Renewable Energy and Energy Conservation Policy in Thailand

Renewable Energy and Energy Conservation Policy in Thailand Department of Alternative Energy Development and Efficiency (DEDE) Ministry of Energy (MOEN) October 2005 1

Presentation Outlines Ø Introduction to DEDE Ø Energy Situation in Thailand Ø Thailand Energy Policy and Strategies Ø Highlighted Programs l l l Promotion on Renewable Energy Tax incentive Energy Efficiency in Residential 2

Department of Alternative Energy Development and Efficiency ( DEDE ) Established in 1953 as a National Energy Office Ø Transfer to Department of Energy Development and Promotion (DEDP) under the Ministry of Science Technology and Environment in 1992 Ø Transform to DEDE Under the Ministry of Energy due to a Major Thai Government Reform in 2002 Ø 3

Mission “ Encouraging the Promoting Energy Efficiency and Conservation as well as Providing and Developing Sources of Alternative Energy to Serve all Energy Consuming Sectors with Competitive Cost and Good Quality of Life” 4

Organization Structure DEDE Secretariat Bureau of Energy Regulation and Conservation Bureau of Energy Research Planning Division Bureau of Energy Efficiency Promotion Bureau of Energy Development Training Division Bureau of Energy Technology Transfer Bureau of Solar Energy 5

Energy Demand Profile 2004 Thailand consumes energy about 1. 45 million barrel of oil equivalent per day , 15% of GDP Agriculture 6% Hydro Coal Industrial 36% Natural Gas Transportation 37% Oil Res & Com 21% Primary Energy consumption Consumption by Sector* 2003*Figures 6

Thailand Energy Strategies for Economic Development and Regional Integration Ø Strategy for Efficient Use of Energy Reduce Energy Elasticity from 1. 4: 1 to 1: 1 by 2007 Ø Strategy for Renewable Energy Development Increase share of RE from 0. 5% to 8% of total final energy by 2011 Ø Strategy for Energy Security Ensure sufficient and reliable energy supply for at least 30 yrs Ø Strategy for Thailand as a Regional Energy Center Develop Strategic Energy Land Bridge and Energy Hub Cabinet Resolution on September 2, 2003 7

Strategy for Renewable Energy Development Commercial Energy TE = Traditional Energy NRE = New & Renewable Energy 2003 (265 ktoe) 52, 939 KTOE Commercial Energy a d n e g A l a n io t a on i t N u l so 04 e R et 20 n , i 8 b Ca June on TE 11% NRE 8% (6, 540 KTOE) %81 2554 2011 81, 753 KTOE 81, 763 k. TOE 8

Strategy for Renewable Energy Development Electricity Target and Strategy of RE Electricity Solar 6 MW Wind 0. 2 MW Biomass 560 MW Heat ~ 0. 00 KTOE RPS 437 MW - Solar - Wind - MSW - Biomass - Hydro INCENTIVE RPS Incentive 1, 093 MW RE 8% RE 0. 5% R&D 2002 (Incentive) 3, 700 KTOE Bio Fuel (Incentive) 1, 800 KTOE Ethanol 3. 0 M liters/D Bio diesel 4. 0 M liters/D Bio fuel ~ 0. 00 KTOE Heat Facilitator 2011 9

Biodiesel Strategic Plan 2004 2005 Research Demonstration 2006 2007 2008 2009 2011 Incentive (Biodiesel Community base) Biodiesel Mandate 10% Blend Phase I: Specified areas Phase II: Whole country Community based Biodiesel Pilot Project Development 2010 Specification of B 100 & B 5, B 10 Prod. Cap. 4. 0 mill. lt/d Industrial based Biodiesel Development 10

Biodiesel : Business Model Blending Facilities Farmers 60, 000 Rai Business Feasibility 100, 000 Liters/day Will produce in the 4 th year and last 21 years Biodiesel Plant Extraction Plant Glycerin Other Oleochemical Products Vitamin A, E Value-added Power Plant Biodiesel Complex 11

Biodiesel and Communities Biodiesel Factory Crushing Factory Power Plant Biodiesel Complex Electricity as Biofuels byproduct Ø Potential for rural off-grid electricification Distributed Generation Ø Renewable energy source for power generation Small-scale Biodiesel Project Ø Biodiesel production for using in community 12

Opening Ceremony for Community Based Biodiesel Researching and Developing – Chiang Mai First in Thailand ASEAN 13

Gasohol Strategic Plan Ethanol 1. 0 mill. lts /d 2004 2005 Ethanol 3. 0 mill. lts /d 2006 Phase I MTBE replacement Formulated policy on fade out MTBE in ULG 95 and promote Gasohol 91 in some areas 2007 2008 2009 Phase II Gasohol Mandate - Spec. of Gasohol 95 & 91 - Emission test on using Gasohol 95 -Defined gasohol use in Spec. of new vehicle procurement - Requested governments’ vehicles to refill gasohol 2010 2011 Formulate policy on utilizing High Performance Vehicles for E 10 and FFV - Enforced government fleets use Gasohol - Gas stations in govern. must sell Gasohol 14

National Ethanol Program Promoting E-10 Gaining popularity and Already replace 25% of ULG 95 Compulsory Measures Compulsory distribution of E-10 on an national scale on Jan 1 st 2007 Increase Outlets Good cooperation with oil companies Expanding station to 4, 000 by 2005 Pricing Policy Price Diff. by 0. 4 Euro Demand by 4 times 15

Ethanol – Gasohol Target December 2005 Ø Expanding gasohol station from 2, 171 * stations to 4, 000 stations nationwide Ø Gasohol 2. 8 * to 4 million litre/day ( * as of Sep. 05) 1 January 2007 Ø Gasohol 95 nationwide, remove gasoline 95 from the market 2008 Ø Using gasohol 91 and 95 nationwide Price Incentive - Gasohol is cheaper than the premium gasoline by 1. 50 baht 16

Gasohol Promotion 17

Ethanol plant location 1 st Phase Molasses Cassava 2 nd Phase Sugar cane juice & Molasses Cassava No direct relation between sugar sector and distillery Ethanol plants 1 st Phase (1. 09 Mill. lts / day ( § 3 existing ethanol plants total production cap. 3750. Mill. lts / day § 3 plants under construction total cap. 0. 715 Mill. lts/day 2 nd Phase (3. 2 Mill. lts / day) 1 8 plants were approved : § 14 sugar mills & § 4 cassava mills 18

Solar Cell Strategic Plan Remote Area (38 MW) Stand alone System Incentive (72 MW) - Feed In Tariff - Soft loan - Tax Incentive RPS (140 MW) 250 MW 2004 2005 2006 2007 2008 2009 2010 2011 R&D - Increase Local Content Percentage Solar Cell Industry - Reduce PV System Price 19

Status of PV Installation in Thailand: End of the Year 2003 As of 2003, approximately 6 MW of PV systems have been installed. Water pumping 1. 14 MW Stand-alone systems 0. 26 MW Battery charging 2. 17 MW Telecommunication 1. 50 MW Schools 0. 30 MW Hospitals 0. 02 MW Ocean navigators 0. 02 MW Grid-connected systems 0. 31 MW Miscellaneous 0. 13 MW Source: Dusit Kruangam, et. al. , Pre-Feasibility Study on Solar Cell Production in Thailand, Technical Digest of the International PVSEC-14, Bangkok, Thailand, 2004. EGAT, by April 2004, has been conducting the biggest Grid-Connected system of 0. 5 MW in Mae Hong Son. Newly government-initiated project, Solar Home System for 200, 000 unelectrified houses in Thailand, of 24 MW will be conducted between 2004 (150, 000 sets 120 Wp each in the first phase) and 2005 (50, 000 sets in the second phase). It is expected that the PV market after 2007 will grow at the rate of 50 MW per year. 20

PV Market Trend in Thailand Newly government-initiated project, Solar Home System for 200, 000 unelectrified houses in Thailand, of 24 MW will be conducted between 2004 (150, 000 sets 120 Wp each in the first phase) and 2005 (50, 000 sets in the second phase). Implementation of a Renewable Portfolio Standard (RPS) would enforce IPPs (independent power producers) as well as SPPs (small power producers) to generate electricity from renewable energy sources. Net metering with government incentives will also be implemented. It is expected that the PV market after 2007 will grow at the rate of 50 MW per year. 21

Tool to Overcome Barriers Ø Need government strongly support and encouragement to drive ethanol market § § Clear policy and target Market drive; Incentive; Specification. Ø Cooperation from all parties concerned § § Car manufacturers; Oil refineries and oil distributors; Industries i. e. sugar mills, CPO mills, starch mills Farmers and cooperatives. 22

Renewable Energy Promotion Program Former Projects -Small Power Producers (SPP) Project (1 st( -SPP Project (2 nd( Ø Ongoing Project -Very Small Power Producers (VSPP) Project Ø Future Projects -Renewable Portfolio Standard (RPS( -Incentive i. e. Feed-in Tariff & Tax Holidays -VSPP (Capacity Expansion( Ø 23

Energy conservation Strategies and Programs Ø Energy Intensity Ø Target of Energy Efficiency Ø Highlighted Programs l l Compulsory Program Cooperative Efforts Revolving Fund Tax Incentives 24

Energy Intensity (Compare with Developed Countries) Thailand USA UK Germany Japan 25

Energy Intensity (Compare with Developing Countries) 26

Energy Efficiency Improvement Target 1 Objective Energy Efficiency Improvement 2 ประเทศไทยม พลงงานใช อยางตอเ นอง เพยงพอตอ ความตองกา รไปอก 50 ประชาชนม 3 พลงงานใช ป อยางทวถ ง ในราคาทเ ปนธรรมและ เพอคณภ าพชวตท 4 ดขน Strategy Indicators 1. Improve EE in Transportation 2. Improve EE in Industry Energy Elasticity = 1: 1 in 5 years 3. Awareness raising campaign 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 2008 ประเทศไทยเป นศนยกลา งพลงงานใน ภมภาค 27

Create Conducive Environment for EE Investment Low Interest Source of Fund Grant for small investmen t Customer Service Access to Funds Workshop & Training Technical Assistance Incentives & Subsidies. Regulations Energy Codes Tax Incentives Promotion Campaign Free Energy Audit and consulting Raise up Confidence Perfect Information. List Demonstration Project Promotion of ESCOs Directory of Technology Providers Of Experts 28

1 Industrial and Building sector Programs Strategy Objective 2 ประเทศไทยม ประเทศไทยเป นศนยกลา งพลงงานใน ภมภาค Energy Intensity ทศทางและมาตรการ ยงไมชดเจน with Ministry of Industry to change industrial structure to be less energy intensive ØSupport by energy conservation promotion programs = Energy GDP l l Basic Metal l Chemical )ป 2524 = 100( พลงงานใช อยางตอเ นอง เพยงพอตอ ความตองกา รไปอก 50 ประชาชนม 3 พลงงานใช ป อยางทวถ ง ในราคาทเ ปนธรรมและ เพอคณภ าพชวตท 4 ดขน ØCooperate 2. Improve EE in Industrial and building Sector Improve enduse energy efficiency Fabricated Metal Food and Beverages Non Metalic Textiles Paper l Regulation Incentives, subsidies Soft loans for EE investment Technical assistance Research and development Training, capacity development ØTax Incentives Tax breaks for ESCOs l Import duty exemption for high energy efficient products, machines l Performance-based incentives l 29

Compulsory Program Ø Over 1 MW peak demand or consume more than 20 TJ annually Ø More than 4000 large buildings and factories (so called Designated Facilities) Ø Mandatory Tasks l l Assign Energy Manager Report Monthly Energy Use Develop EE Target and Plan Compile all energy codes 30

Cooperative Efforts on Energy Management § Objective: Sustainable energy management through internal cooperative efforts § Methodologies o o Educate on concept & method + evaluation Help create and implement EC measures Ø Achievement ü ü ü Implemented factory 95 plants Introduced house-keeping measures Energy saving of 5 -10% for each facility ( simple payback of 2. 5 yrs) 31

Revolving Fund for EC Projects Budgets allocation from ECP Fund Ø Loan approval by Bank Ø Technical assistance by DEDE Ø Key conditions Ø ü ü ü Loan size < 1. 2 mill USD/project Interest rate less than 4% (fixed rate( Repayment in the defined time frame (7 yr( 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 32

Cost Based Tax Incentive Ø 25% Tax Break for the Investment in EE Projects Result in Efficiency Improvement Ø Applicable for the First 50 mill baht Investment ( 1. 25 mill USD ) Ø Incentive Spread Over 5 Years 33

Performance Based Tax Incentive Ø 100% of achieved energy saving will become tax deduction Ø Max Incentive of 2 mill baht (50, 000 USD) / Facility Ø Pre and Post Audit will be required 34

Incentive through Board of Investment ( BOI ) q 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 l Renewable energy production business • Alcohol or fuels from agricultural products • Electricity or steam generation q Incentive last for the max period of 8 years 35

Promotion of ESCOs Ø BOI – Tax Incentive l Ø Access to Revolving Fund l Ø Maximum 8 years tax exemption for ESCO projects – Cooperate Income tax Eligible to borrow the low-interest loan from RF program on project-by-project basis ESCO promotion activities l l Website Seminars, workshop Publications Lists of ESCOs and successful cases 36

Holistic Approach ���������������� Paradigm Shift Enforcer / Regulator Facilitator / Supporter 37

EE in Residential Sector Ø Promotion on energy efficient houses Provide 3 different models of energy efficient houses with a focus on • • • Housing design ( Site allocation / Shape ) Roof design Walls Floor Ceiling Openings ( Door and Windows ) Sunshade Equipment Ventilation Natural light utilization 38

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Energy saving estimation Electricity Cost Model 1. Model A • One-storey • 84 sq. m. • 17, 000 USD 2. Model B • Two-storey • 135 sq. m. • 33, 600 USD Conventional design New design Total (kwh/year) A/C system (kwh/year) Lighting (kwh/year) 6, 499 1, 125 7, 624 4, 420 1, 125 5, 545 10, 293 2, 422 12, 751 Estimated Saving (kwh/year) 27. 3 % 19. 9 % 7, 350 2, 422 9, 772 3. Model C • Two-storey Conventional design 13, 353 3, 386 6, 739 • 183 sq. m. • 40, 800 USD New design 10, 126 3, 386 13, 512 29. 5 % 42

On going projects for Residential Ø Promoting Energy Efficiency Housing Single Family Houses l Townhouses Ø The Study of Building Codes for Energy Efficiency House and Buildings with the Promotional Scheme l 43

More Information Visit www. dede. go. th Thank you 44