Thailand’s clean energy DPPA mechanism to launch by year-end

Thailand to launch DPPA pilot by year-end, eyes data center investments. (Photo: iStock)

Thailand’s Energy Regulatory Commission (ERC) announced that the country’s first pilot project for the Direct Power Purchase Agreement (DPPA) is in its final stages of review and is expected to launch by the end of this year. Authorities hope the scheme will attract international data center developers to invest in Thailand. If industry response is strong, ERC may lift the current 2GW trading cap.

Third-party access rules still under discussion

ERC Secretary-General Poonpat Leesombatpiboon said officials from the Ministry of Energy and the Board of Investment (BOI) have been involved in discussions, with the Third Party Access Code being one of the main issues. ERC has previously stated that if power companies use the national grid in line with the code, related transactions would incur wheeling charges.

As more industries move toward low-carbon and net-zero goals, the government faces increasing pressure to liberalize the green electricity market. Foreign data center developers have explicitly told Thai authorities that they would consider investing if a clear DPPA policy is in place.

Naruechon Dhumrongpiyawut, CEO of Thai clean energy developer Gunkul Engineering, also urged the government to keep pace with other Asian countries such as the Philippines and Taiwan, noting that countries adopting DPPAs are more successful in attracting foreign investment—something she herself prefers when expanding business opportunities abroad.

Thailand’s National Energy Policy Council (NEPC) currently caps DPPA transactions at 2GW. Poonpat said the cap may be raised in the future to meet growing demand.

Thailand's Direct Power Purchase Agreement (DPPA) mechanism is becoming a key factor in attracting investment from data center operators.（Image:iStock）

LNG imports decline for the first time since 2014

Electricity supply and demand in Thailand remain closely tied to the economy and weather. Government data shows that as of July this year, gas-fired power generation dropped 12%, the steepest fall on record, while liquefied natural gas (LNG) imports also contracted for the first time since 2014. Natural gas accounts for 56% of Thailand’s total power generation.

Raksit Pattanapitoon, an analyst at Norway-based consultancy Rystad Energy, noted that weather has been the key driver of Thailand’s electricity demand this year. Frequent rainfall in recent months reduced instances of extreme heat, lowering the demand for air conditioning.

Meanwhile, the World Bank projects Thailand’s economic growth will slow to 1.8% this year and further to 1.7% next year, citing weak exports, slower-than-expected tourism recovery, and political instability. These factors are also dampening electricity demand. 

Still, Pattanapitoon expects demand to rise in the long term, driven by transport electrification and the expansion of data centers.

Source: Bangkok Post(1)、(2)、Reuters