(P)ESTLE Analysis

Political factors:

     In considering constructing micro hydropower plants in Northern Thailand, the political factors are very important. As one of the major stakeholders, the Thai government owns the land and rivers where these projects can be started. They also own the electrical grid, and own most of the electricity production in Thailand that already exist. One can say that government is strongly involved in energy-related business in the country, and to start business in this area one will have to cooperate with the government one way or the other. 

     The Thai government wants to increase the amount of renewable energy in Thailand. In their action plan for the coming years they promise tax benefits potential investors. Policy in this field in general is very supporting when it comes to using the hydro resources in the country for electricity production. Information from the Ministry of Energy when it comes to target levels and support schemes can be found here.

     Infrastructure in the area is not the best, but there is a wide-spread electricity grid across the country. This means that connection to the national grid can be done without the biggest investments from neither the government nor a potential investor.

      Foreign investment is welcomed by the government. This leaves the door open for any energy company that is willing to invest here. Corruption has been a problem for many years, and is something that will have to be dealt with. This might especially be a problem for a foreign company that needs permits, licences etc to start production on government owned land, using a government controlled resource like water. A comparison to other countries from Transparency International can be done here.

     There has also been a problem with political unstable conditions in Thailand. Several parties struggle for power, and violence and coups has been the norm rather than a rarity. This brings uncertainty about long-term conditions and government plans for foreign investors. More information about politics and the thai government can be found here.

     The political risk is definitively present, and the biggest uncertainty comes from the instability of government and the corruption level in the country. Except from this, the government seems very interested in both promoting electricity production in the country, and should be very willing to support investment in micro hydropower in Thailand.