Bangkok: The government is considering amending power purchase agreements with private companies, terminating "perpetual contracts," and adjusting the purchase price to 2.16 baht, matching the community solar program. According to Thai News Agency, Mr. Danucha Pichayanant, Secretary-General of the National Economic and Social Development Council (NESDC), revealed that the meeting resolved to revise guidelines for purchasing electricity from renewable energy sources from the private sector. This aims to create fairness for consumers and reflect true costs in accordance with government policy. The main issue identified was the existence of perpetual contracts for purchasing electricity from small and very small-scale renewable energy sources, such as solar and wind power, which were automatically renewed upon expiration.
The previous purchase price was based on the wholesale price plus the fuel adjustment charge (FT), which amounted to over 3 baht per unit. Since these types of power plants do not have true fuel costs because they generate electricity from renewable energy sources, a new purchase price is being considered to reflect current, lower-cost technology. The new price will be based on the community solar project price of 2.16 baht per unit, initially applied to solar power plants. A new purchase price will be determined for wind power plants at a later date.
The conclusions regarding contract handling were divided into two groups. The first group includes power plants whose 25-year contracts have expired, with approximately 515 contracts totaling around 2,400 megawatts of generating capacity. Previously, these contracts were automatically renewed for 3-5 years. The new resolution states that automatic renewal will no longer occur. Contracts can be renewed for one more cycle, for the duration of the original contract, and must adhere to a purchase price of 2.16 baht per unit. Upon expiration of this period, the contract will be terminated immediately.
The second group comprises approximately 46 contracts that have received the full 10-year Adder subsidy but have not yet completed the 25-year contract term, with a commercial operation date (COD) of about 1,478 megawatts. This group is considered to have recouped its construction costs during the subsidy period. Therefore, for the remaining contract period, the purchase price will be reduced to 2.16 baht per unit. For the group that has not yet commenced commercial operation (Non-COD), comprising approximately 4 contracts with a total capacity of 67 megawatts, contract termination will be considered on a case-by-case basis if there is no progress after 2 years past the COD date.
There are no clear revised figures yet regarding the exact amount of electricity price reduction. However, adjusting the FT to reflect true costs will benefit the overall electricity costs for the public. The Energy Policy and Planning Office (EPPO) and the Energy Regulatory Commission (ERC) are currently calculating the reduction amount. This may not happen immediately in this billing cycle, as it depends on the completion of contract amendments between the electricity authorities and private companies.
The proposal is being prepared for submission to the National Energy Policy Council (NEPC), chaired by the Prime Minister, to be formally adopted as policy. Following this, the NEPC will amend and revoke its previous resolution approving automatic contract renewals. The three electricity authorities will amend their contracts with private companies. Deputy Prime Minister Pakorn Nilapraphan, chairman of the committee, emphasized that the government must prioritize the public interest and fairness, and there is no need to worry about lawsuits from private companies, as this is a duty performed for the public good. The government must resolve the unfairness that has occurred to ensure the greatest benefit for the public.