Over the past five years, solar electricity developers (developers) have busily installed photovoltaic (PV) panels on the rooftops all over Thailand.

Over the past five years, solar electricity developers (developers) have busily installed photovoltaic (PV) panels on the rooftops all over Thailand.

For commercial and industrial (C&I) businesses, the panels were an easy sell. For instance, PV installations are often financed by the developers, rooftop solar reduces overall electricity costs and the glare caused by the sun shimmering off PV panels can display the occupant’s green credentials.

Developers are seeking premier projects such as new factories or stores with creditworthy occupants as they expand their portfolios in Thailand. The initial exuberance remains, but some developers are hesitant to enter Thailand perceiving that many of the best opportunities have already been seized.

However, Thailand’s rooftop solar sector can still expand so interested developers must be aware of relevant regulations so they can take advantage of these opportunities.

This article will look at how the market might consolidate if developers sell some of their existing assets, which may also create refinancing and bankability concerns. The potential impact of carbon trading markets will also be discussed.

Market Consolidation – Regulatory Issues For Buyers And Sellers

There are a significant number of developers active in Thailand’s rooftop solar sector and much of their financing is sourced from shareholder equity contributions or corporate lending.

This has resulted in projects tying-up developers’ capital and delaying expansion plans. To free up some of this cash, developers may look to sell off existing projects which would consolidate the market and result in merger control issues.

Merger Control

In 2009, Thailand’s Energy Regulatory Commission (ERC) enacted the Regulation on the Establishment of Criteria to Prevent Mergers, Competition Lessening or Restrictions in Energy Services B.E. 2552 (2009) (the “MR”), which sets out the basic rules for merger control in the power sector.

Section 3 applies to scenarios that are considered “mergers” under the MR, including:

  • An amalgamation of two or more licensees where one licensee ceases to exist as a distinct juristic person
  • The purchase, or any other action taken to obtain all or certain assets of another licensee, resulting in control of policy, management, supervision or administration
  • The purchase of, or any other action taken to obtain all or certain shares of another licensee, resulting in control of policy, management, supervision or administration
  • The purchase or any other action taken to obtain all or certain shares of a person who has control of the policy, management, supervision or administration of another licensee.

Section 4 of the MR prohibits licensees from merging without first obtaining permission from the ERC.

It should be noted that many rooftop solar projects may fall below the threshold of 1 MW ampere, and therefore the buyer would be exempt from the requirement to obtain licenses under the Energy Industry Act, B.E. 2550 (2007). The MR is promulgated via the EIA so these types of smaller projects would not be subject to the merger control regime.

Property And Regulatory Issues

When conducting due diligence on potential targets, buyers should know the regulatory environment applicable to the rooftop solar sector.

In addition to licenses under the EIA, developers must understand the relevant permits and licenses to lawfully operate a rooftop solar project. These could potentially include a factory operating license, controlled energy production license, network system interconnection or construction permits.

While electricity generation is not restricted to foreigners under Thailand’s Foreign Business Operations Act B.E. 2542 (1999), many other activities tangential to rooftop solar projects may impose licensing requirements. For instance, a foreign customer would not be permitted to lease out its rooftop to the developer if the customer does not have a foreign business license under the FBA. Potential buyers should ensure the regulatory framework is carefully considered at the outset of the project.

Refinancing And Bankability Issues

There is no standard template power purchase agreement (PPA) in Thailand’s rooftop solar industry which means form agreements differ greatly in the quality of their drafting.

Since most rooftop solar projects are not financed by asset-based lending, these corporate PPAs are generally not scrutinized by lenders at the early stages of development to ensure bankability concerns are minimized.

Many developers will likely seek to refinance their projects to access capital for expansion.

Many developers will likely seek to refinance their projects to access capital for expansion. In doing so, lenders will need to consider their comfortability with the overall risk profile of each project (or their portfolio). It is possible that as a condition to refinancing, lenders will require amendments to the PPAs to address bankability concerns.

Some areas of concern when examining the bankability of PPAs could include:

  • Revenue certainty and demand risk. The C&I customer’s anticipated use of electricity from rooftop solar is the primary factor in assessing prospective financial returns. The pricing formula, as well as incentives to use rooftop solar electricity, must be considered.
  • Consequences of termination. The likelihood of early termination and the developer’s rights must be properly understood. Although the developer retains ownership of the installations during the term of the PPA, their ability to make use of the installations will be limited upon termination of the PPA. A mechanism that permits the transfer of the equipment to the C&I customer is essential.
  • Force majeure and unforeseen risks. A project’s commercial viability will depend on projected electricity demand over a 20-25 year period. The PPA must consider unforeseeable events which could affect the rights and normal business operations of the parties. Clear drafting is essential. In the wake of Covid-19, the importance of robust force majeure clauses was highlighted. Although force majeure clauses drafted in 2020 and 2021 can reliably be expected to mention “pandemic or epidemic” as a listed event constituting force majeure, it is important to think about the next round of unforeseeable events such as climate change.

Carbon Trading Markets – A Secondary Source Of Revenue?

Thailand does not have a state-mandated carbon trading market. However, voluntary schemes such as the International Renewable Energy Certificate Standard (I-REC) are gaining in notoriety. Essentially, the I-REC scheme allows generators of renewable electricity to register and sell certificates to consumers on the open market, enabling consumers to meet other clean energy objectives.

Although developers and their customers may not always consider carbon credits when preparing their PPAs, carbon credits could be a secondary source of revenue. Developers are likely better situated than their customers to maximize the benefits of engaging in carbon trading schemes. However, the customers should be conscious of this additional ability to monetize the solar rooftop project in order to leverage preferable terms in the PPA, including a potential reduction of the purchase price for electricity.

In our experience, only some rooftop solar PPAs contemplate allocation of rights over carbon trading units. This could lead to disputes between developers and their customers. Going forward, as businesses increase their efforts to promote energy transitions, carbon trading schemes will play a more prominent role in negotiations.


Thailand’s rooftop solar industry is still young, and there remain numerous opportunities for developers among C&I customers, residential consumers and small retailers. Presently, access to credit and the relatively small size of projects are drawbacks. But these issues can be overcome with proper policy tailoring. As the Thai government has shown a desire to promote renewable energy, it is likely that initiatives will be drawn up to enable greater market penetration.

Although the initial rush to seize the low-hanging fruit of prime C&I rooftop solar projects may be relenting, this sector will continue to provide investors with opportunities. However, whether it is a greenfield or brownfield development, a clear understanding of the business structure and the regulatory framework is essential to ensure projects are built on solid legal foundations.

If you require advice on any of the issues raised in this briefing, please contact the authors below.


David Beckstead


David Beckstead

David Beckstead is a counsel at Chandler MHM Limited (CMHM) and a member of the firm’s Energy & Infrastructure Practice Group. Prior to joining CMHM, he gained experience as a consultant at a respected international law firm in Bangkok.


Chandler MHM Limited
36th Floor, Sathorn Square, Office Tower, 98 North Sathorn Road , Silom, Bangrak, Bangkok 10500 , Thailand.

*This article is the IHC Magazine’s off-shore update for April 2021 issue. Click here to read the full magazine

IHC Magazine InHouse Community

Related Articles by Firm
New regulation on the prohibition of sales of alcoholic beverages online
In line with evolving trends in technology, certain entrepreneurs and retailers have started using online channels to sell alcoholic beverages, which makes it difficult to ensure the sale of such beverages is in accordance with existing laws ...
Nok Air Rehabilitation Proceedings – Updates for Creditors and Lessors
As the global travel industry continues to grapple with the effects of COVID-19, many companies are now beginning to seek protections under various insolvency regimes ...
Thai data privacy act exemptions
A cabinet resolution has approved a draft Royal Decree on temporary exemption of PDPA enforcement for some organisations and businesses.
Procurement of power from community-based power projects
These projects are intended to help generate and distribute income to local communities and promote their participation in local power projects.
Updated standards for e-meeting security
The Emergency Decree requires that electronic meetings follow the security protocols set forth under a notification from the Ministry of Information and Communication Technology.
Waste to energy projects in Thailand
A brief overview of the legal issues related to the development of a municipal solid waste to energy project.
Scrutinising CP Group’s acquisition of Tesco
The decision of Thailand’s competition authorities will set a precedent regarding merger control and provide clarity on market definitions.
PPP projects in Thailand’s EEC
Thailand will continue to aggressively move forward with legislation that streamlines implementation of important PPP projects. This legislative trend presents new opportunities for foreign and local investors alike, with a focus particularly in Thailand’s infrastructure sector ...
Community-based power projects in Thailand
A feed-in tariff scheme for power generated by community-based projects has been approved.
Thailand Plus incentives under BOI
The two new incentives encourage companies to move from overseas to Thailand.
Thailand’s OTCC issues first industry-specific conduct guidelines
Guidelines on the conduct between wholesale and retail business operators and their trade partners announced by the Office of Trade Competition Commission.
Amendment to the Consumer Protection Act 
The Act strengthens the law relating to the safety of products and services.
Personal Data Protection Act published in the Government Gazette
Business operators should ensure that their businesses comply with the PDPA.
Amendment to Thai Arbitration Act
The Amendment expands the ability of foreign arbitrators and representatives to act in arbitral proceedings.
Update on Stamp Duty regulating electronic transactions
A new notification requires parties who enter certain electronic transactions to pay stamp duty in cash.
Ministerial Regulation removing back office services from the Foreign Business Operations Act announced
Certain back office service businesses will no longer require a foreign business licence.
Developments in Thai M&A
Corrupt practices, environmental breaches and merger filing are becoming more significant priorities for clients ...
Thailand: Projects and Energy
Commentary on the latest developments in the Thai projects and energy sector ...
Secondary laws under the Trade Competition Act BE 2560
The enactment of these five Notifications represents a significant leap of progress.
Thailand Update: Amendment to Work Permit Law
In response to criticism, the government decided to amend the Emergency Decree on Managing of Foreigners with relaxed penalties ...
Leasing of residential buildings − A contract-controlled business
The Contract Committee of The Consumer Protection Board recently announced a new Notification which designates the lease of residential property as a “contract-controlled business”.
New Mining Regulations for Thailand
On 30th January 2018, the Ministry of Industry issued a new notification regarding prohibited actions for foreigners ...
Mergers and acquisitions in Thailand
A number of factors are making Thailand a target of choice for international and regional investment ...
Thailand Anti-Corruption Update
National Anti-Corruption Commission Guidelines to Supplement Section 123/5 of the Organic Act on Counter Corruption ...
Amendment to the Thai Civil and Commercial Code
Part IX: Combination of Limited Companies ...
Thailand: Amendment to the Public Company Act
The National Council for Peace and Order has considered the lack of clarity on conditions, procedures and time limitations related to the laws governing business operations ...
Thailand: The Act on the Amendment to the Civil Procedure Code (No. 30) B.E. 2560 (2017)
There are a number of amendments to the current Civil Procedure Code (CPC) as part of its legal execution ...
Projects & Energy Special Report: Thailand: New Minerals Act
A new Minerals Act (BE 2560 (2017) was published on March 2, 2017 and took effect on August 30, 2017 (180 days after the publication date) ...
Thailand: ERC Announcement - Purchase of Electricity From Hybrid-Renewable Energy Small Power Producers
The Energy Regulatory Commission (ERC) issued an invitation to bid for the sale of electricity from Hybrid-Renewable Energy Small Power Producers (SPP) on 4 August 2017 ...
Thailand: New Amendment to the Labor Law
The Labor Protection Act B.E. 2541 (“LPA”) was first enacted in February 1998; the LPA has been amended several times ...
Thailand: Extension of the Reduced VAT Rate
Value added tax (VAT) is an indirect, non-cumulative, consumption tax levied on the supply of goods or provision of services in Thailand ...
Thailand: Ten year visa extension
Due to the rapidly increasing number of foreign senior-citizens seeking Thailand as a retirement destination, Thailand’s Cabinet recently approved the ten-year retirement visa extension ...
Thailand: The New Trade Competition Act
On 24 March 2017, the National Legislative Assembly (the “NLA”) in Thailand passed the final reading of the draft Trade Competition Act ...
Thailand: Amendment to BOI Act to create new BOI benefits
The Thai government has recently been promoting “Thailand 4.0”, which refers to creative and innovative industries ... as a master plan to pull Thailand out of the middle-income trap and toward becoming a high-income country ...
Energising Thailand’s M&A sector
With a focus on the energy and natural resources sector, Chandler & Thong-ek Partner Ratana Poonsombudlert answers our questions on Thailand’s M&A present and future
Related Articles
Related Articles by Jurisdiction
Thailand: The Act on the Amendment to the Civil Procedure Code (No. 30) B.E. 2560 (2017)
There are a number of amendments to the current Civil Procedure Code (CPC) as part of its legal execution ...
Latest Articles