In brief
On 4 June 2026, the Royal Gazette published a new notification of the Provincial Electricity Authority (PEA) re: Criteria for the Change and Transfer of Power Users for Power Users that are Data Center Operators and Large Industrial Businesses with High Power Demand ("PEA Transfer Restriction Notification"), which became effective on 5 June 2026 and introduces unprecedented change of control and power purchase agreement (PPA) transfer restrictions on PEA's energy-intensive power users, including data centers and large industrial users. These restrictions include (i) a three-year lock-up for original shareholders; and (ii) more restrictive criteria governing the novation of PEA's PPAs.
In more detail
This development may potentially impact the risk profile and other credit assessment criteria relating to Thai data center projects that have been (or are in the process of getting) financed, as well as investment structures for prospective greenfield data center (DC) projects and acquisitions. Accordingly, this matter warrants close and immediate attention.
Background
Historically, the PEA has never implemented any change of control restrictions on its power users, and the key criteria governing the transfer or novation of its PPAs with power users generally consisted of only requiring the transferee to have the same corporate objectives as the transferor and furnish a replacement performance security.
With the advent of the PEA Transfer Restriction Notification, a new set of cards are on the table for power users that fall within the categories of data center operators and large industrial businesses ("Affected Power Users"), as summarized below.
Change of control restrictions
For a period of three years from the actual electricity usage date ("Lock-Up Period"), Affected Power Users are prohibited from undergoing any change in control by way of changing the number of shares held by their original shareholders, as specified in their respective power usage applications, except where the original shareholders will maintain more than 50% of the relevant Affected Power User's total shares post-transfer.
While the PEA Transfer Restriction Notification does not expressly stipulate any sanctions or penalties for breach or violation of the change of control restrictions, the PEA has broad discretion to determine that such breach or violation may be deemed a breach of the PPA, entitling the PEA to suspend power supply to the non-complying Affected Power User or terminate the PPA.
PPA novation criteria
While there's effectively no change to the PEA's PPA novation criteria from the status quo after the Lock-Up Period, during the Lock-Up Period additional qualifications are placed on transferees, making any change of power user more restrictive.
In the event that an Affected Power User has not yet commenced usage of electricity supplied by PEA, or has already commenced electricity usage but for less than three years, and such Affected Power User intends to transfer its rights and obligations under its PPA with the PEA ("PPA Transferor") to another entity, such transferee must be a juristic person incorporated in Thailand and have the corporate objective of operating the same business as the PPA Transferor ("Qualified Transferee"). Such transfer ("PPA Novation") must satisfy any one of the following conditions (depending on which scenario applies):
- Qualified Transferee is under common control. Within the date of submission of the application for the PPA Novation, the PPA Transferor holds at least 50% of the total shares in the Qualified Transferee and must maintain such shareholding for a period of at least three years after the PPA Novation has been effected.
- Conversion to public company. The PPA Transferor is a private company limited that has been converted to a public company limited, after which the PPA Transferor can become the Qualified Transferee under the contemplated PPA Novation.
- Amalgamation. The PPA Transferor has amalgamated with another juristic person and formed a new corporate entity by operation of law pursuant to either the Civil and Commercial Code of Thailand or the law governing public companies, in which case the new entity can become the Qualified Transferee. In such case, the shareholders of the PPA Transferor must also hold more than 50% of the total shares in the Qualified Transferee.
In all cases of PPA Novation (whether during or after the Lock-Up Period), the Qualified Transferee will be required to provide a performance security to PEA.
What does this mean for you?
DC operators and large power-intensive corporates that procure (or plan to procure) power from the PEA are directly impacted by this regulatory development. Investors of these Affected Power Users must now revisit their proposed investment structures to ensure compliance with the PEA Transfer Restriction Notification and consider any credit risk implications that may arise should the project require external debt financing.
Also impacted are lenders providing financing to and taking security from the Affected Power Users. From a bankability perspective, the new change of control restrictions and PPA novation criteria give rise to: (i) uncertainty on the ability of the finance parties to straightforwardly enforce any security over the PPA during the Lock-Up Period (including effecting any step-in rights under the PPA, as the PEA may refuse their consent to novate the PPA to any lenders' designee that does not satisfy the Qualified Transferee criteria); and (ii) potential adverse exposure if the pledge of shares in the Affected Power User is enforced during the Lock-Up Period, resulting in a change of control which is contrary to the requirements under the PEA Transfer Restriction Notification.
Given the abruptness with which the PEA Transfer Restriction Notification has come into force and the lack of clarity on how the change of control restrictions would be enforced in practice — including the lack of precedents in which the PEA has overreached to regulate the shareholding composition of its power users — the impact of this new regulatory development could be materially adverse and therefore deserves in-depth scrutiny.
What's to be done next?
This matter warrants close and immediate attention from all stakeholders with existing or prospective exposure to Thai data center projects subject to a PEA PPA. In particular, we recommend that affected stakeholders consider taking the following steps:
- Review existing security packages. Assess the extent to which any step-in rights, conditional assignments, and share pledges in respect of Affected Power Users may be constrained or rendered less effective during the Lock-Up Period.
- Assess ongoing financing transactions. For data center projects currently in the process of being financed, sponsors, lenders and their respective advisers should consider whether any credit assessments need to be revisited in light of the restrictions introduced by the PEA Transfer Restriction Notification.
- Monitor regulatory developments. Monitor any further guidance, clarification, ruling, or enforcement action issued by the PEA in relation to the PEA Transfer Restriction Notification.
- Engage in immediate dialogue. Reach out to us should you wish to discuss any aspect of the PEA Transfer Restriction Notification or its implications for your projects.
How can we help you?
Our team of energy and finance lawyers can help you navigate through any regulatory uncertainties and guide you on the best course of action in such situations. If you or your investment has been affected by the PEA's latest development, please do not hesitate to contact us for immediate assistance to pursue avenues to effectively and expediently mitigate these impacts.