Thailand’s Energy Conservation Policy : Industry Programs Prasert Sinsukprasert Ph D Department of Alternative Energy Development and Efficiency prasert_s@dede.go.th Tel. 662 226 3998 Fax. 662 226 4172

Thailand’s Energy Outlook Thailand consumes energy about 1 mill barrels of oil per day (0.75% of World energy consumption) Hydro Coal Agriculture 6% Transportation 37% Industrial 36% ประเทศไทยใช้พลังงานวันละ 1 ล้านกว่าๆ บาเรล/วัน ส่วนใหญ่ใช้ในภาคขนส่ง และอุตสาหกรรม และน้ำมัน นำเข้ายังเชื้อเพลิงหลัก โดยมีก๊าซธรรมชาติที่ผลิตได้ในประเทศเป็นส่วนเสริมถึงเกือบ 40% Natural Gas Oil Res & Com 21% Supply Demand

Energy Intensity Thailand USA UK Japan Germany (Compare with Developed Countries) Thailand USA UK Germany Japan

Energy Intensity (Compare with Developing Countries)

Thailand’s Energy Situations Energy is basic factor of economic development In 2005, energy costs accounted to about 15% of GDP Oil imports accounted to 12% of total import values 60% of commercial energy was imported or about 700 billion baht Still rooms for energy efficiency improvement Agriculture 6% Resident & Commercial 21% Industry 36% Transport 37%

Energy Efficiency Improvement Target Strategy Indicators Objective 1 Energy Efficiency Improvement 1. Improve EE in Transportation Energy Elasticity = 1:1 in 5 years 2. Improve EE in Industry 2 ประเทศไทยมีพลังงานใช้อย่างต่อเนื่อง เพียงพอต่อความต้องการไปอีก 50 ปี 3. Awareness raising campaign Energy Elasticity = ∆t Energy Consumption/ ∆t GDP 3 ประชาชนมีพลังงานใช้อย่างทั่วถึง ในราคาที่เป็นธรรมและเพื่อคุณภาพชีวิตที่ดีขึ้น Ave. Energy Elasticity 1.4 : 1.0 Ratio of energy growth rate to GDP growth rate = 1.0 by 2008 4 ประเทศไทยเป็นศูนย์กลางพลังงานในภูมิภาค

Create Conducive Environment for EE Investment Customer Service Low Interest Source of Fund Access to Funds Workshop & Training Technical Assistance Free Energy Audit and consulting Tax Incentives Incentives & Subsidies Regulations Energy Codes Promotion Campaign Raise up Confidence Perfect Information List Of Experts Demonstration Project Promotion of ESCOs Directory of Technology Providers

Compulsory Program Over 1 MW peak demand or consume more than 20 TJ annually More than 4000 large buildings and factories (so called Designated Facilities) Mandatory Tasks Assign Energy Manager Report Monthly Energy Use Develop EE Target and Plan Compile all energy codes

Cooperative Efforts on Energy Management Objective: Sustainable energy management through internal cooperative efforts Methodologies Educate on concept & method + evaluation Help create and implement EC measures Achievement Implemented 500 facilities Introduced house-keeping measures Energy saving of 5-10% for each facility ( simple payback of 2.5 yrs) Cooperation Efforts on Energy Management : This program is concentrated on the participation of all related key persons in buildings and factories to proceed for energy conservation activities by themselves as well as to maintain the sustainability of the process. The program will start with the a team of experts which has been sent to educate the concept and method for key persons in the factories and buildings in order to encourage them to create their own measures to reduce energy consumption or to use improve the efficiency of the equipment. The experts will also have to give a recommendation for the energy teamwork as well as evaluate the result of the program. Up to the present time, 95 factories have already been implemented this program. Most of the measures proposed by the teamwork are house-keeping measures which can be easy to implement and require little investment cost but can be achieved a certain level of energy reduction. The average energy saving of those who have implemented this program is about 5-10% of the total consumption with a average payback period of 2.5 years. Presently, this program has leveraged over 20 million USD of EC investment for 26 approved projects. An average size of project investment is around 0.8 mill USD with a wide range of measures such as – Co-generation, Boiler efficiency, Biogas, Chiller, Control system, Lighting, Fuel Switching, etc. An average payback period of all measures is 2.4 years. The potential savings is more than 91 mill kWh per year and 8.6 mill liters of fuel oil per year.

Revolving Fund for EC Projects Phase I Results 82 approved and under construction projects with leverage 80 million USD of EC Investment Average investment 1 mill USD / a project & average payback 2.3 yrs Annual savings > 250 GWh and 91 mill. liter of fuel oil Budgets allocation from ECP Fund Loan approval by Bank Technical assistance by DEDE Key conditions Loan size < 1.2 mill USD/project Interest rate less than 4% (fixed rate) Repayment in the defined time frame (7yr) Revolving Fund for EC Projects For financial incentive program, there is a program so-called revolving fund for energy conservation projects. The objective for this program is to stimulate an investment in EC projects as well as raise up the interest of commercial lending for EC projects among banking community. The budget for the soft loan was allocated from ENCON Fund with an initial of 50 mill USD and distribute to the participating banks. ( 7 banks is now participating ). The approval and loan process is done by banks while DEDE provides technical assistance in project assessment. The max. loan size is 1.2 mill USD/facility while banks can collect a max. of 4% interest rate from the loan. and they have to repay the loam to ENCON Fund through DEDE within 7 years. Phase II Status – 6 months 11 commercial banks joined Loan for EE projects over 300 million USD (mostly from banks)

Cost Based Tax Incentive 25% Tax Break for the Investment in EE Projects Result in Efficiency Improvement Applicable for the First 50 mill baht Investment ( 1.25 mill USD ) Incentive Spread Over 5 Years

Performance Based Tax Incentive 100% of achieved energy saving will become tax deduction Max Incentive of 2 mill baht (50,000 USD) / Facility Pre and Post Audit will be required

Incentive through Board of Investment ( BOI ) Import duties and Cooperate tax exemption on new investment in Energy conservation business High efficiency machine or equipment and renewable energy equipment manufacturing Solar PV manufacturing Energy Service Company – ESCO Renewable energy production business Alcohol or fuels from agricultural products Electricity or steam generation Incentive last for the max period of 8 years

Promotion of ESCOs BOI – Tax Incentive Access to Revolving Fund Maximum 8 years tax exemption for ESCO projects – Cooperate Income tax Access to Revolving Fund Eligible to borrow the low-interest loan from RF program on project-by-project basis ESCO promotion activities Website Seminars, workshop Publications Lists of ESCOs and successful cases

Organizational Restructure Holistic Approach Mission Adjustment Organizational Restructure Value Creation Paradigm Shift Enforcer / Regulator Facilitator / Supporter www.dede.go.th