Thai tech and EV boom spurs I-REC demand, FiT boosts green energy: The Lantau Group

Thailand’s recent initiatives to become a digital and manufacturing hub, alongside its Feed-in Tariff program, have spurred new demand for renewable energy certificates from tech firms and electric vehicle manufacturers, according to economics consultants from The Lantau Group Nov. 4, as companies work to meet sustainability targets.

In early 2024, Thailand formed a Cloud First Policy Committee to guide state agencies toward digitalization. This policy has already attracted major investments from companies like Google Asia-Pacific and Amazon Web Services, who plan to develop AI and cloud services infrastructure in the country.

In June, Google, in partnership with Gulf Energy Development, announced plans to bring AI-enabled cloud services to Thailand, while in May, AWS committed $5 billion to expand its presence in Bangkok by 2025.

"Many leading global technology companies have announced plans to establish AI and cloud services in Thailand," The Lantau Group consultant Jitsai Santaputra said, adding that the increase in data centers and cloud operations, which require substantial energy, will likely boost I-REC demand, as these companies seek renewable energy solutions to offset their carbon footprints.

FiT impact on I-REC market

Thailand’s FiT program is a key component of its renewable energy strategy, designed to encourage the production of solar, wind, biomass and other renewable energy sources.

The FiT policy offers attractive financial incentives for renewable energy producers by guaranteeing a fixed rate for the energy they produce.

Through FiT, Thailand aims to add nearly 5 GW of renewable capacity by 2030, which could significantly increase the supply of I-RECs in the market as new renewable projects generate certifiable clean energy, The Lantau Group consultants said.

The FiT program particularly promotes rooftop solar projects and independent power producers, allowing developers to sell excess renewable energy to the grid. Consequently, rooftop solar and other projects are expected to issue I-RECs, which developers can then sell in the open market.

According to the consultants, this anticipated increase in I-REC supply may help balance rising demand from tech and EV companies, potentially stabilizing prices over time.

I-REC demand from EV manufacturing surge

Thailand’s goal to become a Southeast Asian EV manufacturing hub has led to government incentives that have attracted global EV companies. For instance, in August, China’s Changan Automobile announced plans to open its first EV plant in the region by the first quarter of 2025.

According to Jitsai, these EV manufacturers, driven by sustainability goals, are likely to turn to I-RECs to ensure renewable energy usage across their production processes, further boosting demand.

The influx of EV and tech investments, along with Thailand's recent policies, "will likely drive demand for I-RECs" and pressure prices upward, Jitsai added, as companies seek renewable certifications to meet sustainability commitments and align with the country's climate and energy targets.

Platts, part of S&P Global Commodity Insights, assessed Thai 2024 vintage solar I-RECs at $1.45/MWh and 2023 vintage solar I-RECs at 75 cents/MWh on Nov. 5. Thai biomass I-RECs were assessed at 60 cents/MWh for 2024 vintage and 45 cents/MWh for vintage 2023, while Thai hydro I-RECs were at $1.26/MWh for 2024 vintage and $1/MWh for 2023 vintage.