This energy crisis could make Thailand richer

Modern Thailand was forged in crisis. 

The oil shocks of the 1970s led to filling-station closures, mandated blackouts, and the resignation of the prime minister. Almost simultaneously, the discovery of offshore gas fields laid the foundation of the 1980s and 1990s boom, when Thailand was considered one of the fastest-growing economies.

Now it is facing a repeat. Domestic gas production is down by a quarter since peaking a decade ago. Thailand has become a top-10 importer of liquefied natural gas (LNG), which provides about a third of gas demand. Costs for the chilled fuel are up about 75 per cent in Asia since the start of the war in Iran. With growth already stagnating, that price shock could prove almost as devastating as the emergencies of the 1970s.

Yet Thailand is sitting on an under-utilised resource quite as potent as the gas fields that once transformed it: solar power. Hitherto, that has been held back by an impenetrable thicket of red tape, much to the benefit of incumbent gas-fired power. If Thailand wants to achieve a repeat of its economic heyday, the crisis of 2026 provides the perfect opportunity.

Much of the groundwork has already been done. In the past, it was arguably easier to get approvals for a 500,000-kilowatt (kW) fossil-power station than 1,001kW of roof-mounted solar. Large photovoltaic arrays had to obtain factory licences. Even small solar installations had to get permission from multiple slow-moving agencies. Data centre developers were forbidden from buying cheap power directly from solar generators – all transactions had to be mediated by a state-owned utility.

Much of this cumbersome regulation has been hacked away lately, leading to a dramatically different landscape since 2025. Imports of solar panels from China have grown accordingly, hitting 4.4 gigawatts in the 12 months through February, according to a database maintained by pro-transition group Ember. That is sufficient to increase the capacity of solar by nearly half relative to 2024. Domestic production capacity for panels and lithium-ion batteries is higher still.

Thailand now has the conditions necessary for a Pakistan-style boom in distributed clean energy. Solar rooftop systems cost about half what you will pay for subsidised grid power. Even with battery backup, large users would spend less than the state utility needs to pay off the debts it has taken on since the Ukraine war started pushing up the price of LNG. One of the world’s fastest-growing fleets of electric vehicles could even provide meaningful battery storage to stabilise the grid.

Even so, all the rooftops in Thailand will not provide more than about a quarter of its grid demand. To really change things the way gas did in the 1970s, the government needs to look to its huge expanses of farmland.

That is an acutely sensitive issue. In the popular imagination, the country has none left to spare. Rice, in particular, has an importance that extends far beyond its use as food, well into the spiritual and political realms. The few utility-scale solar farms that have been built to date are mainly floated over reservoirs to prevent them from encroaching on agricultural land.

Yet farming is facing a crisis that solar could help alleviate. Rural incomes have been stagnating for years, and the labour force is ageing. In an attempt to diversify away from unprofitable rice, the government has offered incentives to uproot paddies and plant alternative crops for biofuels, such as sugar cane, palm oil, and cassava.

How much better things would be if Thailand were fixing its energy issues by encouraging farmers to consolidate their holdings into solar farms, instead of leaning on biofuels. Even if they captured just 10 per cent of the value of retail electricity, they would earn about nine times more from land covered in solar than they do from rice. There are abundant hectares available for this, too: The increase in acreage of sugar, palm and cassava since 2010 alone is sufficient to generate five times more electricity than Thailand consumes.

Here is a big idea for an economy badly in need of fresh thinking: Thailand is Asia’s biggest gas producer after China, Indonesia and Malaysia. It should be making money exporting to a region desperate for alternatives to the Strait of Hormuz. Instead, it is paying eye-watering prices to import LNG.

Solar is the answer. The government is currently working on a power plan to guide its energy sector for the next 25 years. By taking the brakes off the sector, Thailand can increase export earnings, clean up its environment, lift rural incomes, and reduce power costs for its cities and industries. It is time for another energy revolution. BLOOMBERG