New economic growth sectors need a clean power system

Thailand updated its Nationally Determined Contribution (NDC) in 2022, in which it committed to reducing greenhouse gas emissions (GHG) by 30% below a business-as-usual level, which is about 388 million tonnes of carbon dioxide (MtCO2), by 2030. With adequate international support, Thailand will aim for a 40% reduction, or 333 MtCO2. To meet carbon neutrality by 2050, Thailand will need to reduce its GHG emissions by 73-83% compared to 2015 levels.

Given that the energy sector accounted for about 69% of total emissions in 2019, decarbonising it will be indispensable to cut emissions. Within the energy sector, the power and transport sectors took up to 68% of total emissions in 2022. Therefore, accelerating renewable energy integration in the power system and electrification of the transport and industry sectors are crucial. 

The draft RPDP sets ambitious emission reduction targets for the power sector, which reduce CO2 emissions by 18% in 2030 and 38% in 2037, compared to the previous plan. Under this pathway, emissions are projected to fall from 95.5 to 77.7 MtCO2 in 2030, and from 99.7 to 61.8 MtCO2 in 2037. 

Achieving these targets will be particularly important given the country’s export-oriented manufacturing strategy, rising demand from data centres and EV adoption. Currently, global markets demand products with smaller carbon footprints, while data centres and electric vehicles (EVs) seek clean electricity. Aligning with international governance frameworks is imperative to maintaining Thailand’s global competitiveness in this era of growth.

Thailand is positioning itself as a regional green manufacturing hub, with a strong focus on electric vehicles. Under its 30@30 policy, unveiled in 2021, the government aims for zero-emission vehicles to make up at least 30% of total auto production by 2030. That target could drive exponential growth in EV adoption over the coming years.

The country is on the right track to promote a rapid EV adoption, which will help attract foreign investment, build new skills, and leverage its long-standing auto industry expertise. But, to fully realise the climate benefits of transport electrification, the power system must evolve in parallel with EV adoption, ensuring that clean energy supplies the rising demand for charging. 

According to the RPDP, EVs are likely to account for about 68 terawatt-hours (TWh) of electricity demand by 2037, or roughly 20% of total consumption. The plan also assumes a 40% reduction in peak demand from EV charging through demand-response incentives and vehicle-to-grid integration. Ember’s analysis suggests the projection underestimates the real impact. Adjusting to a more realistic scenario, with peak demand rising to 50% of the normal peak pattern starting in 2026, the forecast adds an extra 3,355 megawatts (MW) above the RPDP baseline – lifting total peak demand to 57,901 MW by 2037.

The EV boom presents a double-edged sword: it risks straining the grid while accelerating the decarbonisation of road transport. Ensuring that clean energy powers EV charging will be crucial.

Thailand is looking to create a booming market for data centres, which is expected to grow at an annual rate of 7.5%-8.5% between 2025 and 2027 due to rising internet and digital payment usage, widespread cloud adoption, and AI integration across sectors.

The country’s “Cloud First” policy is a government initiative to speed up cloud computing adoption in both public and private sectors. The favourable policy has, so far, attracted $2.8 billion from major investors such as Amazon Web Services, Microsoft, TikTok, Huawei, ST Telemedia and NTT. Google also announced a $1 billion investment in data centres last year to meet growing cloud demand and support AI adoption in ASEAN. The country also benefits from strategic connectivity to China and India, alongside growing links to other markets through an expanding submarine cable network.

Thailand’s electricity demand for data centres is forecast to grow at 8% CAGR from 2025 to 2027 and reach 6 TWh by 2030, or 2.2 % of total electricity demand. Our cost-optimal pathway factors this additional demand from data centres with the assumption of the growth rate to remain constant throughout the whole timeframe, adding about 10 TWh of electricity demand in 2037.

To ensure clean energy meets this demand, in late 2024, the Thai government approved a direct power purchase pilot project. This enables investors in data centres of at least 50 MW to purchase electricity directly from renewable energy generators under a direct power purchase agreement (DPPA). The total procurement capacity of the Pilot Project is expected to be 2,000 MW.

For the first time in the country, the single-buyer system is being relaxed to ease the monopoly over electricity trading and transmission access. Notably, this policy applies exclusively to data centres, reflecting the government’s strong commitment to supporting the industry’s growth.

This incentive paves the way for hyperscale data centre companies to invest in Thailand, as many have pledged to 100% use of renewable energy in data centres. For instance, Microsoft is committed to having 100% of its electricity consumption matched hourly by zero-carbon energy purchases by 2030, Amazon set a goal to supply all of the electricity consumed with 100% renewable energy by 2030, but already achieved it 7 years earlier. Google’s next major target is to operate on 24/7 carbon-free energy by 2030.

Malaysia and Indonesia are considering adding more gas capacity or delaying fossil fuel phase-outs to meet rising data centre demand – an approach that runs counter to the renewable energy commitments of major data centre investors. By advancing its energy transition, Thailand can gain a competitive edge in attracting clean investment for data centres.

The details of how we derive the additional demand from data centres and extra peak demand from EVs is elaborated in the Methodology section’s Demand and electric vehicle sales.