Global warming and its impacts on our daily lives have become ever more apparent. While the COVID-19 pandemic stole the headlines over the last two years, awareness of climate change and that action must be taken quickly has been the most important backstory. Investing in renewable energy is this century’s megatrend that is fundamentally altering the investment landscape in Thailand and the rest of the world. Thailand is well aware that it needs to make a renewable energy transition for several reasons:
While the COVID-19 epidemic has captured the attention of the media in recent years, awareness of climate change and the need for prompt action have been the most important backstories. Thailand has joined many countries around the world in shifting to renewable energy shift not only for the benefit of the planet but for its own reasons, too:
- Thailand wants to dampen the effect that climate change is beginning to have on its agriculture industry, which hires 31% of the country’s workers and accounts for 8% of the GDP.
- Global trade regulations will only require steeper and steeper greenhouse gas reductions in the years to come. Since Thai exports make up 70% of Thailand’s GDP, the country must find ways to comply with these requirements. Otherwise, importing countries will impose carbon taxes that will make Thai products more expensive and therefore less competitive in those markets.
- More and more Thai and foreign companies have set carbon neutrality and net zero goals, and these goals factor into their choice of location. Thailand must be able to support those goals so that eco-conscious corporations will choose to invest in the country.
Thailand is intent on becoming more carbon neutral and energy independent
Since Thailand’s economy relies heavily on trade, reshaping its energy infrastructure will be the most effective way of maintaining – if not improving – its position in this overheating world. This is because shifting to renewables like solar, wind, and hydroelectric increases the overall energy supply and diversifies energy suppliers, thereby making the country less vulnerable to volatility that’s inherent in the fossil fuel industry.
Bolstered energy supply
As Thailand’s economy grows, becomes more digital, and shifts from combustion-powered vehicles to electric ones, the country’s demand for electricity is expected to grow.
More sources of energy
Being mostly reliant on fossil fuels is unsustainable since their supplies are limited and not renewed. And when fossil fuel supply lines are put under pressure (such as during wars), fuel prices spike dramatically and hurt the world’s economies. Having a diverse set of energy suppliers allows Thailand to insulate itself against the pitfalls of fossil fuel dependence. Furthermore, having multiple power backups ensures sustained power delivery in case a supplier goes offline.
BOI Thailand is all for renewable energy
Given the scale of public utility projects, Thailand’s Board of Investment (BOI Thailand) is giving foreign-owned companies and joint ventures incentives to accelerate investments. To encourage them to invest in renewable energy generation projects, BOI is promising corporate income tax (CIT) exemptions spanning 5-8 years. And to encourage companies to invest in decarbonization and sustainability projects, BOI is promising three-year CIT exemptions plus exemption from paying import duties when bringing machinery into Thailand.
Shifting Thailand’s transition to high gear
In Asia, Thailand’s incentives for greenfield investment are hard to beat. This is especially true for investments in renewable energy since Thailand is set on weaning itself off of fossil fuels for good. This commitment to go green is no empty promise – BOI Thailand is actively granting incentives for investments in alternative energy projects. Therefore, if you’re looking to invest in eco-friendly utility-scale projects, Thailand should be on top of your list.