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Introduction

3

Bangladesh (2011)

Country Partner: 1

Advisers: 11

Cambodia* (1995)

Partners: 5

Advisers: 42

Lao PDR (1994)

Partners: 2

Senior counsel: 1

Advisers: 10

Indonesia‡ (2011)

Mataram Partners

Partner: 1

Advisers: 10

Myanmar (1995)

Partners: 2

Senior Counsel: 1

Advisers: 20

Philippines‡ (2015) Ocampo & Suralvo Law Office

Partners: 3

Singapore (2010)

Partners: 2

Advisers: 3

Thailand (2005)

Partners: 4

Advisers: 28

Vietnam (2006)

Partners: 4

Advisers: 17

In Cambodia, DFDL works in commercial cooperation with Sarin & Associates. In Indonesia, DFDL works in association with Mataram Partners. DFDL does not operate or practice law in the Philippines. DFDL collaborates with Philippine law firm, Ocampo & Suralvo Law Offices, which provides local legal advice.

Regional Reach: ASEAN and South Asia

Pioneers in frontier markets of S.E. Asia

What Makes DFDL Unique?

2010

Singapore

2011

Bangladesh

Indonesia*

1994

Lao PDR

1996

Vietnam

2005

Thailand

1995

Cambodia*

Myanmar

2015

Philippines*

In Cambodia, DFDL works in commercial cooperation with Sarin & Associates. In Indonesia, DFDL works in association with Mataram Partners. DFDL does not operate or practice law in the Philippines. DFDL collaborates with Philippine law firm, Ocampo & Suralvo Law Offices, which provides local legal advice.

"Very international - but there on the ground!“ - Chambers Asia 2016

Presenters

Audray Souche Partner;

Deputy Head of Energy, Mining and Infrastructure

[email protected]

Phattharaporn Phetphong Legal Adviser

[email protected]@dfdl.com

Thailand Energy : General Overview

Energy Net Generation by Fuel Type

Energy Policy and Planning Office Ministry of Energy

Energy Consumption

Industrial 44%

Residential 23%

Small General Service 11%

Business 18%

Other 4%

2014 Electricity Consumption

2/3 Natural Gas but reserves decreasing ; imported supply mostly from Myanmar (single supplier) and Myanmar now needs this gas. Goals

Strengthen natural gas infrastructure – gas pipelines, LNG import terminals

Diversify to Coal (imported) Diversify to renewables (domestic and imported) Increase electricity imports (mainly Laos hydropower) x 13% Energy Efficiency

Three Pillars: Security, Affordability, Sustainability (efficiency)

Key Issues

Thailand Energy : Institutional Framework

Thailand: Institutional Structure

Ministry of Energy

Office of the Minister Office of Permanent Secretary

Energy Fund Administration

Institute

Energy Regulatory

Commission

Department of Mineral Fuels

Department of Energy

Resources

Dept. of Alt. Energy

Development and Efficiency

Energy Planning and Policy Office

Elec. Generating Authority of

Thailand (EGAT) PTT Public Co. Ltd

National Energy Policy Council (NEPC): policy making, headed by PM

Ministry of Energy (MOE): Policy and Governance of sector EPPO: research, recommends and develops policy, PDP Office of Permanent Secretary (OPS): coordination Department of Alternative Energy Development and Efficiency (DEDE)

Ministry of Finance (MOF): approves all “public electricity related” projects Energy Regulatory Commission (ERC): sector regulator since 2008

Works within policy framework of NEPC Issues operating licenses Regulations for power purchases; approve electricity tariff Not fully independent as MOE sets budget and operating plan and nominates

commissioners

Ministry of Interior: regulate SOEs

Thailand: Roles and Functions

Energy State Owned Enterprises

Generation

Distribution

Transmission EGAT Responsible for generation and transmission

MEA Distribution and

retail service the rest of

country

PEA Distribution and

retail service the rest of

country

SPP (7%)

EGAT (47%)

IPP (38%)

Import (5%)

VSPP (3%)

Direct Customers

25.41% Associated Company

45% Subsidiary

99.99% Subsidiary

45% Subsidiary

35% Joint Venture

Ratchaburi Electricity Generating Holding Plc.

Electricity Generation Plc.

EGAT International Co., Ltd

District Cooling System and Power Plant Co., Ltd

EGAT Diamond Service Co., Ltd

User

EGAT: Electricity Generation Authority of Thailand MEA: Metropolitan Electricity Authority PEA: Provincial Electricity Authority

% Ownership

Thailand: Role of State-Owned Enterprises

Energy Master Plans

Power Development Plan (PDP) 2015-2036

Alternative Energy

Development Plan (AEDP)

Energy Efficiency

Development Plan (EEDP)

Oil Plan Gas Plan

Thailand Renewable Energy: History, Targets and Tools

Renewable Energy Policies – A Chronological Perspective

16

2006 2009 2011 2013 2014

Introduction of Incentives/ Revision of SPP program

Renewable Energy Development Plan (REDP)

Alternative Energy Development Plan (AEDP)

200 MW Rooftop Solar Program

BOI Policy Revision

Shift from Adder to FIT

Pre 2006

Strategic Plan for Renewable Energy Development: 8% Target (2004)

SPP and VSPP Programs introduced in 1994

Energy Conservation Program (ENCON) 1992

2015

Power Development Plan (PDP) 2015-2036

Alternative Energy Development Plan (AEDP) 2015-2036

PDP/AEDP Targets

17

RE Type 2014 Capacity* (MW) 2036 Target (MW) Solar 1,287 6,000 Wind 224 3,000 Small Hydro 142 376 Biogas Energy Plant 297 600 Biomass 2,451 5,570 MSW 65 501

*MOE AEDP 2015 Presentation

RE Support Toolset

18

Focus on Thai Solar

Thailand Geographical Advantage for Solar

Thailand: 42,356 MW potential Average sunlight 6 hours/day year-round Irradiance of 1,700-2,100 kWh/m2/year Vs. Australia: 2,100-2,300 kWh/m2/year EU/UK: 900-1,200 kWh/m2/year

Regional Comparison – Solar

Capacity Target FIT

Thailand 1,244 MW (2015) 6,000 MW (2036) THB 5.66 ($0.16)

Vietnam 4.5 MW (2014) 12,000 MW (2030) under consideration

Philippines 132 MW (2015) 500 MW (FIT cap) PHP 9.68 ($0.21)

Indonesia 43 MW (2014) 5,000 MW (2025) $0.25 (bid ceiling)

India 5,167 MW (2015) 100,000 MW (2020) reverse bidding

China 43,062 MW (2015) 150,000 MW (2020) RMB 1.15 ($0.18)

Solar Farm vs. Rooftop Progress

Unit: MW installed capacity Source: Ministry of Energy: Sept. 2015

Type Already COD

In contract

Total

Solar farm

1,504 1,100 2604

PV roof-top

78 89 167

Total 1,582 1,189 2,771

Installation capacity

FiT/ Kwh (USD)

Building Type

Rooftop Solar PV

House ≤10 Kw 0.20

Small business 10 Kw ≥ 250 kw 0.19

Med-large business

250 Kw ≥ 1000 Kw 0.17

Government Agency and Agricultural Cooperative

≤ 5 MW 0.16

Adder Tariff Program - Timeline

Adder tariff introduced for solar <90MW (THB 8/$0.23)

Energy Industry Act establishes ERC

Bid bond introduced to deter PPA speculators

Solar PPA applications suspended by EGAT and PEA

Managing Committee appt. to oversee PPA approvals + stricter criteria: land, loan, technology, permits

AEDP targets 25% RE by 2021 (incl. 3000MW solar)

Deadline for application to convert adder tariff to 20 year FIT

2007

178 adder tariff applications (1,013 MW) approved (submitted prior to suspension)

ERC orders EGAT, MEA, PEA to cease offering PPAs to IPPs <10MW

Apr 2010

Jun 2010

2011

Dec 2014

Mar 2015

2015

Aug 2009

2007

Adder Tariff Program - Effects

Overly generous and simple qualification = oversubscription and PPA speculators Govt. burdened with overpriced power and many PPAs never

developed Stricter criteria = deterred speculators, but also decreased

transparency for PPA awards Abrupt policy changes = increased uncertainty for investors But.. successfully added substantial RE capacity over short period

Focus on Governmental Agencies and Agricultural Co-op Solar Program

GAAC Program Timeline

PDP & AEDP released, targets 3,861MW (+2,250MW) solar by 2021; 6,000MW (+4,400MW) by 2036

281MW awarded to 67 projects (Phase 1):

Applications accepted for ground-based solar projects <5MW ‘lucky draw’ up to 800MW total @ THB 5.66 ($0.16) FIT / 25 yr PPA

319MW to be awarded (Phase 1b)

Jun 2015

Nov 2015

Apr 2016

Aug 2016?

200MW to be awarded (Phase 2) Jan 2017?

Sched. Commercial Operation Date (SCOD) deadline for Phase 1 30 Dec 2016

Sched. Commercial Operation Date (SCOD) deadline for Phase 2 30 Jun 2018

Government Agencies (GA): State Agency University under Government Control Government Organizations (excluding

Public Organizations and State Enterprises)

Local Administrative Organizations Agricultural Cooperatives (AC): Agricultural Cooperative Land Settlement Cooperative Fisheries Cooperative Sponsors:

Limited Company Public Limited Company

Key players

Energy Regulatory Commission Metropolitan Electricity Authority Provincial Electricity Authority Satahip Electric Welfare

Relationships Between Key Players

Project Owner

Sponsor

Off Taker

Project Development Agreement (PDA)

Power Purchase Agreement (PPA)

Required Permits Related Authority

GA

AC

MEA

PEA

Satthip

ERC

Other

Limited Company

Public Company

Or

Phase 1: Capacity Targets

North

5 MW

West

159 MW

Central

138 MW

East

87 MW

Sattahip

11 MW

Bangkok

200 MW

Total

600 MW

Phase 1: Power Purchase Target by Region

Offtaker Phase 1: Target Phase 1: Awarded Phase 1: Remaining

1. MEA 200 21.65 178.35

2. PEA 389 259.67 129.33

- Central 138 108.20 ( 25 projects)

29.8

- West 159 76 (18 projects)

83

- East 87 70.47 (17 projects)

16.53

- North 5 5 (1 projects)

-

3. Sattahip Electric Welfare

11 - 11

Total (MW) 600 281.32 318.68

Limited Company or Public Limited Company Registered in Thailand

Objective of generating and selling electricity

Minimum Investment

- Registered capital of THB 2 million per 1 MW sponsored - At least 25 % of registered capital must have been injected

Readiness criteria: 1) Technology capacity 2) Financial potential 3) Experience 4) Not be on Govt. supplier blacklist

May apply for multiple projects provided aggregate <50 MW.

Project Sponsor Qualification

Process for Power Purchase by drawing lots or “lucky draw”

Points connecting power network system open for inspection

File application for sale of power

Submit application supporting documents

Final selection by draw and announcement of results

Announcement of list of projects that have passed qualification screening

Signing of PPA with off taker within 120 days after receipt of official letter from ERC

Applicable Licences

33

License and Permit Contact Agency Estimated Approval Period

Building Construction Permit Tumbol Administration Organization (TAO); Provincial Public Works Office 2 Months

Factory Operation License Ministry of Industry, Dept. of Industrial Works 2 Months

Power Generation Licence Energy Regulation Commission (ERC) 2-3 Months

Controlled Energy Generation Energy Regulation Commission (ERC) 2 Months

Machinery Registration Ministry of Industry, Dept. of Industrial Works 2 Months

Tax Privileges Board of Investment (BOI) 2 Months

PPA and Licensing Process

Letter of award stating that a PPA will be granted to a specific investor and project

Pre-PPA Execution

Application for Construction Permit

Power Generation License: ERC

PPA Execution

Commencement of Construction Post-PPA Execution

Machinery Registration: Department of Industrial Works.

Tax Privileges: BOI

Signing of PPA

SCOD Start of Commercial Operation Date

Factory Operation License (if required)

Simultaneous Actions for Greater Efficiency

Simultaneous Actions for Greater Efficiency

34

Key Conditions of the Power Development Agreements (PDAs)

Agricultural Co-op (AC) Obligations: Propose the project to ERC Provide Land

Sponsor Obligations: Develop/Obtain all Required Permits. Financial Compensation to AC: - Land Rental Fees - Annual Benefit to AC for 25 years - Provide Guarantee/Security to AC (repayable at expiration of PPA) - Contribution to Electricity Fund - Property tax

1. Assignment of Rights under PPA/Application Rights and obligations under an application to sell electricity or PPA cannot be assigned unless the authority responsible for sale of electricity gives consent and ERC approves it. 2. Shareholding Lock-Up Period The Sponsor must not change its shareholding structure where it would cause:

(i) the number of original shareholders to be less than a half of the original shareholders as of the PPA execution date; and

(ii) the number of shares held by the original shareholders to be less than 51 % of the total shares during the first 3 years of COD

Assignment of Rights and Change of Control

Developers of solar power plants can apply for BOI promotion under category 7.1.1.2: Production of electricity or electricity and steam from renewable energy. Group A2 incentives available as follows: Exemption of import duty on machinery (Sections 28 and 29)

8 year exemption of corporate income tax on the net profit and

dividends derived from the promoted activity which capped at the amount of actual investment (Section 31)

Other non-tax incentives

BOI Incentives Available to Relevant Projects

Where to next for the Thai solar sector?

38

1. Adder Program Not clear if outstanding applications (rolled over to 20-year FIT) will

ever be awarded

2. Rooftop Program 167MW awarded (of 200MW target) Private solar rooftop development: game changer?

3. GAAC Solar Farm Program Phase 1 SCOD unrealistic given time required to obtain permits Not confirmed when Phase 1b 319MW (Aug 2016?) and

Phase 2 200MW (Jan 2017?) will actually be awarded. Approx. 1,200MW additional still required for 2021 solar target, assuming Phase 1 & 2 and rooftop targets are all met.

click to edit master title style - dfdl · 2016-06-29 · developers of solar power plants can...

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