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Thailand

Overview

Thailand’s energy transition gained momentum when a 5 GW Power Purchase Agreement (PPA) and Feed-in Tariff (FiT) scheme were introduced in 2022 to accelerate renewable energy deployment (OECD, 2024). However, progress is being hampered by curtailment risks, limited regulatory incentives, a lack of grid planning and a clear long-term RE roadmap aligned with climate goals. This stems from an absence of integrated planning across the energy, renewables and climate domains, with a need for more institutional coordination. To fully unlock its renewable energy potential, Thailand needs to adopt a systemic approach that includes supportive policies for deploying renewables, strengthened grid infrastructure and a clear national RE roadmap, positioning the country as a regional leader in harnessing clean, affordable and secure energy. 

Key barriers and solutions

One major challenge is the limited scale, continuity, and effectiveness of incentives for distributed generation, particularly rooftop solar. Despite Thailand’s strong solar potential, uptake remains low due to insufficient financial incentives and a regulatory environment that does not actively support smallscale or household generation. This represents a missed opportunity for a rapid, low-cost expansion of solar capacity, although it is seen as an area with high potential for positive change. A carbon pricing mechanism such as a carbon tax could play a pivotal role in Thailand by shifting the relative costs of fossil fuels and renewables. Though policy frameworks for carbon tax, ETS, and carbon credit emerged with the proposal of a Climate Change Act, no such policies have yet been finalised or implemented. Thailand’s lack of power system flexibility is another significant barrier to scaling up renewables. While wind and solar are nominally designated as “must-take” sources, they are still subject to curtailment without compensation due to existing takeor- pay contracts with gas generators. This creates a structural incentive for the system operator, EGAT, to prioritise fossil-based generation over renewables. Furthermore, there are currently limited regulatory or market-based measures to incentivise system flexibility or RE integration. Despite Thailand’s technical capacity, the lack of policy focus and awareness around flexibility options hinders progress. In order to address these challenges, Thailand could adopt economic dispatch based on short-run marginal costs, which could reduce overall system costs and support the integration of renewables. Phasing out long-term “take-or-pay” contracts for fossil fuel power plants and introducing flexibility provisions in remaining contracts can also reduce fossil-fuel lock-in effects and enable dispatch decisions to better reflect evolving system needs and decarbonisation objectives. In terms of grid development, while there are plans to expand the transmission network and develop a Smart Grid, these are largely centred on supporting large fossil fuel and hydropower projects. A comprehensive and long-term grid expansion roadmap to 2050 that aligns with RE targets and carbon neutrality ambitions is required. In 2024, Thailand’s National Energy Policy Council approved a 2 GW Direct PPA pilot program to enable foreign investors, particularly data centres of at least 50 MW capacity, to purchase renewable energy directly from generators (Ember, 2025). This is the first time that the country is easing the single buyer model over electricity trading and transmission access and could facilitate greater RE deployment in the future to meet the evolving demands of large industrial users. Thailand has announced carbon neutrality and net-zero targets, but not yet articulated targets for phasing out fossil fuels, with its latest Power Development Plan projecting a 41 percent share of gas and 7 percent share of coal in the electricity mix by 2037 (CASE for Southeast Asia, 2025). The absence of clear fossil fuel transition pathway creates uncertainty around the role of renewables and hinders investor confidence in the long-term energy transition.On the target-setting and governance side, Thailand’s revised 2037 target is for renewables to account for 51 percent of electricity generation, including all RE sources (Ember, 2025). While this is a step forward, the level of ambition may still fall short of what is necessary to achieve carbon neutrality by 2050. Moreover, while efforts are being made to improve monitoring and reporting under the new National Energy Plan, current indicators are fragmented and do not provide a clear, consolidated view of progress towards climate and RE goals. Tracking mechanisms specific to the transition pathway still need to be developed.

Assessment Results

Legend: Low Barriers Medium Barriers High Barriers