The Thai government has recently announced a new policy to restructure the contract terms and pricing arrangements under non-firm power purchase agreements (PPAs) for solar and wind power projects developed by small power producers (SPPs) and very small power producers (VSPPs) that were procured under older procurement regimes with higher purchase tariffs, automatic renewal or extension provisions, and incentive mechanisms. This development forms part of a broader policy objective to reduce electricity costs for consumers and align "legacy" renewable energy procurement arrangements with current production costs and market conditions. The new policy is expected to have significant implications for project companies, sponsors, lenders and investors with exposure to Thai renewable power projects, particularly those operating under these legacy long-term PPA arrangements.

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Hongrat Jungwanitchakun, Senior Associate, has contributed to this legal update.