Foreign Business Licence for the Trade of Renewable Energy Certificate

A Renewable Energy Certificate (REC) is a type of Energy Attribute Certificate (EAC) or legal instrument that represents the environmental attributes of the generation of a one-megawatt hour (MWh) of electricity produced by renewable sources, such as solar, biomass, hydro, wind, biogas and waste.  One REC equals one MWh of electricity generation from renewable energy.

The REC is used to validate the claim for the use and support of the development of green power, renewable electricity or power from zero emissions sources, in the report of the end-user of the REC, such as the environmental, social and governance (ESG) report (a framework used to assess an organisation's business practices and performance on various sustainability and ethical issues. It also provides a way to measure business risks and opportunities in those areas); sustainability report; carbon disclosure project (CDP) (not for profit charity that provides a platform for all suppliers to manage their environmental impacts) or RE100 Initiative (RE100 is a global initiative bringing together the world's most influential businesses committed to 100% renewable electricity).

Thailand’s Alternative Energy Development Plan 2015 – 2036 (AEDP2015) and Power Development Plan 2018 – 2037 (Power Development Plan: PDP2018) include a policy to increase renewable electricity generation and development.

With regard to carrying out  business by foreigner under the Foreign Business Act B.E. 2542 (1999) (“FBA”) in connection with the trade of the REC and carbon offset (carbon credits) schemes, there is a public record of rulings in connection with the trade of carbon credits which state that such activity is a provision of service under List Three (21) of the FBA. This article discusses the type of foreign business licence required for the trade of the REC using the interpretation that it is for the trade of carbon credit activities.

The relevant players in the trade and use of RECs can be as follows: 

• -  Registrant: renewable electricity generator who generates power from renewable energy and sells the REC, for use by the end user.
• -  Certificate issuer (I-REC issuer): the Electricity Generating Authority of Thailand (EGAT) is the sole I-REC issuer for Thailand, as appointed by the certificate registry (the International REC Standard Foundation, I-REC). 
• -  Participant: a buyer of the REC for reselling to an end-user or an end-user who claims the use of renewable energy by redeeming the REC.

Any of following foreign nationals who engage in the trade or transfer of the REC, whether with a charge or free of charge, in the following manner is deemed as performing a service business under List Three (21) of the FBA.

• -  The trade or transfer of the REC to a participant in Thailand or overseas, by the registrant of the REC who is a foreign national located in Thailand. 
• -  The trade or transfer of the REC to an end-user in Thailand, by a participant who is a foreign national located overseas or in Thailand. 
• -  The trade or transfer of the REC issued from whichever country or Thailand, to an end-user in Thailand, by a participant who is a foreign national located overseas. 
• -  The trade or transfer of the REC issued from whichever country or Thailand, to an end-user in whichever country, by a participant who is a foreign national located in Thailand.

However, please note that the ruling is not a law and it is provided on a case-by-case basis and would be applied to the specific case only. Therefore, the differences in circumstances of each case may result in difference in ruling of other cases.

This is intended merely to provide a regulatory overview and not to be comprehensive, nor to provide legal advice. Should you have any questions on this or on other areas of law, please do not hesitate to contact:

Nuttaros Tangprasitti
Partner

Malinee Kriengkrailipikorn
Counsel

Authors