukij, Boonrod and Tippichai, Atit and Kamsamrong, Jirapa}, title = {{Incentives for Renewable Energy in Southeast Asia: Case study of Thailand}}, institution = {International Institute for Sustainable Development}, year = {2013}, month = feb, url = {https://www.iisd.org/system/files/publications/investment_incentives_thailand.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }