Thailand’s Direct PPA Pilot Project: A Paradigm Shift in Energy Procurement

Author: Kobchai Nitungkorn

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Publisher: Nagashima Ohno & Tsunematsu

Journal / Book: NO&T Asia Legal Review No.110 (December, 2025)

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*Please note that this newsletter is for informational purposes only and does not constitute legal advice. In addition, it is based on information as of its date of publication and does not reflect information after such date. In particular, please also note that preliminary reports in this newsletter may differ from current interpretations and practice depending on the nature of the report.

Introduction

On October 3, 2025, the Energy Regulatory Commission of Thailand (ERC) unveiled the draft Direct PPA regulation, marking the most significant liberalization of Thailand’s energy sector in decades. Historically, Thailand’s “Single Buyer” model prohibited direct private-to-private energy trading via the national grid, forcing companies to purchase pooled power from Electricity Authorities※1. This structure has increasingly proven incompatible with the needs of modern foreign investors, specifically Data Centers requiring pure renewable energy traceability.

To address this structural bottleneck and accelerate foreign direct investment, the government has introduced a landmark regulatory sandbox. This new framework allows qualified users to bypass the state monopoly and sign Direct Power Purchase Agreements (Direct PPA) with private renewable energy developers for up to 2,000 MW, utilizing the state’s transmission lines via Third Party Access (TPA).

The pilot is purpose-built to support BOI-promoted Data Centers in meeting corporate sustainability commitments. By enabling direct access to verifiable renewable energy through the national grid, the initiative not only strengthens Thailand’s status as a preferred investment destination but also promotes competition within the domestic energy industry.

Below is a summary of the key criteria under the draft regulation.

1. Eligible “Data Centers” Buyers

The regulation is strictly ring-fenced for hyper-scale data centers. To qualify for the pilot, a buyer must meet the following requirements:

BOI Promotion: The project must have received an investment promotion certificate from the Board of Investment (BOI).
New Investment: The project must not have generated commercial income prior to the application date (i.e., existing operational data centers are excluded).
Parent Company Mandate: Renewable energy usage is mandated by the parent company and must be standardized in all countries where operations are established.
Electricity Authority Confirmation: Must have a contract for purchasing electricity or a letter confirming the status of electricity user from the Electricity Authority, in accordance with the scheduled start of operation date and electricity usage plan, including a purchase of backup electricity from the Electricity Authority.
Minimum Capacity: Must have an IT Base Load of at least 50 MW (per building).
Energy Mandate: Must certify a requirement for 100% Renewable Energy (RE) usage to comply with parent company or headquarters’ policies.
Clear Investment Plan: Must provide project details (location, commercial operation date, 10-year electricity usage plan), specifying the maximum annual electricity capacity (MW) broken down into usage from the Direct PPA, EGAT system, and total Data Center demand, including the load profile.
PPA with Private Party: Must demonstrate concrete plans or agreements for direct PPA electricity procurement from private entities.

2. Eligible Sellers

Power producers (Sellers) must meet these technical specifications to participate:

Each renewable energy power plant must be newly developed and must not be already operating or supplying to the national grid.
Each participating plant has a total installed generating capacity (or total inverter size for solar power plants) of 1,000 kVA or more.
Power plants must not have a binding power purchase agreement with the government or any private offtaker.
The facility must pass the feeder capacity assessment conducted by the Electricity Authority.

3. Other Criteria

Mandatory Grid Agreements: Data Centers must ensure their power producers execute grid service agreement with Electricity Authority within the specified timeframe. Any capacity not secured by a signed agreement will be immediately forfeited.
Code Compliance: Both Data Centers and power producers must strictly adhere to the Electricity Authority’s Grid Code and Third-Party Access (TPA) Code.
Backup Power & Liability: While sourcing from multiple producers is permitted, drawing supplemental power from the Electricity Authority (during shortages or excess demand) requires a separate Backup Power Purchase Agreement, which may include security deposits and potential penalties for non-compliance.

Strategic Progress Towards a Competitive Energy Market

The release of the Direct PPA draft regulation※2 is a landmark development in Thailand’s energy landscape, moving the country from a rigid “Single Buyer” model to a more open, competitive, and investment-friendly electricity market. By unlocking a 2,000 MW quota specifically for hyper-scale data centers, the government is proactively addressing the renewable-energy access challenges that have previously stalled major tech investments.

The framework sets clear expectations, ensuring that only credible, well-prepared investors participate in the pilot. With a 50 MW minimum threshold, the pilot is designed to accelerate actual deployment and ensure efficient use of grid capacity.

For qualified investors, the pilot presents a rare and strategic opportunity: early movers can secure long-term renewable energy capacity, support Thailand’s clean-energy transition, and reinforce the country’s position as a regional hub for sustainable digital infrastructure.

Endnotes

*1
“Electricity Authority” refers collectively to the Electricity Generating Authority of Thailand (EGAT), the Metropolitan Electricity Authority (MEA), or the Provincial Electricity Authority (PEA).

*2
The Direct PPA regulation is currently in draft form and subject to revision through consultation and legislative procedures. Stakeholders should closely monitor developments as specific provisions may evolve during ongoing regulatory discussions.

December 22, 2025

This newsletter is given as general information for reference purposes only and therefore does not constitute our firm’s legal advice. Any opinion stated in this newsletter is a personal view of the author(s) and not our firm’s official view. For any specific matter or legal issue, please do not rely on this newsletter but make sure to consult a legal adviser. We would be delighted to answer your questions, if any.

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