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Thailand Energy Security on Demand Side: Energy Conservation and Renewable Energy Promotion by

Thailand Energy Security on Demand Side: Energy Conservation and Renewable Energy Promotion by Mr. Viraphol Jirapraditkul Deputy Director-General Energy Policy and Planning Office (EPPO) Ministry of Energy 8 June 2004 Siam City Hotel, Bangkok. Primary Energy Consumption

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Thailand Energy Security on Demand Side: Energy Conservation and Renewable Energy Promotion by

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  1. Thailand Energy Security on Demand Side: Energy Conservation and Renewable Energy Promotion by Mr. Viraphol Jirapraditkul Deputy Director-General Energy Policy and Planning Office (EPPO) Ministry of Energy 8 June 2004 Siam City Hotel, Bangkok

  2. Primary Energy Consumption by Energy Source Hydro & Others 5% Lignite & Coal 3% Natural Gas 2% Renewable 8% 11% 2% 27% 10% 15% Oil 15% 25% 45% 48% 2

  3. Final Energy Use by Sector 6% Residence and Commercial 2% 9% Transportation 38% 26% 36% Industrial 35% 36% 29% Year 3

  4. Fuel Consumption for Electricity Generation unit: million 5% 5% 5% 15% 13% 7% 6% 16% 15% 14% 6% 16% 13% 10% 5% 6% 7% 7% 6% 8% 10% 8% 8% 9% 7% 10% 6% 7% 10% 6% 11% 7% 11% 9% 12% 13% 14% 13% 15% 8% 69% 66% 60% 75% 73% 70% 63% 77% 77% 72% 70% 67% 6% 74% 4

  5. log(Energy Use) 3.5 USA 3.0 China Russia Japan Canada Germany 2.5 India France Mexico Italy United Kingdom Thailand 2001 Thailand 2000 2.0 Australia South Korea Thailand 1999 Malaysia China Teipei Indonesia Philipine 1.5 Singapore Vietnam Newzealand Chili Hongkong 1.0 Peru 0.5 Brunei 0.0 log(GDP) 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Energy Use versus GDP by Country 5 5

  6. Renewable Energy Sources in Thailand Biomass 7,000 MW TE 16.5% Solar >5,000 MW 2002 NRE 0.5% Commercial Energy 83% TE = Traditional Energy NRE = New & Renewable Energy Wind 1,600 MW Small Hydro 700 MW High Potential Low Development 6

  7. Strategic Plan for Energy Conservation during 2004-2011 • Energy Efficiency • New and Renewable Energy Technology Development To reduce the ratio of energy consumption growth rate to GDP growth, or energy elasticity, from 1.4:1to 1:1 within five years’period, that is, by 2007. Focus on promotion of : 7

  8. Strategic Plan for Energy Efficiency Emphasis is placed on 2 major energy-intensive sectors : • Transportation Sector • Industrial Sector 8

  9. Strategic Plan Promoting New & Renewable Energy Technology Development Situation in 2002 and Target in 2011 • 1,060 ktoe from power producers using renewable energy; • 3,910 ktoe from traditional biomass, agricultural waste and industrial waste; • 1,570 ktoe from the increase of ethanol blending with gasoline and substitution of the use of diesel oil by biodiesel 2002 52,939 ktoe 2011 81,753 ktoe TE 11% TE 16.5% NRE 0.5% NRE 8% Commercial Energy 83% Commercial Energy 81% TE = Traditional Energy NRE = New & Renewable Energy accounts for 6,540 ktoe 9

  10. Energy Conservation Promotion Fund(ENCON Fund) - The Government Tool • Established in 1995 • Unique resource for supporting RE and ENCON projects in Thailand • Revenue - from the premium rates imposed on petroleum products at 0.04 Baht/litre. • Currently, ~ Baht 13,000 million (US$ 300 million) in the ENCON Fund • Annual revenue is ~ Baht 1,000 million (US$ 23 million). 10

  11. The ENCON Fund supports projects on: • improvement of energy efficiency; • demonstration and dissemination of RE technologies; • R&D • enhancing a market of RE technology equipment; • training and public relations. 11

  12. Factors of Success and Barriers • Cost Competitiveness • Viable Market/Economy of Scale • National Renewable Energy Strategy • Supportive Infrastructure and Measures 12

  13. Investment for the Future Development Renewable Energy • Energy Security • Environment • Knowledge-based • New Business • Opportunities Conventional Energy Time New Energy Development and Business Challenges New Policies and Measures 13

  14. Policy Initiatives To increase the share of renewable energy to 8% by 2011 Market Driven R&D Supports on high potential renewable energy RPS and Specific programs • Innovation and Demonstration • Technology Transfer New Regulations and Policy Fiscal and Financial Incentives to encourage private sector participation and partnership of the local communities in renewable energy business 14

  15. Energy Conservation Policy Implementation - Achievement -Unjustifiable Outcome 15

  16. Achievement Energy Conservation in the Tobacco Curing Industry Subsidy Mechanism (for replacement of major equipment using energy-efficient technology) 16

  17. Old Style Tobacco Curing • Pollution (SO2, Co2,. etc.,) • consume fuel (coal) • bad quality product (mix- colored dry tobacco) 17

  18. Energy Efficient Tobacco Curing Subsidy 40% (10,000 US$/System) • Saving fuel 60-70% • easy operation and maintenance • good quality product (smooth color of dry tobacco) • Saving lignite 55,554 ton/yr. and reduce SO2 2,200 ton/yr. 18

  19. Unjustifiable outcome Implementation of Energy Conservation Measures in Designated Facilities 19

  20. Designated Facility A “designated facility” is a factory or building with energy consumption greater than 1 MW or those authorized to install one or more transformers with a total capacity of 1,175 kilovolt-ampere (kVA). 20

  21. Facility Owners’ Duties Stipulated by Law • 1) Assign staff to take full responsibility concerning energy programs. • 2) Submit information on energy production, consumption and conservation to the Department of Alternative Energy Development and Efficiency (DEDE). • 3) Keep records of all information on energy of machinery or equipment that affects energy consumption and conservation. • 4) Set energy conservation targets and plans. • 5) Conserve energy, audit and analyze the energy consumption. 21

  22. Problems • The appointments of the facilities’ energy managers were delayed. • Lack of capable resources of DEDE and problem on “Registered Consultant” (RC). • The delivery of required data was delayed • The economic downturn, leading to short of investment capital in energy conservation. • Financial assistance not attractive enough 22

  23. Way Forwards • Impose surcharges stipulated by law • Tax incentives are being devised • Promotion of the Energy Service Company, or ESCO. 23

  24. Renewable Energy Policy Implementation • - Achievement • -Unjustifiable Outcome 24

  25. Achievement Promotion of Small Power Producers Using Renewable Energy Subsidy Mechanism (to stimulate participation of potential investors) 25

  26. Subsidized SPP Program • Objective To create incentives for more investors to participate in renewable energy-fueled power generation and distribution 26

  27. Solar Wind Water (hydro) Waste Biogas Agricultural Waste rice-husk, bagasse, tapioca rhizome, woodchip Waste from Agricultural Industrial Process Renewable Energy Sources 27

  28. Support Process • Total funding budget: 3,060 Mbt.(US$ 76.5 million) • Subsidy will be in the form of an addition to EGAT’s power purchasing rates from SPPs using renewable energy • Invite investors to propose required subsidy rates via bidding process (maximum cost .01 US$/kW-hr.) • Funding period: 5 years. • Target 300 MW. 28

  29. Summary of the Subsidized SPP Program Outcome (as of May 2004) No. of Projects MW SPPs approved for subsidy 20 243.3 SPPs pending final approval for subsidy 1 20.0 Total Potential Supply to the Grid 21 263.3 SPPs withdrawn from the Program 10 228 Grand Total 31 491.3 29

  30. Unjustifiable Outcome Solar Water Heaters for Households Subsidy Mechanism (to support the investment cost) 30

  31. Solar Water Heaters for Households • Size 2 sq. m. • Cost 25,000 Baht/System (625 US$/System) • Govt. support (32%) 200 US$/System 31

  32. Problems • Lack of continuity of project monitoring & expansion • Cost very high (10 times compare with electric heaters) • System maintenance services are limited • No further R&D to make it competitive in the market 32

  33. Way Forwards • Re-orient funding method towards creating sustainable markets • Intensify R&D to reduce production costs 33

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