Thailand’s Energy Conservation Policy and Programs Prasert Sinsukprasert Bureau of Energy Conservation and Regulation Dept. of Alternative Energy Development and Efficiency Ministry of Energy 20 October 2005 Presented in the FIRST ASIA ESCO Conference, Bangkok, Thailand

World Energy Situation Total EnergyOtherWind and Solar Hydro Nuclear Biomass, MSW Biomass, MSW Wind & Solar Oil Gas Coal Other Growth rate , % Growth rate , % Solar Wind MBDOE Growth rate , % Growth rate , % 1.7 Source : ExxonMobil Projection

Thailand ’ s Energy Outlook Transportation 37% Agriculture 6% Industrial 36% Res & Com 21% Thailand consumes energy about 1 mill bls of oil per day (0.75% of World energy consumption) Oil Natural Gas Coal Hydro Supply Demand

Thailand ’ s Energy Situations Energy is basic factor of economic development Energy is basic factor of economic development In 2002, energy costs accounted to 14.31% of GDP In 2002, energy costs accounted to 14.31% of GDP Oil imports accounted to 12% of total import values Oil imports accounted to 12% of total import values 60% of commercial energy was imported 60% of commercial energy was imported Still rooms for energy efficiency improvement Still rooms for energy efficiency improvement Transport 37% Industry 36% Resident & Commercial 21% Agriculture 6%

Energy Intensity Thail and USA UK Germ any Japa n (Compare with Developed Countries)

Energy Intensity (Compare with Developing Countries)

New Vision for Energy Development “ … Utilities sector is in transition …. focusing more on Economic Value, rather than revenue generation. ” Prof. Michael E. Porter International Utilities and Energy Conference 2003 “ … In the future, the competitive advantage of nations will partly depend on Energy Efficiency of the domestic real sectors …” William Ramsey Exe. VP of International Energy Agency (IEA)

Energy Strategies for Better Competitiveness 28 August 2003 Energy Strategies for Better Competitiveness 28 August

Strategy 1.Improve EE in Transportation Sector Objective ประเทศไทยมี พลังงานใช้ อย่างต่อเนื่อง เพียงพอต่อ ความต้องการ ไปอีก 50 ปี ประชาชนมี พลังงานใช้ อย่างทั่วถึง ในราคาที่เป็น ธรรมและเพื่อ คุณภาพชีวิต ที่ดีขึ้น Improve end- use energy efficiency ประเทศไทย เป็นศูนย์กลาง พลังงานใน ภูมิภาค Cooperate with Ministry of Transportation to improve structure of public transports Changing Modes from roads to rails Good Management of mass transportation Comprehensive development of transportation system – integration of water and railways Enhance City planning Promote high efficient cars using tax incentives Promotion campaign to change behaviors Ect. Transportation sector Programs

Industrial and Building sector ประเทศไทยมี พลังงานใช้ อย่างต่อเนื่อง เพียงพอต่อ ความต้องการ ไปอีก 50 ปี ประชาชนมี พลังงานใช้ อย่างทั่วถึง ในราคาที่เป็น ธรรมและเพื่อ คุณภาพชีวิต ที่ดีขึ้น ประเทศไทย เป็นศูนย์กลาง พลังงานใน ภูมิภาค Cooperate with Ministry of Industry to change industrial structure to be less energy intensive Support by energy conservation promotion programs Regulation Incentives, subsidies Soft loans for EE investment Technical assistance Research and development Training, capacity development Tax Incentives Tax breaks for ESCOs Import duty exemption for high energy efficient products, machines Performance-based incentives Basic Metal Chemical (ปี 2524 = 100) ทิศทางและมาตรการ ยังไม่ชัดเจน ทิศทางและมาตรการ ยังไม่ชัดเจน Paper Fabricated Metal Textiles Non Metalic Food and Beverages Energy Intensity = Energy GDP Improve end- use energy efficiency 2. Improve EE in Industrial and building Sector Strategy Objective Programs

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

Strategy Energy Efficiency Improvement Target 2. Improve EE in Industry Objective ประเทศไทยมี พลังงานใช้ อย่างต่อเนื่อง เพียงพอต่อ ความต้องการ ไปอีก 50 ปี ประชาชนมี พลังงานใช้ อย่างทั่วถึง ในราคาที่เป็น ธรรมและเพื่อ คุณภาพชีวิต ที่ดีขึ้น Energy Efficiency Improvement ประเทศไทย เป็นศูนย์กลาง พลังงานใน ภูมิภาค Improve EE in Transportation Energy Elasticity = 1:1 in 5 years Indicators Energy Elasticity = ∆ t Energy Consumption/ ∆ t GDP Ave. Energy Elasticity 1.4 : 1.0 Ratio of energy growth rate to GDP growth rate = 1.0 by Awareness raising campaign

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

Cooperative Efforts on Energy Management Cooperative Efforts on Energy Management  Objective: Sustainable energy management through internal cooperative efforts  Methodologies o Educate on concept & method + evaluation o Help create and implement EC measures  Achievement Implemented factory 95 plants Implemented factory 95 plants Introduced house-keeping measures Introduced house-keeping measures Energy saving of 5-10% for each facility Energy saving of 5-10% for each facility ( simple payback of 2.5 yrs) ( simple payback of 2.5 yrs)

Revolving Fund for EC Projects Revolving Fund for EC Projects  Budgets allocation from ECP Fund  Loan approval by Bank  Technical assistance by DEDE  Key conditions Loan size < 1.2 mill USD/project Loan size < 1.2 mill USD/project Interest rate less than 4% (fixed rate) Interest rate less than 4% (fixed rate) Repayment in the defined time frame (7yr) Repayment in the defined time frame (7yr) Present Status  79 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

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

Performance Based Tax Incentive 100% of achieved energy saving will become tax deduction 100% of achieved energy saving will become tax deduction Max Incentive of 2 mill baht (50,000 USD) / Facility Max Incentive of 2 mill baht (50,000 USD) / Facility Pre and Post Audit will be required 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 Energy conservation business High efficiency machine or equipment and renewable energy equipment manufacturing High efficiency machine or equipment and renewable energy equipment manufacturing Solar PV manufacturing Solar PV manufacturing Energy Service Company – ESCO Energy Service Company – ESCO Renewable energy production business Renewable energy production business Alcohol or fuels from agricultural products Alcohol or fuels from agricultural products Electricity or steam generation Electricity or steam generation  Incentive last for the max period of 8 years

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

Holistic Approach เพิ่มมูลค่าเปลี่ยนโครงสร้างปรับกระบวนทัศน์ Paradigm Shift Enforcer / RegulatorFacilitator / Supporter

For More Information