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Thailand’s Energy Conservation Policy: Strategies for Industrial Efficiency Improvement

Thailand is committed to enhancing energy efficiency across various sectors, primarily focusing on the industrial sector. With energy representing a significant portion of GDP, effective conservation measures are crucial. The policy promotes a framework of awareness, investment, and regulatory support, leveraging both tax incentives and financial assistance. Key initiatives include energy audits, the designation of energy managers, and mandatory reporting for large facilities. The strategy aims not only to improve energy efficiency but also to ensure sustainable management through collaborative efforts among stakeholders.

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Thailand’s Energy Conservation Policy: Strategies for Industrial Efficiency Improvement

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  1. Thailand’s Energy Conservation Policy :Industry Programs Prasert Sinsukprasert Ph D Department of Alternative Energy Development and Efficiency sinsukprasert@yahoo.co.th Tel. 662 226 3998 Fax. 662 226 4172 Welcome Delegates from METI, Japan 22 June 2006, Bangkok

  2. Thailand’s Energy Outlook Thailand consumes energy about 1 mill barrels of oil per day (0.75% of World energy consumption) Hydro Coal Agriculture 6% Transportation 37% Industrial 36% Oil Natural Gas Res & Com 21% Supply Demand

  3. Thailand’s Energy Situations • Energy is basic factor of economic development • In 2005, energy costs accounted to about 15% of GDP • Oil imports accounted to 12% of total import values • 60% of commercial energy was imported or about 700 billion baht • Still rooms for energy efficiency improvement Agriculture 6% Resident & Commercial 21% Industry 36% Transport 37%

  4. Ratio of energy growth rate to GDP growth rate = 1.0 by 2008 Energy Efficiency Improvement Target Strategy Indicators Objective 1 Energy Efficiency Improvement 1. Improve EE in Transportation Energy Elasticity = 1:1 in 5 years 2. Improve EE in Industry 2 3. Awareness raising campaign ประเทศไทยมีพลังงานใช้อย่างต่อเนื่อง เพียงพอต่อความต้องการไปอีก 50 ปี Energy Elasticity = ∆tEnergy Consumption/ ∆tGDP 3 ประชาชนมีพลังงานใช้อย่างทั่วถึง ในราคาที่เป็นธรรมและเพื่อคุณภาพชีวิตที่ดีขึ้น Ave. Energy Elasticity 1.4 : 1.0 4 ประเทศไทยเป็นศูนย์กลางพลังงานในภูมิภาค

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

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

  7. Cooperative Efforts on Energy Management • Objective: Sustainable energy management through internal cooperative efforts • Methodologies • Educate on concept & method + evaluation • Help create and implement EC measures • Achievement • Implemented 500 facilities • Introduced house-keeping measures • Energy saving of 5-10% for each facility ( simple payback of 2.5 yrs)

  8. Revolving Fund for EC Projects Present Status • 82 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 • Budgets allocation from ECP Fund • Loan approval by Bank • Technical assistance by DEDE • Key conditions • Loan size < 1.2 mill USD/project • Interest rate less than 4% (fixed rate) • Repayment in the defined time frame (7yr)

  9. Cost Based Tax Incentive • 25% Tax Break for the Investment in EE Projects Result in Efficiency Improvement • Applicable for the First 50 mill baht Investment ( 1.25 mill USD ) • Incentive Spread Over 5 Years

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

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

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

  13. Holistic Approach Value Creation Mission Adjustment Organizational Restructure Paradigm Shift Enforcer / Regulator Facilitator / Supporter www.dede.go.th

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