Non-producing solar plants face termination of contracts in June

It is estimated that 700 megawatts worth of contracts will be terminated midyear.
A ministry source said permanent secretary Norkun Sitipong recently discussed with the Energy Policy and Planning Office (Eppo) the planned introduction of a feed-in tariff to replace the adder-rate measures to support the power plants. The Eppo said the feed-in tariff could be introduced within this first quarter if the National Energy Policy Council approves it.
Once the feed-in tariff is in effect, the projects that have yet to clinch power-purchase deals from the state electricity authorities will be subject to the new tariff measure instead of the existing adder rate.
A feed-in tariff is a measure to support private investment in projects to produce alternative energy. The calculation of the feed-in tariff takes into account electricity production costs and trends of declining costs of the technology involved.
According to Eppo calculations, the feed-in tariff for solar power projects is Bt5.94 per unit and for wind power Bt5.50 per unit, and the plants can enjoy the rate for 20 years. Meanwhile the adder rate for solar power plants is Bt8 per unit and they can enjoy the rate for 10 years.
The ministry source said one problem in supporting alternative-energy producers was that some firms have low potential to invest in the project but can secure the right to set up the plants and later sell the contracts to others with more potential to invest in them.
According to preliminary information of the Provincial Electricity Authority (PEA), last year there were 700 solar power plants proposing to sell a combined 3,000MW to the state agency but only 44 plants with a combined 45MW have already fed power to the system. The rest are just in the process of preparing investments. These plant operators bear no risk if they fail to supply power to the system on schedule as they were not required to make a financial guarantee and face no punitive measures.
Some plants are also believed to be owned by a group of interests with political connections.
The ministry source added that all the solar power plants were supposed to feed power to the PEA by last month but the contracts they made with the authority allowed them to extend the deadline by six months if they could produce valid reasons.
However, the Office of the Attorney-General has informed the Energy Ministry that the PEA and the Electricity Generating Authority of Thailand cannot extend the deadlines past June. Therefore, the producers must start feeding power by that month or their power-purchase contracts will be terminated.
The ministry estimated that contracts equivalent to 700MW would be terminated. If they resubmit the power-sale proposals, they will be subject to the feed-in tariff measure instead of the adder rate.