Experiences on Energy Efficiency Financing Instruments in

Thailand

Amaraporn Achavangkool

Energy Conservation ExpertDepartment of Alternative Energy Development and Efficiency

Ministry of Energy, Thailand

Inter-regional Workshop on Energy Efficiency Investment Projects Pipeline

United Nations Economic and Social Commission for Asia and Pacific (ESCAP)

United Nations Economic and Social Commission for Europe (UNECE)

23 – 24 April 2014, Bangkok, Thailand

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Contents

• Thailand’s Energy Situation 1

• Energy Policy and Plans for EE Promotion2

• Successful Financial Incentive : Energy Efficiency Revolving Fund Project3

• Existing Financial Incentives for Energy Efficiency Promotion4

1. Thailand’s Energy Situation

Source : DEDE Energy Statistics 2012

Final Energy Consumption by Fuel Type

Petroleum Products

Electricity

Traditional Renewable Energy

Coal & itsProducts

Natural Gas

RenewableEnergy

Total Final Energy Consumption in 2012: 73,316 ktoe

Total Energy Use Nearly 2 million barrels (oil equivalent) per day

Energy import accounting for 54% of energy use

Energy import value in 2012 = 1.446 trillion baht (48 billion USD)

=> 77% of import value = Crude Oil

Final Energy Consumption by Fuel Type

4

Source : DEDE Energy Statistics 2012

Final Energy Consumption by Sector

Final Energy Consumption 2012: 73,316 ktoe

5

Import Value in 2012p 1,441,790 million baht

P: Preliminary

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

2552 2553 2554 2555p

Energy Import Value

Elec. Coal Natural gas+LNG Petroleum Crude Oil

Million Baht

Source : EPPO, DEDE Energy Statistics 2012

Energy Consumption

Increasing trend of Energy Consumption

1,1301,188

1,229

1,299 1,322

2552 2553 2554 2555 2556*

Final Energy ConsumptionKboe/day

6

2009 2010 2011 2012

2009 2010 2011 2012p

1,188

1,229

1,300

1,130

2. Energy Policy and Plans for EE Promotion

Thailand’s Energy Policy

Develop Infrastructure to be “Regional Energy Center”• Land Bridge• Smart Grid• Gas Pipeline• Power Grid

Secure Thailand Energy supply• Power Plant / Oil Storage• International Cooperation• Participation

Fair Energy Pricing• Energy Price Restructure

Up-scaling RE mix to 25% in 10 years• CBG• Feed in Tariff• Distributed Green Generation• Research & Development

Target Energy Intensity reduction by 25% within 20 years (based on 2010 level)• Energy Conservation Law & Regulation • CDM

Fin

al

En

erg

y C

on

su

mp

tio

n (

kto

e)

Government policy @ 23rd Aug 2011 aims to reduce Energy Intensity 25% within 20 years

BAU

With EE Plan

EI (2030)

11.7ktoe/billion baht

EI (2010)15.6

ktoe/billion baht

Reduce 25%

Average Growth rate/year (2010-2030)

GDP (2011) 4.3%

Population 0.3%

*GDP2030 at constant price 1988 = 10,650 billion baht

ktoe

162,715

124,515

38,200

Energy usage reduced not less than

38,200 ktoe by 2030

20-Year Energy Efficiency Development Plan

71,200

Expected outcome in 2030

Reduce final energy consumption at least 38,200 ktoe Reduce CO2 emission 130 M. tons Reduce Energy cost 707,000 M.Bahts.

Target Groups Industrial sector Transportation sector Business Building Small Business and Residential Building

EE

9

Sector

Energy Saving Target in year 2030

Electricity

(GWh)

Heat(ktoe)

Total(ktoe)

Industry 39,112 12,767 16,100 (42%) Transportation - 16,800 16,800 (44%) Commercial Building

23,007 340 2,300 (6%)

Residential 18,972 1,383 3,000 (8%)

EE Target by sectors

Social

• ESCO Fund Project• Tax Incentives• Direct Subsidy• EE Revolving Fund

• Public Relation through Media• Creating Awareness• Thailand Energy Awards• Personal Development• EE Display Center• EE Networking / Voluntary Agreement • Energy Conservation in Production /

Making Contribution

• Research & Development• Knowledge & Know-how

• Energy Management for Designated Buildings and Factories under ECP ACT• Building Energy Code• Standard and Labelling for equipments & material (MEPS & HEPS)

Knowledge

Law & Regulation

FinancialSupport

Scheme to promote EE

EE

11

Progress / Target

TargetCurrent

Status 2012

RE promotion

25% of RE Use in 2021

10.6%

EE promotion

25% EI reduction in

2030

5.2%

Current achievement

3. Successful Financial Incentive : Energy Efficiency Revolving Fund Project

Partnership of Government and Banking SectorFor Energy Conservation

Energy Efficiency Revolving Fund

Barriers / ConceptBarriers / Concept

• Limited access to loans

• Higher perceived risks

• High transaction costs

• Not a priority

• Banks were not interested

• Stimulate Investment and Stimulate Interest among Banking Community

• Provide NO cost Capital to EE Market

• Commercial Lending

• Minimize Government Intervention

• Simplified Procedures

Concept and Approach

Barriers

Objectives

Stimulate and leverage commercial investment for EE Improvement

Familiarize commercial banks with EE lending market and opportunities

Bank

RF

Bank Bank

Bank

History of Program Development

Five phases of EE Revolving Fund Program

Phase PeriodSize of

Revolving Fund (million USD)

Interest

1st phase : Jan 2003 – Jan 2006 62.5 -

2nd phase : Mar 2006 – Mar 2009 62.5 0.5%

3rd phase : Aug 2007 – Aug 2010 92 0.5%

4th phase : Sep 2009 – Sep 2012 12.5 0.5%

5th phase: June 2010-May 2013 15.6 0.5%

Total 245.10

Terms and Conditions

Loan Period 7 years maximum

Eligible Borrowers Facilities’ Owners, ESCOs and Project

Developers

Eligible Projects EE improvement or RE development and

Utilization

Loan Size from RF Up to 1.56 million USD / project

( 50 million Baht / project)

Interests charge to

customers

Not more than 4% (negotiable)

1 USD = 32 Bath

Eligible Investment CostsEligible Investment Costs

Equipment and Installation costs

Consulting Costs – design, control, supervision, guarantee fees

Civil works, piping, or necessary components specifically and necessary for the project

Associated Costs necessary – removal of existing equipment, transportation, taxes, VATs

Not Eligible: Land Costs, Land Improvement Costs, building construction, Costs not specifically needed for the project – main transformers, substation

Work Process

DEDE allocate

budget for

banks

Banks lend to Client

for EE Project

EE ProjectImplemented

Clients Return Payment

Banks

payback to

DEDE

11 Participating Banks

1. Bangkok Bank (BBL)2. Bank of Ayudhya (BAY)3. CIMB Thai (CIMB)4. Thai Military Bank (TMB)5. Siam City Bank (SCIB)6. Siam Commercial Bank (SCB)7. Thai Farmers Bank (TFB)8. Exim Bank (Exim)9. Krung Thai Bank (KTB)10. SME Bank (SME)11. UOB

• 6 Banks participating in the 1st Phrase

• 11 Banks participating in 2nd – 3rd Phrase

• 9 Bank participating in 4th – 5th Phrase

RE, 40%

EE, 60%

Revolving Fund Project: Proposals

most Factory proposal

most Buildings proposal

Type of Enterprise Projects

Factory 247

Buildings 43

ESCO 5

Total 295

Factory Type

1. Food, beverages and tobacco

2.Textiles

3. Chemical

Building Type

1.Hospitals

2.Hotels

3.Offices

Investment

From Energy Conservation Promotion Fund

7,231 Million Baht / y

From Finance Institutions 8,728 Million Baht / y

Total Investment 15,959 Million Baht / y

Investment of All Proposal (phase 1-5)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Ph1 Ph2 Ph3 Ph4 Ph5

55.51% 52.10%45.97%

30.64%24.48%

44.49% 47.90%54.03%

69.36%75.52%

From Finance From Fund

Investment

From Energy Conservation Promotion Fund

7,231 Million Baht / y

From Finance Institutions 8,728 Million Baht / y

Total Investment 15,959 Million Baht / y

Investment of All Proposal (phase 1-5)

Unit : Million Bath

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Ph1 Ph2 Ph3 Ph4 Ph5

1,902.25 1,734.96 2,702.04

392.73 499.96

1,524.68 1,594.843,175.96

889.161,542.46

From Finance From Fund

Energy Savings of All Proposal (phase 1-5)

ElectricFuelSavings

Electric Saving 1,171 MWh/y

Fuel Saving 234 Million Liters/y

Total Cost Savings 6,806 Million Baht

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Ph1 Ph2 Ph3 Ph4 Ph5

21.90% 17.94%

43.61%

66.35% 64.66%

78.10% 82.06%

56.39%

33.65% 35.34%

Fuel Electirc

Ph1 Ph2 Ph3 Ph4 Ph5

627.19520.72

1,193.55

257.93 327.25

809.77948.91

614.82

52.10 71.25

Fuel Savings (Baht)

Electric Savings (Baht)

Energy Savings of All Proposal (phase 1-5)

ElectricFuelSavings

Electric Saving 1,171 MWh/y

Fuel Saving 234 Million Liters/y

Total Cost Savings 6,806 Million Baht

Unit : Million Bath

Types of Renewable Energy (phase 1-5)

Fuel Changes

Biogas

Co-Generation

Solar farm Biomass Gasification

Renewable Energy : ProposalsMost Proposals Percentage

1.Fuel Changes 55%

2. Biogas 23%

3. Co-Generation 14%

4. Solar farm 5%

Types of EE Measures Implemented (phase 1-5)

Machine Changes

Air-conditioning

system

Manufacturing Improvement

Boilers

Energy Management

Electrical

Lighting

Energy Conservation : Proposal

Most Proposal Percentage

1. Machine Change 59%

2. Air-conditioning system 21%

3. Manufacturing Improvement 16%

4. Boilers 2%

48%

25%

12%

8%7%

0%

Co-Gen Power Produce Plant

Fuel Changs

Biogas

Biomass

solarcell

Gasification

Types of RE Measures Implemented (phase 1-5)

RE Proposals Analyze by Investment

Types of RE Measures Implemented (phase 1-5)

70%

19%

9%

1% 1%

0%

0%

Machine Changes

Manufacturing Improvement

Air-Conditioning System

Boilers

Energy Management

Electrical

Lighting

EE Proposals Analyze by Investment

Types of EE Measures Implemented (phase 1-5)

RE Proposals Analyze by Savings

44%

35%

11%

9% 1%0%

Co-Gen Power ProducePlant

Fuel Changs

Biogas

Biomass

Solarcell

Gasification

Types of EE Measures Implemented (phase 1-5)

EE Proposals Analyze by Savings

1%

18%

70%

7%0%0% 4% Energy Management

ManufacturingImprovementMachine Changes

Air-ConditioningSystemElectrical

Lighting

Boilers

4. Existing Financial Incentives for Energy Efficiency Promotion

EE Loans• Encouraging banks to offer

loans for EE proj. based on the success from RF program

• DEDE provide technical assistance & Info.

ESCO Fund Project• Co-investing with privates

through benefit sharing

• Run by selected fund managers (E for E, ECTF)

Financing

Tax Incentive• Privilege on buying EE products• Privilege on doing EE business

Direct Subsidy• 20% subsidy for EE proj. to privates (max. 3 mill.Baht)

• Subsidy for Gov. buildings

for EE equipment DEDE’s efforts

Cooperation with others

Welcome for new

initiatives !!!

Financial Incentives

34

Thank you for Your attention!

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