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“SPPs and the ENCON Fund of Thailand” by Mr. Viraphol Jirapraditkul Director, Energy Conservation and Renewable Energy Division National Energy Policy Office (NEPO) “ASEM Green IPPs Network- First Regional Workshop” 24-25 October 2002 Sofitel Silom Bangkok. N ational Energy Policy Office.
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“SPPs and the ENCON Fund of Thailand” by Mr. Viraphol Jirapraditkul Director, Energy Conservation and Renewable Energy Division National Energy Policy Office (NEPO) “ASEM Green IPPs Network- First Regional Workshop” 24-25 October 2002 Sofitel Silom Bangkok National Energy Policy Office
MAIN DRIVING FACTORSPROMOTING RENEWABLE ENERGY • Energy Security • Self-dependency – Reduce energyimport • Reduce Emission Page 2
Energy Security • Projection that: • fossil energy reserves will be decreasing • fossil energy prices will constantly increase if no new resources are developed Hence: • emphasis on diversification of energy supplies • promotion of REutilization and technology development Page 3
Self-dependency – Reduce energyimport • Thailand -- heavily dependent on fossil fuels • Oil, gas, and coal -- 80% of the total primary energy demand in 2001 • speed up exploration and development of indigenous energy resources, including RE • major potential in Thailand: solar, wind, biogas, biomass Page 4
Reduce Emission • Air pollution from fossil fuel combustion: the transport, electricity and industry sectors. • In 1999, about 67% of total SO2 emissions resulted from electricity generation. Improvement: • Installation of Flue Gas Desulfurization Units (FGD) at lignite-fired plants. • Increased use of natural gas. • Transportation sector - the improved specifications of diesel oil for vehicles. • Use of RE: solar energy in power generation/biofuel in the transportation sector. Page 5
Energy Conservation Promotion Fund(ENCON Fund) - The Government Tool • Established in 1995 • Unique resource for supporting RE and ENCON projects in Thailand • Revenues -- 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). Page 6
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. Page 7
Major Means to Promote Use of RE • Financial Assistance for RE Projects • Soft Loan for RE Projects • Public Awareness Campaigns & RE Information Centers Page 8
Financial Assistance for RE Projects ENCON Fund provides “Project Owners” with financial assistance or grants for: 1) preparation of a comprehensive project plan 2) project management 3) financial assistance for investments of “Project Participants” in RE technologies. • “Project Owners” must be government agencies/ state-enterprises/educational institutions/ non-profit organizations. • Private entities can join as “Project Participants” • Proposed projects must have EIRR > 9%. Page 9
Soft Loan forRE Projects • One paramount barrier is financing mechanisms. • RE projects are often considered “not eligible” for financing by financial institutions. • “Soft Loan” – new channel, currently under consultation with financial institutions. • Appropriate criteria, procedures and interest rates will be established. Page 10
Public Awareness Campaigns & • RE Information Centers PA Campaigns will focus on: • dissemination of progress and achievement of funded RE projects • R&D on RE technologies and applications in Thailand. • RE information centers: • to provide information and technical advice on renewable energy technologies • to create positive attitude towards the use of RE. Page 11
Strategies to Increase RE Utilization • Thailand’s Strategic Plan for Energy Conservation during 2002-2011 has been developed, comprising4 main elements: • Energy Conservation • Renewable Energy Utilization • Human Resources Development • Public Awareness Campaigns. Page 12
EightTechnologies are targeted in the Strategic Plan: Solar Wind Biogas Biomass Hydro Biofuel Geothermal Fuel cells. Targets in 10 years’ period: to increase use of RE by 9% from the current rate =a decrease of primary commercial energy consumption by 5,068ktoe/year. Page 13
Promotional Schemes for SPPs in Thailand So far, 3 major programs have been undertaken: 1. Power Purchase Programs from Small Power Producers (SPPs) 2. Subsidy for Renewable Energy SPPs 3. Very Small Renewable Energy Power Producers (VSREPP) Page 14
1. Powers Purchase from SPPs -- “The SPP Program” Started in 1992 – 1st government policy instrument promoting RE use in the power sector. • As ofJuly 2002, 107 SPP project proposals have been submitted to EGAT. • 64 projects accepted, with a total proposed sale of 2,233 MW. • 60 projects signed PPA with EGAT • 50 SPPs now in operation, selling a total of 1,970 MW to EGAT. Of the 1,970 MW, 1,353 MW or 68.7%, use natural gas as fuel. Only 178 MW or 9% is generated by RE, wastes or residues. Page 15
Table1 : Power Purchase from SPPs by Type of Fuel (as of July 2002) Page 16
2. Subsidy for Renewable Energy SPPs -- “the Subsidized SPP Program” • In May 2001 “the Subsidized SPP Program” was approved. • Baht 2,060 million (US$ 47 million) from the ENCON Fund was allocated for this project. • About 300 MW generated from RE is expected, as a pilot scale. • In October 2001, 43 proposals were received, with a total proposed sale of 775 MW. • 17 SPPs with a total sale of 313 MW have initially been selected. Page 17
“The Subsidized SPP Program” (Cont’d) • An additional budget of Baht 1,000 million (US$ 23 million) was approved. • In May 2002, 14 SPPs selected, with a total proposed sale of 198 MW. • A total of 31 SPPs selected, with a total proposed capacity sale of 511 MW. • PENDING organization of a public hearing process. Page 18
Table 2 : SPPs Selected for Subsidy by Type of Fuel (as of May 2002) Page 19
3. Very Small Renewable Energy Power Producers – “the VSREPP Program” On 14 May 2002 the regulations on power purchase from VSREPP was approved. • A VSREPP is defined as a generator • with own generating unit; • utilizing RE sources, agricultural and industrial wastes and residues, or by-product steam; • selling no more than 1 MW of electrical power to a distribution utility. Page 20
“The VSREPP Program” (Cont’d) • Objective: to promote • participation of small generators in power generation; and • efficient use of domestic natural resources that are environmentally friendly. • VSREPP regulations: • allow for net metering arrangements • streamlined interconnection process to minimize VSREPP connecting costs • Targets: pig farms and food processing industries. Page 21
Effectiveness of Existing Policies • Existing policies for promoting RE utilization are favorable. • Review will be made to determine power purchasing rates for RE SPPs, taking into account externality benefits. • Additional promotional mechanisms are being explored. • R&D activities, training programs, experience sharing and cooperation are essential. Page 22
Conclusion • Thailand has well-targeted policies promoting utilization of RE resources & high-efficiency technologies for power generation. • ENCON Fund has been a unique resource facilitating the policy implementation. • Information dissemination on the benefits of RE applications is essential. • RE applications will play a significant role in Thailand’s energy sector during the next decade. Page 23
Thank you Energy Conservation and Renewable Energy Division National Energy Policy Office Tel: 0 2612 1555 Ext. 332 www.nepo.go.th