THAI EXPERENCES: RENEWABLE ENERGY AND ENERGY EFFICIENCY POLICY

Chavalit Pichalai Director, Energy System Analysis BureauEnergy Policy and Planning Office (EPPO)Ministry of Energy, Thailand

Presented at theMeeting for Workshop on renewable energy and energy efficiency with internationel experiencres August 28, 2006

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Contents

1. Background and Rationale2. Implementation of Energy Conservation

Measures in Thailand3. Energy Conservation Measures: Private Sector4. The Role of NRE in the Country’s Energy

Conservation Program5. Conclusion

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1. Background and Rationale (1)

- Energy is an important factor to the economic and social development of the country.

- High volatility of world oil prices & unpredictable political tension in major oil exporting countries affects the national energy security.

- To strength energy security, the Ministry of Energy has initiated strategies and measures to reduce dependency on oil imports while enhancing utilization of domestic energy resources.

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6. Results/Output of the Country’s Energy Conservation Measures (2)

2.1 Acceleration of ENCON Measures to Respond to the Oil Price Hikes (cont.)

2. Implementation of Energy 2. Implementation of Energy Conservation Measures in Conservation Measures in ThailandThailand (4)(4)

The implementation can be divided into the following economic sectors:

1) Transport: to reduce oil consumption by 25% by 2009

2) Industrial: to reduce oil consumption by 20% by 2008

3) Household: to reduce energy consumption by 10%, with the Kick-Off of energy saving campaigns on 1Jun05

4) Government: to reduce energy consumption by 10-15%, with immediate effect.

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3. Energy Conservation Measures: Private Sector (1)

Focus on 3 key economic sectors: transportation, industrial and residential, which account for a share of 37%, 36% and 21% of the total energy consumption respectively.

3.1 Transportation SectorTarget: to reduce 25% of oil consumption by 2009

Measures: Promotion of new/alternative transport fuels – to reduce oil demand by 15% by 2008.- Gasohol: 8 M litres/day in 2006; replace gasoline 95 as from 1Jan2007- Biodiesel: 5.2 M litres/day in 2006; 8.5 M litres/day by 2012- NGV: 180 NGV stations in 2006 and to replace 10% of oil by Dec2008;

500,000 NGV-fueled vehicles by 2010, with 740 NGV stations.

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3. Energy Conservation Measures: Private Sector (2)

3.1 Transportation Sector (cont.) Improvement of Transport System Efficiency – to reduce oil

demand by 10%, via: - Promotion of rail and waterway transport modes - Promotion of public transport systems - Improvement of the traffic management system - Promotion of oil transportation via pipelines

- The use of town planning to enhance transportation system efficiency

- Promotion of energy saving vehicles - Application of tax measures

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3. Energy Conservation Measures: Private Sector (3)

3.2 Industrial SectorTarget: to reduce 20% of energy consumption by 2008Measures: Promotion of the use of NG -- to replace 5% of fuel oil

consumption in large industrial factories - Promotion of CHP system (Cogen) and the Gas District Cooling

(e.g. at Suvannabhumi Airport) - Promotion of power and cool-water generation using Distributed-

Generation (DG) system in large department stores Energy efficiency improvement – to save 15% of energy - Speed up EE improvement in SMEs – revolving funds/tax

incentives/investment promotion measures via BOI - Promotion of Energy Services Company (ESCO) business

- Restructuring of the industrial sector non-energy intensive

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3.3 Household SectorTarget: to reduce 10% of energy consumptionMeasures: Promotion of high-efficiency equipment, via: - Minimum Energy Performance Standards (MEPS): air-

conditioners, refrigerators, ballast, fluorescent lamps and compact fluorescent lamps

- Energy efficiency labeling - Establishment of the standards of LPG-fired cookers - Promotion of high-efficiency cooking stoves - Establishment of building code & building material standards Public awareness campaigns

3. Energy Conservation Measures: Private Sector (4)

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4. The Role of NRE in the Country’s Energy Conservation Program (1)

Renewable Energy Development Program is one major sub-program of the ENCON Program, focusing on 5 areas:

1. Promotion of the use of biofuels – gasohol/biodiesel

2. Promotion of RE utilization for power generation

3. Promotion of RE utilization for heat generation in industrial factories

4. Policy study and R&D on RE – solar, micro-hydropower and biomass energy

5. Human resources development and public awareness campaigns

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4. The Role of NRE in the Country’s Energy Conservation Program (2)

4.1 Promotion of Biofuels/Alternative Transport Fuels GasoholTarget1 January 2007• Replacing premium

gasoline (gasoline octane 95) with Gasohol 95 (“E-10” – a mixture of ethanol and gasoline octane 91 at a ratio 1:9) nationwide

2008 onwards• Replacing gasoline octane

91 with Gasohol 91

Target1 January 2007• Replacing premium

gasoline (gasoline octane 95) with Gasohol 95 (“E-10” – a mixture of ethanol and gasoline octane 91 at a ratio 1:9) nationwide

2008 onwards• Replacing gasoline octane

91 with Gasohol 91

Government Measures to Promote Gasohol

Price measure Keeping the price of gasohol

cheaper than the premium gasoline at 1.50 Baht (~3.75 US cents)/litre

Government support: BOI investment promotion for fuel-

ethanol production plants Reduction of import & excise taxes

for flexible-fuel vehicles (FFV) Soft-loans for domestic FFV

manufacturing

Government Measures to Promote Gasohol

Price measure Keeping the price of gasohol

cheaper than the premium gasoline at 1.50 Baht (~3.75 US cents)/litre

Government support: BOI investment promotion for fuel-

ethanol production plants Reduction of import & excise taxes

for flexible-fuel vehicles (FFV) Soft-loans for domestic FFV

manufacturing

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4. The Role of NRE in the Country’s Energy Conservation Program (3)

Biodiesel

Government Measures to Promote Biodiesel

Increase palm oil plantation by 5 million rais by 2009

Promote small-scale projects (community level)

- now 11 pilot communities and will expand to 60 in various provinces within 2006

Government Measures to Promote Biodiesel

Increase palm oil plantation by 5 million rais by 2009

Promote small-scale projects (community level)

- now 11 pilot communities and will expand to 60 in various provinces within 2006

Target Blending Ratio

(to replace diesel

consumption)

Distribution Area

2005-2006 (trial)

2% certain areas

2007-2011(commercial)

5% certain areas

(e.g. in the South, BKK)

2012 onwards

10% nationwide

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4. The Role of NRE in the Country’s Energy Conservation Program (4)

NGVTarget500,000 NGV-fueled

vehicles by 2010• Focus on public transport

fleets, taxis and government car fleets

• Increase NGV stations from now 60 to 200 stations in 2006 and to 740 stations by 2010

Target500,000 NGV-fueled

vehicles by 2010• Focus on public transport

fleets, taxis and government car fleets

• Increase NGV stations from now 60 to 200 stations in 2006 and to 740 stations by 2010

Government Measures to Promote NGV

Price measure NGV retail price at 50% of diesel

retail price and may be adjusted to 55% and 60% of gasoline 91 in 2007 and 2008 respectively

Government support: Soft loans for NGV conversion

kit installation Establish standards of NGV

equipment & reduce import taxes

Tax incentives for NGV vehicle manufacturing

Government Measures to Promote NGV

Price measure NGV retail price at 50% of diesel

retail price and may be adjusted to 55% and 60% of gasoline 91 in 2007 and 2008 respectively

Government support: Soft loans for NGV conversion

kit installation Establish standards of NGV

equipment & reduce import taxes

Tax incentives for NGV vehicle manufacturing

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4. The Role of NRE in the Country’s Energy Conservation Program (5)

4.2 The Use of NRE in the Industrial Sector The use of RE, especially biomass, is being promoted for

heat generation via: - the establishment of minimum efficiency of the Combined

Heat and Power (CHP) system; - measures on biomass management in industrial factories; - tax incentives for industries using biomass fuel; and - legislative measures on wastewater treatment and waste

disposal. Natural Gas will be promoted to replace the use of oil. Expansion of the Gas District Cooling &

Cogeneration.

The use of RE, especially biomass, is being promoted for heat generation via:

- the establishment of minimum efficiency of the Combined Heat and Power (CHP) system;

- measures on biomass management in industrial factories; - tax incentives for industries using biomass fuel; and - legislative measures on wastewater treatment and waste

disposal. Natural Gas will be promoted to replace the use of oil. Expansion of the Gas District Cooling &

Cogeneration.

4. The Role of NRE in the Country’s Energy Conservation Program (8)

Greater use of RE for power generation will also be promoted.

Focus is made on 4 domestic RE sources, of which the potential is high, i.e. solar, wind, biomass/biogas and mini or micro-hydro.

Also, Thailand is seeking cooperation on hydropower development with neighboring countries, e.g. Laos, Myanmar, China and Cambodia.

Supportive Measures to Encourage RE Utilization in Power Generation

Renewable Portfolio Standard (RPS) measure – 140 MW generated by RE is expected by 2011;

Improvement of the power purchase regulations and the introduction of “Feed-in Tariff” e.g. ROIC ≥11%;

Fiscal and financial incentives, e.g. tax privileges, soft loans, investment promotion through BOI, measures on externality costs and on carbon tax.

4. The Role of NRE in the Country’s Energy Conservation Program (9)

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5. Conclusion (1)

The private sector has realized the benefits from EE improvement and the use of NRE.

To facilitate EE improvement, the Thai government has promoted ESCO services, especially in large factories and buildings.

Financial measures have been devised to boost investment in EE improvement: soft loans, tax incentives, promotion measures via BOI.

For NRE, the private sector has taken part in the implementation of a number of projects, e.g. biogas for power generation in livestock farms and for waste water treatment in agro-industry factories

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5. Conclusion (2)

Academics and industries have taken part in terms of R&D of NRE technologies, e.g. solar cells for tropical climate, fuel cell development and wind resource assessment.

Government policy & energy conservation strategies and measures

+ Private sector cooperation

+ energy saving consciousness of the public

National energy security will be strengthened

Sustainable development

+ Well-being of the people

Thank youThank you