Prof. Thierry Lefevre and Govinda R. Timilsina CENTER FOR ENERGY-ENVIRONMENT RESEARCH & DEVELOPMENT ASIAN INSTITUT

1. Demand Side Management Program in Thailand: A Model for Implementing GHG Mitigating Technologies in Developing Countries Prof. Thierry Lefevre and Govinda R. Timilsina CENTER FOR ENERGY-ENVIRONMENT RESEARCH & DEVELOPMENT ASIAN INSTITUTE OF TECHNOLOGY UNFCCC Regional Workshop on Technology Transfer 17-19 January 2000 Cebu, Philippines

2. 1. Introduction and Objectives of DSM Program in Thailand 2. Mitigation Technologies Implemented under the Program 3. Institutional Arrangement 4. Program Implementation Strategies 5. Financial Arrangement 6. Achievements of the Program 7. Conclusions and Final Remarks Outlines

3. • To cope with the very high growth in electricity demand (i.e., 13% AAGR) during the second half of the Eighties and first half of the Nineties, the Thai government decided to launch the demand side management program in the country. • In 1991, EGAT came up with a DSM master plan, obtained the government’s approval for DSM programs in 1992, which was formally launched on September 20, 1993. INTRODUCTION

4. Four objectives of the DSM Program: to educate, encourage (through incentives) and inform consumers about energy conservation; to stimulate manufacturers and importers to produce or import energy-saving and efficient appliances and equipment; to support and pursue energy efficiency and load management technologies; to build sufficient institutional capability in the electricity sector and the energy-related private sector to deliver cost-effective energy services throughout the economy. OBJECTIVES OF THE DSM PROGRAM

5. Residential sector Fluorescent thin tube Low watt fluorescent fixtures Low loss ballasts Compact fluorescent lamps Energy efficient refrigerators Energy efficient air conditioners Commercial sector High pressure sodium lamp for street lighting Energy efficient freezers Energy efficient air conditioners Industrial sector Energy efficient electric motors Variable speed drives Energy efficient refrigerating, heating and air conditioning systems MITIGATION TECHNOLOGIES IMPLEMENTED

6. Implemented under the Thin Tube” program since 20 September 1993. Under this program, Thailand’s five largest fluorescent lamp manufacturers agreed to replace production of all T-12, 40 W and 20 W fat tubes (with 1.5 inch tube diameter) with T-8, 36 W and 18 W thin tubes, which use 10% less energy for providing the same level of illumination. Fluorescent lamps were also implemented under the Low-Income Lighting Retrofit Program, where low income households with electricity consumption less than 35 kWh/month were encouraged to replace their 60 watt incandescent lamps by 18 watt fluorescent fixtures. Efficient Fluorescent Lamp (EFL)

7. Low-loss ballasts are new types of magnetic ballasts, which require only half of the energy required by the standard existing ballasts. Under the Low-Loss Ballast Program, the EGAT has procured the low-loss ballasts in a large scale and distributed them to the households at a subsidised price through Green Shops. Low-loss ballasts were also implemented in low income households under the Low-Income Lighting Retrofit Program. Low-loss Ballasts

8. This technology was implemented under “Million Hearts, Million Lights” program launched in September 1996. Under this program, EGAT has planned to sell over 1.5 million units of CFLs through a mass procurement system. Up to 35% of the equipment price has been subsidised. CFLs are distributed to households at PTT and Shell gas stations and at Seven Eleven convenience stores. Compact Fluorescent Lamp (CFL)

9. This technology has been implemented since October 1996 under the street and farm lighting retrofit program, which involved installation of high pressure sodium vapour lamps in 55,000 villages all over the country. This technology has also been implemented through a pilot project in northern hills where tribal people were encouraged to replace the incandescent lamps by high HPSVL. High Pressure Sodium Vapour Lamp (HPSVL)

10. Energy efficient refrigerators have been implemented under the energy efficient refrigerator program, which was launched in September 1994. Under this program, manufacturers and importers of refrigerators were persuaded to test their products for efficiency rating labelling. The EGAT on its part launched a comprehensive media campaign to promote the new models, which cost only 10% more than the standard models. Energy efficient refrigerator

11. Use of energy efficient air conditioners has been promoted through the Air Conditioner Labelling Program, which was launched in September 1995. The program target was to replace the sales of inefficient air conditioners with Energy Efficiency Ratio (EER) of 7.6 by the efficient ones with EER of 9.6 to 10.6 or higher. The incremental costs incurred were financed by EGAT through interest-free loans. Energy efficient air conditioner

12. The concept of thermal energy storage is to chill water or produce and store ice during off-peak periods when electricity demand and utilisation rates are low and use this chilled water or ice to cool the buildings instead of operating large chillers during peak periods. This system has been encouraged in the commercial buildings, under the thermal energy storage program. The program was launched in April 1996 through a pilot project in EGAT’s 15-storey headquarters in Nonthaburi. The project installed a 1,500 ton-hours of chilled water storage, which is expected to reduce the buildings peak demand by 350 kW. Thermal energy storage

13. High efficiency motors are2-6% more efficient than the standard motors. Since electric motors account for 80% of total electricity consumption in the industrial sector, a small improvement in motor efficiency could result in significant energy savings. As HEMs are 15-30% more expensive, EGAT has provided interest-free financing, payable in three years, at the rate of US$440 per kW saved. High efficiency motor (HEM)

14. In order to implement demand side management programs in Thailand, the Electricity Generation Authority of Thailand established a Demand Side Management Office (DMSO) as a department level organisation reporting directly to a DSM-sub committee. This sub-committee, chaired by the Governor of EGAT, oversees and coordinates DSM efforts in the country carried out by various agencies. DSMO is responsible for the development of the programs, implementation strategy and financial packages to support the programs. DSMO has hired an independent and internationally recognised agency for monitoring and evaluation of the program. INSTITUTIONAL ARRANGEMENT

15. The DSM-sub committee consists of representatives from the following agencies. 1. National Energy Policy Office (NEPO) 2. Research and Academic Institutions 3. Department of Energy Development and Promotion (DEDP) 4. Energy Conservation Center of Thailand (ECCT) 5. Fiscal Policy Office (FPO) 6. Electricity Generation Authority of Thailand (EGAT) 7. Metropolitan Electricity Authority (MEA) 8. Provincial Electricity Authority (PEA) Composition of DSM-Sub Committee

16. Organisational Structure for the Implementation of the DSM Program

17. The DSM implementation strategies implemented by EGAT can be classified into four categories: market transformation through voluntary agreement, energy efficiency labelling, customer oriented programs, public-private sector partnership. PROGRAM IMPLEMENTATION STRATEGIES

18. Under this strategy, EGAT has directly negotiated with the manufacturers and importers of electrical appliances and made them agree to replace their inefficient products by their efficient counterparts. For example, under the “Thin Tube” program EGAT has directly negotiated with the Thai lamp manufacturers to voluntarily agree to ban the production of low-efficiency T-12 fluorescent lamps and to produce only high-efficiency T-8 fluorescent lamps. In return, EGAT financed advertising campaigns in mass media to promote the new products. Market Transformation through Voluntary Agreement

19. EGAT adopted a product efficiency labelling program for refrigerators and air conditioners under which all participating brands of refrigerators and air conditioners adopted a label. The label indicates the efficiency, annual energy consumption and the energy saving estimates. The ratings were numbered 1 to 5 along with increasing efficiency of the products. Thanks to the labeling, sales of refrigerators and air conditioners with higher efficiency ratings significantly replaced the sales of those with lower efficiency ratings. Energy Efficiency Labelling

20. EGAT has implemented an energy efficient building program called the “Green Building” program, through which customers were assisted to comply with the comprehensive energy use standards provided in the Energy Conservation and Promotion Act of 1992. For example, EGAT has installed load monitoring and control equipment at a resort hotel. The hotel reduced its monthly peak demand from 1,360 kW to 1,200 kW by continuously monitoring the electricity consumption at locations such as chillers, kitchen, laundry, conference hall, etc. A large number of buildings have already been participating in this program. Customer-Oriented Program Design

21. To support private sector participation for energy service delivery, EGAT has implemented a pilot phase Energy Service Companies (ESCO) program for implementing energy-efficiency measures in the industrial sector. Four ESCOs have been selected to implement energy efficiency investments in the industrial/commercial sector. Financing has been provided by EGAT, while ESCOs are expected to perform the energy auditing, feasibility study, engineering, installation, management, and performance monitoring. Public-Private Sector Partnership

22. Of the total budget of US$ 189 million for a five year period (i.e., 1993 to 1998), the external sources (i.e., GEF and OECF) have covered about 21%, whereas the rest has been managed through internal sources. FINANCIAL ARRANGEMENT Table : Budget for the DSM Program in Thailand

23. The actual reductions of peak demand is twice as much as the targeted reductions, while the actual energy saving from the program is 1.5 times higher than the targeted savings. Similarly, the actual reduction of CO2 emission is 1.4 times higher than the targeted reduction. ACHIEVEMENTS OF THE PROGRAM Table : Targeted and Actual Achievement of the DSM Program in Thailand

24. The demand side management program (1993-1998) of Thailand is regarded as one of the most successful DSM programs in the developing countries as the program not only met the target but also well surpassed it. The program has implemented most of the greenhouse gas emissions mitigation technologies available on the demand side (i.e., efficient lighting systems, efficient refrigerating systems, efficient air conditioning systems, energy efficient motors). The program has several special characteristics, for example, the program was innovative and was designed in the socio-economic and cultural context of the country; it was focussed on mutual benefits among the government, customers and equipment manufacturers and suppliers. The program made appropriate financial arrangements (e.g., subsidies to the efficient equipment, interest free loans) to overcome the first-cost barriers. CONCLUSIONS AND FINAL REMARKS

25. The program encouraged the market transformation; helped the customers to comply with the existing laws and standards on energy efficiency; launched specific consumer oriented programs and encouraged private sector to participate in energy conservation programs through Energy Service Companies. From the success of Thailand’ demand side management program , it can be recommended that other developing countries share Thailand’s experiences in implementing GHG mitigating technologies under the demand side management programs. CONCLUSIONS AND FINAL REMARKS