Thailand’s Ministry of Energy is preparing to introduce a new electricity user category, “Category 9,” specifically for data center operators, as the Ministry has planned to review the Adder contracts to alleviate energy cost burdens for the public.
Adder contract is a surcharge on renewable energy procurement which has existed for years, and in some cases, is automatically renewed. The contract has raised concerns over its elevated cost structures. The Ministry will appoint a committee to study and develop the contract review proposals before presenting them to the National Energy Policy Council (NEPC).
Additionally, the market for clean electricity will also open up for direct power purchases and transmission system charges.
Ekniti Nitithanprapas, Deputy Prime Minister and Minister of Finance, as Chairman of the Board of Investment (BOI), has ordered a full review of strategies and perspectives on data centers. He highlighted both opportunities and challenges:
- On the positive side, data centers serve as the backbone for modern industries, as AI requires vast data storage, and Thailand can leverage data centers to grow its cloud service sector.
- On the other hand, data centers are significant consumers of both power and water on a global scale, which raises energy management concerns.
To mitigate this, BOI encourages investors to develop clean energy projects (Direct PPA) alongside data center investments, helping prevent strain on resources needed by other sectors and Thai citizens.
With increasing data center investments in Thailand, which may potentially outpace available energy resources, the government has set preliminary strategies:
- Centralizing the permit process through the BOI, replacing the current fragmented approach requiring approvals from multiple agencies.
- Promoting vertical integration, from upstream to downstream industries, to boost added value and provide Thais with affordable, secure access to AI.
- Developing skilled talent, particularly data scientists specializing in data centers and cloud services, with a focus on nurturing these competencies among Thai youth.
Beyond the data center discussion, the government emphasizes that Thailand’s energy transition is an urgent priority to address structural weaknesses brought by heavy reliance on imported energy, which threatens economic stability. This vulnerability is evident in the current account deficit, attributed in part to high energy costs.
According to Bualuang Securities, electricity tariffs for data centers could rise to THB 5 – 8 per unit, from the current THB 3.4 – 3.5 per unit. This spike may cause planned investments this year to drop from the expected 3,000 – 4,000 MW to less than 1,000 MW, as higher costs trigger investor concern, potentially prompting a shift of investments to other countries, or delaying investment decisions. Presently, Vietnam’s data center electricity rate is about THB 2 per unit, while Malaysia’s rate is similar to Thailand at THB 3.5 per unit.
Simultaneously, reviewing and amending power purchase agreements with the private sector—especially listed firms like Energy Absolute Public Company Limited (SET: EA) and Global Power Synergy Public Company Limited (SET: GPSC)—could have significant implications. There is risk of margin compression for renewable energy contracts post-expiry, particularly within the next five years. However, the full impact awaits further clarification. Currently, the base tariff for solar power is about THB 2.2 per unit.
