Financing Utility DSM : Thailand Experiences

Ms. Napaporn Phumaraphand Director, Demand Side Management & Planning Division Electricity Generating Authority of Thailand

June, 2011
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Presentation Outlines
1. Structure of Energy Efficiency Implementation in
Thailand

2. Funding of Energy Efficiency Activities in Thailand 3. EGATs DSM Historical Success & Current Situation

4. Fact Findings in Financing EGAT DSM

5. Implication for Financing Utilities DSM

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1. Structure of Energy Efficiency Implementation in Thailand

Energy Conservation Fund

Ministry of Energy

Ministry of Internal Affairs

EPPO
Regulators
Energy related policies Thailands Energy Conservation Plan 2008-2012

DEDE
MEPS Law & Regulations Voluntary programs Other regulatory roles

EGAT
Deputy Governor...

MEA

PEA

Deputy Governor...

Deputy Governor - CSR

Assistant Governor - CSR

DSM and Planning Division

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DSM Implementation Division

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2. Funding of Energy Efficiency Activities in Thailand

Established in 1992 under Energy Conservation Act

Energy Conservation Fund

Collecting a small levy (~1 US cent/litre) from the sell of gasoline, diesel, fuel oil and kerosene Supporting EE/RE promotion activities

Public Fund

Revolving Fund ESCO Fund

Soft loan program Co-investment program

EGAT
Utility Fund MEA PEA

Demand Side Management programs in residential, commercial and industrial sector Focusing Standard & Labeling for electrical equipments Limited activities in energy efficiency

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3. EGATs DSM Historical Success & Current Situation

EGATs DSM Office was established in 1993 by resolution of the Cabinet. Financial support since 1993- present
1993 June 2000. A grant of US $ 15.5 million from GEF was administered and supervised by the World Bank. 1993 September 2000. The utilities DSM expenditures reimbursed from the Ft (fuel adjustment charge in tariff structure). 1994 January 2002. A concessional loan of US $ 25 million from the Overseas Economic Cooperation Fund of Japan (now JEBIC). October 2000 onwards. EGATs budget (based tariff). Energy Conservation Fund: some programs

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Sources of fund to support EGATs DSM Programs

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

A grant of US $ 15.5 million from GEF

A concessional loan of US $ 25 million from JEBIC

reimbursed from the Ft under approval of DSM Subcommittee

EGATs budget (based tariff) around 10 Mil US$ annually

Financial support from Energy Conservation Fund in some programs

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DSM Initiatives Focusing Residential Sector

Standard & Labeling program Energy efficiency labeling, rating scale 1-5 (worst-best) 13 kinds of appliance to date Market transformation Thin tube program

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Energy Labeling by EGAT

Refrigerator (1994) Air conditioner (1995) Compact Fluorescent Lamp (1996) Electromagnetic Ballast (1998) Electric Fan (2001) Automatic Rice Cooker (2003) Lighting Luminare (2003) T5 (2009) Electronic Ballast (2009) Double-oscillating Fan (2009) T5 Luminare (2010) Exhaust Fan (2010) Standby 1 Watt Television (2010)
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Market Transformation Programs

Switching from Fat Tube to Thin tube Fluorescent Lamps
Achievement Successfully removed low efficient fat tube from the market. Manufacturers stopped producing fat tube at all since September 1995

Create massive popularity for thin tubes among consumers all over the
country. Energy savings of 1,958 GWh/yr and peak demand reduction of 402 MW and 1.47 million ton of CO2 reduction. Famous stars for
The public campaigns

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DSM Initiatives Focusing Commercial & Industrial

Sectors
Energy audit & load management
Green Buildings (1995) & Energy Service Company (1999)

Providing energy audit, consulting, installation services of energy efficiency measure and financial service for commercial buildings and factories

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DSM Initiatives Public Sector

Attitude creation program
Green Learning Rooms lab-installing: Inculcating energy efficiency awareness in younger minds (ongoing 420 schools in 76 provinces)

Municipal Street Lighting

More than 270,000 street-lamp installed with subsidies.
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DSM program impacts (as of Dec 2010)

Achieved to date (as of Dec 2010) Program MW GWh CO2 (Ton) Lighting 619.8 3,357.3 2,165,761 - Fluorescent Tube (T8) 401.5 1,957.5 1,446,682 - CFL(before labeling) 10.0 57.2 42,295 - CFL(labeling 2008) 191.6 1,242.1 608,167 - Low-Loss Ballast 16.7 83.3 55,894 - HPSV Street Light 17.2 12,723 Refrigerator 436.5 3,129.6 2,114,015 - 1 door 331.0 2,608.0 1,858,750 - 2 doors 105.5 521.6 255,265 Air Conditioner 954.3 5,396.5 3,208,023 Fan 33.9 299.0 145,826 - 12 inchs 5.0 54.7 26,260 - 16 inchs 28.9 244.3 119,566 Rice cooker 12.2 16.2 7,887.5 Motor Comercial Total
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Share of Peak Demand saving by program

Comercial buildings & Fan 1.5% others 0.1% Lighting 30.3%

Air Conditioner 46.8% Refrigerator 21.2%

Share of CO2 reduction by program

Comercial buildings & Fan 1.7% Air Conditioner 41.4% others 0.1% Lighting 28.3%

0.2 2.6 2,059.5

1.2 10.3 12,210.2

909 7,583 7,650,005

Refrigerator 28.4%

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4. Fact Findings in Financing EGAT DSM

Action
1. With government support, EGAT received GEE & GOA grants and JBIC funding at initial stage. 2. DSM program expenditures which could not be reimbursed from the grants/JBIC loan were all covered by Ft.

Results
1. Attracted interests form local and international agencies which helped accelerate program delivery 2. Reimbursement from Ft allowed for flexibility and autonomy in program operations.

3. From 2000, grants & loan expired as well as 3.1 DSM expenditures has been included in reimbursement form Ft was no longer EGATs annual budget. (around 0.06% of allowed due to revised tariff structure. EGATs revenue or 1.0% of profit per year) But flexibility and autonomy were removed. 3.2 EE programs for large customers in commercial & industrial sector transferred to DEDE. 3.3 Since then EGAT mainly Implement only standard & labeling programs which requires smaller amount of budget. 3.4 DSM becomes EGATs tool to develop its corporate image and public relations.
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5. Implication for Financing Utilities DSM

Financial resources and mechanism are critical to the scale of energy efficiency program delivery and its sustainability. Policies and regulations to encourage utility to promote energy efficiency programs could be developed such as rewarding mechanism with comparable level of earnings for energy efficiency investments as well as earnings from energy sales.
In Thailand, the main type of performance-based regulations, Return on Invested Capital (ROIC), is strict for electric utilities. ROIC criteria of ~ 8% is applied for generation utility and ~ 5% for distribution utilities. This type of regulation does not encourage utilities to seek lower-cost resources, including DSM. On the other hand, they would prefer selling more power.
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5. Implication for Financing Utilities DSM

Another approach of financial incentive to encourage utility DSM is the concept of R&D funding.
In Thailand, there is a government policy guideline for R&D budget, of which 3% of the utility (EGAT)s profit has been allocated for R&D projects. The actual amount spent on R&D are exempted from corporate tax.

Similar approach could be applied for promoting utilitys DSM programs with financial mechanism.

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Thank you
for your attention
Ms. Napaporn Phumaraphand
Director, Demand- Side Management& Planning Division Electricity Generating Authority of Thailand Bang Kruai, Nonthaburi 11130, THAILAND
E-mail: napaporn.p@egat.co.th Tel. +66 2436 8100 Fax.+66 2433 3329
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