In Thailand, climate-related startups are few and far between, and emerging climate and clean tech firms have had to explore energy efficiency solutions outside the regulated market due to restrictive government policies and the dominance of a power production oligopoly.
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Speakers at the inaugural Thailand edition of Unlocking capital for sustainability conference said these startups find it challenging to trade clean energy and many can only do it on a “peer to peer” basis at a smaller scale, which obstructs the climate tech sector from blossoming.
Peter du Pont, co-founder and co-chief executive of global consultancy Asia Clean Energy Partners, said even innovative solutions like peer-to-peer (P2P) energy trading are not supported or accommodated by Thailand’s current national policies, so startups either try to circumvent existing regulatory rules or remain confined to the regulatory sandboxes piloted by the Energy Regulatory Commission (ERC).
“They have to do it behind the meter, in captive power facilities in industrial estates, or in gated communities of only a few 100 houses with solar panels,” said du Pont, adding that this prevents startups in Thailand from scaling or reaching commercial viability.
Currently, Thai clean tech firms do P2P trading – buying and selling locally generated renewable energy such as solar power – directly within a private grid, bypassing traditional electricity suppliers such as the Electricity Generating Authority of Thailand (EGAT).
“The fact that innovative companies have to try to escape or avoid the regulated space, that sucks,” du Pont said, underscoring the urgent need for a “wholesale energy reform” in order to scale Thailand’s climate tech sector.
He cited Thai tech companies he supports through the Private Financing Advisory Network (PFAN), a global initiative for the development and financing of climate and clean energy projects in emerging markets and the obstacles they have faced. For example, E-Finity is a blockchain-based P2P energy trading platform that has operated within the sandbox environment validated by ERC. Enabled through Web3 and blockchain technologies, it is a way for firms to buy and sell energy directly between two parties without a third party involved but is only allowed as a test in controlled environments in Thailand.
Under the Paris Agreement, Thailand has set a mid-term goal to reduce greenhouse gas emissions by 30 per cent by 2030 and a long-term goal of achieving carbon neutrality by 2050 and net-zero emissions by 2065.
Whether the country could reach these targets remains to be seen as it is not capitalising on the available technology to scale renewable energy and energy efficiency solutions, said Chow Wong Yuen, chief sustainability officer of UOB Thailand, who spoke on an earlier panel at the same event, organised by Eco-Business.
He said, Thailand is the “most conservative” when it comes to net zero goals, as it only “installs a few solar panels here and there” that do not have a significant impact on decarbonising the energy sector.
Instead, the Thai government has recently approved a new liquefied natural gas terminal for power generation which could make the energy transition very difficult if investments are locked in.
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The fact that innovative companies have to try to escape or avoid the regulated space, that sucks.
Peter du Pont, co-founder and co-chief executive, Asia Clean Energy Partners
Sarinee Achavanuntakul, director of climate finance network Thailand and managing director of Sal Forest, echoed that it would be difficult for Thailand to attain its ambitious net-zero goals without “genuine energy reform” and the restructuring of its governance system.
She said reform is crucial to ensure Thailand’s competitiveness in the renewable energy market since the current adoption of renewables is only about 18 per cent of the energy mix, far from the country’s 51 per cent target by 2037, a new target in the recently revised version of its Power Development Plan (PDP).
Like many Southeast Asian countries, Thailand relies heavily on fossil fuels for power generation. More than half of Thailand’s electricity is generated through natural gas, followed by coal and oil with a combined total of 25 per cent.
Sarinee urged the industry to speak up on losing competitiveness in renewable energy because the more the country invests into fossil fuels, the higher the need to invest in expensive carbon capture and storage technologies to reduce emissions.
Commercialising climate tech startups
The lack of financing for clean-tech startups is another major reason why a lot of innovative ideas do not get commercialised.
Data from Techsauce Startup Directory shows that Thailand currently only has about 20 (6 per cent) climate-related tech firms of 325 tech startups, indicating a significant lack in the number of innovations needed to spearhead the country’s decarbonisation goals.
Jirapat Horesaengchai, Thailand Country Manager of New Energy Nexus stressed that energy efficiency solutions, in particular, are what Thailand needs the most since most of its energy is used for cooling purposes.
He said the demand for energy efficiency is huge and scaling startups that offer these solutions should be a priority.
Woraphot Kingkawkantong, head of investment at Beacon Venture Capital explained that although financing is one of the challenges, Thailand’s innovation landscape has historically been driven by key performance indicators (KPIs) that do not have to do with commercialisation, such as research citations in academic publications. As a result, the resources needed to bring innovations to the market are rarely mobilised.
“A lot of times when we talk to researchers wanting to commercialise a project, we often realise that within the team, they are all researchers, and not a single one person knows about finance, marketing or business development,” he said.
Nonetheless, these gaps can be addressed by deploying capital from large international finance pools such as multilateral development banks with the help of local representatives and partners.
Woraphot noted that ecosystem builders – organisations and institutions that foster the growth of the clean technology sector – can serve as accelerators by connecting companies seeking funding with venture capital firms by leveraging their knowledge of the market and ongoing innovation activities.
Since the need for climate tech aggregators is “lacking tremendously” in Thailand, he said, these entities can facilitate matchmaking between corporations seeking innovative solutions and startups – a critical function given the limited number of startups, many of which operate outside regulated spaces.
At the same time, financiers can also collaborate with local investors who understand the market’s pain points and viable business models along with local government agencies, such as the National Innovation Agency (NIA) and the Digital Economy Promotion Agency (DEPA), that support climate tech startups through funding, mentorship, and collaboration opportunities and the adoption of digital technologies.
Unlocking capital for sustainability is an annual flagship event on sustainable finance organised by Eco-Business in partnership with UN Environment Programme (UNEP). The next edition of the flagship will be held in Hong Kong, on 28 February 2025. Find out more details here.
